27704 Federal Register / Vol. 87, No. 89 / Monday, May 9, 2022 / Rules and Regulations 

DEPARTMENT OF HEALTH AND 

HUMAN SERVICES 

Centers for Medicare & Medicaid 

Services 

42 CFR Parts 417, 422, and 423 

[CMS–4192–F, CMS–1744–F, and CMS– 

3401–F] 

RIN 0938–AU30, 0938–AU31, and 0938– 

AU33 

Medicare Program; Contract Year 2023 

Policy and Technical Changes to the 

Medicare Advantage and Medicare 

Prescription Drug Benefit Programs; 

Policy and Regulatory Revisions in 

Response to the COVID–19 Public 

Health Emergency; Additional Policy 

and Regulatory Revisions in Response 

to the COVID–19 Public Health 

Emergency 

AGENCY: Centers for Medicare & 

Medicaid Services (CMS), Department 

of Health and Human Services (HHS). 

ACTION: Final rule. 

SUMMARY: This final rule will revise the 

Medicare Advantage (MA) (Part C) 

program and Medicare Prescription 

Drug Benefit (Part D) program 

regulations to implement changes 

related to marketing and 

communications, past performance, Star 

Ratings, network adequacy, medical loss 

ratio reporting, special requirements 

during disasters or public emergencies, 

and pharmacy price concessions. This 

final rule will also revise regulations 

related to dual eligible special needs 

plans (D–SNPs), other special needs 

plans, and cost contract plans. This final 

rule finalizes certain 2021 and 2022 Star 

Ratings provisions that were included in 

two interim final rules with comment 

period (IFC) that CMS issued on April 

6, 2020, and September 2, 2020; other 

policies from those interim final rules 

will be addressed in other rulemakings. 

DATES: 

Effective dates: These regulations are 

effective on June 28, 2022, except for 

amendatory instructions 27 and 36 

(regarding the definition of ‘‘negotiated 

price’’ at §§ 423.100 and 423.2305), 

which are effective January 1, 2024. 

Applicability dates: The applicability 

date of the provisions in this rule is 

January 1, 2023, except as explained in 

SUPPLEMENTARY INFORMATION. 

FOR FURTHER INFORMATION CONTACT: 

Marna Metcalf Akbar, (410) 786–8251, 

or Melissa Seeley, (212) 616–2329— 

General Questions. 

Jacqueline Ford, (410) 786–7767—Part 

C Issues. 

PartCandDStarRatings@

cms.hhs.gov—Part C and D Star Ratings 

Issues. 

Marna Metcalf-Akbar, (410) 786– 

8251—D–SNP Issues. 

PartDPaymentPolicy@cms.hhs.gov— 

Part D Pharmacy Price Concession 

Issues. 

MLRreport@cms.hhs.gov—MLR 

Issues. 

SUPPLEMENTARY INFORMATION: 

Acronyms 

ACC Automated Criteria Check 

AHC Accountable Health Communities 

AKS Anti-kickback Statute 

ANOC Annual Notice of Change 

ARB At-Risk Beneficiaries 

BBA Bipartisan Budget Act 

CAHPS Consumer Assessment of 

Healthcare Providers and Systems 

CAI Categorical Adjustment Index 

CMS Centers for Medicare & Medicaid 

Services 

COI Collection of Information 

COVID–19 Coronavirus 2019 Disease 

C–SNP Chronic Condition Special Needs 

Plan 

DME Durable Medical Equipment 

D–SNP Dual Eligible Special Needs Plan 

EGWP Employer Group Waiver Plan 

EOC Evidence of Coverage 

FAI Financial Alignment Initiative 

FDR First-Tier Downstream and Related 

Entity 

FFS Fee-for-Service 

FIDE SNP Fully Integrated Dual Eligible 

Special Needs Plan 

FQHC Federally Qualified Health Center 

HEDIS Healthcare Effectiveness Data and 

Information Set 

HHS Department of Health and Human 

Services 

HIDE SNP Highly Integrated Dual Eligible 

Special Needs Plan 

HIPAA Health Insurance Portability and 

Accountability Act of 1996 

HOS Health Outcomes Survey 

HPMS Health Plan Management System 

HRA Health Risk Assessment 

HSD Health Service Delivery 

ICR Information Collection Requirement 

IRE Independent Review Entity 

I–SNP Institutional Special Needs Plan 

LOI Letter of Intent 

LTSS Long Term Services and Supports 

MA Medicare Advantage 

MAC Medicare Administrative Contractor 

MACPAC Medicaid and CHIP Payment and 

Access Commission 

MA–PD Medicare Advantage Prescription 

Drug 

MCO Managed Care Organization 

MCMG Medicare Communications and 

Marketing Guidelines 

MACPAC Medicaid and CHIP Payment and 

Access Commission 

MedPAC Medicare Payment Advisory 

Commission 

MIPPA Medicare Improvements for Patients 

and Providers Act 

MLR Medical Loss Ratio 

MMA Medicare Prescription Drug, 

Improvement, and Modernization Act 

MMCO Medicare-Medicaid Coordination 

Office 

MMP Medicare-Medicaid Plan 

MOC Model of Care 

MOOP Maximum Out-of-Pocket 

NAMBA National Average Monthly Bid 

Amount 

NEMT Non-emergency Medical 

Transportation 

NMM Network Management Module 

OACT Office of the Actuary 

OMB Office of Management and Budget 

PACE Programs of All-Inclusive Care for the 

Elderly 

PAHP Prepaid Ambulatory Health Plan 

PBP Plan Benefit Package 

PDE Prescription Drug Event 

PDP Prescription Drug Plan 

PHE Public Health Emergency 

PIHP Prepaid Inpatient Health Plan 

PRA Paperwork Reduction Act 

RFI Request for Information 

RFA Regulatory Flexibilities Act 

RHC Rural Health Clinic 

SAE Service Area Expansion 

SB Summary of Benefits 

SDOH Social Determinants of Health 

SHIP State Health Insurance Assistance 

Program 

SNP Special Needs Plan 

SSA Social Security Administration 

SSBCI Special Supplemental Benefits for 

the Chronically Ill 

TPMO Third-Party Marketing Organization 

Additional information regarding the 

applicability dates: The Star Ratings 

provision at § 422.166(i)(12) is 

applicable to the calculation of the 2023 

Star Ratings released in October, 2022, 

as discussed in section II.D.2. of this 

final rule. The definition of ‘‘fully 

integrated dual eligible special needs 

plans (FIDE SNP)’’ in § 422.2 at 

paragraphs (2)(i) and (iii) through (v), 

(5), and (6) as discussed in section II.A.5 

of this final rule are applicable 

beginning January 1, 2025. The 

definition of ‘‘highly integrated dual 

eligible special needs plans’’ in § 422.2 

at paragraph (3), as discussed in section 

II.A.5.f. of this final rule, is applicable

beginning January 1, 2025. The

applicability date of the requirements at

§ 422.101, as discussed in section II.A.4.

of this final rule, is January 1, 2024. The

requirements at § 423.100, as discussed

in section II.H. of this final rule, are

applicable beginning on January 1,

2024.

I. Executive Summary

A. Purpose

Over 29 million individuals receive

their Medicare benefits through 

Medicare Advantage (MA or Part C), 

including plans that offer Medicare 

Prescription Drug Benefit (Part D) 

coverage. Over 23 million individuals 

receive Part D coverage through 

standalone Part D plans. The primary 

purpose of this final rule is to 


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1Centers for Medicare & Medicaid Services. 

(n.d.). Person & Family Engagement Strategy: 

Sharing with Our Partners. Retrieved from https:// 

www.cms.gov/Medicare/Quality-Initiatives-PatientAssessment-Instruments/QualityInitiativesGenInfo/ 

Downloads/Person-and-Family-EngagementStrategy-Summary.pdf. 

implement changes to the MA and Part 

D programs. This final rule implements 

changes related to marketing and 

communications, past performance, Star 

Ratings, network adequacy, medical loss 

ratio reporting, special requirements 

during disasters or public emergencies, 

and pharmacy price concessions. This 

final rule also revises regulations related 

to dual eligible special needs plans (D– 

SNPs), other special needs plans, and 

Medicare cost contract plans. 

B. Summary of Major Provisions 

1. Enrollee Participation in Plan 

Governance (§ 422.107) 

Managed care plans derive significant 

value from engaging enrollees in 

defining, designing, participating in, 

and assessing their care systems.1

Through this final rule, we require that 

any MA organization offering a D–SNP 

establish one or more enrollee advisory 

committees in each State to solicit direct 

input on enrollee experiences. We also 

establish that the committee must 

include a reasonably representative 

sample of individuals enrolled in the 

D–SNP(s) and solicit input on, among 

other topics, ways to improve access to 

covered services, coordination of 

services, and health equity for 

underserved populations. Public 

comments on our proposal reinforced 

our belief that the establishment and 

maintenance of an enrollee advisory 

committee is a valuable beneficiary 

protection to ensure that enrollee 

feedback is heard by managed care 

plans and to help identify and address 

barriers to high-quality, coordinated 

care for dually eligible individuals. 

2. Standardizing Housing, Food 

Insecurity, and Transportation 

Questions on Health Risk Assessments 

(§ 422.101) 

Section 1859(f)(5)(A)(ii)(I) of the 

Social Security Act (hereafter known as 

the Act) requires each special needs 

plan (SNP) to conduct an initial 

assessment and an annual reassessment 

of the individual’s physical, 

psychosocial, and functional needs. We 

codified this requirement at 

§ 422.101(f)(1)(i) as part of the model of 

care requirements for all MA SNPs. 

Certain social risk factors can lead to 

unmet social needs that directly 

influence an individual’s physical, 

psychosocial, and functional status. 

Many dually eligible individuals 

contend with multiple social risk factors 

such as homelessness, food insecurity, 

lack of access to transportation, and low 

levels of health literacy. Building on 

CMS’s experience with other programs 

and model tests, and with broad support 

from public commenters, we are 

finalizing a requirement that all SNPs 

include one or more questions from a 

list of screening instruments specified 

in sub-regulatory guidance on housing 

stability, food security, and access to 

transportation as part of their health risk 

assessments (HRAs). However, based on 

public comments, we are not finalizing 

our proposal that all SNPs use the same 

specific standardized questions. 

Our final rule will result in SNPs 

having a more complete picture of the 

risk factors that may inhibit enrollees 

from accessing care and achieving 

optimal health outcomes and 

independence. We believe this 

knowledge will better equip the MA 

organizations offering these SNPs to 

meet the needs of their members. Our 

final rule will also equip these MA 

organizations with person-level 

information that will help them better 

connect people to covered services, 

social service organizations, and public 

programs that can help resolve housing 

instability, food insecurity, or 

transportation challenges. 

3. Refining Definitions for Fully 

Integrated and Highly Integrated 

D–SNPs (§§ 422.2 and 422.107) 

Dually eligible individuals have an 

array of choices for how to receive their 

Medicare coverage. We proposed several 

changes to how we define fully 

integrated dual eligible special needs 

plan (FIDE SNP) and highly integrated 

dual eligible special needs plan (HIDE 

SNP) to help differentiate various types 

of D–SNPs, clarify options for 

beneficiaries, and increase integration 

for these types of D–SNPs. 

In this final rule, we are requiring, for 

2025 and subsequent years, that all FIDE 

SNPs have exclusively aligned 

enrollment, as defined in § 422.2, and 

cover Medicare cost-sharing and three 

specific categories of Medicaid benefits: 

Home health services (as defined in 

§ 440.70), medical supplies, equipment, 

and appliances (as described in 

§ 440.70(b)(3)), and behavioral health 

services through a capitated contract 

between the State Medicaid agency and 

the Medicaid managed care organization 

that is the same legal entity as the MA 

organization that offers the FIDE SNP. In 

addition, we are requiring that, for plan 

year 2025 and subsequent years, each 

HIDE SNP have a service area that 

completely overlaps the service area of 

the affiliated Medicaid managed care 

plan with the capitated contract with 

the State. Consistent with existing 

policy outlined in sub-regulatory 

guidance, this final rule also codifies 

specific, limited carve-outs of the 

Medicaid long-term services and 

supports and Medicaid behavioral 

health services covered under the 

Medicaid capitated contract affiliated 

with FIDE SNPs and HIDE SNPs. 

We believe these policies will create 

better experiences for beneficiaries and 

move FIDE SNPs and HIDE SNPs 

toward greater integration, which we 

believe is a purpose of the amendments 

to section 1859(f) of the Act regarding 

integration made by section 50311(b) of 

the BBA of 2018. 

4. Additional Opportunities for 

Integration Through State Medicaid 

Agency Contracts (§ 422.107) 

Section 164 of Medicare 

Improvements for Patients and 

Providers Act of 2008 (MIPPA) (Pub. L. 

110–275) amended section 1859(f) of the 

Act to require that a D–SNP contract 

with the State Medicaid agency in each 

State in which the D–SNP operates to 

provide benefits, or arrange for the 

provision of Medicaid benefits, to which 

an individual is entitled. States have 

used these contracts to better integrate 

care for dually eligible individuals. In 

this final rule we codify new pathways 

through which States can use these 

contracts to require that certain D–SNPs 

with exclusively aligned enrollment (a) 

establish contracts that only include one 

or more D–SNPs within a State, and (b) 

use certain integrated materials and 

notices for enrollees. Where States 

choose this opportunity, it will help 

individuals better understand their 

coverage. Because Star Ratings are 

assigned at the contract level, this final 

rule will also provide a mechanism to 

provide States and the public with 

greater transparency on the quality 

ratings for the D–SNP(s), helping CMS 

and States better identify disparities 

between dually eligible beneficiaries 

and other beneficiaries and target 

interventions accordingly. 

We also codify mechanisms to better 

coordinate State and CMS monitoring 

and oversight of certain D–SNPs when 

a State has elected to require these 

additional levels of integration, 

including granting State access to 

certain CMS information systems. 

Collectively, our proposals will improve 

Federal and State oversight of certain 

D–SNPs (and their affiliated Medicaid 

managed care plans) through greater 

information-sharing among government 

regulators. 


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5. Attainment of the Maximum Out-ofPocket Limit (§§ 422.100 and 422.101) 

In order to ensure that MA plan 

benefits do not discriminate against 

higher cost, less healthy enrollees, MA 

plans are required to establish a limit on 

beneficiary cost-sharing for Medicare 

Part A and B services after which the 

plan pays 100 percent of the service 

costs. Current guidance allows MA 

plans, including D–SNPs, to not count 

Medicaid-paid amounts or unpaid 

amounts toward this maximum out-ofpocket (MOOP) limit, which results in 

increased State payments of Medicare 

cost-sharing and disadvantages 

providers serving dually eligible 

individuals in MA plans. In this final 

rule we specify 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) must be calculated 

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 (including 

cost-sharing that remains unpaid 

because of State limits on the amounts 

paid for Medicare cost-sharing and 

dually eligible individuals’ exemption 

from Medicare cost-sharing). The 

change will result in more equitable 

payment for MA providers serving 

dually eligible beneficiaries. We project 

that our requirement as finalized will 

result in increased bid costs for the 

MOOP for some MA plans. A portion of 

those higher bid costs will result in 

increased Medicare spending of $3.9 

billion over 10 years. That cost is 

partially offset by lower Federal 

Medicaid spending of $2.7 billion and 

the portion of Medicare spending paid 

by beneficiary Part B premiums, which 

totals $600 million over 10 years. The 

net Federal 10-year cost estimate for the 

finalized requirement is $614.8 million. 

6. Special Requirements During a 

Disaster or Emergency for Medicare 

Advantage Plans (§ 422.100(m)) 

In order to ensure enrollees have 

uninterrupted access to care, current 

regulations provide for special 

requirements at § 422.100(m) for MA 

plans during disasters or emergencies, 

including public health emergencies 

(PHEs), such as requirements for plans 

to cover services provided by noncontracted providers and to waive 

gatekeeper referral requirements. The 

timeframe during which these special 

rules apply can be very specific 

depending on the type or scope of the 

disaster or emergency, while other 

situations, like the PHE for COVID–19, 

may have an uncertain end date. 

Currently, the regulation states that a 

disaster or emergency ends (thus ending 

the obligation for MA plans to comply 

with the special requirements) the 

earlier of when an end date is declared 

or when, if no end date was identified 

in the declaration or by the official that 

declared the disaster or emergency, 30 

days have passed since the declaration. 

This has caused some confusion among 

stakeholders, who are unsure whether to 

continue special requirements during a 

state of disaster or emergency after 30 

days, or whether those special 

requirements do not apply after the 30- 

day time period has elapsed. In this 

final rule, we clarify the period of time 

during which MA organizations must 

comply with the special requirements. 

Under this final rule, MA organizations 

must ensure access for enrollees to 

covered services throughout the disaster 

or emergency period, including when 

the end date is unclear and the period 

renews several times, so long as there is 

a disruption of access to healthcare. 

7. Amend MA Network Adequacy Rules 

by Requiring a Compliant Network at 

Application (§ 422.116) 

We proposed to amend § 422.116 to 

require applicants to demonstrate that 

they meet the network adequacy 

standards for the pending service area as 

part of the MA application process for 

new and expanding service areas and to 

adopt a time-limited 10-percentage 

point credit toward meeting the 

applicable network adequacy standards 

for the application evaluation. Under 

our current rules, we require that an 

applicant attest that it has an adequate 

provider network that provides 

enrollees with sufficient access to 

covered services, and we will not deny 

an application based on the evaluation 

of the MA plan’s network. Network 

adequacy reviews are a critical 

component for confirming that access to 

care is available for enrollees. As such, 

we believe that requiring applicants to 

meet network adequacy standards as 

part of the application process will 

strengthen our oversight of an 

organization’s ability to provide an 

adequate network of providers to deliver 

care to MA enrollees. This change will 

also provide MA organizations with 

information regarding their network 

adequacy ahead of bid submissions, 

mitigating current issues with late 

changes to the bid that may affect the 

bid pricing tool. Finally, we understand 

that it may be difficult for applicants to 

have a full network in place almost 1 

year ahead of the beginning of the 

contract as the proposed change for 

network adequacy rules will require. 

Therefore, the final rule includes a 10- 

percentage point credit towards the 

percentage of beneficiaries residing 

within published time and distance 

standards for new or expanding service 

area applicants. Once the contract is 

operational, the 10-percentage point 

credit will no longer apply and MA 

organizations will need to meet full 

compliance. 

We are finalizing our proposal, with 

one modification; to allow applicants to 

utilize Letters of Intent (LOIs) to meet 

network standards in counties and 

specialty types as needed. Once the 

contract is operational, MA 

organizations must have signed 

contracts with providers and facilities to 

be in full compliance. 

8. Part C and Part D Quality Rating 

System 

Due to the scope and duration of the 

COVID–19 PHE, we adopted a technical 

change to the 2022 Star Ratings 

methodology for extreme and 

uncontrollable circumstances in the 

‘‘Medicare and Medicaid Programs, 

Clinical Laboratory Improvement 

Amendments (CLIA), and Patient 

Protection and Affordable Care Act; 

Additional Policy and Regulatory 

Revisions in Response to the COVID–19 

Public Health Emergency’’ published in 

the Federal Register and effective on 

September 2, 2020 (hereafter referred to 

as the ‘‘September 2nd COVID–19 

IFC’’),2 (CMS–3401–IFC; 85 FR 54820) 

at 42 CFR 422.166(i)(11) to make it 

possible for us to calculate 2022 Star 

Ratings for MA contracts. We proposed 

making a technical change at 

§ 422.166(i)(12) to enable CMS to 

calculate 2023 Star Ratings for three 

Healthcare Effectiveness Data and 

Information Set measures that are based 

on the Health Outcomes Survey (87 FR 

1842, January 12, 2022). Specifically, 

these measures are Monitoring Physical 

Activity, Reducing the Risk of Falling, 

and Improving Bladder Control. 

Without this technical change, CMS will 

be unable to calculate measure-level 

2023 Star Ratings for these measures for 

any MA contract. We are therefore 

finalizing § 422.166(i)(12) without 

modification. In this final rule, we also 

respond to comments we received on 

the Medicare Advantage and Part D Star 

Ratings provisions in the interim final 

rules titled ‘‘Medicare and Medicaid 

Programs; Policy and Regulatory 

Revisions in Response to the COVID–19 

Public Health Emergency’’ published in 

the Federal Register on April 6, 2020, 


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with a March 31, 2020 effective date 

(hereafter referred to as the ‘‘March 31st 

COVID–19 IFC’’) 3 (85 FR 19230) and the 

September 2nd COVID–19 IFC. As 

detailed in sections II.D.3. and II.D.4. of 

this final rule, we are finalizing most of 

the Star Ratings provisions from the 

March 31st COVID–19 IFC and the 

September 2nd COVID–19 IFC, but we 

are not finalizing several Star Ratings 

provisions in those interim final rules, 

regarding circumstances that did not 

happen, because they are moot. CMS 

will address other provisions from the 

interim final rules in other rulemakings. 

9. Past Performance Methodology to 

Better Hold Plans Accountable for 

Violating CMS Rules (§§ 422.502 and 

422.503) 

In a previous rulemaking cycle, CMS 

modified the past performance 

methodology, revising the elements that 

are reviewed to determine if CMS 

should permit an organization to enter 

into a new contract or expand an 

existing contract. The current regulatory 

language prohibits an organization from 

expanding or entering into a new 

contract if it has a negative net worth or 

has been under sanction during the 

performance timeframe. In this final 

rule, we include an organization’s 

record of Star Ratings, bankruptcy 

issues, and compliance actions in our 

methodology going forward. 

10. Marketing and Communications 

Requirements on MA and Part D Plans 

To Assist Their Enrollees (§§ 422.2260 

and 423.2260, 422.2267 and 423.2267, 

422.2274 and 423.2274) 

CMS has seen an increase in 

beneficiary complaints associated with 

third-party marketing organizations 

(TPMOs) and has received feedback 

from beneficiary advocates and 

stakeholders concerned about the 

marketing practices of TPMOs who sell 

multiple MA and Part D products. In 

2020, we received a total of 15,497 

complaints related to marketing. In 

2021, excluding December, the total was 

39,617. We are unable to say that every 

one of the complaints is a result of 

TPMO marketing activities, but based 

on a targeted search, we do know that 

many are related to TPMO marketing. In 

addition, we have seen an increase in 

third party print and television ads, 

which appears to be corroborated by 

State partners. Through this final rule, 

we will address the concerns with 

TPMOs by means of the following three 

updates to the communications and 

marketing requirements under 42 CFR 

parts 422 and 423, subpart V: (1) We 

define TPMOs in the regulation at 

§§ 422.2260 and 423.2260 to remove any 

ambiguity associated with MA plans/ 

Part D sponsors responsibilities for 

TPMO activities associated with the 

selling of MA and Part D plans; (2) we 

add a new disclaimer that will be 

required when TPMOs market MA 

plans/Part D products (§§ 422.2267(e) 

and 423.2267(e)); and (3) we update 

§§ 422.2274 and 423.2274 to require 

additional plan oversight requirements 

associated with TPMOs, in addition to 

what is already required under 

§§ 422.504(i) and 423.505(i) if the 

TPMO is a first tier, downstream or 

related entity (FDR). 

CMS’ January 2021 final rule, entitled 

‘‘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’’ (86 FR 5864) did 

not require notice and taglines, based on 

the HHS Office for Civil Rights repeal of 

certain notice and tagline requirements 

associated with section 1557 of the 

Affordable Care Act. In the months 

since the publication of this rule, CMS 

gained additional insight regarding the 

void created by the lack of these 

notification requirements. Based on the 

significant population (12.2 percent) of 

those 65 and older who speak a 

language other than English in the home 

and complaints CMS received through 

our Complaint Tracking Module, in this 

final rule we are finalizing a 

requirement that MA and Part D plans 

create a multi-language insert that will 

inform the reader, in the top fifteen 

languages used in the U.S., as well as 

any additional non-English language 

that is the primary language of at least 

5 percent of the individuals in a plan 

benefit package service area, that 

interpreter services are available for 

free. As a note, CMS provides plans a 

list of all languages that are spoken by 

5 percent or more of the population for 

every county in the U.S. As part of the 

finalized requirement, plans will be 

required to include the multi-language 

insert whenever a Medicare beneficiary 

is provided a CMS required material (for 

example, Evidence of Coverage, Annual 

Notice of Change, enrollment form, 

Summary of Benefits) as defined under 

§§ 422.2267(e) and 423.2267(e). We 

further note that existing statutes, 

including Section 504 of the 

Rehabilitation Act and 1557 of the 

Affordable Care Act, require the 

provision of any auxiliary aids and 

services required for effective 

communication for individuals with 

disabilities at no cost to the individual. 

Finally, in this final rule we are 

codifying a number of current subregulatory communications and 

marketing requirements that were 

inadvertently not included during the 

previous updates to 42 CFR parts 422 

and 423, subpart V. 

11. Greater Transparency in Medical 

Loss Ratio Reporting (§§ 422.2460 and 

423.2460) 

To improve transparency and 

oversight concerning the use of Trust 

Fund dollars, we reinstate the detailed 

medical loss ratio (MLR) reporting 

requirements that were in effect for 

contract years 2014 to 2017, which 

required reporting of the underlying 

data used to calculate and verify the 

MLR and any remittance amount, such 

as incurred claims, total revenue, 

expenditures on quality improving 

activities, non-claims costs, taxes, and 

regulatory fees. In addition, the new 

MLR reporting templates will require 

additional details regarding plan 

expenditures so we can better assess the 

accuracy of MLR submissions, the value 

of services being provided to enrollees 

under MA and Part D plans, and the 

impacts of recent rule changes that 

removed limitations on certain 

expenditures that count toward the 85 

percent MLR requirement. 

12. Pharmacy Price Concessions to Drug 

Prices at the Point of Sale (§§ 423.100 

and 423.2305) 

The ‘‘negotiated prices’’ of drugs, as 

the term is currently defined in 

§ 423.100, must include all network 

pharmacy price concessions except 

those contingent amounts that cannot 

‘‘reasonably be determined’’ at the 

point-of-sale. Under this exception, 

negotiated prices typically do not reflect 

any performance-based pharmacy price 

concessions that lower the price a 

sponsor ultimately pays for a drug, 

based on the rationale that these 

amounts are contingent upon 

performance measured over a period 

that extends beyond the point of sale 

and thus cannot reasonably be 

determined at the point of sale. We 

proposed to eliminate this exception for 

contingent pharmacy price concessions 

(87 FR 1842, January 12, 2022). We 

proposed to delete the existing 

definition of ‘‘negotiated prices’’ at 

§ 423.100 and to adopt a new definition 

for the term ‘‘negotiated price’’ at 

§ 423.100, which we proposed to define 

as the lowest amount a pharmacy could 


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receive as reimbursement for a covered 

Part D drug under its contract with the 

Part D plan sponsor or the sponsor’s 

intermediary (that is, the amount the 

pharmacy will receive net of the 

maximum negative adjustment that 

could result from any contingent 

pharmacy payment arrangement and 

before any additional contingent 

payment amounts, such as incentive 

fees). We proposed to allow plans the 

flexibility to determine how much of the 

pharmacy price concessions to pass 

through at the point of sale for 

applicable drugs in the coverage gap 

phase of the benefit. After consideration 

of the comments, we are modifying our 

proposal to apply the new definition of 

‘‘negotiated price’’ to all phases of the 

Part D benefit, including the coverage 

gap phase. We are also amending the 

definition of ‘‘negotiated price’’ at 

§ 423.2305 by revising paragraphs (1) 

and (2) of the definition of ‘‘negotiated 

price’’ for the Coverage Gap Discount 

Program to be consistent with the 

definition of ‘‘negotiated price’’ that we 

are adopting at § 423.100 (that is, the 

lowest possible reimbursement such 

network entity will receive, in total, for 

a particular drug). This policy takes 

effect 60 days after publication of the 

final rule and is applicable beginning on 

January 1, 2024. Part D sponsors will 

need to account for these changes in the 

bids that they submit for contract year 

2024. 

In this final rule, we add a definition 

of ‘‘price concession’’ at § 423.100. 

Although ‘‘price concession’’ is a term 

important to the adjudication of the Part 

D program, it had not yet been defined 

in the Part D statute, Part D regulations, 

or sub-regulatory guidance. We define 

price concession to include any form of 

discount, direct or indirect subsidy, or 

rebate received by the Part D sponsor or 

its intermediary contracting 

organization from any source that serves 

to decrease the costs incurred under the 

Part D plan by the Part D sponsor. 

C. Summary of Costs and Benefits 

BILLING CODE 4120–01–P 


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Summary of Major Provisions Description Impact 

of Rule 

1. Enrollee Participation in Plan We are finalizing a requirement that any There is on average an 

Governance (§ 422.107) MA organization must establish one or annual cost of $1.0 million 

more enrollee advisory committees in each on MA organizations for 

State where the organization offers a D- establishing and maintaining 

SNP to solicit direct input on, among other these D-SNP advisory 

topics, ways to improve access to covered committees, with a wide 

services, coordination of services, and range of variability. 

health equity for underserved populations. 

2. Standardizing Housing, Food Building on CMS's experience with other For the initial year of 

Insecurity, and Transportation programs and model tests, we are implementation, there is a 

Questions on Health Risk Assessments finalizing a requirement that all SNPs negligible impact on a 

(§ 422.101) include questions on housing stability, portion of SNPs to update 

food security, and access to transportation systems and HRA 

from a list of screening instruments instruments. 

specified by CMS in sub-regulatory 

guidance as part of their initial and annual 

health risk assessments beginning in 

contract year 2024. 

3. Refining Definitions for Fully We are finalizing a requirement, for 2025 There is a negligible oneIntegrated and Highly Integrated D- and subsequent years, that all FIDE SNPs time impact to update 

SNPs (§§ 422.2 and 422.107) have exclusively aligned enrollment, as contracts. 

defined in § 422.2, and cover Medicare 

cost-sharing and Medicaid home health, 

medical supplies, equipment and 

appliances, and behavioral health services 

through a capitated contract with the State 

Medicaid agency. We are also finalizing a 

requirement that each HIDE SNP's 

capitated contract with the State apply to 

the entire service area for the D-SNP for 

plan year 2025 and subsequent years. 

Finally, consistent with existing policy 

outlined in sub-regulatory guidance, we are 

codifying specific limited benefit carveouts for FIDE SNPs and HIDE SNPs. 
Federal Register / Vol. 87, No. 89 / Monday, May 9, 2022 / Rules and Regulations 27709 


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Summary of Major Provisions Description Impact 

of Rule 

4. Additional Opportunities for We are codifying new pathways through There is a one-time $1.1 

Integration through State Medicaid which States can use the State Medicaid million impact shared 

Agency Contracts agency contracts to require that certain D- among the Federal 

(§ 422.107) SNPs with exclusively aligned enrollment Government, State 

(a) apply and request to establish contracts governments, and MA 

that only include one or more D-SNP organizations to create new 

within a State, and (b) integrate materials contracts and to update 

and notices for enrollees. We are also systems to review the new 

finalizing mechanisms to better coordinate materials. 

State and CMS monitoring and oversight 

of certain D-SNPs when a State has elected 

to require these additional levels of 

integration, including granting State access 

to certain CMS information systems. 

5. Attainment of the Maximum Out-of- We are finalizing that the maximum out- The policy will increase 

Pocket Limit(§§ 422.100 and 422.101) of-pocket limit in an MA plan (after which Medicare spending by $3.9 

the plan pays 100 percent of MA costs) billion over 10 years. That 

must be calculated based on the accrual of cost is partially offset by 

all cost-sharing in the plan benefit, whether lower Federal Medicaid 

that cost-sharing is paid by the beneficiary, spending of $2. 7 billion and 

Medicaid, other secondary insurance, or the portion of Medicare 

remains unpaid. spending paid by 

beneficiary Part B 

premiums, which totals 

$600 million over 10 years. 

The net 10-year cost 

estimate for the proposal is 

$614.8 million. 

6. Special Requirements during a We are clarifying the period of time during None anticipated. 

Disaster or Emergency for Medicare which MA organizations must comply 

Advantage Plans(§ 422.l00(m)) with the special requirements to ensure 

access for enrollees to covered services 

during a disaster or emergency (including 

PHEs) period, including when the end date 

is unclear and the period renews several 

times, so long as there is a disruption in 

access to healthcare for enrollees in the 

plan service area. 
27710 Federal Register / Vol. 87, No. 89 / Monday, May 9, 2022 / Rules and Regulations 


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Summary of Major Provisions Description Impact 

of Rule 

7. Amend MA Network Adequacy We are finalizing an amendment at In response to comments, 

Rules by Requiring a Compliant § 422.116 to require an applicant to we are allowing LOis in lieu 

Network at Application(§ 422.116) demonstrate compliance with network of full contracts during the 

adequacy standards as part of the MA application period to meet 

application process for new and expanding the network standards. This 

service areas and to adopt a time-limited change will have negligible 

10 percentage point credit toward meeting impact. 

the applicable network adequacy standards 

for the application evaluation. We are also 

finalizing a modification to our proposal to 

allow applicants to utilize Letters oflntent 

to meet network standards in counties and 

specialty types as needed. 

8. Part C and Part D Quality Rating We are finalizing a technical change at None anticipated. 

System(§§ 417.472, 422.152, 422.164, § 422.166(i)(12) without modification to 

422.166, 422.252, 423.156, 423.182, enable CMS to calculate 2023 Star Ratings 

423.184, and 423.186) for three Healthcare Effectiveness Data 

and Information Set measures that are 

based on the Health Outcomes Survey. 

We also respond to comments and finalize 

certain Star Ratings provisions adopted in 

the March 31st COVID-19 IFC and the 

September 2nd COVID-19 IFC in sections 

II.D.3. and II.D.4. of this final rule. 

9. Past Performance Methodology to We are finalizing the inclusion of Star None anticipated. 

Better Hold Plans Accountable for Ratings, bankruptcy issues, and 

Violating CMS Rules (§§ 422.502 and compliance actions in our methodology 

422.503) going forward. 
Federal Register / Vol. 87, No. 89 / Monday, May 9, 2022 / Rules and Regulations 27711 


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Summary of Major Provisions Description Impact 

of Rule 

10. Marketing and Communications We are finalizing several updates to the There is an annual impact of 

Requirements on MA and Part D Plans communications and marketing $0.3 million on plans to 

to Assist Their Enrollees (§§ 422.2260 requirements under 42 CFR parts 422 and print the multi-language 

and 423.2260, 422.2267 and 423.2267, 423, subpart V, to define MA plans/Part D insert. 

422.2274 and 423.2274) sponsors responsibilities for TPMO 

activities associated with the selling of MA 

and Part D plans. 

We are finalizing a requirement that MA 

and Part D plans use a multi-language 

insert that will inform the reader, in the top 

fifteen languages used in the U.S., that 

interpreter services are available for free. 

We are also finalizing a requirement to 

include the multi-language insert whenever 

a Medicare beneficiary is provided a CMS 

required material as defined under 

§§ 422.2267(e) and 423.2267(e). 

Lastly, we are codifying a number of 

current sub-regulatory communications 

and marketing requirements. 

11. Greater Transparency in Medical To improve transparency and oversight MA organizations and Part 

Loss Ratio Reporting(§§ 422.2460, concerning the use of Trust Fund dollars, D sponsors are expected to 

422.2490, and 423.2460) we are reinstating the detailed MLR pay an additional $268.6 

reporting requirements that were in effect million in remittances to the 

for contract years 2014-2017, which Treasury over a 10-year 

required reporting of the underlying data period. There is an annual 

used to calculate and verify the MLR and additional $2.3 million 

any remittance amount. In addition, we are administrative cost to MA 

finalizing the collection of additional organizations and Part D 

details regarding plan expenditures so we sponsors for complying with 

can better assess the accuracy ofMLR these provisions, as well as 

submissions, the value of services being a $0.2 million cost to the 

provided to enrollees, and the impacts of government for Federal 

recent rule changes. contractors. 
27712 Federal Register / Vol. 87, No. 89 / Monday, May 9, 2022 / Rules and Regulations 

BILLING CODE 4120–01–C 

D. Background 

We received approximately 6,179 

timely pieces of correspondence 

containing one or more comments for 

the provisions addressed in this final 

rule from the proposed rule titled 

‘‘Medicare Program; Contract Year 2023 

Policy and Technical Changes to the 

Medicare Advantage and Medicare 

Prescription Drug Benefit Programs’’ 

which appeared in the Federal Register 

on January 12, 2022 (hereafter referred 

to as the January 2022 proposed rule, 87 

FR 1842). Comments were submitted by 

MA health plans, Part D sponsors, 

beneficiaries, MA enrollee and 

beneficiary advocacy groups, trade 

associations, providers, pharmacies and 

drug companies, States, telehealth and 

health technology organizations, policy 

research organizations, actuarial and 

law firms, MACPAC, MedPAC, 

Members of Congress, and other vendor 

and professional associations. 

The proposals we are finalizing in this 

final rule range from minor 

clarifications to more significant 

modifications based on the comments 

received. Summaries of the public 

comments received and our responses to 

those public comments are set forth in 

the various sections of this final rule 

under the appropriate headings. 

We received an overarching comment 

related to the proposed rule, which we 

summarize in the following paragraphs: 

Comment: A commenter expressed a 

concern about the timing of the 

provisions included in the proposed 

rule related to the deadline for bid 

submissions, especially related to 

proposals with contract year 2023 

effective dates. The commenter noted 

that several proposals would require 

operational and technical changes for 

MA organizations as well as additional 

resource allocations, and, as such, 

welcomed additional time for 

implementation. The commenter 

suggested it could better align and 

collaborate with CMS in the future if 

given more time to fully understand and 

implement proposed changes. 

Response: We understand and 

appreciate the commenter’s concerns 

and MA organizations and Part D 

sponsors’ willingness to work to meet 

the implementation date timeframes. In 

response to comments, we are 

modifying the date on which some of 

the new and amended regulations in 

this final rule become applicable. We 

describe these modifications in further 

detail in the respective sections of the 

rule. 

We also note that some of the public 

comments received for the provisions 

implemented in this final rule were 

outside of the scope of the proposed 

rule. As such, these out-of-scope public 

comments are not addressed in this final 

rule. The following paragraphs 

summarize the out-of-scope public 

comments. 

A commenter noted that long-term 

care provider-led institutional special 

needs plans (I–SNPs) offer a strong 

additional solution to States in 

integrated efforts, especially for longterm care services uses with complex, 

high risk needs. 

We received a few comments related 

to D–SNP look-alikes, which are 

addressed at § 422.514(d). A commenter 

requested that CMS consider reducing 

the threshold for a D–SNP look-alike 

from the current 80 percent of dually 

eligible individuals enrolled to 50 

percent and requiring the Medicare 

program to inform individuals that they 

are enrolling in a non-integrated model 

where an integrated model exists. 

Without such action, this commenter 

expressed that D–SNP look-alikes could 

undermine progress on integration, 


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Summary of Major Provisions Description Impact 

of Rule 

12. Pharmacy Price Concessions to We are eliminating the exception for Requiring pharmacy price 

Drug Prices at the Point of Sale (§ § pharmacy price concessions that cannot concessions in the 

423.100 and 423.2305) reasonably be determined at the point of negotiated price is expected 

sale for all phases of the Part D benefit. to reduce total beneficiary 

We are also deleting the existing definition costs by $26.5 billion 

of"negotiated prices" at§ 423.100 and between 2024 and 2032, or 

adopting a new definition for the term approximately 2 percent. In 

"negotiated price" at§ 423.100, which we addition, the policy is 

define as the lowest amount a pharmacy estimated to have $46.8 

could receive as reimbursement for a billion in Part D costs for 

covered Part D drug under its contract with the government between 

the Part D plan sponsor or the sponsor's 2024 and 2032 due to 

intermediary. We are also modifying the increases in direct subsidy 

definition of negotiated price in the and low-income premium 

coverage gap at§ 423.2305 to align with subsidy payments, which 

the new definition of negotiated price at § represents a 3 percent 

423 .100. Lastly, we are adding a definition increase. Manufacturers will 

of"price concession" at§ 423.100. save about $16.8 billion 

over the same period. We 

expect a one-time cost to 

plan sponsors of $0.1 

million to update systems 

and ongoing costs of $0.1 

million for added PDE 

transmission costs. 
Federal Register / Vol. 87, No. 89 / Monday, May 9, 2022 / Rules and Regulations 27713 

leading to the erosion of D–SNP 

enrollment over time and additional 

beneficiary confusion. Another 

commenter requested that CMS 

reconsider its current policy for States 

without a D–SNP option for partialbenefit dually eligible individuals by 

either allowing these individuals to 

enroll in FIDE SNPs or excluding them 

from the 80-percent threshold 

calculation used to determine D–SNP 

look-alikes in these States. 

A few commenters encouraged CMS 

to consider applying other MMP design 

elements to D–SNPs. These included 

extending contract management teams 

to HIDE SNPs and FIDE–SNPs, D–SNPs 

with exclusively aligned enrollment, 

and/or D–SNPs with a meaningful 

proportion of enrollees who receive 

Medicaid benefits from a managed care 

plan affiliated with the D–SNP; 

requiring D–SNPs to develop single case 

agreement policies to enable enrollees to 

see out-of-network providers; applying 

MMP program audit rules and protocols 

to D–SNPs with exclusively aligned 

enrollment; and allowing beneficiaries 

to enroll in integrated plans on a 

monthly basis rather than the roughly 

quarterly enrollment opportunities 

under MA. 

MACPAC noted that while the 

provisions in the proposed rule promote 

integration in existing products, they do 

not necessarily increase the availability 

of integrated models or enrollment in 

integrated plans and urged CMS to look 

for ways to expand policies to promote 

integration beyond D–SNPs with 

exclusively aligned enrollment in future 

rulemaking. 

A commenter encouraged CMS to 

reconsider its approach to setting 

separate requirements for D–SNPs and 

Medicaid managed care plans and to 

align Federal regulations for FIDE SNPs 

with those that already exist for 

Medicaid managed care. 

A commenter recommended that CMS 

take steps to reduce limitations on data 

sharing between plans and States and 

provide additional guidance on creating 

a standardized and electronic method to 

integrate information in model 

materials. 

A few commenters recommended that 

CMS take steps to ensure that quality 

measurement is appropriately targeted 

to the populations served by each 

product and that measurement and 

related financial incentives do not 

disproportionately penalize D–SNPs for 

serving populations with greater risk 

factors. Other commenters urged CMS to 

require all States to adopt standardized, 

disability-informed quality 

measurement tools so that measures are 

collected and reported in a uniform 

format. 

A few commenters expressed concern 

related to quality measurement for D– 

SNPs more broadly. A commenter stated 

that because of the challenges inherent 

to serving younger dually eligible 

beneficiaries with disabilities who 

represent the most complex and at-risk 

Medicare members with the most social 

risk factors, plans serving this 

population have less quality bonus 

funding available to support 

supplemental benefits tailored to the 

population. 

A commenter suggested CMS consider 

revising the requirement that the D–SNP 

and Medicaid managed care plan 

contract holder must be the same legal 

entity in order to qualify as a FIDE SNP; 

instead, the commenter recommended 

using the same requirement that is used 

for HIDE SNPs that the contract holder 

is the same parent organization or 

another entity that is owned and 

controlled by its parent organization. 

A few commenters requested CMS 

consider additional financial policies. A 

commenter encouraged CMS to require 

States to ensure that the capitated 

payments for HIDE SNPs and FIDE 

SNPs are documented in the State 

Medicaid agency contract. Another 

commenter noted that the existing risk 

adjustment methodology is not sensitive 

to pick up all of the nuances for D–SNPs 

that largely serve populations with more 

complex care. A commenter requested 

that CMS consider clarifying elements 

of the cost-sharing billing process 

during an enrollee’s Medicare deeming 

period, including prohibiting Medicare 

cost-sharing being billed to dually 

eligible individuals during the Medicare 

deeming period. 

A commenter requested guidance on 

how to handle cost-sharing for 

supplemental benefits that may overlap 

with what is provided by Medicaid. 

A commenter expressed concern 

regarding the complaint resolution 

process for dually eligible individuals, 

noting that it is fragmented and 

confusing when some issues are 

handled by State Medicaid agencies or 

plans while others are handled by CMS 

or MA plans. The commenter noted that 

‘‘no wrong door’’ policies for enrollee 

concerns are critical to ensuring 

complaints are addressed. 

A commenter urged CMS to consider 

the limited availability of transportation 

options in rural communities when 

finalizing the proposed rule. 

A commenter expressed interest in 

additional research to better understand 

fluctuations within dual eligibility and 

what may cause a partial-benefit dually 

eligible individual to become a fullbenefit dually eligible individual and 

encouraged CMS to assess whether 

integrated models can help prevent 

partial-benefit dual eligible individuals 

from necessitating full-benefit status. 

A commenter suggested that another 

approach to improving integrated care is 

to establish a single program that would 

provide dually eligible beneficiaries 

with their medical, long-term care, 

behavioral, and social needs. They 

further suggested the program allow 

States to contract with the administering 

entities, which would bear two-sided 

risk to ensure accountability and 

eliminate incentives for cost-shifting. 

A commenter expressed concerns 

about the MA program overall, 

including inadequate care provided to 

MA enrollees, low payments to 

providers, and high MA payment rates 

compared to the original Medicare feefor-service (FFS) program. 

CMS received a number of comments 

regarding extending the COVID–19 

disaster adjustments that all contracts 

received for the 2022 Star Ratings for 

measures other than HEDIS–HOS 

measures and reducing the weight 

applied to the patient experience/ 

complaints and access measures for the 

2023 Star Ratings. 

CMS received many comments 

regarding network adequacy 

requirements and policies that are 

outside of the scope of this rule. Some 

commenters indicated that CMS should 

consider reinstating previous network 

adequacy standards including returning 

to the 90 percent rate of beneficiary 

requirements within time and distance 

standards for micro, rural and counties 

with extreme access considerations, as 

well as including dialysis facilities as a 

specialty type evaluated for network 

adequacy under § 422.116(b). Many 

commenters recommended that CMS 

add criteria to our current network 

adequacy standards. For example, 

commenters recommended that CMS 

add new provider and facility specialty 

types, including sub-specialty types, to 

our list of those which are evaluated for 

network adequacy standards under 

§ 422.116(b). Some commenters 

suggested that CMS increase the 

frequency in which network adequacy 

formal reviews are conducted or align 

the triennial network adequacy review 

timelines with the application timeline. 

A commenter suggested that CMS 

integrate network adequacy into Star 

Ratings measures. A few commenters 

suggested that CMS consider how 

increased use of telehealth-provided 

services will impact network adequacy, 

and that CMS should consider 

expanding the telehealth credit in 

certain county types such as rural 


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27714 Federal Register / Vol. 87, No. 89 / Monday, May 9, 2022 / Rules and Regulations 

4For example, see chapter 1 of Medicaid and 

CHIP Payment and Access Commission, Report to 

Congress on Medicaid and CHIP, June 2021, and 

chapter 12 of Medicare Payment Advisory 

Committee, June 2019 Report to the Congress: 

Medicare and the Health Care Delivery System. 

5 ‘‘Person-centered care’’ typically refers to 

focusing care on the needs of the individual and 

ensuring that a person’s individual preferences, 

needs, and values guide care decisions. This is in 

contrast to approaches to care in which the specific 

diagnosis or illness drives care and treatment 

decisions. See the National Center on Advancing 

Person-Centered Practices and Systems for 

additional information: https://ncapps.acl.gov/ 

home.html. 

6CMS Medicare-Medicaid Coordination Office 

FY 2020 Report to Congress, available at: https://

www.cms.gov/files/document/ 

reporttocongressmmco.pdf. 

counties. A few commenters 

recommended CMS establish policies to 

enhance information available in MA 

plan network directories. A commenter 

suggested that CMS consider changes 

and improvements to the network 

adequacy exceptions and criteria 

process. A commenter provided 

recommendations regarding how 

network adequacy standards should 

recognize and address the unique needs 

of enrollees in I–SNPs. A commenter 

recommended CMS develop network 

standards specific to the D–SNP 

population. Additional topics out of 

scope of this rule include requests to 

update timelines for release of the 

Reference and Sample Beneficiary Files, 

make MA organizations’ network 

adequacy review data publicly 

available, and limit organization’s 

ability to make changes to network 

providers throughout the contract year. 

CMS received some comments 

regarding special requirements during 

emergency and disasters that are out of 

scope for this rule. A commenter asked 

CMS to provide guidance about online 

or point-of-sale processing of Part B outof-network claims during a disaster or 

emergency. Another commenter 

expressed concerns that these 

requirements do not apply to Part D 

drugs. 

A commenter suggested that we take 

a more holistic approach to past 

performance. The commenter suggested 

we review all contracts for past 

performance and not just applicants. 

We received several out-of-scope 

comments related to the provision on 

applying all pharmacy price 

concessions to the negotiated price at 

the point of sale. A few commenters 

urged CMS to address pharmacy benefit 

managers’ (PBMs’) formularies, 

specifically the preference for brand 

medications over generics due to the 

rebates and with respect to the use of 

biosimilars as they launch. Many 

commenters asked that CMS address the 

‘‘reasonable and relevant’’ contracting 

terms and conditions between MA 

organizations/plan sponsors and 

pharmacies. A few commenters 

expressed concern with vertical 

integration of PBMs and pharmacies. A 

few commenters were concerned about 

the costs of COVID–19 tests and 

treatments. Some commenters stated 

that CMS should not make the changes 

associated with this Pharmacy Price 

Concessions rule when it should instead 

be working to wind down or officially 

incorporate policies put in place during 

the COVID–19 PHE. Some commenters 

stated that the proposal failed to address 

the root cause of high drug prices and 

offered recommendations for regulating 

the pharmaceutical industry. A few 

commenters stated that PBMs should 

not set drug prices and encouraged CMS 

to make sweeping reforms including a 

patient bill of rights and a pharmacy bill 

of rights. A few commenters stated that 

PBMs cannot engage in sub-capitation 

arrangements that require pharmacies to 

bear risk. Some commenters requested 

CMS re-evaluate its policy on U.S. Food 

and Drug Administration (FDA)- 

approved anti-obesity medications. 

Other commenters recommended that 

CMS do more to improve access to the 

Part D Low-Income Subsidy (LIS) 

program, noting the program’s 

importance to improving health equity 

and the nearly three million 

beneficiaries who are eligible for the 

program but not enrolled. This 

commenter also requested that CMS 

track and report on the number of 

complaints received regarding Part D 

plans charging individuals enrolled in 

the full LIS program the higher plan 

copayment rather than the established 

LIS copayment. 

Unless otherwise noted, cites to 

regulations are to title 42 of the CFR. 

II. Provisions of the Proposed Rule and 

Analysis of and Responses to Public 

Comments 

A. Improving Experiences for Dually 

Eligible Individuals 

1. Overview and Background 

Over 11 million people are 

concurrently enrolled in both Medicare 

and Medicaid. Beneficiaries who are 

dually eligible for both Medicare and 

Medicaid can face significant challenges 

in navigating the two programs, which 

include separate or overlapping benefits 

and administrative processes. 

Fragmentation between the two 

programs can result in a lack of 

coordination for care delivery, 

potentially resulting in: (1) Missed 

opportunities to provide appropriate, 

high-quality care and improve health 

outcomes; and (2) undesirable 

outcomes, such as avoidable 

hospitalizations and poor beneficiary 

experiences. Advancing policies and 

programs that integrate care for dually 

eligible individuals is one way in which 

we seek to address such fragmentation.4

‘‘Integrated care’’ refers to delivery 

system and financing approaches that— 

• Maximize person-centered5

coordination of Medicare and Medicaid 

services, across primary, acute, longterm, behavioral, and social domains; 

• Mitigate cost-shifting incentives, 

including total-cost-of-care 

accountability across Medicare and 

Medicaid; and 

• Create seamless experiences for 

beneficiaries. 

We described at 87 FR 1849 through 

1850 of the proposed rule a range of 

approaches to integrating Medicare and 

Medicaid benefits or financing for 

dually eligible individuals, including 

through demonstrations and existing 

programs. The most prevalent forms of 

integrated care use capitated financing, 

including capitation of health plans to 

cover the full range of Medicare and 

Medicaid services. The number of 

dually eligible individuals in integrated 

care or financing models or both has 

increased over time, now exceeding 1 

million beneficiaries, but it remains the 

exception rather than the rule in most 

States.6

An increasing number of dually 

eligible individuals are enrolled in 

managed care plans. The broader trend 

toward managed care presents 

opportunities for integrated care. It also 

presents risks for further fragmentation 

and complexity. In fact, while 

enrollment in integrated care has 

increased, it is also becoming 

increasingly likely that dually eligible 

individuals are in one sponsor’s 

Medicaid managed care organization 

(MCO) and a competitor’s D–SNP. The 

result: Duplicative health risk 

assessments (HRAs); multiple ID cards, 

handbooks, and provider and pharmacy 

directories; strong incentives for costshifting where possible; multiple care 

coordinators; more complex billing 

processes for providers; and similar 

other fragmented care, burdens, or 

increased costs. 

Section 2602 of the Patient Protection 

and Affordable Care Act of 2010 (Pub. 

L. 111–148) (Affordable Care Act) 

established the Medicare-Medicaid 

Coordination Office (MMCO) within 

CMS to better align and integrate 

benefits for dually eligible individuals. 


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Federal Register / Vol. 87, No. 89 / Monday, May 9, 2022 / Rules and Regulations 27715 

7 ‘‘Care coordination’’ typically refers to the 

managing of care and sharing of information among 

medical and non-medical providers and supports 

across the spectrum primary, acute, behavioral 

health, long-term services and supports. See, for 

example, https://www.ahrq.gov/ncepcr/care/ 

coordination.html, and Barth, S., Silow-Carroll, S., 

Reagan, Russell, M., Simmons, T. (2019) Care 

Coordination in Integrated Care Programs Serving 

Dually Eligible Beneficiaries—Health Plan 

Standards, Challenges and Evolving Approaches. 

Report to the Medicaid and CHIP Payment and 

Access Commission. https://www.macpac.gov/wpcontent/uploads/2019/03/Care-Coordination-inIntegrated-Care-Programs-Serving-Dually-EligibleBeneficiaries.pdf. 

8Centers for Medicare & Medicaid Services. SNP 

Comprehensive Report (January 2021). Retrieved 

from https://www.cms.gov/Research-Statistics-Dataand-Systems/Statistics-Trends-and-Reports/ 

MCRAdvPartDEnrolData/Special-Needs-Plan-SNPData.html. 

9See https://www.govinfo.gov/content/pkg/FR2019-04-16/pdf/2019-06822.pdf. 

10See https://www.govinfo.gov/content/pkg/FR2020-02-18/pdf/2020-02085.pdf. 

11MMP enrollment as of January 2022. See CMS 

Monthly Enrollment by Contract Report (January, 

2022). Retrieved from https://www.cms.gov/ 

research-statistics-data-and-systemsstatisticstrends-and-reportsmcradvpartdenroldatamonthly/ 

enrollment-contract-2022-01. 

Section 50311(b)(2) of the Bipartisan 

Budget Act (BBA) of 2018 amended that 

provision to also charge MMCO with— 

• Developing regulations and 

guidance related to the integration or 

alignment of policy and oversight under 

Medicare and Medicaid regarding D– 

SNPs; and 

• Serving as the single point of 

contact for States on D–SNP issues. 

At 87 FR 1850 of the proposed rule, 

we described recent MA/Part D 

rulemaking to enhance D–SNPs. Despite 

this recent work, additional actions are 

needed to maximize the potential of D– 

SNPs to deliver person-centered 

integrated care—and ultimately better 

health outcomes and independence in 

the community—for dually eligible 

older adults, people with disabilities, 

and people with end stage renal disease. 

We are working to improve and increase 

options for more integrated care in a 

variety of ways, including through D– 

SNPs. 

a. Dual Eligible Special Needs Plans 

Special needs plans (SNPs) are MA 

plans created by the Medicare 

Prescription Drug, Improvement, and 

Modernization Act of 2003 (Pub. L. 108– 

173) that are specifically designed to 

provide targeted care and limit 

enrollment to special needs individuals. 

Under section 1859(b)(6) of the Act, 

SNPs restrict enrollment to certain 

populations. The most common type of 

SNP is a dual eligible special needs 

plan, or D–SNP, in which enrollment is 

limited to individuals entitled to 

medical assistance under a State plan 

under title XIX of the Act. 

D–SNPs are intended to integrate or 

coordinate care 7 for dually eligible 

individuals more effectively than 

standard MA plans or the original 

Medicare fee-for-service (FFS) program 

by focusing enrollment and care 

management on this population. As of 

January 2022, approximately 4.0 million 

dually eligible individuals (more than 1 

of every 4 dually eligible individuals) 

were enrolled in 729 D–SNPs.8

Federal statute and implementing 

regulations have established several 

requirements for D–SNPs in addition to 

those that apply to all MA plans to 

promote coordination of care, including 

HRA requirements as described in 

section 1859(f)(5)(A)(ii)(I) of the Act and 

at 42 CFR 422.101(f)(1)(i), evidencebased models of care (MOCs) as 

described in section 1859(f)(5)(A)(i) of 

the Act and at 42 CFR 422.101(f), and 

contracts with State Medicaid agencies 

as described in section 1859(f)(3)(D) of 

the Act and at 42 CFR 422.107. The 

State Medicaid agency contracting 

requirement allows States to require 

greater integration of Medicare and 

Medicaid benefits from the D–SNPs in 

their markets. 

Most recently, section 50311(b) of the 

BBA of 2018 amended section 1859 of 

the Act to add new requirements for D– 

SNPs, beginning in 2021, including 

minimum integration standards, 

coordination of the delivery of Medicare 

and Medicaid benefits, and unified 

appeals and grievance procedures for 

integrated D–SNPs, the last of which we 

implemented through regulation to 

apply to certain D–SNPs with 

exclusively aligned enrollment, termed 

‘‘applicable integrated plans.’’ These 

requirements, along with clarifications 

to existing regulations, were codified in 

the ‘‘Medicare and Medicaid Programs; 

Policy and Technical Changes to the 

Medicare Advantage, Medicare 

Prescription Drug Benefit, Programs of 

All-Inclusive Care for the Elderly 

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

Medicaid Managed Care Programs for 

Years 2020 and 2021’’ final rule (84 FR 

15696 through 15744) (hereinafter 

referred to as the April 2019 final rule).9

For a more comprehensive review of 

D–SNPs and legislative history, see 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 AllInclusive Care for the Elderly’’ (85 FR 

9018 through 9021), which appeared in 

the Federal Register on February 18, 

2020.10

b. Medicare-Medicaid Plans 

To test additional models of 

integrated care, we established the 

Medicare-Medicaid Financial 

Alignment Initiative (FAI) in July 2011 

with the goal of improving outcomes 

and experiences for full-benefit dually 

eligible individuals while reducing 

costs for both States and the Federal 

Government. This State-Federal 

partnership is tested using authority 

under 1115A of the Act (as added by 

section 3021 of the Affordable Care Act) 

and further described below. Although 

the FAI includes two models, the model 

with the largest number of States 

participating is a capitated model 

through which CMS, the State, and 

health plans (called Medicare-Medicaid 

Plans or MMPs) enter into three-way 

contracts to coordinate the full array of 

Medicare and Medicaid services for 

members. Our proposed rule at 87 FR 

1851 through 1854 summarized the key 

elements offered by MMPs under the 

capitated model demonstrations. 

As discussed in the proposed rule at 

87 FR 1851, CMS and States partnered 

with MMPs to create a seamless 

experience for beneficiaries, but MMPs 

operate as both MA organizations 

offering Medicare Advantage 

Prescription Drug (MA–PD) plans and 

Medicaid managed care organizations. 

As such, unless waived by CMS, MMPs 

are required to comply with Medicaid 

managed care requirements under 42 

CFR part 438, with MA (also known as 

Part C) requirements in title XVIII of the 

Act as well as 42 CFR part 422 and, with 

regard to the Medicare prescription drug 

benefit, Part D requirements in title 

XVIII of the Act and 42 CFR part 423. 

Section 1115A of the Act (as added by 

section 3021 of the Affordable Care Act) 

authorizes waiver of certain Medicare 

provisions and CMS used that authority 

to waive several Medicare requirements 

for the FAI. For States participating in 

the capitated model, CMS typically uses 

authority under section 1115(a), 

1915(b), 1915(c), or 1932(a) of the Act to 

waive or exempt the State from certain 

provisions of title XIX of the Act or 

establish the authority to deliver 

Medicaid services through managed 

care. 

As of January 2022, there are 39 

MMPs in nine States serving 

approximately 424,000 members.11

As summarized at 87 FR 1851 through 

1854 in our proposed rule, while an 

independent evaluation of the FAI is 

still underway, we have already gleaned 

several lessons regarding integrated, 


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12Bipartisan Policy Center, Guaranteeing 

Integrated Care for Dual Eligible Individuals (2021) 

and A Pathway to Full Integration of Care for 

Medicare-Medicaid Beneficiaries (2020). 

managed care from the capitated 

financial alignment model: 

• Enrollee participation in 

governance helps identify and address 

barriers to high-quality, coordinated 

care; 

• Assessment processes are a vehicle 

for identifying and addressing unmet 

needs, particularly those related to 

social determinants of health; 

• Medicare-Medicaid integration 

correlates with high levels of beneficiary 

satisfaction; 

• Carving in Medicaid behavioral 

health benefits helps promote better 

coordination of behavioral health and 

physical health services; 

• Integrated beneficiary 

communication materials can enhance 

the beneficiary experience; 

• Effective joint oversight of 

integrated managed care products is 

possible; 

• Integrated care and joint oversight 

provide a platform for quality 

improvement; 

• There is potential for market 

distortions in areas with multiple 

options targeting the same population; 

and 

• State investment is critical to 

successful implementation of integrated 

care either through MMPs or D–SNPs. 

Since the outset of the FAI, our shared 

goal with State partners has been to 

develop models that promote greater 

Medicare-Medicaid integration that, if 

successful, could be implemented on a 

broader scale. We proposed to 

incorporate into the broader MA 

program many of the MMP practices 

that successfully improved experiences 

for dually eligible individuals. 

2. Summary of D–SNP Proposals 

Related to MMP Characteristics 

Many of the proposals in the 

proposed rule would incorporate certain 

MMP policies into the regulations 

governing D–SNPs or, in several cases, 

certain types of D–SNPs. We included a 

table (87 FR 1854) summarizing how 

our proposals relate to MMP policies. 

Section II.A.14 of this final rule 

includes an updated version of that 

table to reflect the policies adopted in 

this final rule. 

Comment: Several commenters, 

including MACPAC, described the 

challenges dually eligible individuals 

and their providers and families 

experience navigating separate and 

fragmented Medicare and Medicaid 

delivery systems. A commenter noted 

suboptimal care coordination can 

compromise patient care and increase 

overall program spending. A commenter 

noted younger dually eligible 

individuals face health inequities 

caused by institutional racism and other 

systematic disadvantages. A few 

commenters encouraged full integration 

and MACPAC cited recent Bipartisan 

Policy Center reports 12 urging full 

integration of Medicare and Medicaid 

services for all full-benefit dually 

eligible individuals. Another 

commenter emphasized that coverage of 

medical, behavioral health, and longterm services and supports should be 

aligned and integrated care should be 

grounded in the diversity of dually 

eligible enrollees, tailored to 

individuals’ needs and preferences, 

prioritize care coordination, simplify 

eligibility and enrollment processes, 

minimize administrative burdens, and 

honor enrollee choice of plan and 

providers. 

Response: We appreciate the 

comments and we agree that a 

fragmented delivery system raises major 

issues, as we discussed in the proposed 

rule (87 FR 1849 through 1850). We are 

committed to maximizing opportunities 

for integration through the proposals 

finalized in this rule and will continue 

to explore additional ways to better 

align the Medicare and Medicaid 

programs in the future. We acknowledge 

the comment about dually eligible 

individuals experiencing health 

inequities caused by institutional racism 

and other systematic disadvantages. 

Addressing such inequity is a major 

focus of CMS and other Federal 

agencies, based in part on Executive 

Order 13985 on Advancing Racial 

Equity and Support for Underserved 

Communities Through the Federal 

Government (January 20, 2021). 

Comment: Numerous commenters 

supported the overall focus of the 

proposals to better integrate Medicare 

and Medicaid services, incrementally 

strengthen and improve integration for 

D–SNPs, advance health equity, and 

improve the beneficiary experience for 

older adults and people with 

disabilities. A few commenters 

indicated these proposals improve the 

potential for D–SNPs to provide personcentered care and support enrollees to 

remain independent and manage their 

health and daily activities. A few 

commenters indicated the proposals 

provide States with greater D–SNP 

coordination and oversight 

opportunities. 

A few commenters believed the 

proposals would tighten and clarify 

requirements for D–SNPs. A commenter 

indicated the proposals would help 

simplify D–SNP offerings, and another 

commenter noted support for the 

proposed rule’s goal of strengthening 

consumer protections to ensure dually 

eligible individuals have access to 

accurate and accessible information 

about health plan choices and benefits. 

A few commenters believed the 

proposals would help engage enrollees 

in designing and participating in care. 

Another commenter indicated the 

proposals offer the potential for both 

administrative and clinical integration 

at the plan level. 

A commenter encouraged CMS to 

couple implementation of the final rule 

with guardrails to mitigate against 

potential unintended consequences. 

Another commenter encouraged CMS to 

quickly adopt regulations that reflect 

stakeholder recommendations in light of 

the rapid growth of D–SNPs. 

Several commenters expressed 

support for the package of D–SNP 

proposals as useful incremental steps 

toward furthering integrated care via D– 

SNPs. A commenter encouraged CMS to 

consider how steps taken now build 

towards a broader long-term vision for 

integrated care. Another commenter 

acknowledged that CMS did not want to 

be prescriptive but encouraged CMS to 

provide sufficient detail with regard to 

the array of D–SNP proposals when 

finalizing the rule given the recent 

growth in the D–SNP landscape. 

Response: We appreciate the 

widespread support for our proposals. 

As discussed in the proposed rule (87 

FR 1850), these proposals build on two 

recent MA/Part D rulemakings and our 

experiences with MMP policies. We 

believe this final rule will further the 

potential of D–SNPs to deliver personcentered integrated care—and 

ultimately better health outcomes and 

independence in the community—for 

dually eligible older adults, people with 

disabilities, and people with end stage 

renal disease. 

As we discuss later in this section 

under specific proposals, we will 

provide technical assistance, monitor 

implementation of the finalized 

provisions, and consider future 

rulemaking as needed to address any 

identified areas of concern. For 

example, information from CMS audits 

will help us monitor the extent to which 

MA organizations are meeting the 

enrollee advisory committee 

requirements at § 422.107(f), and we 

may consider more prescriptive 

requirements, as needed, based on 

implementation experience. 

We acknowledge the request for 

additional detail related to some of the 

D–SNP proposals. As we discuss in 

response to comments on specific 


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proposals later in this section, we aim 

to strike a balance between providing 

MA organizations with flexibility in 

implementing various finalized 

requirements versus being more 

prescriptive. We explain our rationale 

further in responses to comments, 

including related to requirements for 

enrollee advisory committees at 

§ 422.107(e), SDOH questions in SNP 

HRAs at § 422.101(f)(1)(i), and limited 

carve-outs of Medicaid behavioral 

health services and long-term services 

and supports (LTSS) at § 422.107(g) and 

(h). 

Comment: A number of commenters 

commended CMS for applying lessons 

learned from MMPs to D–SNPs and 

providing a long-term strategy for D– 

SNPs as an integrated plan option. A 

few commenters stated that the MMP 

demonstrations created a gold standard 

for integrated care and have given 

beneficiaries avenues for providing 

input on plan operations though 

beneficiary advisory committees; 

enhanced the beneficiary experience 

through integrated communications 

materials; scaled up person-centered 

care planning and care coordination 

including effectively combining medical 

and behavioral health benefits; and 

delivered a platform for incentivizing 

innovation and investment to improve 

quality of care for dually eligible 

individuals. Several commenters noted 

the achievements of particular States 

and MMPs in the FAI and expressed 

appreciation for the CMS goal of 

establishing a more permanent 

mechanism to sustain integrated 

programs beyond the demonstrations. 

MACPAC expressed support for CMS 

for proposals to promote integration by 

applying features of the MMPs operating 

under the FAI to D–SNPs. MedPAC 

encouraged CMS to extend some of the 

proposals that promote integration to 

HIDE SNPs too. A few commenters 

acknowledged the role of nonmedical 

benefits in providing care to complex 

populations and expressed appreciation 

for flexibilities in payment and benefit 

design. 

Response: We thank the commenters 

for the support for the proposals that 

incorporate many of the early lessons 

learned from the MMP experience into 

the broader MA program. We believe 

doing so will improve experiences for 

dually eligible individuals. 

Comment: A few commenters 

expressed support for the work of the 

CMS Medicare-Medicaid Coordination 

Office (MMCO) to improve care for 

dually eligible individuals, address 

needs around integration of care, focus 

on social determinants of health, and 

promote equity, while another 

commenter noted appreciation for 

MMCO efforts to lower health care costs 

for beneficiaries, States, and Federal 

Government. 

Response: We thank commenters for 

their support. 

Comment: Several commenters noted 

that Federal support would be an 

important component to helping States 

implement the necessary changes and to 

facilitate further integration of D–SNPs. 

These commenters noted that State 

officials often struggle with competing 

priorities, limited Medicare knowledge, 

and limited staff capacity to develop 

and implement integrated care 

initiatives for dually eligible individuals 

relative to their other responsibilities. A 

few commenters acknowledged the 

wide range of technical assistance that 

CMS has provided to date to help 

navigate the complexities of the policy 

environment and expand State ability to 

integrate and encouraged CMS to 

continue to bolster these resources for 

States should the proposals in this rule 

become final. Other commenters 

recommended that States would need 

additional Federal funding to enhance 

State capacity and to further incentivize 

integration. 

Response: We thank the commenters 

for this feedback and agree that States 

are an important partner in 

implementing many of the D–SNP 

proposals in this rule. We are 

committed to continue working closely 

with States to support their integration 

efforts and intend to utilize and build 

from the technical assistance resources 

we already have in place, including the 

Integrated Care Resource Center (see 

https://

integratedcareresourcecenter.com). 

Comment: A few commenters noted 

the importance of robust oversight to 

ensure that policies do not lead to 

higher spending without actually 

benefiting people with Medicare and 

supported the increased oversight of D– 

SNPs contained within the proposed 

rule. A commenter expressed concern as 

to whether there was sufficient 

demographic data, especially on 

disability and on social, racial, and 

economic status, or data on MA 

supplemental benefit spending, access, 

and eligibility for such oversight. 

Another commenter expressed concern 

that the Federal Government lacks the 

capacity to conduct adequate oversight 

without sharing responsibility with 

States. 

Response: We thank the commenters 

for these comments. We agree that 

oversight is an important component of 

providing person-centered, high quality 

care and will continue to work with 

stakeholders to ensure integrated 

programs do just that. We will consider 

opportunities for improving the types 

and quality of available data necessary 

to support such oversight in the future. 

We address issues related to 

expenditure data on MA supplemental 

benefits as part of MLR reporting in 

section II.G of this final rule. 

Comment: A few commenters 

supported the focus on the D–SNP 

model for deepening integration, 

pointing out the widespread availability 

and growing enrollment in D–SNPs and 

the ongoing investments by plans and 

States in supporting infrastructure. The 

commenter indicated the provisions 

included in the proposed rule were a 

logical alternative to other more radical 

integration proposals. A commenter 

specifically appreciated CMS’s focus on 

the experience of D–SNP enrollees given 

the large number of enrollees in D–SNPs 

in certain States and the health care 

needs of these individuals. 

Response: We thank the commenters 

for this feedback. As we discussed in 

the proposed rule at 87 FR 1888, the 

integrated care landscape has changed 

substantially over the last 10 years. Key 

changes include Congress making D– 

SNPs permanent, establishing new 

minimum integration standards, and 

directing the establishment of unified 

appeals and grievance procedures. 

Changes in MA policy have also created 

a level of benefit flexibility that did not 

previously exist outside of the capitated 

model demonstrations, with MA plans 

increasingly offering supplemental 

benefits that address social 

determinants of health and LTSS. These 

changes make D–SNPs an attractive 

vehicle for integration for dually eligible 

individuals. 

Comment: A few commenters stated 

that the proposals do not go far enough 

to further integrated care. A commenter 

stated that the proposed changes do not 

address the main factors that determine 

long-term beneficiary satisfaction with 

integrated care, such as access to 

providers, easily understood marketing 

or other materials to help inform 

beneficiaries of their choices, and access 

to supplemental benefits. Another 

commenter stated that while the 

proposed policy changes promote 

integration in existing products, they do 

not necessarily increase the availability 

of integrated models or enrollment in 

integrated plans. 

Response: We appreciate the feedback 

from these commenters. We believe 

several of our proposals address factors 

that determine beneficiary satisfaction— 

see, for example, our proposal at 

§ 422.107(e) related to using specified 

integrated materials—but we appreciate 

that there remain many other 


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13Centers for Medicare & Medicaid Services. 

(n.d.). Person & Family Engagement Strategy: 

Sharing with Our Partners. Retrieved from https:// 

www.cms.gov/Medicare/Quality-Initiatives-PatientAssessment-Instruments/QualityInitiativesGenInfo/ 

Downloads/Person-and-Family-EngagementStrategy-Summary.pdf. 

14Resources for Integrated Care and Community 

Catalyst, ‘‘Listening to the Voices of Dually Eligible 

Beneficiaries: Successful Member Advisory 

Councils’’, 2019. Retrieved from: https://

www.resourcesforintegratedcare.com/Member_

Engagement/Video/Listening_to_Voices_of_Dually_

Eligible_Beneficiaries. 

opportunities to improve experiences 

for dually eligible beneficiaries. We will 

consider whether there are additional 

opportunities to address these issues in 

the future. 

Comment: A few commenters 

supported the overall effort to promote 

care integration for dually eligible 

individuals but expressed concern about 

the potential for increased 

administrative burden for State 

Medicaid agencies, disruptions in care 

for members, and other operational 

challenges. A commenter expressed 

concern that some of the proposals 

would significantly curtail States’ 

ability to customize programs that meet 

the specific needs of their State 

programs and constituents. Another 

commenter noted that the proposals are 

likely to be most impactful for States 

that are relatively far along in their 

integrated care strategies and 

recommended CMS continue its efforts 

through the Medicare-Medicaid 

Coordination Office and the Integrated 

Care Resource Center to promote 

integration for States newer to this 

policy area. A commenter was 

concerned that the operational aspects 

of some of the provisions would 

disadvantage new entrants to the MA 

market, particularly those that target 

underserved populations. Another 

commenter emphasized that CMS has 

an opportunity to ensure States do not 

use the proposed changes to hinder new 

market entrants who may offer more and 

better service to beneficiaries. 

Response: We thank the commenters 

for these comments and acknowledge 

the concerns they raise. It is important 

to note that none of the provisions in 

the proposed rule would impose new 

requirements on States; rather, States 

may choose whether or not to take 

advantage of any of the proposals 

finalized here. We are committed to 

continue working closely with States to 

support their integration efforts, 

regardless of how far along they are, and 

intend to utilize and build from the 

technical assistance resources we 

already have in place, including the 

Integrated Care Resource Center. While 

some proposals would impose new 

requirements of D–SNPs, we think on 

balance, the advantages of increasing 

the overall level of integration outweigh 

the potential downsides. 

Comment: A commenter 

recommended allowing MA 

organizations to offer D–SNPs without 

holding a Medicaid contract either 

directly or between the parent company 

and the State Medicaid agency. 

Response: We note that while State 

contracting policies may have prevented 

sponsors from offering D–SNPs in some 

markets, section 1859(f)(3)(D) of the Act 

requires a D–SNP to have a contract 

with the applicable State Medicaid 

agency. States are authorized to 

determine which D–SNPs they will 

contract with, as described in section 

164 of the Medicare Improvement for 

Patients and Providers Act (MIPPA) 

(Pub. L. 110–274), which amended 

section 1859(f) of the Act to add the 

requirement for D–SNPs to have a 

contract with the State. 

Comment: A commenter 

recommended that CMS further define 

terms such as care coordination, personcentered care, and integrated care. This 

commenter believes further definition of 

these terms is important to gain trust 

among dually eligible individuals, 

especially those between the ages of 21 

and 65 years old. 

Response: An important theme of our 

proposals is to improve experiences for 

dually eligible beneficiaries who are 

enrolled in D–SNPs. As part of that, we 

aim to streamline and simplify 

operations, including the terminology 

we use. We appreciate these suggestions 

and will consider them for the future. 

We believe that the terms care 

coordination, person-centered care, and 

integrated care are sufficiently clear in 

this final rule that additional regulatory 

definitions are not necessary. 

3. Enrollee Participation in Plan 

Governance (§ 422.107) 

We believe managed care plans derive 

significant value from engaging 

enrollees in defining, designing, 

participating in, and assessing their care 

systems.13 By soliciting and responding 

to enrollee input, plans can better 

ensure that policies and procedures are 

responsive to the needs, preferences, 

and values of enrollees and their 

families and caregivers. One of the ways 

managed care plans can engage dually 

eligible individuals is by including 

enrollees in plan governance, such as 

establishing enrollee advisory 

committees and placing enrollees on 

governing boards. Engaging enrollees in 

these ways seeks to keep enrollee and 

caregiver voices front and center in plan 

operations and can help plans achieve 

high-quality, comprehensive, and 

coordinated care.14 As described at 87 

FR 1855 through 1856 of the proposed 

rule, Federal regulations for other 

programs, such as the Programs of AllInclusive Care for the Elderly (PACE) 

and Medicaid managed care plans that 

cover LTSS include requirements for 

stakeholder engagement and 

committees, including input from 

beneficiaries. 

As required by the three-way 

contracts between CMS, States, and 

MMPs, all MMPs established enrollee 

advisory committees. As described at 87 

FR 1854 through 1855 of the proposed 

rule, these enrollee advisory committees 

provide a mechanism for MMPs to 

solicit feedback directly from enrollees, 

assisting MMPs in identifying and 

resolving emerging issues, and ensuring 

they meet the needs of dually eligible 

individuals. 

We believe that the establishment and 

maintenance of an enrollee advisory 

committee is a valuable beneficiary 

protection to ensure that enrollee 

feedback is heard by D–SNPs and to 

help identify and address barriers to 

high-quality, coordinated care for dually 

eligible individuals. Therefore, we 

proposed at § 422.107(f) that any MA 

organization offering one or more D– 

SNPs in a State must establish and 

maintain one or more enrollee advisory 

committees to solicit direct input on 

enrollee experiences. We also proposed 

at § 422.107(f) that the committee 

include a reasonably representative 

sample of individuals enrolled in the D– 

SNP(s) and solicit input on, among 

other topics, ways to improve access to 

covered services, coordination of 

services, and health equity for 

underserved populations. 

We proposed to establish the new 

paragraph at § 422.107(f) under our 

authority at section 1856(b)(1) of the Act 

to establish in regulation other 

standards not otherwise specified in 

statute that are both consistent with Part 

C statutory requirements and necessary 

to carry out the MA program and our 

authority at section 1857(e) of the Act to 

adopt other contract terms and 

conditions not inconsistent with Part C 

as the Secretary may find necessary and 

appropriate. We believe that a 

requirement for an MA organization 

offering one or more D–SNPs to 

establish one or more enrollee advisory 

committees is not inconsistent with 

either the Part C statute or 

administration of the MA program. 

While current law does not impose such 

a requirement, our experience with 

existing requirements for MMPs and 

PACE demonstrates that the use of 


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advisory committees improves plans’ 

ability to meet their enrollees’ needs by 

providing plans with a deeper 

understanding of the communities the 

plans serve and the challenges and 

barriers their enrollees face, as well as 

serving as a convenient mechanism to 

obtain enrollee input on plan policy and 

operational matters. Our experience also 

suggests that advisory committees 

complement other mechanisms for 

enrollee feedback—such as surveys, 

focus groups, and complaints—with 

most advisory committees featuring 

longer-term participation by enrollees 

who can share their lived experiences 

while also learning how to best advocate 

over time for broader improvements for 

all enrollees. We believe the 

performance of all D–SNPs would 

benefit from this new requirement and 

that this requirement is therefore 

necessary and appropriate. 

While we described the proposed 

advisory committee at § 422.107(f) as an 

enrollee advisory committee consistent 

with the use of the term ‘‘enrollee’’ in 

MA regulations, we noted that 

‘‘enrollee’’ under the proposed 

§ 422.107(f) requirement for D–SNPs has 

the same meaning as ‘‘member’’ under 

the § 438.110 requirement for Medicaid 

plans to have a member advisory 

committee when LTSS are covered 

under a Medicaid managed care plan’s 

contract. 

First, we proposed that the MA 

organization offering one or more D– 

SNP(s) in a State must have one or more 

enrollee advisory committees that serve 

the D–SNP(s) offered by the MA 

organization in that State. As proposed, 

an MA organization would be able to 

choose between establishing one single 

enrollee advisory committee for one or 

multiple D–SNPs in that State or by 

establishing more than one committee 

in that State to meet proposed 

§ 422.107(f). 

Second, we proposed that the 

advisory committee must have a 

reasonably representative sample of 

enrollees of the population enrolled in 

the dual eligible special needs plan or 

plans, or other individuals representing 

those enrollees. At 87 FR 1856 of the 

proposed rule, we explained that, by 

using the phrase ‘‘representative 

sample’’ in the regulation text, we 

intended that D–SNPs incorporate 

multiple characteristics of the total 

enrollee population of the D–SNP(s) 

served by the enrollee committee, 

including but not limited to geography 

and service area, and demographic 

characteristics. For MA organizations 

that offer separate D–SNPs serving fullbenefit dually eligible individuals and 

partial-benefit dually eligible 

individuals in the same State, we 

explained that our proposal would 

provide flexibility for MA organizations 

to solicit enrollee input through one or 

more committees where separate 

committees might represent specific 

eligibility groups. 

Finally, we proposed that the 

advisory committee must, at a 

minimum, solicit input on ways to 

improve access to covered services, 

coordination of services, and health 

equity among underserved populations, 

which is a CMS priority aligned with 

Executive Order 13985 on Advancing 

Racial Equity and Support for 

Underserved Communities Through the 

Federal Government (January 20, 2021). 

Our proposal did not specify other 

responsibilities or obligations for the 

committee, but we encouraged D–SNPs 

to solicit input from enrollees on other 

topics would be part of the committee’s 

responsibilities. 

At 87 FR 1857 of the proposed rule, 

we described how our proposal would 

relate to the requirement at § 438.110 for 

Medicaid managed care plans that cover 

long-term services and supports and 

how some organizations may satisfy our 

proposed requirement at § 438.110 with 

the same advisory committee. 

Citing our belief that D–SNPs should 

work with enrollees and their 

representatives to establish the most 

effective and efficient process for 

enrollee engagement, we did not 

propose Federal requirements as to the 

specific frequency, location, format, 

participant recruiting and training 

methods, or other parameters for these 

committees beyond certain minimum 

requirements. However, we solicited 

comments on whether we should 

include more prescriptive requirements 

on how D–SNPs select enrollee advisory 

committee participants, training 

processes on creating and running a 

successful committee, the committee 

responsibilities, additional committee 

topics, and whether we should limit the 

enrollee advisory committee proposed 

at § 422.107(f) to a subset of D–SNPs. 

We also solicited comments on whether 

our approach to allow MA organizations 

to meet the requirements in proposed 

§§ 422.107(f) and 438.110 through one 

enrollee advisory committee could 

dilute the § 438.110 requirement by 

detracting from the focus on LTSS 

enrollees. We noted that, if our proposal 

were finalized, we would update the 

CMS audit protocols for D–SNPs to 

request documentation of enrollee 

advisory committee meetings. 

Comment: Numerous commenters 

expressed strong support for our 

proposal to require that an MA 

organization offering one or more D– 

SNP(s) in a State have one or more 

enrollee advisory committees that serve 

the D–SNP(s) offered by the MA 

organization in that State. Many of these 

commenters noted direct input from 

enrollees helps to improve plan quality, 

operations, and care coordination to 

better serve its enrollees and can help 

advance health equity among dually 

eligible individuals. A number of 

commenters stated that their support for 

our proposal was informed by their 

experience with enrollee advisory 

committees implemented by MMPs, 

Medicaid managed care plans, and D– 

SNPs. Numerous commenters suggested 

that engagement of enrollees 

representing the diversity of the dually 

eligible population in a State is essential 

to providing meaningful personcentered care and effectively 

coordinating and integrating care across 

Medicare and Medicaid services in a 

manner that reflects individual’s needs 

and preferences. A commenter shared 

their experience implementing D–SNP 

enrollee advisory committees, noting 

these committees are a chance to build 

trust with enrollees, improve plan 

processes, address health equity 

barriers, and empower enrollees as 

active contributors and co-designers of 

programs and policies. Some 

commenters appreciated that our 

proposal builds on existing Federal 

regulations that require enrollee 

advisory processes among Medicaid 

LTSS managed care plans and PACE 

and similar requirements for MMPs, 

which would create fewer differences 

for State staff managing multiple 

integration efforts and preserve 

flexibility in the design of these 

committees. MACPAC expressed its 

support for the proposal and welcomes 

CMS modeling the structure after the 

MMP committees to include 

beneficiaries, families, and other 

caregivers. Some commenters viewed 

the proposed committee requirement as 

an opportunity for States to crosspollinate committee input and activities 

across D–SNPs that operate in their 

State. Other commenters appreciated 

the proposed requirement for the 

committee to encompass a 

representative sample of D–SNP 

enrollees within a State and noted that, 

because of this requirement, plans 

constructing these committees would 

take efforts to recruit participants from 

the diverse backgrounds of their 

enrollees. 

Response: We appreciate the 

widespread support we received for our 

proposal. These comments bolster our 

belief that the establishment and 

maintenance of an enrollee advisory 


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15Community Catalyst, ‘‘Meaningful Consumer 

Engagement: A Toolkit for Plans, Provider Groups 

and Communities,’’ March 2014. Retrieved from 

http://www.advancingstates.org/hcbs/article/ 

meaningful-consumer-engagement-toolkit-plansprovider-groups-and-communities; and Community 

Catalyst, ‘‘Supporting Meaningful Engagement 

through Community Advisory Councils,’’ August 

2020. Retrieved from: https://

www.healthinnovation.org/resources/publications/ 

supporting-meaningful-engagement-throughcommunity-advisory-councils. 

16Resources for Integrated Care and Community 

Catalyst, ‘‘Member Engagement in Plan Governance 

Webinar Series’’, 2019. Retrieved from: https://

www.resourcesforintegratedcare.com/article/ 

member-engagement/. 

committee is a valuable beneficiary 

protection to ensure that enrollee 

feedback is heard by managed care 

plans and to help identify and address 

barriers to high-quality, coordinated 

care for dually eligible individuals. We 

agree that the requirement that D–SNPs 

include a reasonably representative 

sample of members will incentivize 

them to consider diversity when 

recruiting for their enrollee advisory 

committees. 

Comment: A commenter applauded 

CMS’s effort to create more mechanisms 

for enrollee input in plan operations 

and consult enrollees on issues related 

to health equity. But, this commenter 

believed requiring each SNP to establish 

and maintain a separate advisory 

committee could be redundant and 

duplicative with existing efforts. The 

commenter offered the example that, in 

many regions, coalitions or community 

groups already exist that can provide 

input on enrollee needs and stated that 

in some cases the existing coalitions or 

community groups are already prepared 

to inform plans about the challenges 

that impact their enrollees. This 

commenter recommended that CMS 

require all SNPs to have a mechanism 

to obtain diverse and representative 

enrollee input on plan policy and 

operations rather than requiring all D– 

SNPs to use the specific mechanism of 

enrollee advisory committees. Further, 

the commenter suggested that where 

community groups do not already exist, 

plans could then establish their own 

enrollee advisory committees. 

Response: We thank the commenter 

for this perspective. We would like to 

take the opportunity to clarify that our 

proposal would not apply to all SNPs 

but MA organizations with one or more 

D–SNPs in a State. While C–SNPs and 

I–SNPs could benefit from enrollee 

advisory committees and the type of 

engagement described by the 

commenter, and we encourage them to 

do so, we are not requiring it at this 

time. Our experience with such 

committees has been concentrated on 

plans exclusively or mainly enrolling 

dually eligible individuals, so we have 

chosen to apply this requirement to D– 

SNPs. Based on the D–SNP experience 

with such committees, we may consider 

future rulemaking to consider such a 

requirement for C–SNPs and I–SNPs. 

We recognize that coalitions and 

groups serving local communities can 

offer helpful perspectives to MA 

organizations and D–SNPs and our 

proposal does not preclude MA 

organizations and D–SNPs from 

engaging with other parties to gather 

feedback. But, our experience with 

existing requirements for MMPs and 

PACE demonstrates that the use of 

advisory committees improves plans’ 

ability to meet their enrollees’ needs by 

providing plans with a deeper 

understanding of the communities the 

plans serve and the challenges and 

barriers their enrollees face, as well as 

serving as a convenient mechanism to 

obtain enrollee input on plan policy and 

operational matters. Our experience also 

suggests that advisory committees 

complement other mechanisms for 

enrollee feedback—such as surveys, 

focus groups, and complaints—with 

most advisory committees featuring 

longer-term participation by enrollees 

who can share their lived experiences 

while also learning how to best advocate 

over time for broader improvements for 

all enrollees. We believe the 

performance of all D–SNPs would 

benefit from this new requirement, 

which is consistent with the existing 

requirement at § 438.110 for Medicaid 

plans to establish member advisory 

committees when those Medicaid 

managed care plans cover LTSS. 

Comment: Several commenters 

requested technical assistance for MA 

organizations and D–SNPs to help 

establish the proposed enrollee advisory 

committees. A few of these commenters 

stated that establishing robust enrollee 

advisory committees can be challenging. 

A commenter emphasized that the 

existence of an advisory committee is 

not itself a demonstration of enrollee 

input, but that these committees must 

be intentionally designed, integrated 

into overall program structures to be 

considered true enrollee engagement, 

and have decision-making authority. 

Another commenter requested that CMS 

provide technical assistance and 

guidance documents and/or training to 

plans, States, and consumer advocates 

on effective and standardized practices 

for these committees. A commenter 

suggested CMS leverage two existing 

resources on the topic of consumer 

engagement in enrollee advisory 

committees as technical assistance for 

plans regarding how to build a 

meaningful advisory committee.15

Response: We welcome this feedback 

and agree that technical assistance to 

support the design and implementation 

of enrollee advisory committees is 

important. CMS’s contractor Resources 

for Integrated Care partnered with 

Community Catalyst, a non-profit 

advocacy organization, and offered a 

series of webinars and other written 

technical assistance to help enhance 

MMPs’ operationalization of these 

committees in 2019.16 In the proposed 

rule at 87 FR 1855, we outlined some of 

the best practices leading to successful 

enrollee advisory committees. We also 

noted in the proposed rule (87 FR 1888) 

that we intend to continue—focusing 

now on D–SNPs—many of the technical 

assistance and quality improvement 

activities that we initially developed for 

MMPs, including— 

• Learning communities; 

• Direct work with beneficiary 

advocates and other stakeholders; 

• Targeted efforts to improve 

outcomes and reduce disparities; and 

• Capacity building on topics like 

person centeredness, disabilitycompetent care, dementia, and 

behavioral health. 

We expect these topics to also include 

a focus on enrollee advisory 

committees. 

Comment: We received numerous 

comments in favor of more prescriptive 

requirements and numerous comments 

in favor of a less prescriptive approach 

consistent with our proposal. 

Among those in favor of more 

prescriptive requirements, numerous 

commenters requested that we provide 

clarification or further requirements on 

selection processes for enrollee advisory 

committees and what we consider to be 

a reasonably representative sample of 

the population enrolled in the D–SNP. 

Several commenters suggested that a 

reasonably representative sample 

should include enrollee characteristics 

such as race, ethnicity, language, 

disability status, sexual orientation and 

gender identity, receipt of LTSS or 

behavioral health services, geography 

and service area. A few commenters 

suggested that we establish percentage 

thresholds, such as a majority of 

committee participants are dually 

eligible individuals or a majority of 

participants are non-white or nonEnglish speaking. A commenter 

recommended that enrollee advisory 

committees be composed of a majority 

of participants based on the 

proportional representation of enrollees 

with lived experiences and 

demographic identities, including 

disability, while other commenters 

requested we provide specific 


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17Center for Consumer Engagement in Health 

Innovation, ‘‘An Exploration of Consumer Advisory 

Councils within Medicare-Medicaid Plans 

Participating in the Financial Alignment Initiative’’, 

2019, Retrieved from: https://

www.healthinnovation.org/resources/publications/ 

an-exploration-of-consumer-advisory-councilswithin-medicare-medicaid-plans. 

18RTI, ‘‘Financial Alignment Initiative Annual 

Report: One Care: MassHealth Plus Medicare, First 

Annual Report,’’ September 2016 (updated July 

2017). Retrieved from: https://innovation.cms.gov/ 

files/reports/fai-ma-firstevalrpt.pdf. 

19RTI, ‘‘Financial Alignment Initiative: 

Massachusetts One Care Second Annual Report,’’ 

April 2019. Retrieved from https://

innovation.cms.gov/files/reports/fai-masecondevalrpt.pdf. 

parameters on how D–SNPs might meet 

the definition of ‘‘representative 

sample’’. Some commenters requested 

that we specify a minimum number of 

participants for the enrollee advisory 

committees. A commenter 

recommended that CMS establish a 

threshold for volume of D–SNP 

enrollees that a single committee could 

represent, suggesting one committee per 

D–SNP or per a certain number of D– 

SNP enrollees across plans (for example, 

20,000). This commenter also 

recommended that D–SNPs be required 

to notify eligible enrollees of the 

opportunity to participate. Another 

commenter suggested we relax the 

representative sample requirement, as it 

is difficult for D–SNPs to engage all 

populations enrolled to include 

representation on advisory committees. 

Another commenter requested that 

CMS direct MA organizations to work 

with stakeholders, such as patient 

advocacy groups, to ensure enrollee 

advisory committees include a diverse 

and comprehensive patient population. 

MACPAC expressed that these 

committees should be developed by 

plans in partnership with advocates and 

should be representative of the people 

served by integrated programs. A few 

commenters noted that CMS should 

require D–SNPs to allow caregivers, 

personal care attendants, interpreters, 

and others to attend to help enrollees 

participate. 

In making its case for more 

prescriptive requirements, a commenter 

remarked that an analysis of MMP 

advisory committees indicates that, 

despite requirements in most States that 

committee membership reflects the 

diversity of the member body, the lack 

of guidance on what diversity means or 

how to properly recruit leads to underrepresentation of minority enrollees in 

committees. According to the 

commenter, not defining ‘‘reasonable 

sample’’ of individuals enrolled in D– 

SNPs increases the risk that the 

committee does not adequately 

represent the D–SNP enrollees. 

Response: We appreciate the 

commenters’ suggestions for additional 

specificity in requirements for 

establishing enrollee advisory 

committees for MA organizations with 

one or more D–SNPs in a State. Given 

the variation in State Medicaid program, 

D–SNPs, and dually eligible populations 

across States and localities and the 

existence of enrollee advisory 

committees established under § 438.110, 

we continue to believe that D–SNPs 

should work with enrollees and their 

representatives to establish the most 

effective and efficient process for 

enrollee engagement. 

We appreciate comments regarding 

the need for more prescriptive 

requirements with respect to enrollee 

advisory committee diversity, and the 

need to more specifically define a 

reasonable sample of D–SNP enrollment 

such that committee representation is an 

accurate reflection of overall 

enrollment. We recognize that a key 

finding from the 2019 report ‘‘The Role 

of Consumer Advisory Councils in the 

Financial Alignment Initiative’’ 17 was 

the need for improved diversity of 

enrollee advisory committee 

participation. The first annual report for 

the Massachusetts Financial Alignment 

Initiative demonstration found that 

attracting and retaining diverse 

stakeholder participation in the 

Implementation Council was a 

challenge.18 The second annual report 

indicated the Implementation Council 

was able to recruit additional members, 

and one Implementation Council 

member noted that ‘‘the resulting 

diversity was both exciting and 

challenging’’.19 While we are choosing 

to be nonprescriptive in how a 

reasonable sample is defined for the 

purposes of our new requirement, we 

may consider more prescriptive 

requirements based on information 

regarding how MA organizations 

implement committees and comply with 

the requirement that the D–SNP enrollee 

committees be reasonably representative 

of the enrolled population. Future 

technical assistance will include 

promising practices for how plans can 

build a diverse committee membership. 

Comment: We received some 

comments from organizations requesting 

that we specify how often the enrollee 

advisory committees must meet. A few 

of these commenters encouraged CMS to 

establish minimum frequency 

requirements but did not specify a 

meeting interval. Several commenters 

recommended that we require enrollee 

advisory committees to meet at least 

twice per year, and a commenter 

suggested quarterly convenings. A few 

of these commenters expressed concern 

that, without a minimum required 

frequency, plans would opt for annual 

meetings, which the commenters 

indicated would have limited value. 

A few commenters encouraged CMS 

to set training requirements for MA 

organizations and D–SNPs as they 

establish these committees. A 

commenter emphasized that CMS 

require D–SNPs to establish a process to 

train D–SNP staff on collecting and 

incorporating advisory committee 

feedback into plan operations and 

informing participants how enrollee 

feedback was used. We also received a 

comment that States should be given the 

authority to specify and require training 

components as part of their contracting 

with plans. 

Some commenters encouraged CMS to 

provide more specifics related to 

training for enrollee advisory committee 

participants. A few of these commenters 

recommended requirements to ensure 

MA organizations educate enrollee 

advisory committee participants about 

the responsibilities of these committees 

and ways to meaningfully engage in 

them, including providing an 

understanding of D–SNP program 

design and organizational structure. A 

commenter suggested that CMS include 

a requirement that the enrollee advisory 

committee receives training on key 

health and health care disparity 

concerns that affect the population 

served by the D–SNP and a robust 

module be provided on disability 

inclusion in health care, emphasizing 

intersectional identities. This 

commenter also suggested that D–SNPs 

provide the committee basic 

information about the right to request 

reasonable accommodations and policy 

modifications, an overview of the D– 

SNPs’ transparency and accountability 

mechanisms, and local and State 

agencies and commissions with 

overlapping responsibilities and 

interests. A few of the commenters 

suggested that CMS create standards for 

training processes but did not provide 

further details. 

A few commenters suggested that 

CMS require enrollee advisory 

committees to incorporate other 

parameters. A commenter recommended 

that enrollees, not State authorities, 

should lead the committee process. 

Another commenter stated that CMS 

should consider other required feedback 

mechanisms for enrollee input beyond 

the proposed committee structure, 

which—in their view—could have a 

limited number of participants or may 

not include those who have voiced 

concerns about the plan. Another 

commenter suggested that CMS require 

MA organizations to implement best 


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20Coordination-only D–SNPs are D–SNPs that 

neither meet the FIDE SNP nor HIDE SNP 

definitions at § 422.2. 

practices to ensure enrollee advisory 

committee participant retention and 

equity. 

A few commenters urged CMS to 

issue additional sub-regulatory guidance 

concerning its expectations of MA 

organizations and D–SNPs in 

establishing these enrollee advisory 

committees. 

Some commenters suggested specific 

topics the committee should be required 

to focus on beyond the health equity 

topic included in the proposed rule. A 

few commenters recommended that the 

committees focus on concerns and 

priorities of the enrollees themselves. A 

commenter supported additional topics 

be shared with committee participants 

for their input but did not name any 

particular topics. Another commenter 

did not specify any additional topics but 

suggested that the D–SNPs provide 

information to alert the enrollee 

advisory committee participants of the 

scope of potential topics, such as 

through a non-exhaustive list of topics 

other advisory committees have tackled. 

A few additional commenters identified 

specific topics for consideration, such as 

medication adherence, D–SNP 

collection of self-identified functional 

limitation data, and addition of selfidentified functional limitation data 

fields to electronic patient records. 

Response: We appreciate the 

commenters’ suggestions for additional 

specificity in requirements for 

establishing enrollee advisory 

committees. We continue to believe that 

giving D–SNPs flexibility in structuring 

the enrollee advisory committees will 

permit D–SNPs—and the enrollees 

participating on the advisory 

committees—to tailor these committees 

based on the local needs of enrollees. As 

we stated in the proposed rule, our 

experience with MMPs establishing and 

maintaining enrollee advisory 

committees demonstrates that these 

plans have found the committees useful 

and carefully consider feedback 

provided by enrollees to inform plan 

decisions without prescriptive Federal 

requirements for the committees. We 

expect the evolution and adoption of 

telecommunications technology, 

including as experienced during the 

COVID–19 public health emergency, 

will mean that the most effective 

modalities for enrollee input may 

change over time. Therefore, we are not 

finalizing any additional Federal 

requirements as to the specific 

frequency, location, format, participant 

recruiting and training methods, or 

other parameters for these committees 

beyond certain minimum requirements; 

however, we may consider more 

prescriptive requirements in future 

rulemaking based on D–SNP experience 

with enrollee advisory committees. 

Comment: Numerous commenters 

emphasized the importance for 

transparency of these enrollee advisory 

committees and ensuring D–SNPs are 

held accountable for adhering to 

established requirements. Several 

commenters suggested that MA 

organizations create a feedback loop for 

advisory committees to see how their 

feedback is being considered and 

implemented and to share this 

information with enrollee advisory 

committee participants. A few 

commenters welcomed information on 

how CMS would evaluate the 

effectiveness of the enrollee advisory 

committees, including any expected 

measurable outcomes, to better 

understand how well the committees 

are achieving policy goals. Another 

commenter requested that CMS consider 

whether there may be additional Federal 

and State benefits to compiling the 

findings of these enrollee advisory 

committees since this information may 

help inform future policy duration for 

not only MA plans and SNPs but also 

for the original Medicare FFS program. 

Response: We appreciate the request 

for monitoring of enrollee advisory 

committees against the requirements 

outlined at § 422.107(f) and the interest 

in information gathered through these 

convenings. We are not requiring that 

MA organizations publicly distribute 

enrollee advisory committee meeting 

agendas or materials since these 

committees will be addressing 

challenging topics related to plans and 

their enrollees, including potentially 

market-sensitive information related to 

potential changes in future plan 

benefits. We are concerned that 

requiring plans to make these agendas 

and materials publicly available could 

interfere with committee effectiveness. 

We noted in the proposed rule that, if 

our proposal were finalized, we would 

update the CMS audit protocols for D– 

SNPs to request documentation of 

enrollee advisory committee meetings. 

Information from CMS audits will help 

us monitor the extent to which MA 

organizations are meeting the enrollee 

advisory committee requirements at 

§ 422.107(f), and we may consider more 

prescriptive requirements, as needed, 

based on implementation experience. 

Comment: Numerous commenters 

supported the flexibility CMS offered in 

the structure of the proposed enrollee 

advisory committees and urged CMS to 

require a less prescriptive approach to 

the enrollee advisory committees, 

consistent with the proposed rule. Many 

of these commenters favored a 

minimum set of requirements to give D– 

SNPs the flexibility to implement and 

manage enrollee advisory committees 

that best meet the needs of the local 

population and obtain meaningful 

input. Several commenters stated that 

the design flexibilities encourage the 

development of enrollee advisory 

committees to best reflect the different 

types of D–SNPs (that is, fully integrated 

dual eligible (FIDE) SNPs, highly 

integrated dual eligible (HIDE) SNPs, 

coordination-only D–SNPs 20) currently 

in place and the complexity of the 

dually eligible populations enrolled, 

which can differ from one locale to 

another. Some commenters noted that 

this flexibility would allow plans that 

currently offer D–SNPs in multiple 

States to build a foundation for an 

advisory committee that can be modeled 

and then refined to address specific 

needs of populations represented in 

each committee. Several commenters 

urged CMS not to be prescriptive with 

enrollee advisory committee 

requirements, especially for plans that 

already have such committees in place. 

These commenters emphasized that 

flexible enrollee advisory committee 

requirements would allow plans to 

build on experience and existing 

enrollee feedback approaches to best 

reflect the nuance and complexity of the 

D–SNP plans offered and populations 

served by those plans. Other 

commenters noted that this flexibility 

allows MA organizations already 

implementing such committees to 

continue existing operations without 

major changes, and the flexibility would 

allow plans to avoid overlapping or 

duplicative requirements from CMS and 

States as well as avoid beneficiary 

confusion. In supporting this 

perspective, a commenter explained that 

its experience offering FIDE SNPs, HIDE 

SNPs, and coordination-only D–SNPs 

across multiple States suggested wide 

variation in the specific benefits covered 

and populations served. Another 

commenter expressed concern that an 

overly prescriptive approach would 

reduce the flexibility for innovation and 

could stifle some of the positive strides 

already underway among managed care 

plans. 

Response: We thank the commenters 

for their perspectives. Based on our 

experience with enrollee advisory 

committees operated by MMPs and 

PACE, we believe that D–SNPs should 

work with enrollees and their 

representatives to establish the most 

effective and efficient process for the 

enrollee advisory committees. 


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21Resources for Integrated Care and Community 

Catalyst, ‘‘Engaging Members in Plan Governance’’, 

2019. Retrieved from: https://

www.resourcesforintegratedcare.com/article/ 

member-engagement/. 

Permitting flexibility for the enrollee 

advisory committees gives MA 

organizations—and enrollees 

themselves—more opportunity to 

establish committees that best meet the 

needs of enrollees. 

State Medicaid agencies have broad 

authority to include more prescriptive 

parameters for enrollee advisory 

committees in their contracts with D– 

SNPs and could adopt some of the 

commenters’ suggestions appropriate to 

their State through these State Medicaid 

agency contracts. As discussed in the 

proposed rule at 87 FR 1857, some State 

Medicaid agencies already do this in 

applying § 438.110. 

Though we are choosing to be 

nonprescriptive on meeting frequency, 

location, format, enrollee recruitment, 

training, and other parameters, we 

encourage D–SNPs to adopt identified 

best practices 21 to ensure advisory 

committee meetings are accessible to all 

enrollees, including but not limited to 

enrollees with disabilities, limited 

literacy (including limited digital 

literacy), and lack of meaningful access 

technology and broadband. We note that 

compliance with Federal law related to 

accessibility and effective 

communications for persons with 

disabilities is a requirement under other 

statutes such as Section 504 of the 

Rehabilitation Act. We also clarify that 

the enrollee advisory committees are not 

meant to preclude MA organizations 

and D–SNPs from gathering enrollee 

feedback through other means. As we 

discussed at 87 FR 1856, our experience 

with existing requirements for MMPs 

and PACE suggests that advisory 

committees complement other 

mechanisms for enrollee feedback— 

such as surveys, focus groups, and 

complaints—with most advisory 

committees featuring longer-term 

participation by enrollees who can share 

their lived experiences while also 

learning how to best advocate over time 

for broader improvements for all 

enrollees. 

Comment: Some commenters 

requested that CMS clarify what 

documentation we will request as part 

of CMS audit protocols with respect to 

enrollee advisory committees. Other 

commenters suggested we audit enrollee 

advisory committees on the accuracy of 

committee representation of the D–SNP 

enrollee membership, meeting 

frequency and committee feedback to 

the D–SNP. 

Response: Information requested as 

part of the CMS audit protocols may be 

similar to that reported by MMPs as part 

of the reporting requirement (for 

example, dates of meetings held, 

number of enrollees invited, number of 

enrollees in attendance). As described 

in section IV.B.1.b., prior to 

implementation of new audit protocols 

(under OMB control number 0938–1395; 

CMS–10717), we will make them 

available to the public for review and 

comment under the standard PRA 

process, which includes the publication 

of 60- and 30-day Federal Register 

notices. 

Comment: Several commenters 

questioned whether D–SNPs could 

delegate the facilitation or operation of 

enrollee advisory committees to first 

tier, downstream, or related entities. 

Response: There is nothing in rule 

that precludes a D–SNP from delegating 

the facilitation or operation of an 

enrollee advisory committee to a first 

tier, downstream, or related entity. 

Notwithstanding any relationship(s) that 

the D–SNP has with first tier, 

downstream and related entities, the 

MA organization maintains the ultimate 

responsibility for adhering to and 

otherwise fully complying with all 

terms and conditions of its contract with 

CMS, per § 422.504(i). All requirements 

with respect to the enrollee advisory 

committee are still applicable in the 

event a D–SNP delegates facilitation or 

operation of the enrollee advisory 

committee. 

Comment: In addition to D–SNP 

enrollee advisory committees, some 

commenters recommended CMS require 

States to create centralized, cross-plan 

advisory councils, similar to the 

implementation councils currently in 

place for the Massachusetts and Rhode 

Island demonstrations under FAI. 

Commenters suggested these councils be 

comprised of majority of D–SNP 

enrollees and their caregivers, and 

expressed that such councils could 

provide additional transparency and 

insight into D–SNP policy and 

operations. A commenter suggested 

CMS provide Federal funding for these 

State-level advisory councils, and 

another commenter suggested an 

implementation council was best 

positioned to liaise and collaborate with 

other similar health services and LTSS/ 

HCBS (home and community-based 

services) county and State-level 

committees including Olmstead 

committees, Money Follows the Person 

advisory committees, and Medicaid 

advisory committees. 

Response: While we acknowledge the 

utility of a centralized advisory council, 

and commend the important work of the 

Massachusetts One Care 

Implementation Council in particular, 

we defer to States to decide whether to 

implement broader advisory councils in 

order to solicit feedback more broadly 

on their Medicaid managed care 

programs and the D–SNPs that operate 

in the State. 

Comment: A commenter opposed the 

approach of allowing MA organizations 

to meet the requirements proposed in 

§§ 422.107(f) and 438.110 through one 

enrollee advisory committee, 

acknowledging that, although there is 

overlap in the enrollees served, there are 

important distinctions in the 

populations and topics relevant for each 

stakeholder group. 

Response: While we appreciate the 

commenter’s perspective that there are 

important distinctions in the 

populations served, and that there may 

be distinct topics for each group, there 

may also be instances in which 

populations align and therefore separate 

enrollee advisory councils may be 

duplicative. We believe the best 

approach is to be nonprescriptive and 

allow one enrollee advisory committee 

to satisfy both requirements in the 

instances in which the minimum 

requirements for §§ 422.107(f) and 

438.110 are both met. States may choose 

to apply distinct requirements via their 

State Medicaid agency contracts and 

their Medicaid managed care contracts, 

such that plans would need distinct 

enrollee advisory committees for 

different plan populations. 

Comment: Many commenters 

suggested we delay the implementation 

of the enrollee advisory committee 

provision to contract year 2024 or 

suggested a phased-in approach that 

would require FIDE and HIDE SNPs to 

implement the enrollee advisory 

committees starting in contract year 

2023, with less integrated D–SNPs 

implementing in contract year 2024. 

Commenters indicated the need for 

additional time to develop outreach 

strategies, coordinate with States, and 

develop reasonable representation 

recruitment strategies. A commenter 

noted D–SNPs will need more than a 

few months to ensure membership 

represents the different enrollee 

perspectives impacted by access, 

infrastructure, clinical needs, economic 

status, and prevalence of social 

supports. 

Response: While we acknowledge 

commenters concerns around potential 

operational challenges to establishing 

and convening an enrollee advisory 

committee, we are nonprescriptive on 

meeting committee frequency, location, 

format, participant recruitment and 

training methods. For this reason, we do 


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27724 Federal Register / Vol. 87, No. 89 / Monday, May 9, 2022 / Rules and Regulations 

22Resources for Integrated Care ‘‘Engaging 

Members in Plan Governance’’, Retrieved From: 

https://www.resourcesforintegratedcare.com/ 

article/member-engagement/. 

23Resources for Integrated Care ‘‘Engaging 

Members in Plan Governance’’, Retrieved From: 

https://www.resourcesforintegratedcare.com/ 

article/member-engagement/. 

not believe a contract year 2023 

implementation timeframe is 

unreasonable. Given the 

implementation timing of this rule, D– 

SNPs will have approximately 6 months 

prior to the effective date of January 1, 

2023, to develop an enrollee advisory 

committee, and we are nonprescriptive 

regarding when in calendar year 2023 

the committee must meet, as well as the 

number of meetings and meeting 

frequency. Further, the regulation 

permits use of one committee per State, 

allowing for D–SNPs to start with a 

single committee and develop more 

nuanced committees over time. 

Additionally, while we have committed 

to providing technical assistance to D– 

SNPs in this area, a number of resources 

on establishing meaningful enrollee 

advisory committees are currently 

available via the Resources for 

Integrated Care.22

Comment: Numerous commenters 

requested clarification on how D–SNPs 

could reimburse enrollee advisory 

committee members for their time and 

expertise, and suggested D–SNPs be able 

to offer stipends, transportation or 

transportation reimbursement for inperson meetings, and food and drink. 

Response: We acknowledge the 

advantages of reimbursing enrollee 

advisory committee participants for 

their time and expertise, and prior 

technical assistance in this area 23 has 

cited incentives as a best practice to 

recruit and retain enrollee advisory 

committee members. We clarify that 

enrollee participation in an advisory 

committee is neither a marketing 

activity nor a personal enrollee healthrelated activity that would fall under 

§ 422.134, so the authorities and limits 

that are specific to those activities under 

MA regulations would not apply. 

However, MA organizations are 

prohibited from providing cash, gifts, 

prizes, or other monetary rebates as an 

inducement for enrollment or otherwise 

by sections 1851 and 1854 of the Act. 

D–SNPs should ensure that any 

incentives be structured to avoid an 

inadvertent impact on enrollee 

eligibility for public benefits. In 

addition, the provision of stipends, 

transportation reimbursement, or 

anything else of value to D–SNP 

enrollees serving on the enrollee 

advisory committee potentially 

implicates the Federal Anti-kickback 

Statute (AKS), found in section 

1128B(b) of the Act. Whether any 

particular arrangement violates the AKS 

would be based on the specific facts and 

circumstances. D–SNPs must ensure 

that the provision of reimbursement to 

these members complies with the AKS 

and other applicable law. We will 

provide future technical assistance to 

D–SNPs on this issue to help avoid 

unintended consequences related to 

plan compliance or enrollee eligibility 

for public programs. 

Comment: A number of commenters 

expressed concerns about 

operationalizing an enrollee advisory 

council for a D–SNP that has low 

enrollment. Commenters cited concerns 

about D–SNPs’ ability to meet the 

reasonably representative sample if 

overall plan enrollment is too small, 

particularly for a newly established plan 

or a plan operating in a rural service 

area. These commenters suggested CMS 

either set a minimum enrollment 

threshold or allow for advisory 

committees to cross geographies (for 

example, via multi-State consumer 

advisory councils). A few commenters 

recommended we set the minimum D– 

SNP enrollment threshold at 1,000 

enrollees for the establishment of 

enrollee advisory committees. A 

commenter requested we consider 

exempting new plans from this 

requirement, while another 

recommended small plans be able to 

meet the requirement via focus groups, 

surveys, or other methods. 

Response: While we appreciate the 

commenters’ recommendations with 

respect to low-enrollment D–SNPs and 

the challenges low D–SNP enrollment 

might present in operationalizing a 

consumer advisory committee, we do 

not agree that the reasons cited create a 

significant barrier for MA organizations 

to meet the new requirement. First, we 

would like to clarify that an MA 

organization offering one or more D– 

SNP(s) in a State must have one or more 

enrollee advisory committees that serve 

the D–SNP(s) offered by the MA 

organization in that State. As proposed 

and finalized here, an MA organization 

would be able to choose between 

establishing a single enrollee advisory 

committee for one or more D–SNPs in 

that State or by establishing multiple 

committees in that State to comply with 

§ 422.107(f). Thus, in situations where 

an MA organization operates more than 

one D–SNP in a State, the MA 

organization can, unless State Medicaid 

agency contracts dictate otherwise, 

establish one or more committees that 

encompass multiple D–SNPs in a State, 

which should help to address concerns 

related to low enrollment in any given 

D–SNP. Second, a number of MMPs that 

participated in FAI had low enrollment 

(that is, fewer than the suggested 1,000 

enrollee threshold) and were able to 

operationalize meaningful enrollee 

advisory committees. Third, we are 

nonprescriptive in this requirement 

regarding how an MA organization 

recruits committee membership, the 

timing, frequency or number of advisory 

meetings an MA organization must 

conduct in a calendar year, and the 

meeting’s format (for example, in person 

or virtual). The reasonably 

representative requirement is also 

sufficiently flexible that small plans can 

meet the standard. With this level of 

flexibility, we believe it is reasonable for 

D–SNPs that may have low enrollment 

to meet the requirements finalized at 

§ 422.107(f). 

Comment: Some commenters asked us 

to clarify or confirm whether D–SNPs 

have the flexibility to convene their 

advisory councils virtually. A 

commenter noted current use of digital 

platforms, while other commenters 

suggested virtual meetings may 

encourage greater enrollee participation. 

A few commenters specifically 

welcomed the flexibility in committee 

format (that is, in-person vs. virtual). A 

commenter explained that while inperson meetings remain the goldstandard for engagement, providing 

flexibility in how a D–SNP advisory 

committee engages with enrollees 

would help maximize enrollee 

engagement and provide flexibility for 

the D–SNP to evolve its processes as 

new effective methods become 

available. 

Response: We are not proposing 

Federal requirements regarding the 

means by which enrollee advisory 

committees or committee meetings 

convene (either in-person or virtually). 

We confirm that MA organizations can 

meet the minimum requirements at 

§ 422.107(f) by convening meetings 

virtually, provided they are not 

restricted from doing so via their State 

Medicaid agency contract. However, we 

reiterate our encouragement of D–SNPs 

to adopt identified best practices to 

ensure advisory committee meetings are 

accessible to all enrollees, including 

where lack of meaningful access to 

internet technology and broadband may 

limit involvement. 

Comment: In the proposed rule, we 

solicited comments on whether we 

should limit enrollee advisory 

committees to a subset of D–SNPs. A 

few commenters agreed that the new 

requirement should apply to all D– 

SNPs, noting it to be the most 

comprehensive approach to soliciting 

feedback from dually eligible enrollees, 


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while acknowledging some D–SNPs 

may already have enrollee advisory 

councils that meet the new requirement. 

A commenter noted that while it had 

encouraged applying enrollee advisory 

committees to FIDE SNPs in the past, it 

also supported applying this approach 

more broadly to all D–SNPs. 

Response: We appreciate the 

comments of support and we agree that 

applying an enrollee advisory 

committee requirement to D–SNPs 

broadly, rather than a subset, is the 

better mechanism to solicit feedback 

directly from enrollees and assist D– 

SNPs in identifying and resolving 

emerging issues. We believe applying 

this requirement to all D–SNPs, 

including those with a low level of 

integration, is the best approach to 

elevate the voice of dually eligible 

enrollees across a wider array of States 

and circumstances. 

Comment: To increase transparency, 

oversight, and accountability, a few 

commenters urged State Medicaid 

agency participation in D–SNP enrollee 

advisory councils, or to give States 

access to the proceedings and 

recommendations of the committees on 

at least a quarterly basis. In contrast, a 

commenter suggested the inclusion of 

State participation on enrollee advisory 

councils would add unnecessary 

complexity. 

Response: Nothing in the proposed 

rule precludes State Medicaid agencies 

from requiring, via the State Medicaid 

agency contracts required by § 422.107, 

D–SNPs to include State representatives 

in their enrollee advisory council 

meetings. Additionally, through these 

State Medicaid agency contracts, States 

could require D–SNPs to provide 

additional reporting on D–SNP advisory 

councils as a means for additional 

transparency, accountability, and 

oversight. 

Comment: A few commenters 

suggested CMS allow MA organizations 

to establish enrollee advisory 

committees on a regional or multi-State 

basis, to overcome barriers to enrollee 

participation or when D–SNP 

enrollment is small in any single State. 

A commenter suggested the MA–PD’s 

enrollee advisory committee within a 

State include enrollee representatives of 

the plans’ other Medicare products as 

another means to encourage enrollee 

participation, while another requested 

to include Medicaid-only participants 

on the advisory committee to meet the 

existing Medicaid managed care 

advisory requirement at § 438.110. 

Response: Due to the variations in 

State Medicaid agency contracts and 

Medicaid, we believe there is value in 

keeping enrollee advisory councils 

specific to a State. This offers 

operational simplicity to MA 

organizations to meet any State-specific 

advisory committee requirements and 

would improve the effectiveness of an 

enrollee advisory committee without 

combining committee membership 

across States, where services, eligibility, 

and geography could vary greatly. While 

we intend this new requirement to 

generate feedback based on the unique 

experience of dually eligible enrollees 

via a D–SNP enrollee advisory 

committee, we recognize that 

committees may not always be made up 

solely of dually eligible enrollees, as 

organizations can use a single advisory 

committee to meet the Medicaid 

managed care advisory committee 

requirement at § 438.110. However, we 

do not agree that the enrollee advisory 

committee should include 

representatives from Medicare products 

that do not focus on dually eligible 

enrollees. In meeting the requirement 

proposed at § 422.107(f), there is 

nothing precluding MA organizations 

from establishing sub-committee 

arrangements to established enrollee 

advisory committees. Also, the 

proposed requirement does not preclude 

non-SNP MA plans from establishing 

separate enrollee advisory committees. 

Comment: Many commenters 

indicated that the minimum of a single 

Statewide enrollee advisory committee 

across potentially multiple D–SNP 

products was an insufficient approach 

in larger States, where D–SNPs may 

have very large enrollment as well as 

geographically and demographically 

diverse service areas. Commenters noted 

that a combined enrollee advisory 

council in a large State would dilute the 

value of the committee. A commenter 

suggested CMS require each D–SNP to 

establish its own committee, and a few 

commenters requested flexibility for 

States to further direct committee 

geographic scope, composition, and 

other factors beyond the Federal 

minimum requirements, including the 

ability to require multiple committees 

for specific enrollee populations. 

Several other commenters asked CMS to 

clarify whether enrollee advisory 

committees need to be at the plan 

benefit package (PBP) level. Finally, a 

commenter expressed that even within 

a State and D–SNP parent organization, 

many D–SNPs have similar plan names 

and cover different benefits, which 

could lead to potential enrollee 

confusion if an advisory committee is 

established Statewide across D–SNP 

products. 

Response: The new requirement 

established at proposed § 422.107(f) 

does not preclude States from using 

their State Medicaid agency contracts 

(as required by § 422.107) to impose 

more prescriptive requirements for D– 

SNP enrollee advisory committees based 

on D–SNP enrollment, service area 

geography, or any other characteristic. 

The new proposal does not require D– 

SNPs to implement enrollee advisory 

committees at the PBP level, although 

they could choose to do so. States could 

also require each D–SNP to develop its 

own committee, either at the contract or 

the PBP level. Additionally, 

organizations that operate multiple D– 

SNPs in a State could elect to establish 

and maintain multiple enrollee advisory 

committees that best represent their 

eligibility populations (for example, 

full- or partial-benefit dually eligible 

beneficiaries) and/or service areas. We 

believe this regulation sets a floor from 

which States and D–SNPs may work to 

craft enrollee advisory committees that 

best meet local population and plan 

needs without committee duplication or 

significant disruption of current 

enrollee advisory committee operations, 

as required either by States or § 438.110. 

Comment: Many commenters 

questioned whether D–SNPs could use 

existing plan enrollee advisory 

committees—either FIDE SNP or 

committees representing Medicaid 

managed care plans that cover long term 

services and supports—to meet the new 

proposed requirement at § 422.107(f). A 

few commenters asked us to clarify that 

one enrollee advisory committee could 

be used to meet the new requirements 

in §§ 422.107(f) and 438.110, noting that 

competing advisory committees would 

be inefficient. Another commenter 

requested we provide clarity on how the 

proposal should be implemented with 

respect to LTSS and non-LTSS enrollee 

participants and corresponding council 

topics. Other commenters recommended 

the use of subcommittees (either D–SNP 

enrollee advisory committees specific to 

MLTSS or MLTSS advisory committee 

with a subcommittee specific to dually 

eligible enrollees) as a potential means 

to solicit more precise feedback on 

unique plan subpopulations. 

Response: We acknowledge some D– 

SNPs, or their affiliated Medicaid 

managed care plans covering LTSS, are 

currently operating enrollee advisory 

committees to meet existing State 

requirements; these existing committees 

may satisfy the requirements at 

§ 422.107(f). As we noted in the 

proposed rule, our proposal at 

§ 422.107(f) would permit an 

organization that operates a D–SNP that 

is affiliated with a Medicaid managed 

care plan to use one enrollee advisory 

committee to meet both the requirement 

under § 438.110 and the requirement 


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27726 Federal Register / Vol. 87, No. 89 / Monday, May 9, 2022 / Rules and Regulations 

24 In the CY 2016 Call Letter (an attachment to the 

Announcement of Calendar Year (CY) 2016 

Medicare Advantage Capitation Rates and Medicare 

Advantage and Part D Payment Policies) released on 

April 6, 2015, CMS encouraged SNPs to adopt the 

components in the CDC’s ‘‘A Framework for 

Patient-Centered Health Risk Assessments’’ tool but 

did not mandate their use. Specifically, CMS 

encouraged the use of elements that identify the 

medical, functional, cognitive, psychosocial and 

mental health care needs of enrollees. 

25Hugh Alderwick and Laura M. Gottlieb, 

‘‘Meanings and Misunderstandings: A Social 

Determinants of Health Lexicon for Health Care 

Systems: Milbank Quarterly,’’ Milbank Memorial 

Fund, November 18, 2019, https://

www.milbank.org/quarterly/articles/meanings-andmisunderstandings-a-social-determinants-of-healthlexicon-for-health-care-systems/. 

26See the ‘‘Medicare and Medicaid Programs: CY 

2020 Home Health Prospective Payment System 

Rate Update; Home Health Value-Based Purchasing 

Model; Home Health Quality Reporting 

Requirements; and Home Infusion Therapy 

Requirements’’ final rule (84 FR 39151 through 

39161) as an example. In the interim final rule with 

comment period (IFC) ‘‘Medicare and Medicaid 

Programs, Basic Health Program and Exchanges; 

Additional Policy and Regulatory Revisions in 

Response to the COVID–19 Public Health 

Emergency and Delay of Certain Reporting 

Requirements for the Skilled Nursing Facility 

Quality Reporting Program’’ (85 FR 27550 through 

27629), CMS delayed the compliance dates for these 

proposed at § 422.107(f), when all the 

criteria in both regulations are met. 

However, a State may limit the ability 

of a D–SNP to use one committee to 

meet both regulatory requirements. 

Finally, nothing in our proposed 

requirement would preclude the use of 

subcommittees with respect to unique 

D–SNP subpopulations. As discussed 

earlier in this section, we are 

nonprescriptive on topics (for example, 

with respect to LTSS) covered by 

enrollee advisory committees so long as 

the minimum topics specified in the 

regulation (ways to improve access to 

covered services, coordination of 

services, and health equity for 

underserved populations) are addressed; 

however, we encourage D–SNPs and 

their advisory committees to choose 

topics most relevant to the populations 

served. 

Comment: Numerous commenters 

requested we encourage or require D– 

SNPs to operate their enrollee advisory 

committees with accessibility, 

accommodations, and communications 

access in mind for enrollees with 

disabilities, as well as enrollees with 

limited literacy, limited digital literacy, 

lack of meaningful access to technology 

and broadband and limited English 

proficiency. Other commenters 

recommended CMS require D–SNPs 

provide interpretation and 

accommodation for individuals with 

hearing and vision disabilities and 

impairments. Another commenter 

recommended CMS require D–SNPs to 

conduct enrollee advisory committee 

meetings in the preferred language of 

the region/county, when that region’s 

primary language preference is not 

English. A commenter noted the need 

for committee meeting materials in 

alternate formats, while another 

commenter urged CMS to require D– 

SNPs to provide accommodations to 

committee enrollees who lack 

transportation or access to the 

technology necessary to facilitate robust 

virtual participation. Finally, a 

commenter recommended that CMS 

provide parameters regarding the 

importance of D–SNPs facilitating 

access to enrollee advisory committees 

via training, recruitment, and location 

and timing of meetings that reflect the 

community and population to create a 

process that allows enrollees to 

meaningfully participate in the 

committee. 

Response: We agree with the 

commenters that it is vitally important 

for MA organizations to facilitate 

meaningful enrollee access to their 

enrollee advisory committees through 

accommodations for their enrollees’ 

needs in order to achieve a 

representative sample of enrollee 

perspectives and meaningful feedback 

from the enrollee advisory committees. 

Although we are choosing to be 

nonprescriptive on meeting frequency, 

location, format, enrollee recruitment 

and training methods, and other 

parameters, we encourage D–SNPs to 

adopt identified best practices to ensure 

advisory committee meetings are 

accessible for all enrollees. Ensuring 

that the enrollee advisory committee has 

a reasonably representative sample of 

the covered population should include 

taking steps to ensure access for 

enrollees with disabilities, limited 

literacy (including limited digital 

literacy), and lack of meaningful access 

technology and broadband, particularly 

to the extent that these considerations 

are also relevant to improving access to 

covered services and health equity. 

Where D–SNPs serve enrollees with 

disabilities, limited literacy or limited 

English proficiency, we expect those 

characteristics to be reflected in the D– 

SNP’s enrollee advisory committee 

membership. D–SNPs must comply with 

any applicable civil rights law. We note 

that existing Federal civil rights 

authorities such as Section 504 of the 

Rehabilitation Act of 1973, HHS’ 

implementing regulation at 45 CFR part 

84, and Title VI of the Civil Rights Act 

of 1964 and the implementing 

regulation at 45 CFR part 80 would 

likely apply to an MA organization’s 

administrative functions, such as 

enrollee advisory committees. We 

encourage D–SNPs to also consider 

virtual accessibility and transportation 

accessibility for in person meetings for 

their enrollee committee membership. 

After considering the comments we 

received and for the reasons outlined in 

the proposed rule and our responses to 

comments, we are finalizing without 

modification our proposed requirement 

for D–SNPs to establish and maintain 

enrollee advisory committees at 

§ 422.107(f). 

4. Standardizing Housing, Food 

Insecurity, and Transportation 

Questions on Health Risk Assessments 

(§ 422.101) 

Section 1859(f)(5)(A)(ii)(I) of the Act 

requires each SNP to conduct an initial 

assessment and an annual reassessment 

of the individual’s physical, 

psychosocial, and functional needs 

using a comprehensive risk assessment 

tool that CMS may review during 

oversight activities, and ensure that the 

results from the initial assessment and 

annual reassessments conducted for 

each individual enrolled in the plan are 

addressed in the individual’s 

individualized care plan. We codified 

this requirement at § 422.101(f)(1)(i) as a 

required component of the D–SNP’s 

MOC. In practice, we allow each SNP to 

develop its own HRA, as long as it 

meets the statutory and regulatory 

requirements.24 In the final rule titled 

‘‘Medicare and Medicaid Programs; 

Contract Year 2022 Policy and 

Technical Changes to the Medicare 

Advantage Program, Medicare 

Prescription Drug Benefit Program, 

Medicaid Program, Medicare Cost Plan 

Program, and Programs of All-Inclusive 

Care for the Elderly’’ (86 FR 5864) 

(hereinafter referred to as the January 

2021 final rule), we noted that 

integrated D–SNPs (by which we mean 

D–SNPs or their affiliates under the 

same parent organization also receiving 

capitation for Medicaid services) may 

combine their Medicare-required HRA 

with a State Medicaid-required HRA so 

long as the applicable requirements for 

the HRA under § 422.101(f) are met, to 

reduce assessment burden (86 FR 5879). 

Certain social risk factors can lead to 

unmet social needs that directly 

influence an individual’s physical, 

psychosocial, and functional status.25

This is particularly true for food 

insecurity, housing instability, and 

access to transportation. As summarized 

in our proposal rule at 87 FR 1858, CMS 

in recent years has addressed social risk 

through the identification and 

standardization of screening for risk 

factors, including finalizing several 

standardized patient assessment data 

requirements for post-acute care 

providers 26 and testing the Accountable 


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standardized patient assessment data under the 

Inpatient Rehabilitation Facility (IRF) Quality 

Reporting Program (QRP), Long-Term Care Hospital 

(LTCH) QRP, Skilled Nursing Facility (SNF) QRP, 

and the Home Health (HH) QRP due to the public 

health emergency. In the ‘‘CY 2022 Home Health 

Prospective Payment System Rate Update; Home 

Health Value-Based Purchasing Model 

Requirements and Model Expansion; Home Health 

and Other Quality Reporting Program 

Requirements; Home Infusion Therapy Services 

Requirements; Survey and Enforcement 

Requirements for Hospice Programs; Medicare 

Provider Enrollment Requirements; and COVID–19 

Reporting Requirements for Long-Term Care 

Facilities’’ final rule (86 FR 62240 through 62431), 

CMS finalized its proposals to require collection of 

standardized patient assessment data under the IRF 

QRP and LTCH QRP effective October 1, 2022, and 

January 1, 2023, for the HH QRP. 

27CMS Innovation Center, ‘‘The Accountable 

Health Communities Health-Related Social Needs 

Screening Tool.’’ Retrieved from: https://

innovation.cms.gov/files/worksheets/ahcmscreeningtool.pdf. 

28Medicaid and CHIP Payment and Access 

Commission, ‘‘Report to Congress on Medicaid and 

CHIP,’’ June 2020. Retrieved from: https://

www.macpac.gov/wp-content/uploads/2020/06/ 

June-2020-Report-to-Congress-on-Medicaid-andCHIP.pdf. 

29For more information, see: https://

www.healthit.gov/isa/taxonomy/term/1801/uscdiv2. 

30For more information, see: https://prapare.org/ 

the-prapare-screening-tool. 31For the Accountable Health Communities 

Health-Related Social Needs Screening Tool, see 

https://innovation.cms.gov/files/worksheets/ahcmscreeningtool.pdf. The PAC assessment utilized the 

same transportation question as the AHC HRSN 

Tool. 

Health Communities (AHC) model 

under section 1115A of the Social 

Security Act. The AHC model tests 

whether systematically screening for 

health-related social needs and referrals 

to community-based organizations will 

improve health care utilization and 

reduce costs, and includes a CMS 

Innovation Center-developed AHC 

Health-Related Social Needs (HRSN) 

Screening Tool.27

As discussed in the proposed rule at 

87 FR 1858 through 1859, many dually 

eligible individuals contend with 

multiple social risk factors such as food 

insecurity, homelessness, lack of access 

to transportation, and low levels of 

health literacy.28 We posited that 

requiring SNPs to include standardized 

questions about social risk factors 

would be appropriate in light of the 

impact these factors may have on health 

care and outcomes for the enrollees in 

these plans and that access to this 

information would better enable SNPs 

to design and implement effective 

models of care. 

We proposed to amend 

§ 422.101(f)(1)(i) to require that all SNPs 

(chronic condition special needs plans, 

D–SNPs, and institutional special needs 

plans) include one or more standardized 

questions on the topics of housing 

stability, food security, and access to 

transportation as part of their HRAs. We 

noted that these questions would help 

SNPs gather the necessary information 

to conduct comprehensive risk 

assessments of each individual’s 

physical, psychosocial, and functional 

needs as required at § 422.101(f)(1)(i) 

and would inform the development and 

implementation of each enrollee’s 

comprehensive individualized plan of 

care as required at § 422.101(f)(1)(ii). 

Rather than include the specific 

questions in regulation text, we 

proposed that the questions be specified 

in sub-regulatory guidance. This would 

afford us some flexibility to modify 

questions to maintain consistency with 

standardized questions that are 

developed for other programs while still 

providing MA organizations with clear 

requirements; we expressed our intent 

to provide ample notice to MA 

organizations of any changes in the 

questions over time. As discussed in the 

proposed rule, SNPs would comply 

with the new requirement added to 

§ 422.101(f) by including in their HRAs 

the standardized questions on these 

topics that we would specify in subregulatory guidance. We described in 

the proposed rule our intent to, at a 

minimum, align selected questions with 

the Social Determinants of Health 

(SDOH) Assessment data element 29

established as part of the United States 

Core Data for Interoperability Standard 

(USCDI) v2, when finalized and where 

applicable. 

While we proposed that the regulation 

text specify that the wording of 

individual questions would be 

established through sub-regulatory 

guidance, we provided examples in the 

proposed rule of the questions on these 

topics used in other Medicare contexts 

to provide better context on the 

proposed requirement and to solicit 

public comment. These examples 

included the transportation question in 

the post-acute care patient/resident 

instruments 30 and the housing and food 

insecurity questions from the AHC 

Model HRSN Screening Tool.31

As discussed in the proposed rule at 

87 FR 1859, our proposal would result 

in SNPs having a more complete picture 

for each enrollee of the risk factors that 

may inhibit accessing care and 

achieving optimal health outcomes and 

independence. We believe that these 

questions are sufficiently related to and 

provide information on enrollees’ 

physical, psychosocial, and functional 

needs to be appropriate to include the 

HRAs. Having knowledge of this 

information for each enrollee would 

better equip MA organizations to 

develop an effective plan of care for 

each enrollee that identifies goals and 

objectives as well as specific services 

and benefits to be provided. Our 

proposal would also equip SNPs with 

person-level information that would 

help them better connect enrollees to 

covered services and to social service 

organizations and public programs that 

can help resolve housing instability, 

food insecurity, transportation needs, or 

other challenges. Coordinating care 

along these lines is consistent with the 

obligations under § 422.112(b)(3) for MA 

organizations that offer coordinated care 

plans. 

We did not propose that SNPs be 

accountable for resolving all risks 

identified in these assessment 

questions, but § 422.101(f)(1)(i) requires 

that the results from the initial and 

annual HRAs be addressed in the 

individualized care plan. As explained 

in the proposed rule at 87 FR 1859, 

results of the HRAs would not require 

SNPs to provide housing or food 

insecurity supports, but having the 

results means that SNPs would need to 

consult with enrollees about their 

unmet social needs, which may include 

homelessness and housing instability, 

for example, in developing each 

enrollee’s care plan. We explained that 

a SNP could demonstrate this in several 

ways, consistent with its MOC, 

including making referrals to 

appropriate community partners and 

taking steps to maximize access to 

covered services that meet the 

individual’s needs. 

By standardizing certain data 

elements, our proposal would make 

those data elements available for 

collection by CMS from the SNPs for all 

enrollees. (States can also use their 

contracts with D–SNPs at § 422.107 to 

require reporting of these data elements 

in the HRAs to the State or its designee.) 

In the proposed rule at 87 FR 1859, we 

explained that, while we continue to 

consider whether, how, and when we 

would have the SNPs actually report 

data to CMS, we believe having such 

information could help us to better 

understand the prevalence and trends in 

certain social risk factors across SNPs 

and further consider ways to support 

SNPs in promoting better outcomes for 

their enrollees. We believe 

standardizing these data elements could 

also eventually facilitate better data 

exchange among SNPs (such as when an 

individual changes SNPs). 

We understand that some States may 

separately require that Medicaid 

managed care plans collect similar 

information, potentially creating 

inefficiencies and added assessment 

burden on dually eligible individuals 

who are asked similar, but not identical, 


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questions in multiple HRAs. As we 

explained in the proposed rule, we 

believe that the benefit gained by all 

SNPs having standardized information 

about these social risk factors outweighs 

this potential risk. Where States are 

interested in requiring assessment 

questions, we recommended that States 

consider conforming to the standardized 

questions we implement for use under 

this final rule and, for integrated care 

programs, ensuring that plans do not 

need to ask the same enrollees similar 

or redundant questions. However, we 

also solicited input from States about 

what questions they are using and how 

we can best minimize assessment 

burden while ensuring that SNPs and 

States are capturing actionable 

information on social risk factors. 

As discussed in the proposed rule at 

87 FR 1860, we considered several 

alternatives to our proposal. We 

considered requiring fewer or more 

assessment questions on additional 

topics related to social risk factors or 

different combinations of questions, 

including questions on health literacy 

and social isolation. We considered 

soliciting comment on different 

examples of questions on housing, food, 

and transportation other than the 

examples included in the proposed rule. 

We considered simply proposing that all 

HRAs address certain domains (for 

example, housing), without authorizing 

CMS to specify the standardized 

questions to be used. We also 

considered specifying that the new 

questions only apply to certain enrollees 

and not others. We explained our 

rationale for not including these 

alternatives in the proposed rule at 87 

FR 1860. 

Finally, due to the processes 

associated with developing HRA tools, 

approval of MOCs, and MOC 

implementation, we discussed applying 

our proposed requirement beginning 

contract year 2024. However, we also 

considered whether to have our 

proposed requirement take effect at a 

later date, such as contract year 2025, to 

allow MA organizations more time to 

work our proposed new questions into 

their existing SNP HRAs. We solicited 

comments on our proposal and these 

potential alternatives. We also solicited 

comments on when CMS would need to 

issue sub-regulatory guidance providing 

the specific questions to be included in 

the HRAs to ensure that MA 

organizations would have sufficient 

time to incorporate the required 

questions. 

We received the following comments 

on this proposal and respond to them 

below: 

Comment: Most commenters 

expressed support for our proposal to 

require all SNPs to include questions on 

housing stability, food security, and 

access to transportation as part of their 

HRAs. Some commenters noted that 

inclusion of questions on these topics in 

HRAs would improve insight into 

enrollee needs. Several commenters 

stated that collection of information 

related to the SDOH can also better 

inform plans of enrollees’ challenges 

and reduce barriers to optimal care and 

quality of life. A few commenters noted 

the importance of SDOH-related 

information in the development of an 

individualized, person-centered care 

plan. Some commenters expressed 

appreciation that CMS’s proposal 

acknowledged the influence of the 

SDOH on health outcomes. Several 

commenters noted that social risk 

factors have a significant impact on 

health outcomes for the SNP population 

in particular. Several commenters noted 

that capturing social risk factors in SNP 

HRAs can help plans develop targeted 

interventions and connect enrollees to 

available supplemental benefits. A 

commenter believed health plans are 

best suited to collect this information 

and have the necessary resources to 

connect beneficiaries to social support 

services. Another commenter believed 

awareness of SDOH information 

improves care and lowers long-term 

costs. Other commenters noted that 

identifying unmet social needs among 

SNP enrollees could help reduce health 

disparities and advance health equity. A 

few commenters stated that that answers 

to HRA questions help capture 

information on social risk factors that is 

not only useful for individual enrollees, 

but also can be curated for evaluation at 

the population level in a way that can 

inform policy changes like payment 

reform. Another commenter believed 

HRA data on social risk factors have the 

potential to inform SNP supplemental 

benefit design and could be useful for 

incorporating social risk factors into 

future risk adjustment. 

Response: We appreciate the 

widespread support for inclusion of 

questions on housing stability, food 

security, and access to transportation as 

part of SNP HRAs. We agree that 

requiring SNPs to collect information on 

these topics can allow SNPs to better 

understand enrollees’ needs and 

challenges. As we noted in the proposed 

rule, our proposal would result in SNPs 

having a more complete picture of the 

risk factors that may inhibit enrollees 

from accessing care and achieving 

optimal health outcomes and 

independence. We also appreciate the 

commenters’ support for reducing 

health disparities and advancing health 

equity more broadly. We agree that 

better identifying the needs of SNP 

enrollees can be an important first step 

toward these larger goals. 

Comment: A number of commenters 

expressed support for the three question 

topic areas included in the proposed 

rule (housing stability, food security, 

and access to transportation). A 

commenter recommended CMS require 

all three categories be added to the 

HRAs. A few commenters noted these 

three topics are important indicators of 

social needs that are linked to 

individual health outcomes. A 

commenter noted that these three risk 

factors are issues that SNPs are wellpositioned to address. Another 

commenter noted they supported the 

proposal and were already 

implementing an assessment tool that 

covered these three topics. Other 

commenters expressed support for all 

three topics, but noted transportation in 

particular. A commenter noted that 

problems with transportation can 

seriously impact access to care, and that 

advocates and beneficiaries report that 

these problems are widespread. Another 

commenter noted the importance of 

transportation for rural populations that 

may need to travel significant distances 

to providers. A commenter stated that 

SNPs armed with the knowledge that, 

for example, many of their members are 

experiencing access barriers due to a 

lack of transportation may wish to 

expand the availability of transportation 

benefits. 

A commenter expressed support for 

all three proposed topics, but noted 

particular support for the inclusion of 

one or more questions about food 

security. The commenter believed that 

requiring screening for food insecurity 

will allow plans to better understand 

the important interplay between food 

insecurity and chronic illness in their 

enrollee populations, and will better 

equip plans to connect enrollees to 

critical responsive services such as 

medically tailored meals. 

Response: We appreciate the support 

for our proposed HRA question topics. 

As we outlined in the proposed rule, we 

focused on housing stability, food 

security, and access to transportation 

because there is a large evidence base 

suggesting they have a particularly 

significant influence on the physical, 

psychosocial, and functional needs of 

the enrollees. These comments reinforce 

our belief that these three topics are the 

most important factors for which SNPs 

should be screening their enrollees. 

Comment: Some commenters 

expressed support for the three topic 


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32See, for example, Kushel M.B., Gupta R., Gee 

L., Haas J.S.. Housing instability and food insecurity 

as barriers to health care among low-income 

Americans. J Gen Intern Med. 2006;21(1):71–7. doi: 

10.1111/j.1525–1497.2005.00278.x. 

33https://www.ncqa.org/blog/hedis-publiccomment-period-is-now-open/. 

areas included in the proposed rule but 

recommended that CMS include 

questions on additional topics as well. 

Several commenters recommended 

adding a question about family and 

unpaid caregiver support. A commenter 

noted that understanding how much 

support a SNP member has at home— 

or the caregiving responsibilities they 

may have—has direct connections to 

health outcomes of SNP enrollees and 

may provide information on the 

prevalence of family caregivers and the 

need to better support them to help 

ensure members can continue to live in 

the community. Another commenter 

believed that addressing this topic and 

expanding supports for caregivers could 

reduce future reliance on Medicaidfunded LTSS and limit growth in LTSS 

expenditures. A few commenters 

suggested adding questions about 

caregiver burden in particular, noting 

that early recognition of caregiver 

burden can lead to targeted supports, 

and a lack of recognition of caregiver 

burden can prompt an emergency 

department visit or hospitalization. A 

commenter also suggested CMS add an 

assessment question about symptom 

burden, noting that the SNP assessment 

can be a powerful opportunity to 

identify poorly managed pain and 

symptoms and avoid crises like 

potentially preventable emergency 

department visits. The commenter 

recommended that, at minimum, 

questions about symptom burden as 

well as caregiver burden be required for 

SNP enrollees with certain serious 

illnesses, but also believed there are 

benefits to including those two topics in 

HRAs for all SNP enrollees. 

Another commenter recommended 

multiple additional domains such as 

such as functional status, frailty, spoken 

language, and health literacy. Several 

other commenters encouraged CMS to 

include one or more questions on health 

literacy. A commenter noted that a 

question related to health literacy gets at 

the individual’s ability to understand 

and ask questions about health 

information they receive, which the 

commenter suggested could have a 

significant impact on health outcomes. 

Some commenters recommended 

CMS include questions on both health 

literacy and social isolation. A 

commenter noted that these two healthrelated social needs are prevalent among 

SNP populations and have direct 

impacts on health outcomes and 

behaviors, and expressed support for 

validated, concise screening tools on 

these topics, such as the Single Item 

Literacy Screener and AHC Model 

HRSN Screening Tool. Another 

commenter pointed to research showing 

that low health literacy is associated 

with nonadherence to treatment plans 

and puts patients at higher risk for 

hospitalization and mortality, and noted 

disparities in health literacy among 

different racial and ethnic groups. The 

commenter also believed the COVID–19 

pandemic has highlighted weaknesses 

in the social support systems of older 

adults and at-risk populations, and 

noted that social isolation is associated 

with increased risk for premature 

mortality and significantly influences 

physical, mental, and cognitive health 

outcomes. A few commenters suggested 

CMS include a question on social 

isolation. A commenter recommended 

CMS include a question on social 

isolation rather than one on access to 

transportation. The commenter believed 

transportation has not been as high on 

the list of observed needs for SNP 

enrollees—they noted this was perhaps 

because many SNPs provide 

transportation as a supplemental 

benefit. 

A few commenters recommended 

CMS include questions related to 

disability and functional limitations. 

These commenters believed that 

information related to the SDOH is not 

enough and that, without information 

on disability status, the assessment is 

incomplete and will perpetuate the 

disparities it seeks to uncover. Another 

commenter recommended including 

questions about interpersonal violence 

and its subdomains intimate partner 

violence and elder abuse, as well as 

utilities insecurity, and noted that the 

AHC HRSN screening tool includes 

these topics. 

A commenter expressed support for 

CMS’s three proposed topic areas, but 

noted some populations may not have 

those specific needs depending on 

individual circumstances or geographic 

location. The commenter believed an 

exclusive focus on these three social 

needs could miss other critical social 

needs that are more relevant, and noted 

that the relevance of different social 

needs questions will vary depending on 

individual circumstances, geographic 

location, populations served, and 

resource availability, among other 

factors. Another commenter noted that 

once the proposed HRA questions have 

been implemented successfully, CMS 

could consider adding new questions or 

expanding to other social needs topics, 

such as social isolation and access to 

telehealth. 

Response: We appreciate the 

commenters’ suggestions and 

acknowledge that the domains these 

commenters suggested are all important 

indicators of unmet enrollee needs. 

However, we maintain that the three 

topics we proposed have the strongest 

currently available evidence base 32

suggesting they have a particularly 

significant influence on health 

outcomes, and we still value parsimony 

in establishing new HRA requirements. 

Furthermore, the three topics on which 

SNP HRAs will be required to solicit 

information align with other efforts in 

this arena, such as the National 

Committee for Quality Assurance 

(NCQA) proposed Social Need 

Screening and Intervention HEDIS 

measure, which measures the percent of 

enrollees who were screened for unmet 

food, housing, and transportation needs, 

and received a corresponding 

intervention if they screened positive.33

As we discuss in more detail later in 

this section, the requirement we are 

finalizing at § 422.101(f)(1)(i) allows 

SNPs flexibility to include questions 

from a list of screening instruments 

specified by CMS in sub-regulatory 

guidance on housing stability, food 

security, and access to transportation. 

The amendment we are finalizing to 

§ 422.101(f)(1)(i) does not preclude 

SNPs from including additional 

questions in their HRAs as appropriate 

for their enrollee populations. The 

broad language at section 1859(f)(5)(A) 

of the Act and at § 422.101(f) provide 

SNPs a great deal of flexibility in 

developing their HRA tools to gather 

information about the unique physical, 

psychosocial, and functional needs of 

their enrollee populations in order to 

better meet those needs and coordinate 

care for the specific special needs 

population enrolled in the plan. 

Additionally, we may consider adding 

more, specific question topics in future 

rulemaking. We note that current 

regulations do not contain any specific 

requirements similar to what we are 

adopting in this rule, and we believe it 

is appropriate to first assess experiences 

implementing the change we are 

finalizing in this rule before proposing 

to require questions on other topics. 

Comment: Some commenters 

recommended that CMS require 

collection of patient demographic 

information as part of the HRA, 

including a variety of factors, such as 

race, ethnicity, sex, gender, gender 

identity, sexual orientation, language, 

disability, and others. A few of these 

commenters noted collecting this 

information is important to 

understanding how demographic 


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characteristics interact with each other 

intersectionally as well as with health 

outcomes, and is important to 

identifying disparities within a plan and 

in the SNP population more broadly. A 

commenter noted that collecting 

demographic information should be 

accompanied by quality improvement 

initiatives to reduce health disparities, 

such as improving a plan’s ability to 

provide primary care in a culturally and 

linguistically appropriate manner. A 

commenter noted that demographic 

information can help facilitate a 

culturally sensitive care planning 

process for SNP enrollees. Another 

commenter expressed support for the 

proposal, but urged CMS to add 

safeguards to ensure the questions are 

framed and presented, and the answers 

are received, in respectful and culturally 

competent ways. The commenter 

encouraged all such questions to be 

posed only by people who have had 

training to combat implicit bias. 

A commenter recommended ensuring 

that SDOH data standards are inclusive 

so there is not exclusion and further 

marginalization of populations due to 

limited definitions such as gender being 

defined as binary male or female, 

excluding individuals of other genders 

including nonbinary, agender, and 

transgender. Another commenter 

believed there is a need to move beyond 

individual SDOH factors to incorporate 

factors at the neighborhood, community, 

and zip code level, such as housing 

discrimination, to identify systematic 

and institutionalized forms of 

discrimination that may affect health. 

A few commenters recommended that 

CMS include an option for an enrollee 

to choose not to respond to the 

proposed HRA questions to protect 

enrollee choice and privacy. 

Response: We appreciate the 

commenters’ input and agree that 

collecting enrollee demographic and 

other information can provide the plan 

with a more complete picture of the 

enrollee. We believe that many SNPs are 

already collecting demographic and 

other information as described in the 

comments, and therefore we have 

chosen to focus on the three topics we 

proposed for parsimony. The 

amendment we are finalizing at 

§ 422.101 requires SNPs to include one 

or more questions on housing stability, 

food security, and access to 

transportation using questions from a 

list of screening instruments specified 

by CMS in sub-regulatory guidance. We 

believe this approach allows SNPs 

enough flexibility to choose questions 

that are the most appropriate for their 

enrollee populations while still 

maintaining some of the benefits of 

standardization. We encourage SNPs to 

ensure HRAs are conducted in a 

culturally sensitive manner. We also 

clarify that enrollees always have the 

option to refuse to answer an HRA 

question if they choose. 

Comment: Some commenters 

suggested CMS require alternative or 

additional questions from those 

discussed in the proposed rule at 87 FR 

1859 that cover the same three proposed 

topics or closely related topics. A 

commenter suggested CMS consider the 

National Comprehensive Cancer 

Network’s Distress Thermometer 

assessment, a well-known screening tool 

among oncology providers, that 

includes housing, food security, and 

transportation among other topics. 

Another commenter noted examples of 

questions covering these three topics 

that are required for D–SNPs in the 

commenter’s State. A commenter 

believed the examples in the proposed 

rule provided a good starting point for 

the subsequent sub-regulatory guidance, 

but also offered additional questions for 

consideration on topics related to those 

in the proposed rule, including 

questions about fall risk in the home, 

barriers to shopping for healthy food, 

and whether lack of access to 

transportation is persistent or 

infrequent, among other questions. 

Another commenter recommended CMS 

require SNPs to include in their HRAs 

questions across three specific housing 

specific domains, not just the proposed 

topic of housing stability: 

Homelessness, housing instability, and 

inadequate housing, noting that the 

AHC HRSN screening tool identifies all 

three housing topics. A commenter 

cautioned CMS against utilizing 

questions from the PAC assessment 

instruments. The commenter noted the 

patient assessment instruments used in 

each of the PAC settings are based on a 

‘‘medical’’ model designed to determine 

medical care needs and associated 

resource use, and believed the 

information collected in the PAC 

assessments is insufficient to address 

ongoing social or medical needs. 

Response: We appreciate the 

commenter’s suggestions. As discussed 

in more detail later in this section, we 

are finalizing language at 

§ 422.101(f)(1)(i) to require SNPs to 

include one or more questions from a 

list of screening instruments specified 

by CMS sub-regulatory guidance that 

complies with the Paperwork Reduction 

Act on housing stability, food security, 

and access to transportation (rather than 

requiring that all SNPs use the same 

specific standardized questions on these 

topics as proposed). We recognize that 

a variety of HRA questions on these 

topics could allow SNPs to collect 

meaningful information on their 

enrollees’ needs. The requirement we 

are finalizing in this rule provides SNPs 

with some flexibility to select the 

specific questions on these topics that 

are most appropriate for their enrollees 

from the list of screening tools specified 

by CMS in sub-regulatory guidance. We 

remind SNPs that they may also choose 

to include additional questions that are 

related to the three required topics, but 

not exactly the same, such as fall risk in 

the home, for example. 

Comment: A number of commenters 

expressed concern that the addition of 

the proposed questions to HRAs would 

make the assessments too long and 

burdensome. Several commenters 

suggested that CMS limit the number of 

questions SNPs must include in their 

assessments. A commenter 

recommended CMS limit the number of 

required questions to one question on 

each of the three proposed domains. A 

few commenters stated CMS should 

start with just a few questions and/or 

interoperable codes relating to housing, 

food, and transportation. Other 

commenters believed adding the 

proposed questions could reduce HRA 

completion rates. 

Response: We appreciate the 

commenters’ perspective on this issue. 

We believe that the potential benefit of 

SNPs having a more complete picture 

their enrollees’ physical, psychosocial, 

and functional needs as required at 

§ 422.101(f)(1)(i) outweighs the potential 

burden of including these questions in 

an assessment. Furthermore, because 

the requirement we are finalizing allows 

SNPs some flexibility to choose 

questions on housing stability, food 

security, and access to transportation 

from a list of screening tools specified 

by CMS in sub-regulatory guidance, 

SNPs can potentially continue using 

existing questions on these topics they 

already include in their HRAs if they are 

from the CMS-specified list, reducing 

the potential for administrative burden. 

We anticipate that the list of tools 

included in the CMS sub-regulatory 

guidance will likely include screening 

tools that are widely used in the 

industry and that SNPs may already be 

using for their HRAs. We will seek input 

on the list of screening instruments and 

comply with the Paperwork Reduction 

Act. 

Comment: A commenter suggested 

that, instead of questions on the three 

proposed domains, CMS use a one-totwo-question pre-screener that asks 

enrollees their needs or challenges 

across a wider range of social needs 

(such as social isolation, employment, 

safety, legal needs, assistance with 


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utilities, issues with a person’s living or 

home environment, material security, 

and digital access, in addition to 

housing, food and transportation). 

While the commenter recognized that 

social needs pre-screeners have not been 

widely used or vetted, the commenter 

believed pre-screeners could allow for a 

more holistic assessment of enrollee 

needs, which can then be followed up 

by additional questions if needed and be 

used to better inform care. 

Response: We appreciate the 

commenter’s suggestion; however, as 

the commenter noted, this approach has 

not been widely used or vetted. We 

prefer that SNPs use questions from 

validated or otherwise widely used 

assessment instruments (including any 

required by States), because we believe 

they will allow SNPs to collect highquality, actionable information on their 

enrollees—at the individual level as 

well as at the population level—to more 

holistically understand the barriers to 

care enrollees face. While we are not 

familiar with exactly what type of 

questions would be included in such a 

pre-screener, we do not believe that a 

question that asks enrollees about their 

needs across such a wide range of 

domains is likely to receive useful 

responses. Because we believe using 

validated or otherwise widely used 

assessment instruments is important to 

understanding and addressing enrollee 

needs, we are finalizing a requirement at 

§ 422.101(f)(1)(i) that SNPs include one 

or more questions from a list of 

screening instruments specified by CMS 

in sub-regulatory guidance on housing 

stability, food security, and access to 

transportation. 

Comment: A few commenters 

opposed requiring questions about 

social risk factors as part of SNP HRAs. 

A commenter recommended CMS give 

health plans the choice to include these 

questions on their HRAs to preserve 

assessment completion rates. Another 

commenter suggested CMS consider 

providing a list of standardized optional 

HRA questions, and noted that States 

could choose to require D–SNPs to 

include one or more optional questions 

in their HRAs, and individual plans 

could decide to include them as well. 

The commenter noted that plans using 

the optional questions could provide 

feedback to CMS on ease of use to help 

inform a future CMS decision about 

requiring these additional questions. 

Response: We disagree with the 

recommendation to make questions 

about social risk factors optional for 

SNPs. We believe it is necessary to 

require SNPs to include questions about 

housing stability, food security, and 

access to transportation in order to have 

a more complete understanding of 

enrollees’ physical, psychosocial, and 

functional needs. Though we are aware 

that many SNPs may already be asking 

their enrollees various questions related 

to SDOH, we want to ensure that, at 

minimum, SNPs are collecting 

information on these three key topics 

that are among the most influential to an 

enrollee’s health outcomes. We remind 

commenters that SNPs currently have 

the option to include questions about 

social risk factors on their HRAs; 

making the proposed questions optional 

would not necessarily expand the 

screening of SNP enrollees for social 

risk factors from the level of screening 

that SNPs are doing currently. 

Comment: A significant number of 

commenters expressed support for 

requiring standardized questions on the 

proposed topics. A commenter noted 

that standardized questions would 

streamline and facilitate ease in 

reporting, leading to improved data 

collection and higher quality data that 

more reliably measures impact and 

progress across populations. Another 

commenter believed that a lack of 

standardized data has impaired the 

ability of policymakers to fully 

understand the links between social risk 

factors and health inequities. Other 

commenters believed standardization 

would better ensure beneficiary needs 

are systematically identified and enable 

SNPs to develop and implement models 

of care to address those needs. 

Several commenters noted 

standardized questions could improve 

SNPs’ ability to understand prevalence 

and trends in social risk factors among 

enrollees. Several commenters also 

noted that standardized questions 

would enhance both SNPs’ and CMS’s 

ability to collect, analyze, and publicly 

report disparity- and equity-related data. 

Another commenter noted that 

developing standards for collecting and 

sharing SDOH-related data can result in 

actionable insights into disparities 

while improving data sharing across 

sectors. A commenter noted the 

importance of standardized data on food 

security in particular, stating that the 

use of standardized screening questions 

would provide data needed to better 

understand the impact of food 

insecurity and chronic illness across 

SNPs as a whole. A few commenters 

noted the importance of standardized 

assessment questions to data exchange 

between SNPs. 

A commenter noted that there is a key 

need for standardized data on SDOH for 

interoperability purposes, the 

importance of which has been further 

amplified during the COVID–19 

pandemic. A few commenters 

applauded CMS’s intent to align the 

selected HRA questions with the SDOH 

data elements established as part of the 

USCDI v2. A commenter noted, 

however, there is still clarification 

needed to make certain the USCDI v2 

questions would integrate seamlessly 

with traditional health information and 

result in successful interoperability. 

A few commenters stated that 

implementing standardized questions 

such as those from the AHC Model 

screening tool would ensure that plans 

are using screening questions that have 

been tested for validity and reliability 

and to maximize opportunities to 

compare data across settings. Another 

commenter stated that SDOH-related 

information should be standardized 

across plans and Medicare programs to 

ensure the screening tools health plans 

are utilizing to capture this information 

are uniformly adopted across SNP, MA, 

Health Exchange and Medicaid plans. 

A health plan commenter noted that 

they are already utilizing questions from 

the AHC HRSN screening tool to assess 

their enrollees and track their needs. 

The commenter noted that using this 

standardized tool has informed how 

they invested in internal capabilities 

and formed community partnerships to 

meet enrollee needs and improve their 

health. A few commenters stated that 

standardized questions would support 

plans’ ability to address enrollee needs 

directly or to make referrals to social 

service organizations and programs. 

Another commenter believed that SNPs 

are in a unique position to meet enrollee 

needs because they have the flexibility 

to create unique benefit packages which 

can get to the root of many of the most 

important SDOH. 

A commenter noted that they did not 

have a preference to which questions 

are specified (that is, from which 

standardized screening tool), but they 

strongly encouraged CMS to include 

standardized questions in subregulatory guidance and recommended 

that CMS coordinate with other HHS 

agencies to require the same set of 

standardized questions. 

A commenter requested that CMS 

consider standardizing all questions on 

SNP HRAs to increase care 

coordination. Another commenter 

suggested CMS should provide clear 

definitions of housing, food, and 

transportation insecurity and word 

questions in a way to limit any 

ambiguity of the responses to increase 

the probability that MA plans get 

quantifiable, actionable data. They 

encourage CMS to reference existing 

tools and assessment questions when 

developing the standardized questions 

so that there is consistency with 


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screening tools already in use by 

providers and social services 

organizations. 

Response: We appreciate the 

commenters’ support for our proposal to 

require standardized questions, and the 

commenters’ perspective that 

standardizing the collection of 

information on SNP enrollees’ social 

risk factors would improve SNPs’ ability 

to understand their enrollees’ needs, 

track those needs over time, and 

improve interoperability and data 

exchange between plans as well as 

between plans and CMS, should CMS 

require the SNPs to report this data. We 

are finalizing an amendment at 

§ 422.101(f)(1)(i) to require SNPs to 

include one or more questions from a 

list of screening instruments specified 

by CMS in sub-regulatory guidance on 

housing stability, food security, and 

access to transportation in their HRAs. 

However, we are not finalizing the part 

of our proposal that required SNPs to 

use specific standardized questions 

identified by CMS. We believe this 

middle-ground approach will retain 

some of the benefits of standardization 

while mitigating the potential 

downsides of using standardized 

questions, such as possibly (and 

unintentionally) limiting the 

opportunity to adopt questions that 

maximize cultural competence, 

potential increases in administrative 

burden and cost, and the potential for 

redundancy in States that have similar 

(but not fully aligned) requirements in 

their Medicaid programs. Requiring 

questions on the three topics from a 

CMS-specified list of screening tools, 

rather than specific standardized 

questions, will allow SNPs to choose 

questions from the specified tools on 

these topics that are most relevant to 

their enrollee populations. 

We considered concerns about the 

administrative burden associated with 

modifying an HRA, as discussed in 

response to comments later in this 

section. We recognize that it could be 

burdensome for a SNP that is already 

asking questions on these topics in its 

current HRA to replace those questions 

with new ones from a CMS-specified list 

of screening tools. However, we believe 

that some degree of standardization 

helps ensure that SNPs are using 

validated questions and gathering highquality, actionable responses from 

enrollees. Therefore, we are finalizing a 

requirement at § 422.101(f)(1)(i) for 

SNPs to include one or more questions 

from a list of screening instruments 

specified by CMS in sub-regulatory 

guidance on housing stability, food 

security, and access to transportation in 

their HRAs. 

In response to commenters who 

expressed support for standardization 

because of its potential for improved 

data collection and exchange, we 

recognize there is a need for greater 

interoperability in this area. Though we 

are not limiting SNPs to specific 

questions identified by CMS, we are 

requiring SNPs to use questions from a 

list of screening instruments specified 

by CMS in sub-regulatory guidance. 

While this provides a measure of 

flexibility for SNPs, by limiting the 

scope of available questions on these 

three domains to specified instruments, 

we expect there will be some degree of 

standardization. We anticipate 

including validated, health IT-enabled 

assessment tools on the CMS-specified 

list in order to maximize opportunities 

for standardized data collection and 

analysis. We also anticipate our subregulatory guidance will include 

screening instruments that have been 

developed with clear definitions of 

housing stability, food security, and 

access to transportation and that word 

questions in a way to limit any 

ambiguity of the responses and increase 

the probability that SNPs gather 

quantifiable, actionable data. As we 

develop the CMS-specified list in subregulatory guidance, we will consider 

existing requirements in other HHS 

programs, and will coordinate with 

agency partners to identify 

opportunities for burden reduction. In 

addition, the sub-regulatory guidance 

will include the option to use Staterequired Medicaid screening 

instruments that include questions on 

these domains. 

In response to the commenter who 

requested that CMS consider 

standardizing all HRA questions, we 

note that we do not currently require 

any specific questions on SNP HRAs, 

and implementing such a large-scale 

requirement is outside the scope of this 

rulemaking. 

We clarify that this requirement only 

applies to SNP HRAs, though other MA 

plans are free to include questions on 

these topics on the one-time HRAs they 

are required to make a best effort to 

complete within 90 days of enrollment 

under § 422.112(b)(4)(i). 

Comment: Numerous commenters 

opposed the requirement to include 

standardized questions specified by 

CMS. A number of commenters 

recommended that CMS instead set 

more flexible guidelines that allow 

plans to select their own assessment 

questions, such as requiring questions 

on certain topics rather than dictating 

the questions themselves. Some 

commenters asked CMS to consider 

allowing SNPs that are already 

collecting information on the proposed 

topic areas in their HRAs to continue 

using their existing questions. Another 

commenter believed flexibility to select 

and customize assessment instruments 

and questions is the best approach to 

encourage screening for a broad array of 

needs and identifying an enrollee’s most 

salient needs. 

A commenter believed that requiring 

standardized questions would be 

expensive and cumbersome to change 

HRA questionnaires to match the CMSspecified question wording for plans 

that already actively work with SDOH 

assessment software vendors. Another 

commenter noted there is already a 

robust data collection environment in 

this area, and that payers and providers 

may have existing interoperable systems 

with their own definitions and language 

that encode social needs questions in 

HRAs and electronic health records 

(EHRs). The commenter believed the 

CMS proposal could require multiple 

organizations to modify data collection 

and IT systems and have significant 

spillover impacts into provider EHRs. 

Another commenter believed that 

prescriptive HRA elements would 

disrupt SNP operations and have an 

adverse impact on overall HRA 

completion rates. The commenter did 

not believe that the HRA questions 

themselves must be standardized in 

order for SNPs to have a more complete 

picture of their enrollees’ risk factors. 

A few commenters noted concerns 

about continuity in HRA data. A 

commenter expressed concern that, in 

the case of States and SNPs that have 

already been collecting this information, 

existing and baseline data could be lost 

or marginalized. Another commenter 

expressed concern that changes to their 

existing HRA would prevent them from 

doing effective historical data analysis. 

Several commenters believed that 

requiring standardized questions would 

be burdensome for SNP enrollees, citing 

that enrollees may already be answering 

similar but slightly different questions 

in other assessments, such as in 

Medicaid programs. A commenter noted 

that most D–SNPs actively work with 

State partners to simplify data collection 

tools so that beneficiaries do not have to 

answer multiple questions with similar 

responses, and suggested that this 

proposal could get in the way of that 

coordination and lead to assessment 

burden among enrollees. A commenter 

expressed concern that beneficiaries 

would be required to answer multiple 

related questions solely as a result of 

this requirement. 

Other commenters believed SNPs 

should be able to continue using their 

own assessment questions on topics 


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related to social risk factors because 

they tailored them to their specific 

enrollee populations and developed 

them over time to obtain more detailed 

information from enrollees. A 

commenter believed that standardized 

questions can lead to enrollees not 

feeling comfortable sharing information. 

Another commenter believed that CMS’s 

proposal would prevent organizations 

from using validated questions they 

have determined work best to elicit 

information that is most effective in 

developing individualized plans of care 

for their enrollees. Another commenter 

believed plans are in the best position 

to review and revise their current HRAs 

to ensure collection of information and 

avoid overlap or unnecessary burden on 

enrollees. 

A few commenters expressed concern 

about standardized assessment 

questions needing to be translated. A 

commenter stated that expectations of 

enrollees may differ in certain SNP 

service areas due to a range of cultural, 

linguistic, social, geographic, and 

economic factors, and believed that 

CMS should consider giving plans 

flexibility so that information on 

housing stability, food security, and 

access to transportation can be sought in 

a manner that is culturally and 

linguistically appropriate. 

Response: We appreciate the 

commenters’ concerns about requiring 

standardized questions in SNP HRAs. 

We recognize the challenge that CMSspecified standardized questions can 

pose to SNPs in terms of plan 

administrative burden and to enrollees 

in terms of potentially being asked 

multiple similar questions, and we 

acknowledge the commenters’ 

perspective that SNPs are best-suited to 

develop questions that are most 

appropriate to their specific enrollee 

populations. We are also particularly 

sensitive to concerns about cultural and 

linguistic competence in HRAs. We 

agree with the commenter who stated 

that enrollee expectations may differ in 

different SNP service areas, and 

understand that an assessment question 

that is appropriate for one group of 

enrollees may be irrelevant or 

insensitive to another group. As 

discussed earlier in this section, we 

believe that the downsides of requiring 

specific standardized questions, 

including the potential administrative 

burden and duplication of existing 

efforts, outweigh the potential benefits 

of requiring specific standardized 

questions. However, we believe some 

degree of standardization helps ensure 

that SNPs are collecting high-quality, 

actionable responses from enrollees. We 

also believe using questions from a 

CMS-specified list of screening 

instruments increases the likelihood of 

SNP HRA data being shared in a 

meaningful way because the answers 

can be comparable across populations 

that are using the same questions. 

Therefore, we are finalizing language at 

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

include one or more questions from a 

list of screening tools specified by CMS 

in sub-regulatory guidance on housing 

stability, food security, and access to 

transportation in their HRAs. The subregulatory guidance will include the 

option to use State-required Medicaid 

screening instruments that include 

questions on these domains. We believe 

the requirement we are finalizing allows 

SNPs enough flexibility to choose 

questions that are appropriate for their 

enrollee population, given that they will 

be able to choose from a CMS-specified 

list of assessment tools. We also believe 

the requirement we are finalizing 

addresses commenters’ concerns about 

the need to make burdensome changes 

to information technology (IT) and EHR 

systems to utilize CMS-specified 

standardized questions. We aim to 

include validated, widely available 

screening tools in our sub-regulatory 

guidance, similar to the tools included 

in the proposed NCQA Social Need 

Screening and Intervention HEDIS 

measure. We believe many plans may 

already be using questions from one or 

more of these types of screening tools. 

As a result, relative to our proposal, we 

believe there will be less need for 

systems, IT, and EHR changes. 

Comment: Many commenters 

expressed concern that requiring 

standardized HRA questions would lead 

to duplication of efforts, given existing 

State and provider SDOH assessment 

requirements. A commenter noted that 

plans, providers, and States have been 

using a variety of different screening 

tools for years that focus on similar 

SDOH domains but with questions that 

may differ slightly. A few commenters 

stated they did not fully support the 

proposal because many providers are 

duplicating this work at the clinic level. 

A commenter cited work that has gone 

into building SDOH screening and 

navigation into provider offices. 

Another commenter noted that it is 

important to continue to have flexibility 

for providers to pursue more in-depth 

screening in the clinical setting as they 

deem appropriate. 

A number of commenters noted 

concerns about how the SNP HRA 

requirement might overlap with existing 

efforts, particularly at the State level. A 

few commenters stated that dually 

eligible individuals may be asked 

similar, but not identical, questions in 

Medicaid managed care and in 

statewide D–SNP HRAs, and believed 

that the proposal to require 

standardized questions could therefore 

be challenging to implement. A 

commenter believed most D–SNPs 

already incorporate questions 

addressing social risk factors into their 

HRAs and actively work with State 

partners to simplify data collection tools 

and ensure the process is not 

burdensome for beneficiaries. A 

commenter recommended CMS give 

SNPs a menu of potential questions to 

include in their HRAs to potentially 

reduce overlap with other assessments. 

A few other commenters believed States 

should work with CMS on the 

development of standardized HRA 

questions and that CMS’s rules should 

allow States to require alternative, 

standardized, State-specific HRA 

questions in addition to those CMS may 

specify in sub-regulatory guidance. The 

commenter believed this would improve 

alignment across each State’s Medicaid 

program and reduce duplication for 

enrollees. Another commenter 

expressed support for standardization, 

but recommended that CMS allow for 

exemptions in cases where a State 

already requires assessments for social 

risk factors for Medicaid beneficiaries 

through other means, such as Health 

Homes and other Medicaid programs. 

The commenter noted that, in cases 

where community-based organizations 

are conducting care coordination 

activities such as assessments, standard 

measures and systems for collection can 

create a barrier due to the cost of 

systems, including updates or changes 

to existing systems, to support 

standardized data collection. A 

commenter believed that States would 

like to retain the right to modify D–SNP 

HRA questions to complement Medicaid 

assessment questions through the State 

Medicaid agency contract with D–SNPs 

required by § 422.107, and expressed 

uncertainty about whether that option 

would remain available under CMS’s 

proposal. 

Another commenter recommended 

CMS consider how to use information 

on social risk factors that is already 

being collected by different providers to 

populate a SNP enrollee’s HRA when 

the information came directly from the 

enrollee within a given timeframe, 

rather than asking the enrollee to 

answer multiple similar questions. 

A few commenters suggested CMS 

allow health plans to leverage 

community or provider organizations to 

complete these assessments. A 

commenter believed HRAs have a 

greater likelihood of being completed 

when conducted in the community 


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rather than by a health plan. Another 

commenter supported requiring 

standardized questions as outlined in 

the proposed rule, but encouraged 

flexibility in how the information would 

be gathered. The commenter noted they 

already require the same information as 

part of their State’s comprehensive 

LTSS assessments. 

Response: We thank the commenters 

for their input on how we can best 

minimize assessment burden while 

ensuring SNPs and States are capturing 

actionable information on these three 

social risk factors. SNPs can choose to 

utilize community-based organizations 

or other entities as subcontractors to 

conduct HRAs or portions of an HRA, 

and we have seen successful examples 

of this both with SNPs and MMPs. SNPs 

and MMPs are responsible for ensuring 

that their subcontractors meet all CMS 

care coordination requirements. As 

described in Medicare Part C Plan 

Technical Specifications for D–SNPs, 

CMS will accept a Medicaid HRA that 

is performed within 90 days before or 

after the effective date of Medicare 

enrollment as meeting the Part C 

obligation to perform an HRA, provided 

that the requirements in 

§ 422.101(f)(1)(i) are met. We appreciate 

the commenters’ concerns about 

duplication of efforts. We recognize that 

some SNPs, particularly D–SNPs, may 

already include questions related to 

housing stability, food security, and 

access to transportation on their HRAs 

to meet State requirements for assessing 

social risk factors. We also recognize 

that States may require D–SNPs to use 

particular assessment tools or questions 

on these topics to align with other State 

Medicaid initiatives or priorities, and 

that requiring SNPs to also include 

similar but not identical CMS-specified 

questions could result in redundant 

assessment questions that do not 

necessarily add to SNPs’ knowledge of 

their enrollees’ needs. When considered 

in combination with other concerns we 

discuss earlier in this section, we 

believe the potential downsides of 

requiring specific standardized 

questions—including potential 

redundancy and duplication of effort— 

outweigh the potential benefits of 

requiring all SNPs to use the same 

standardized questions. However, we 

maintain that some level of 

standardization is necessary to ensure 

SNPs are using validated questions and 

collecting reliable, actionable responses 

from enrollees. Therefore, we are 

finalizing language at § 422.101(f)(1)(i) 

that requires SNPs to include one or 

more questions on housing stability, 

food security, and access to 

transportation from a list of screening 

tools specified by CMS in sub-regulatory 

guidance in their HRAs but does not 

require SNPs to adopt standardized 

questions on these topics. We will 

consider State requirements in 

establishing the list of screening tools in 

sub-regulatory guidance. As a result, the 

sub-regulatory guidance will include the 

option to use any State-required 

Medicaid screening instruments that 

include questions on these domains. 

This modification to our proposal will 

allow SNPs to continue to use questions 

on social risk factors that States may 

already require and will prevent 

duplication of efforts. 

Comment: Some commenters 

recommended CMS consider the use of 

standardized coding of responses rather 

than standardized responses. A 

commenter noted that with 

standardized data elements, assessment 

information would be interoperable to 

help plans, providers, States, and 

community-based organizations 

collectively identify and address social 

needs. Several commenters noted that 

standardized data elements would allow 

CMS to collect the assessment data and 

suggested that CMS specify a 

permissible set of SDOH screening tools 

to ensure the use of person-centered and 

validated tools without mandating 

specific standardized questions. A few 

of these commenters noted that 

requiring standardized data elements 

rather than standardized questions 

would be easier for SNPs to implement, 

potentially allowing them to continue to 

use their existing HRA questions that 

cover housing stability, food security, 

and access to transportation. A 

commenter noted this would allow 

SNPs to ensure HRA questions are 

culturally appropriate when translated 

across the many languages that SNP 

enrollees speak. The commenter also 

stated standardized coding would give 

plans the flexibility to ask questions in 

a way that accommodates the specific 

communication needs of enrollees, such 

as individuals with intellectual 

disabilities. 

A commenter suggested CMS look to 

the Gravity Project for standardized 

value sets, interoperable codes, and HL7 

technical standards to document 

standardized data on social needs. The 

commenter noted interoperable codes 

could include codes from ICD–10 Z 

codes, LOINC codes, and/or SNOMED 

code sets, among others. 

Response: We appreciate the 

commenters’ suggestions and will 

consider them as we develop the list of 

specified screening instruments in subregulatory guidance. We aim for SNPs to 

utilize questions from assessment tools 

that have the capability to facilitate data 

exchange as well as systematic analysis 

of prevalence and trends in their 

enrollees’ social risk factors. 

Comment: A commenter suggested 

that CMS create a standardized data 

submission tool to collect social risk 

factor-related data in a way most 

compatible to how the MA plans 

currently collect and report that data. 

The commenter expressed concern that 

requiring a standardized reporting 

format would cause MA organizations 

already actively collecting this data to 

undertake a potentially costly 

adjustment to their HRA operations. 

Another commenter stated health plans 

consistently identify the lack of 

standardization in SDOH data 

definitions and lack of harmony in 

scaling and scoring between assessment 

instruments as challenges. The 

commenter noted that requiring a 

specific instrument across settings and 

providers could solve this issue, but 

noted that another solution would be to 

allow for multiple screening 

instruments where items and scoring are 

cross-walked to create a universal scale. 

Several commenters recommended CMS 

allow SNPs to capture the required 

SDOH data using their own methods, 

including but not limited to HRAs, then 

crosswalk the data to CMS-specified 

data elements in order to report it to 

CMS. A few commenters specifically 

recommended that CMS work with 

experts to conduct a cross-walk of 

SDOH risk factor items from validated 

instruments and then create an 

acceptable equivalence to harmonize, 

calibrate and connect the items, scaling, 

scores, and findings from the various 

instruments to one standardized 

universal scale for each SDOH risk item. 

A commenter believed multiple data 

sources would be able to feed into the 

SDOH data that CMS could collect. 

Response: We thank the commenters 

for these suggestions. We remind the 

commenters that CMS does not 

currently collect information related to 

social risk factors from SNPs. CMS 

currently only collects information 

regarding the number of initial and 

annual HRAs conducted as part of the 

Medicare Part C Reporting 

Requirements and reviews a sample of 

HRAs conducted by SNPs during audits. 

We will consider this feedback as we 

continue to consider whether, how, and 

when we would have SNPs report data 

to CMS. 

Comment: A commenter believed that 

focusing on the annual HRA only as a 

source of information on enrollees’ 

social risk factors would miss 

opportunities to better understand 

enrollee needs and would have limited 


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impact. A commenter noted that 

allowing SNPs to capture SDOH data 

outside of the HRA process would be 

sensitive to the personal nature of 

questions about social risk factors and 

allow the care team member the enrollee 

trusts the most to ask the questions. 

Another commenter believed CMS 

should allow collection of social risk 

factor information through HRAs or 

through other screening processes, and 

that CMS should require use of that 

social risk factor data in risk assessment 

and navigation to supports. 

A commenter suggested that, instead 

of requiring plans to incorporate 

specific questions in their HRAs, CMS 

could require plans to include a 

minimum number of social needsrelated questions in their HRAs, the 

SNP Model of Care, or as part of the 

Managed Care Manual Chapter 5 

requirements. The commenter believed 

this alternative approach would fulfill 

the intent of the proposed requirement 

while providing plans the flexibility to 

leverage existing social risk factor 

questions they have already 

incorporated into their HRAs, 

minimizing the need for edits to existing 

HRAs. 

Response: We appreciate SNPs’ efforts 

to address their enrollees’ unmet needs 

through their models of care, quality 

improvement projects, and various 

touchpoints with enrollees. We clarify 

that the new requirement at 

§ 422.101(f)(1)(i) does not say that SNPs 

are to use the HRA as the only source 

of information on enrollee social risk 

factors. In addition to HRAs, we 

encourage SNPs to use sources of 

information outside of the HRA process 

in order to ensure that SNPs have a 

complete picture of an enrollee’s 

physical, psychosocial, functional, and 

social needs and their personal goals. 

This can include, but is not limited to, 

interactions between enrollees and 

providers, care coordinators, other 

members of the integrated care team, or 

community-based organizations. This 

information can assist with the 

development of and any updates to an 

enrollee’s individualized care plan. 

Though SNPs may use a variety of 

sources of information to better 

understand their enrollees’ needs, we 

are finalizing a requirement for SNP 

HRAs to include questions from a list of 

CMS-specified screening tools about 

housing stability, food security, and 

access to transportation because all 

SNPs are required at § 422.101(f)(1)(i) to 

conduct a comprehensive HRA. Making 

this requirement part of the HRA 

ensures all SNPs are universally 

collecting this information, at 

minimum, in their assessments, 

regardless of any other sources of 

information on enrollee social risk 

factors they may use. As described 

elsewhere in this section, we have 

considered commenters’ perspectives in 

coming to a final decision regarding a 

requirement to use CMS-specified 

standardized questions, and are instead 

finalizing language at § 422.101(f)(1)(i) 

that requires SNPs to include questions 

from a list of screening tools specified 

by CMS in sub-regulatory guidance on 

housing stability, food security, and 

access to transportation in their HRAs. 

Comment: Many commenters 

recommended CMS gather further input 

from stakeholders, including enrollees, 

plans, SDOH assessment tool 

developers, and providers, to develop 

the proposed standardized HRA 

questions before releasing subregulatory guidance. A few commenters 

suggested CMS convene a technical 

expert panel to consider research on the 

comparative effectiveness of existing 

social needs screening tools and to 

develop and test a social needs prescreener. A commenter noted that the 

complexity of capturing social needs 

requires a thoughtful and multifaceted 

understanding of enrollee populations. 

Another commenter recommended CMS 

conduct a landscape review and align 

requirements to build off of what plans 

have already accomplished. A 

commenter suggested CMS initially 

gather information on one or two 

questions per SDOH topic so that plans 

can begin to incorporate standardized 

questions into their HRAs while 

continuing to use most of their own 

already-tested questions with enrollees. 

Another commenter believed CMS 

should not dictate specific questions 

without going through a consensus 

process for measure development, such 

as the National Quality Forum, and 

noted that SNPs should be able to 

incorporate CMS’s required questions 

into their existing assessment tools. 

A commenter urged CMS to seek 

provider feedback on the wording of 

standardized HRA questions. Several 

commenters suggested CMS incorporate 

direct enrollee input into any required 

HRA questions to ensure they are 

understandable and relevant to the 

intended audience. A commenter 

offered to provide CMS input into the 

development of the standardized 

questions that would work well across 

diverse enrollee populations. A 

commenter believed enrollees should 

have opportunities for feedback and 

oversight not only on screening 

questions, but also on any navigation 

and referral system a plan may use to 

meet the needs enrollees identify. 

Another commenter stated that CMS 

should not rush to use questions that 

collect questionable, unreliable, or 

inconsistent data. 

Response: We thank the commenters 

for their suggestions. We agree that the 

complexity of capturing social needs 

requires a thoughtful and multifaceted 

understanding of enrollee populations. 

We are not finalizing the proposed 

requirement that SNPs use standardized 

questions specified by CMS on these 

topics. Instead, we are finalizing a 

requirement that SNPs use questions on 

these topics from a list of screening 

tools specified by CMS in sub-regulatory 

guidance. In developing this subregulatory guidance, we will consider 

the extensive work that health plans, the 

Federal Government, tool developers, 

and other stakeholders have already 

done to research and validate screening 

instruments. We clarify that we did not 

propose to create new measures, nor did 

we intend to require that SNPs adopt 

new assessment tools wholesale. Rather, 

we proposed to require SNPs to 

incorporate CMS-specified standardized 

questions about housing stability, food 

security, and access to transportation 

into their HRAs; we had intended that 

existing standardized questions, from 

existing validated assessment tools, 

would be specified by CMS for use by 

SNPs. Although we are not finalizing a 

requirement for SNPs to use CMSspecified standardized questions, we are 

finalizing a requirement that SNPs use 

questions from a list of screening 

instruments specified by CMS in subregulatory guidance. We anticipate this 

list will include validated, widely used 

assessment tools that include questions 

on housing stability, food security, and 

access to transportation. 

Comment: Several commenters 

supported CMS’s proposal to apply this 

HRA requirement across all SNPs. A 

commenter noted that all SNP enrollees 

are at elevated risk of experiencing 

health-related social needs. A few 

commenters recommended that CMS 

apply a requirement to screen 

beneficiaries for social risk factors 

beyond SNPs. A commenter suggested 

that CMS consider how to encourage all 

MA plans to screen beneficiaries for 

social risk. Another commenter 

encouraged an even greater expansion of 

this type of data collection across the 

Medicare program, noting that data 

collection by MA plans could provide a 

model for other providers in better 

understanding gaps in health equity 

especially given that racial minorities 

make up a larger percentage of MA 

enrollees than Original Medicare 

enrollees. Other commenters 

recommended that CMS work to 

implement social risk screening 


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consistently across both the Medicare 

and Medicaid programs. 

Response: We appreciate the 

commenters’ support and suggestions 

for expanding our proposed requirement 

beyond SNPs. We agree that greater 

prevalence of screening for social risk 

factors can help providers better 

understand health disparities for all MA 

enrollees and will consider future 

rulemaking on this subject. In this final 

rule, we are limiting the new 

requirement to include questions on 

housing stability, food security, and 

access to transportation on HRAs to 

SNPs because we believe SNP enrollees 

are more likely than other MA enrollees 

to have particular challenges with 

unmet social needs. 

Comment: A commenter encouraged 

CMS to consider excluding institutional 

special needs plans (I–SNPs) from the 

requirement to include questions on 

housing stability, food security, and 

access to transportation in SNP HRAs. 

The commenter noted that all I–SNP 

enrollees reside in nursing facilities, 

which provide housing, meals, and 

transportation. The commenter also 

noted that nursing facilities are required 

to conduct minimum data set 

assessments and meet other 

requirements, and believed that 

requiring I–SNPs to assess enrollees for 

social risk factors would add 

administrative burden for the plan and 

potential confusion for enrollees with 

no apparent benefit. Another 

commenter believed that the proposal to 

include questions about housing 

stability in SNP HRAs was equally 

important to enrollees who reside in 

congregate housing as those who live in 

the community. The commenter noted 

that some residents of congregate 

housing may be spending down 

resources and believed it would be 

helpful to understand if an individual’s 

current housing arrangements are 

precarious, potentially allowing a plan 

to connect them with needed services or 

resources. 

Response: We disagree that assessing 

nursing facility residents for social risk 

factors in HRAs provides no apparent 

benefit. An enrollee residing in a 

nursing facility or other congregate 

housing setting can have concerns about 

the stability of their living situation. 

And, as we noted in the proposed rule 

preamble at 87 FR 1860, people may 

move between settings, including from 

an institutional placement to the 

community. In addition, I–SNPs may 

enroll individuals living in the 

community who require an institutional 

level of care, for whom housing stability 

could be of particular concern. I–SNPs, 

like other SNPs, are required at 

§ 422.101(f)(1)(i) to conduct an initial as 

well as annual comprehensive HRA. We 

believe that the benefit of better 

understanding enrollee needs outweighs 

any potential burden of adding a few 

questions to the required assessment. 

However, we recognize that the types of 

questions that may be relevant for 

community-dwelling SNP enrollees may 

be less relevant for I–SNP enrollees who 

reside in a nursing facility. Therefore, 

we are allowing some flexibility for 

SNPs by finalizing regulatory language 

at § 422.101(f)(1)(i) which requires SNPs 

to include questions from a list of CMSspecified screening instruments on 

these three topics in the initial and 

annual HRA. 

Comment: Numerous commenters 

provided feedback on the timing for 

enforcement of the proposal. A few 

commenters recommended requiring 

HRA questions on social risk factors as 

quickly as possibly rather than delaying 

until contract year 2025. A commenter 

noted that the three proposed question 

topics are already well-developed in 

2022 and believed the questions are too 

important to delay beyond 2024. Other 

commenters expressed support for 

implementing the requirement in 

contract year 2024. Several commenters 

recommended CMS consider delaying 

implementation beyond 2024. A 

commenter requested that CMS make 

the effective date no earlier than 2025 to 

allow time for plans to design, test, 

evaluate, and operationalize the 

requirements. Another commenter 

recommended CMS provide subregulatory guidance on the specific 

standardized questions at least one year 

in advance of the required 

implementation to allow SNPs time for 

IT, system, and process changes. A few 

commenters suggested that CMS 

consider allowing flexibility in the time 

granted to implement standardized 

questions. Other commenters urged 

CMS to effectively communicate their 

requirements and implementation 

timeframe to States to allow time for 

States to remove any overlapping 

assessment requirements. 

Some commenters stated they were 

supportive of a 2024 effective date only 

if CMS did not require standardized 

questions, and noted that, if CMS did 

require standardized questions, they 

requested an effective date no earlier 

than 2025 to allow SNPs sufficient time 

for implementation. A few of these 

commenters believed the 

implementation timeline should depend 

on the scope and complexity of the 

questions CMS ultimately requires. 

A commenter encouraged CMS to give 

plans at least six months’ notice of final 

requirements before the implementation 

date. A commenter noted that any 

change of assessment questions could 

have implications for EHR vendors that 

would need to implement such changes 

within an 18- to 24-month cycle. A plan 

commenter stated they would require 90 

days to implement additional HRA 

questions. 

Response: We appreciate the 

commenters’ input on the 

implementation timeline for our 

proposal. We are finalizing a 

requirement at § 422.101(f)(1)(i) that 

SNPs must include questions from a list 

of screening instruments specified by 

CMS in sub-regulatory guidance on 

housing stability, food insecurity, and 

access to transportation beginning 

contract year 2024. We will ensure 

compliance with the Paperwork 

Reduction Act as we strive to post the 

sub-regulatory guidance by the end of 

2022. This would leave more than a year 

from publication of this final rule for 

SNPs to come into compliance. The 

comments we received suggested that 

many SNPs already include questions 

on these topics in their HRAs. We 

believe many of the SNPs that are 

already including questions on these 

topics are using certain validated, 

widely available screening instruments. 

In our sub-regulatory guidance, we 

anticipate including validated tools that 

are already widely in use. Because we 

believe many SNPs are already using 

these types of screening tools, and 

because we are not requiring the use of 

specific standardized questions, we 

believe it is reasonable for SNPs to 

implement this requirement in contract 

year 2024. 

Comment: Many commenters 

expressed concern about SNPs’ 

responsibility to address social risk 

factors identified through the HRA. 

Several commenters noted that the HRA 

should be used to inform the enrollee’s 

individualized care plan as well as to 

connect enrollees to covered services 

and community resources. A commenter 

noted that developing the enrollee’s 

plan of care invites the SNP to form 

community partnerships that will allow 

them to address enrollee needs. The 

commenter believed these partnerships 

were crucial to reducing health 

disparities. Another commenter 

believed that assessments must be 

paired with strong connections to 

community-based organizations, 

including innovative approaches to 

payment for these organizations. 

A number of commenters 

recommended CMS take steps to ensure 

SNPs are acting on the information they 

receive in HRAs. A commenter 

encouraged CMS oversight to ensure 

that HRA results are included in 


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enrollees’ individualized plan of care. 

Another commenter believed CMS 

should emphasize that HRA questions 

related to social risk factors would help 

inform, but not direct, a provider’s plan 

of care. A commenter expressed concern 

with CMS’s statement, described at 87 

FR 1859, that CMS would not be 

explicitly requiring that SNPs be 

accountable for resolving all risks 

identified in the HRA questions. The 

commenter believed CMS should 

require this type of accountability for 

SNPs. A few commenters requested 

CMS consider going beyond requiring 

HRA questions and work with plans to 

ensure that plans are not only assessing 

and referring enrollees to services, but 

also confirming that needed social 

services have been received. A 

commenter believed there needs to be a 

clear level of understanding of who is 

responsible for connecting a patient to 

services, and that there is potential for 

doing more harm than good by 

frequently asking enrollees about their 

social risk factors but not addressing 

them. A few commenters believed that 

screening without a strong referral and 

navigation system is ineffective, 

disrespectful, and unethical, and it can 

undermine enrollee trust in providers. 

Another commenter suggested that 

assessments for social risk factors be 

conducted on a monthly basis and even 

more frequently based on an enrollee’s 

needs. 

A few commenters urged CMS to 

consider how it can encourage and 

support plans to use data collected in 

HRAs in meaningful ways, and what 

guidance and resources it can provide 

plans on meeting enrollees’ social 

needs. Another commenter urged CMS 

to establish oversight mechanisms and 

standards to ensure that SNPs have 

systems in place to assist enrollees 

based on the needs identified in the 

HRA. A commenter encouraged CMS to 

track HRA data to identify trends and 

potentially compare to the supplemental 

benefit offerings and utilization. 

Another commenter urged CMS to 

provide not just standardized questions 

but also guidance around framing, an 

explanation of why the questions are 

being asked, and expectation setting 

about how the information will be used 

to ensure it is maximally actionable. 

Other commenters expressed concern 

about increasing demand for 

community-based services. A 

commenter noted that, even with 

services in place, enrollees may face 

access challenges, especially in rural 

areas. Another commenter believed that 

increasing screening for social risk 

factors would create more demand for 

an already-taxed community-based 

services infrastructure, which would 

inadvertently create new or exacerbate 

existing health disparities. The 

commenter recommended CMS work 

with the Administration for Community 

Living to continue to build communitybased organizations’ capacity to partner 

with health plans. The commenter also 

recommended CMS encourage financial 

investments in the community-based 

services infrastructure through valuebased payments and flexible spending 

arrangements. 

Response: We thank the commenters 

for their perspective on this issue. We 

agree that it is important for SNPs to not 

only assess their enrollees for social risk 

factors, but also connect them to needed 

services based on enrollee goals and 

preferences, whether such services are 

plan-covered benefits or referrals to 

community resources. We believe 

requiring all SNPs to include questions 

on enrollees’ housing stability, food 

security, and access to transportation 

will help inform the comprehensive 

individualized plan of care required at 

§ 422.101(f)(1)(ii); these individualized 

plans of care identify goals developed 

with the enrollee and measurable 

outcomes as well as describe specific 

services and benefits. At 87 FR 1859 in 

the proposed rule, we provided several 

examples of the ways in which SNPs 

could consult with enrollees about their 

unmet social needs as part of the 

development of individualized care 

plans, such as making a referral to an 

appropriate community partner. We 

appreciate the need for additional 

technical assistance on addressing the 

social needs of enrollees and will 

consider it in the future. 

Comment: A commenter stated it is 

important to understand how the SDOH 

data that is collected through the new 

required questions is going to be used, 

including what the proposed output 

would be if those data elements are 

required to be reported to CMS. 

Response: We clarify that the SDOH 

data collected as part of an HRA would 

be used to inform a SNP enrollee’s 

individualized care plan based on the 

enrollee’s goals. The language we are 

finalizing at § 422.101(f)(1)(i) does not 

require SNPs to submit HRA data to 

CMS. However, as we outlined in the 

proposed rule at 87 FR 1859, we 

continue to consider whether, how, and 

when we could have SNPs report this 

data to CMS under other regulations. If 

SNPs do submit this data to CMS in the 

future, we believe having such 

information could help us better 

understand the prevalence and trends in 

certain social risk factors across SNPs 

and consider ways to support SNPs in 

improving enrollee outcomes. 

Comment: Several commenters 

suggested that CMS clarify that SNPs are 

not responsible for addressing all 

enrollee social risk factors identified 

during the HRA. A commenter 

requested clarification on whether 

CMS’s expectation would be that these 

questions trigger care management 

outreach. Another commenter noted 

that plans often do not have the ability 

to address all the systemic barriers to 

achieving optimal health outcomes that 

may be identified in the HRA. A few 

commenters believed addressing social 

risk factors requires resources beyond 

what a SNP can offer, or may lie outside 

a SNP’s control. A commenter believed 

that an organization’s ability to address 

enrollee social needs depends on many 

factors, such as geographic location and 

resource availability in their 

communities, among others. Another 

commenter believed HRA questions 

about social risk factors could cause 

enrollee confusion, noting that an 

enrollee who indicates they are 

struggling to afford their rent may 

expect a health plan to provide a 

solution—perhaps a referral to a 

community housing resource—but then 

experience frustration and 

disappointment when a health plan is 

unable to do so. 

A commenter expressed concerns 

about how SNP auditors may interpret 

this proposed requirement. The 

commenter believed that program 

auditors have demanded verification 

that such risks or needs are assessed and 

resolved. The commenter strongly 

encouraged CMS to include language in 

the SNP audit protocols emphasizing 

that the focus of this requirement, if 

finalized, is on assessment not 

resolution. 

Response: We appreciate the 

commenters’ perspectives on this issue. 

As stated at 87 CFR 1859, our proposal 

regarding the content of the HRA would 

not require SNPs to be accountable for 

resolving all risks identified in these 

assessment questions. The information 

gathered in the HRAs must be used to 

inform the development of the 

individualized care plan per 

§ 422.101(f)(1)(i) and (ii). Section 

422.101(f)(1)(i) requires the SNP to 

ensure that the results from the initial 

and annual HRAs are addressed in the 

individualized care plan. Section 

422.101(f)(1)(ii) also provides that the 

individualized care plan must be 

developed and implemented in 

consultation with the beneficiary. The 

SNP must take steps to provide the 

services or connect the enrollee with 

appropriate services in order to 

accomplish the goals identified in the 

individualized care plan. The SNP can 


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take these social risk factors into 

account in the development and 

implementation of the individualized 

care plan, even if the SNP is not 

accountable for resolving all social risk 

factors. For instance, knowing that an 

enrollee is homeless or lacks reliable 

transportation could change how the 

SNP delivers covered services, such as 

by helping the enrollee find a primary 

care physician (PCP) that is more 

conveniently located or suggesting that 

the enrollee utilize a Federally Qualified 

Health Center (FQHC) in order to get 

multiple services delivered at the same 

time. 

We remind the commenter who 

expressed concerns about how SNP 

auditors may interpret this proposed 

requirement that CMS welcomes 

stakeholder feedback on the audit 

protocols when the collection becomes 

available for public comment under the 

Paperwork Reduction Act of 1995. We 

also remind commenters of the 

requirement at § 422.503(b)(4)(vi) for 

MA organizations to adopt and 

implement an effective compliance 

program to prevent, detect, and correct 

non-compliance with CMS’s program 

requirements, including the requirement 

at § 422.101(f)(1)(ii) that SNPs must 

develop and implement an 

individualized care plan. 

Comment: Some commenters 

provided feedback on CMS’s intent to 

provide the specific HRA questions 

through sub-regulatory guidance. 

Several commenters indicated they were 

supportive of this approach. A 

commenter agreed that it is important 

for CMS to retain the discretion to 

modify questions while still providing 

SNPs with clear requirements. Another 

commenter recommended CMS include 

a statement in sub-regulatory guidance 

to discourage States from adding their 

own questions and to encourage data 

sharing. A few commenters encouraged 

CMS to provide additional detail on 

how SNPs should implement this 

proposal. 

Other commenters did not support 

CMS’s intent to specify the questions in 

sub-regulatory guidance. A commenter 

believed this information should be 

standardized across plans and Medicare 

programs, rather than being specified in 

sub-regulatory guidance applicable to 

SNPs only. Another commenter strongly 

suggested CMS include any questions or 

specific requirements in regulation text 

because the commenter would like as 

much time as possible to implement 

changes, and believed the predictability 

of the regulatory cycle would allow 

them to better plan for policy changes. 

Response: We appreciate the 

commenters’ perspectives on use of subregulatory guidance to specify 

standardized questions. We believe that 

specifying the topics in regulation while 

providing additional operational detail 

in sub-regulatory guidance strikes the 

appropriate balance between the need 

for stability and predictability for plans 

and the need to be able to revise the 

specific questions to stay aligned with 

similar assessment tools. Although we 

are not requiring SNPs to use specific 

standardized questions, we believe a 

degree of standardization is necessary to 

ensure that SNPs are gathering highquality, actionable responses from 

enrollees on their social risk factors. We 

also believe that allowing SNPs to 

choose questions from a list of screening 

instruments may increase opportunities 

for alignment with other efforts in this 

area, including NCQA’s proposed Social 

Need Screening and Intervention HEDIS 

measure, as discussed in more detail 

later in this section. Therefore, we are 

finalizing a requirement at 

§ 422.101(f)(1)(i) that SNPs include one 

or more questions from a list of 

screening instruments specified by CMS 

in sub-regulatory guidance on each of 

these three topics. We believe the 

requirement we are finalizing addresses 

commenters’ concerns about the lack of 

predictability involved in specifying 

required HRA questions in subregulatory guidance, since SNPs will be 

able to choose questions on these topics 

from the list of screening instruments in 

sub-regulatory guidance that best meet 

the need to assess housing stability, 

food insecurity, and access to 

transportation for the specific 

population they serve. We intend to 

issue the first sub-regulatory guidance 

on this issue by the end of 2022 and will 

revise and update the guidance as 

necessary in the future. 

Comment: A few commenters 

recommended CMS consider privacy 

and confidentiality as part of this 

proposal. A commenter strongly urged 

CMS to provide adequate protection for 

and confidentiality of information 

collected through HRAs, noting that the 

collection and use of SDOH-related 

information should be held to the 

highest standard and that appropriate 

oversight and enforcement should 

restrict inappropriate use and access. 

Another commenter recommended CMS 

maintain high data security standards to 

ensure the collection of demographic 

information be conducted in a 

transparent, secure, and culturally 

sensitive manner for the targeted 

populations in question to reduce 

systemic bias. Another commenter 

asked for clarification as to whether the 

HRA is intended to be delivered by and 

stored as part of the EHR. 

Response: We appreciate the 

commenters’ concerns for protecting 

enrollee privacy. At a minimum, all MA 

plans, including the SNPs that are 

subject to this new requirement, must 

ensure the confidentiality of enrollee 

records under § 422.118 and the Health 

Insurance Portability and 

Accountability Act (HIPAA) Security 

and Privacy Rules at 45 CFR part 164. 

Enrollee records that must be protected 

under § 422.118 include the information 

collected as part of health risk 

assessments, and we believe that 

information gathered through SNP 

HRAs is protected health information 

(as defined in 45 CFR 160.103) subject 

to protection under HIPAA rules. We 

agree that information related to social 

risk factors is particularly sensitive and 

should be handled accordingly. We do 

not intend to specify how SNPs store 

this information. We remind the 

commenters that CMS does not 

currently collect this type of 

information from SNPs. Should CMS 

collect this information in the future, we 

will protect enrollee privacy as we do 

more broadly when handling 

beneficiary data. 

Comment: Several commenters noted 

related efforts within and outside of 

CMS that they recommended CMS 

leverage when determining what 

questions to include in the HRA. A few 

commenters noted the Social Need 

Screening and Intervention quality 

measure under development from 

NCQA. Several others noted the work of 

the Gravity Project, supported by the 

Office of the National Coordinator for 

Health Information Technology, 

including the USCDI v2. A commenter 

strongly encouraged alignment with 

USCDI v2. A few commenters supported 

leveraging and aligning with the work of 

the Gravity Project, as well as ensuring 

alignment with other programs. A 

commenter noted CMS’s proposal is 

consistent with the February 1, 2022 

National Quality Forum Measure 

Applications Partnership 

recommendations to CMS for screening 

for social drivers of health and public 

data on those screening positive for 

social drivers of health. Another 

commenter cited a proposal for a similar 

quality measure for use in the MeritBased Incentive Payment System for 

physicians and Inpatient Quality 

Reporting program for hospitals. A 

commenter also encouraged an 

approach that utilizes publicly available 

tools, such as the AHC HRSN screening 

tool, and does not require use of any 

specific proprietary screening tool. 


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Response: We appreciate the 

additional information and have been 

closely reviewing other SDOH efforts 

both within the Federal Government 

and other parts of the industry, 

including NCQA’s proposed new Social 

Need Screening and Intervention HEDIS 

measure and discussion in the contract 

year (CY) 2023 Rate Announcement 

about comments received on potential 

future use of that proposed measure in 

Star Ratings. We recognize that there are 

a number of well-developed validated 

assessment tools with questions on the 

three proposed topics already in use by 

plans. We agree that our efforts should 

align with other programs. As we 

discussed in responses to earlier 

comments, we are finalizing a 

requirement at § 422.101(f)(1)(i) that 

SNPs must include one or more 

questions from a list of screening 

instruments specified by CMS in subregulatory guidance about housing 

stability, food insecurity, and access to 

transportation in their HRAs, rather 

than requiring specified standardized 

questions. We believe allowing some 

flexibility for SNPs to choose questions 

best suited to their enrollee populations 

is important; however, we also believe 

some degree of standardization is 

necessary to ensure SNPs are collecting 

high-quality, actionable responses from 

enrollees. Furthermore, we believe this 

approach better allows us to align with 

other programs and SDOH efforts and 

retains the potential for improved data 

exchange and interoperability. For 

example, in response to the 2023 

Advance Notice, the vast majority of 

commenters supported the use of 

NCQA’s proposed screening and referral 

to services for social needs measure in 

MA Star Ratings. We believe our 

requirement would align well with 

potential use of that measure in Star 

Ratings. The proposed NCQA measure 

does not require use of a specific tool or 

questions, but would allow use of 

questions from a list of selected 

validated assessment instruments, 

similar to the new requirement finalized 

here at § 422.101(f)(1)(i). We anticipate 

our list of screening instruments in subregulatory guidance will overlap with 

the list of screening instruments NCQA 

includes in the specifications for its 

proposed measure, which will provide 

the opportunity for SNPs to align their 

compliance with the new requirement at 

§ 422.101(f)(1)(i) with data to be used for 

the proposed NCQA measure. We 

believe the result will still be an 

increased ability for interoperable data 

exchange among SNPs. 

Comment: A commenter requested 

clarification on several aspects of our 

proposal. The commenter questioned 

whether the HRA questions should be 

included on the initial, reassessment, 

and transition HRAs and whether each 

plan would be required to include the 

same questions on the HRA or whether 

it would be up to the individual plan to 

determine wording and how these new 

question sets fit into other existing 

domains. 

Response: We appreciate the 

commenter’s request for clarity. We 

clarify that the questions should be 

included in all HRAs used by SNPs. On 

the commenter’s request for clarification 

about question standardization, we 

clarify that our original proposal would 

have required SNPs to use CMSspecified standardized questions. 

However, as discussed earlier in this 

section, we are instead requiring SNPs 

to use one or more questions from a list 

of screening instruments specified by 

CMS in sub-regulatory guidance in each 

of the three required domains. However, 

SNPs can determine how any new 

questions they add to their HRA in 

order to meet the new requirement fit 

into their existing assessment process. 

Comment: A commenter requested 

CMS clarify how SDOH-related 

information may be used if an HRA 

identifies an issue that is not identified 

by a provider and asked how CMS 

intends to treat that information for 

other MA purposes. 

Response: We thank the commenter 

for their questions and note that, per 

§ 422.101(f)(1), the enrollee’s providers 

should be included as part of the 

interdisciplinary care team (ICT) and 

the information from HRAs should be 

shared with the ICT as described in the 

SNP’s MOC. As discussed in more detail 

in other comments and responses earlier 

in this section, the individualized plan 

of care for an enrollee must be 

developed in consultation with the 

enrollee and the care plan should 

address the results from HRAs. A 

provider is not required to 

independently identify a social health 

factor for it to be addressed in the care 

plan. As to the treatment of the 

information for other MA purposes, 

CMS does not currently intend to collect 

information about the responses on 

these newly required questions from 

SNPs. CMS may review HRAs and 

responses in order to determine 

compliance with the regulatory 

requirement. 

Comment: A commenter encouraged 

CMS to allow for a wider range of 

providers who can conduct the HRA 

without the oversight of physicians and 

requested that CMS to continue to allow 

non-physician clinicians to conduct the 

HRA using telehealth under the 

supervision of a physician. They asked 

CMS to provide additional resources to 

community advocates, who can 

facilitate remote provider-patient 

interactions. A commenter suggested 

that enrollees, especially those with 

nutrition-related chronic conditions, 

should receive a referral to registered 

dietician nutritionists when food 

insecurity is identified. 

Response: We thank the commenters 

and note that § 422.101(f)(1)(i) does not 

stipulate that specific plan personnel 

must conduct the HRA. CMS does not 

require physicians to oversee providers 

or other staff when conducting an HRA 

and allows SNPs flexibility to determine 

the level of clinical expertise needed to 

conduct the HRA. CMS does not 

preclude the use of telehealth to 

conduct HRAs. SNPs must conduct their 

HRA in a manner that is consistent with 

the plan’s approved MOC; approval of 

the MOC is required by § 422.101(f)(3). 

We appreciate the information on 

community resources for referrals 

provided by commenters and will 

consider providing additional education 

on resources available to fill enrollee’s 

needs as determined by the HRA and 

ways to support community-based 

organizations. 

Comment: A commenter urges CMS to 

require that these standardized 

questions be made available and 

accessible in the preferred languages of 

the enrollees. They noted that for 

individuals with limited English 

proficiency, the inability to 

communicate adequately with providers 

serves as a barrier to accessing care. 

Response: We appreciate the 

commenter’s perspective on this issue. 

In § 422.112(a)(8), we require that MA 

organizations that offer MA coordinated 

care plans ensure that services are 

provided in a culturally competent 

manner to all enrollees, including those 

with limited English proficiency or 

reading skills, and diverse ethnic and 

cultural backgrounds. The HRAs 

conducted by SNPs are key to 

developing individualized care plans for 

enrollees and such care plans are the 

foundation for furnishing, coordinating, 

and managing covered services to the 

special needs individuals who are 

enrolled in SNPs. Further, 

§ 422.2267(a)(2) requires that, for 

markets with a significant non-English 

speaking population, MA organizations 

translate required materials into any 

non-English language that is the primary 

language of at least five percent of the 

individuals in a plan benefit package 

(PBP) service area. As HRAs are 

required by § 422.101(f)(1), SNPs are 

obligated to comply with 


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§§ 422.112(a)(8) and 422.2267(a)(2) in 

performing these assessments. 

Comment: A commenter requested 

that CMS review and rewrite the 

technical specifications of the existing 

SNP care management reporting 

measure. They stated that, as currently 

written, a plan is required to conduct 

two HRAs (an initial and a 

reassessment) in the same calendar year 

for members who did not complete an 

HRA the previous year. They believe 

that the ‘‘doubling up’’ of HRAs in the 

same year can create member abrasion. 

Response: This comment is out of 

scope of this final rule; however, we 

will consider it in future reporting 

specifications. 

Comment: A few commenters stated 

that, under current statutory authority, 

SDOH cannot be used as primary 

targeting criteria for Special 

Supplemental Benefits for the 

Chronically Ill (SSBCI), just as 

secondary criteria when the three-part 

eligibility criteria have been met. The 

commenters recommend that CMS 

provide additional flexibilities to equip 

plans with the ability to address the 

social needs for which standardized 

data collection is being proposed in this 

rule. They recommend CMS consider 

allowing plans to use indicators of 

SDOH need outside of low-income 

subsidy status as primary targeting 

criteria through the Value-Based 

Insurance Design demonstration under 

Center for Medicare and Medicaid 

Innovation authority. They stated that 

this demonstration can serve as a pilot 

for potentially expanding the eligibility 

criteria for SSBCI in the future. 

Response: We appreciate the 

recommendations for using SDOH data 

for determining eligibility for SSBCI and 

will consider it in the future. With 

regard to the commenters’ 

recommendation that CMS provide 

additional flexibilities to equip plans 

with the ability to address social needs, 

we remind the commenter that, as 

discussed in more detail earlier in this 

section, SNPs must use the information 

gathered in the HRA to inform the 

development and implementation of the 

individualized care plan, and to ensure 

that the results of HRAs are addressed 

in the care plan per § 422.101(f)(1)(i) 

and (ii). We also remind the 

commenters that SNPs are not required 

to furnish housing, food, or 

transportation services. Changing the 

scope and criteria for SSBCI is outside 

the scope of this rulemaking. 

Comment: A few commenters 

requested that CMS explore the 

potential use of standardized SDOH 

data more broadly in the Medicare 

Advantage program, such as in the Star 

Ratings program and in the CMS–HCC 

(hierarchical condition category) riskadjustment model. Another commenter 

noted that the adoption and 

optimization of EHR infrastructure in 

low-resource settings is vital to 

increasing interoperability, as providers 

in underserved communities typically 

have outdated systems unable to 

integrate with other sources. A 

commenter also stated that the software 

development community is missing 

important guidance that would allow 

them to promulgate consensus-based 

standards for the exchange of SDOH 

data with providers and communitybased organizations. A commenter 

strongly supported efforts to promote 

greater flexibility and alignment of 

provider payment incentives for care 

that address social needs and outcomes 

that advance health equity, noting that 

such measures can include incentives to 

increase provider uptake of evidencebased, high-value, low-cost services 

known to improve patient health 

outcomes. 

Response: We agree that the use of 

SDOH data can provide us with a better 

understanding of enrollees. We thank 

commenters for raising these important 

issues. However, addressing SDOH and 

social risk factors in the context of 

payment policy, interoperability and 

EHR standards, and quality rating 

programs is outside the scope of this 

rulemaking. We note that CMS has 

discussed SDOH and social risk factors 

in other contexts, such as in the CY 

2023 Rate Announcement, which 

discussed comments received on MA 

risk adjustment payment policy and use 

of a health equity index in MA/Part D 

Star Ratings. We appreciate the 

commenter’s perspective on alignment 

of provider payment incentives for care 

to address social needs, but the topic is 

outside the scope of this rulemaking. 

Further, CMS is prohibited from 

requiring MA organizations to use 

particular payment arrangements with 

their contracted providers by section 

1854(a)(6)(B) of the Act, but we will take 

these comments into consideration with 

regard to the Medicare FFS program and 

Innovation Center models. 

After considering the comments we 

received and for the reasons outlined in 

the proposed rule and our responses to 

comments, we are finalizing a 

requirement at § 422.101(f)(1)(i) for 

SNPs to include one or more questions 

from a list of screening instruments 

specified by CMS in sub-regulatory 

guidance on housing stability, food 

insecurity, and access to transportation 

in their comprehensive risk assessment 

tool. However, we are not finalizing the 

proposal that SNPs use specific 

standardized questions. 

5. Refining Definitions for Fully 

Integrated and Highly Integrated D– 

SNPs (§§ 422.2 and 422.107) 

Dually eligible individuals have an 

array of choices for how to receive their 

Medicare coverage. Those choices vary 

by market, and not all dually eligible 

individuals may qualify for all options, 

but they include Original Medicare with 

a standalone prescription drug plan, 

non-D–SNP MA plans, FIDE SNPs, 

HIDE SNPs, coordination-only D–SNPs, 

and Programs of All-Inclusive Care for 

the Elderly. Those choices can be 

complex and, for some, overwhelming. 

Our own terminology is complex too. 

While we have defined terms through 

rulemaking in § 422.2, there remains 

nuance and variation that may make it 

difficult for members of the public—and 

even the professionals who support 

them—to readily understand what may 

be unique about a certain type of plan 

or what a beneficiary can expect from 

any FIDE SNP, for example. We 

proposed several changes to how we 

define FIDE SNPs and HIDE SNPs, 

citing our belief that they would 

ultimately help to differentiate various 

types of D–SNPs and clarify options for 

beneficiaries. 

Comment: Numerous commenters 

expressed support of CMS’s proposed 

changes to refine the definitions of FIDE 

SNPs and HIDE SNPs. MACPAC echoed 

this support and expressed the belief 

that CMS’s proposal furthers integration 

and clarifies the definitions of FIDE 

SNPs and HIDE SNPs. MedPAC 

supported the proposed changes to the 

FIDE SNP requirements, stating that it 

believed the changes will help ensure 

that those plans are fully integrated with 

Medicaid and make it easier for 

beneficiaries to understand how they 

differ from other, less integrated D– 

SNPs. MedPAC also supported the 

proposed changes to the HIDE SNP 

requirements as an incremental step 

towards greater integration. Others also 

believed that CMS’s proposal raises the 

standards for integration in SNP 

products. Several commenters agreed 

that the proposed refinements increase 

transparency of the options available for 

dually eligible beneficiaries. A 

commenter appreciated that CMS’s 

proposal may encourage more States 

and health plans to provide integrated 

care for dually eligible individuals. 

Another commenter expressed support 

that the proposal would allow standards 

for quality measures set to be set more 

accurately, services provided more 

effectively, and plans held more 

accountable. A commenter stated that 


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Minnesota Medicaid products 

continued to meet the proposed 

definitions. A commenter urged CMS to 

require plans to make their status as a 

FIDE SNP or HIDE SNP more 

transparent to ensure beneficiaries and 

their advocates can understand the level 

of alignment and integration they 

should expect from their current or 

potential plan. 

MACPAC cautioned that some States 

may need support to implement the new 

requirements and that there is some risk 

that the new requirements may lead to 

fewer FIDE SNP or HIDE SNPs available 

in the market. MACPAC suggested that 

CMS work closely with States and plans 

to remove barriers to offering FIDE SNPs 

and HIDE SNPs to make these integrated 

plans more available. Another 

commenter expressed a similar concern 

that States may choose to have less 

integrated systems due to limited State 

capacity and challenges with conflicting 

timelines for Medicaid requests for 

proposal and procurements and for CMS 

and D–SNP contracts. The commenter 

recommended several proposals to ease 

the burden for States, including CMS 

developing educational materials on the 

benefits of integrated care and CMS 

working with Congress to develop 

formal requirements and strategies to 

integrate care and increase State 

funding. Another commenter suggested 

that CMS encourage States to use a 

request for proposals process for FIDE 

SNPs to ensure FIDE SNPs are best 

positioned to support State and CMS 

goals for integration. 

Response: We appreciate the robust 

support for our proposed changes to the 

FIDE and HIDE SNP definitions. We 

agree with commenters that the changes 

to the definitions will ultimately help 

differentiate the types of D–SNPs, 

clarify options available to beneficiaries, 

and improve and increase integrated 

coverage options for dually eligible 

individuals. 

We appreciate the comments about 

States needing support to take actions 

that make HIDE SNP or FIDE SNP 

designation attainable for D–SNPs that 

operate in the State. CMS will continue 

to engage with States to promote 

integration, directly as well as by 

providing education to States about this 

final rule through our technical 

assistance contract with the Integrated 

Care Resource Center, which provides a 

range of written and live resources 

targeted to State Medicaid staff, such as 

sample contract language for State 

Medicaid agency contracts with D– 

SNPs, tip sheets describing exclusively 

aligned enrollment and other 

operational processes that support 

Medicare and Medicaid integration, 

educational materials and webinars 

about D–SNPs and highlighting State 

strategies for integrating Medicare and 

Medicaid, and one-on-one and small 

group technical assistance. 

We acknowledge the suggestion for us 

to work with Congress on requirements 

and strategies to integrate care and 

increase State funding. While outside 

the scope of this rulemaking, we will 

consider whether there are additional 

opportunities to address this in the 

future. A Federal requirement for States 

to use a request for proposal process is 

outside the scope of this rulemaking, 

but nothing in this rulemaking prohibits 

States from using a request for proposal 

process to select the FIDE SNPs and 

affiliated organizations with which the 

State will contract. 

Comment: A commenter 

recommended that in future rulemaking, 

CMS eliminate the distinction between 

HIDE SNPs and FIDE SNPs and that all 

D–SNPs in all States be required to meet 

a standard definition of full integration. 

The commenter also recommended 

limiting enrollment in full integration 

models, such as FIDE SNPs, to full 

benefit dual eligible individuals to 

improve integration in those models. 

Another commenter suggested that CMS 

should establish a glide path for phasing 

out HIDE SNPs to instead support FIDE 

SNPs. The commenter believes that 

lower tiers of integration are not 

sufficient to meet the needs of dually 

eligible individuals with disabilities. 

Response: We appreciate the 

perspective shared by the commenters. 

We believe the distinction between 

HIDE SNPs and FIDE SNPs is 

meaningful and accounts for variation 

in State integration strategies, and 

therefore we are retaining HIDE SNPs. 

To clarify, in proposing that all FIDE 

SNPs have exclusively aligned 

enrollment, as discussed later in this 

section at II.A.5.a., all FIDE SNPs would 

be limited to full benefit dually eligible 

individuals beginning in 2025. 

Comment: A few commenters 

expressed concern about State or 

Federal policies that may result in 

limiting the number or type of plan 

operating in a given market. A 

commenter requested that CMS 

continue to allow for HIDE SNPs and 

coordination-only D–SNPs to operate 

alongside FIDE SNPs required to have 

exclusively aligned enrollment as it 

promotes quality and value through 

competition and preserves freedom of 

choice. Another commenter 

recommended that CMS discourage any 

requirements that limit plan choice to a 

select few plans, particularly if these 

plans have limited or no experience 

servicing complex populations. 

A few commenters expressed concern 

about the number of plan choices 

currently available to dually eligible 

beneficiaries. A commenter noted the 

number of plan choices and related 

information provided to beneficiaries 

results in a coverage landscape that is 

overwhelming to dually eligible 

individuals. The commenter further 

noted that more work is needed to 

increase awareness around integrated 

options and their potential value. 

Response: We thank the commenters 

for sharing their perspectives. While our 

proposal makes changes to how we 

define FIDE SNPs and HIDE SNPs that 

we believe will ultimately help to 

differentiate various types of D–SNPs 

and clarify options for beneficiaries, we 

do not believe our proposal will directly 

limit the number or types of plans 

available for beneficiaries to choose 

from. We clarify that our proposal does 

not impact the ability for HIDE SNPs 

and coordination-only D–SNPs to 

operate alongside FIDE SNPs. 

Comment: A commenter 

recommended that CMS revise the 

requirement that the MA organization 

offering the D–SNP and the Medicaid 

MCO contract holder must be the same 

legal entity in order to qualify as a FIDE 

SNP because, based on the experience of 

the commenter, there is no difference in 

a plan’s ability to work with the State 

or integrate care for the members based 

on legal entity or parent organization 

status. 

Another commenter expressed 

concern that the current definitions of 

HIDE and FIDE SNPs restrict plans that 

are operationally fully integrated from 

obtaining a FIDE SNP designation by 

requiring a Medicaid contract within the 

same legal entity that contracts with 

CMS to operate as a MA plan, while 

Medicaid contracts for HIDE SNPs only 

be provided by the same parent 

organization as that offering the MA 

plan. The commenter recommended 

that CMS amend the definition of FIDE 

SNPs to allow for the Medicaid 

contracts to be provided by the same 

parent organization that offers the MA 

plan because, in the commenter’s view, 

this level of integration is sufficient to 

allow for full data sharing and 

coordination of benefits and is in 

keeping with the spirit of D–SNP 

regulations. 

Response: We appreciate the 

comments but, because we did not 

propose to change that aspect of the 

definitions for FIDE SNPs and HIDE 

SNPs, we believe the suggestions are out 

of the scope this rulemaking. We believe 

that providing coverage of Medicare and 

Medicaid benefits through a single legal 

entity constitutes the most extensive 


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level of integration, with the greatest 

potential for holistic and personcentered care coordination, integrated 

appeals and grievances, comprehensive 

beneficiary communication materials, 

and quality improvement. However, we 

will consider these comments in future 

rulemaking. 

Comment: A few commenters 

encouraged CMS to strengthen its 

oversight on State Medicaid rate setting 

to ensure that Medicaid rates for the 

MCO contracts held by FIDE SNPs are 

adequate and appropriately reflect the 

scope of the Medicaid services covered. 

A commenter noted that in some cases 

a capitated contract with a State 

Medicaid agency is held by a D–SNP’s 

parent company or sister company, 

while in other cases the D–SNP entity 

itself may hold the contract. The 

commenter stated that, in the latter 

situation, Medicaid rules are not clear 

about the application of the Medicaid 

actuarial soundness requirements at 42 

CFR 438.4 to the Medicaid benefits 

covered by those capitated contracts. 

Specifically, 42 CFR 438.4 applies to 

MCOs with comprehensive Medicaid 

contracts, prepaid inpatient health 

plans, and prepaid ambulatory health 

plans. The commenter noted that 

neither that rule nor the current CMS 

Medicaid Managed Care Rate 

Development Guide refer to D–SNPs or 

provide guidance on the applicability of 

Medicaid actuarial soundness standards 

to Medicaid services provided by D– 

SNPs. The commenter therefore requests 

that CMS formally clarify that capitation 

rates developed pursuant to State 

Medicaid agency contracts with D–SNPs 

are subject to the actuarial soundness 

requirements of 42 CFR 438.4. 

Response: We appreciate the 

commenter’s perspective on this issue. 

We clarify that the phrase ‘‘capitated 

contract with the State Medicaid 

agency’’ may be a Medicaid managed 

care contract for coverage of Medicaid 

benefits by a Medicaid MCO, or, for a 

HIDE SNP, a prepaid inpatient health 

plan (PIHP) or prepaid ambulatory 

health plan (PAHP), depending on the 

scope of coverage of Medicaid services. 

All MCO, PIHP, and PAHP contracts are 

subject to the actuarial soundness 

requirements of 42 CFR 438.4. When the 

same legal entity as the MA organization 

that offers the D–SNP has the contract 

for coverage on a risk basis for Medicaid 

benefits—that is, when there is a 

capitated contract between the D–SNP 

and the State Medicaid agency—that 

contract may be an MCO, PIHP, or 

PAHP contract depending on the scope 

of benefits covered; in such cases, all of 

the applicable 42 CFR part 438 

requirements for the MCO, PIHP, or 

PAHP contract, including the 

requirement for actuarially sound 

capitation rates, must be met. For 

example, Medicaid PIHPs and PAHPs 

can serve as the affiliated Medicaid 

managed care plan for delivery of 

Medicaid behavioral health or LTSS for 

HIDE SNPs. 

a. Exclusively Aligned Enrollment for 

FIDE SNPs 

Section 422.2 defines the term ‘‘fully 

integrated dual eligible special needs 

plan’’. Under the current definition, 

FIDE SNPs are plans that: (i) Provide 

dually eligible individuals access to 

Medicare and Medicaid benefits under a 

single entity that holds both an MA 

contract with CMS and a Medicaid MCO 

contract under section 1903(m) of the 

Act with a State Medicaid agency, (ii) 

under the capitated Medicaid managed 

care contract (that is, the MCO contract), 

provide coverage, subject to some 

limited flexibility for carve-outs, of 

primary care, acute care, behavioral 

health, and LTSS, and coverage of 

nursing facility services for a period of 

at least 180 days during the plan year; 

(iii) coordinate delivery of covered 

Medicare and Medicaid benefits using 

aligned care management and specialty 

care network methods for high-risk 

beneficiaries; and (iv) employ policies 

and procedures approved by CMS and 

the State to coordinate or integrate 

beneficiary communication materials, 

enrollment, communications, grievance 

and appeals, and quality improvement. 

The current definition of a FIDE SNP 

does not require that the MA contract 

limit enrollment to the individuals who 

are enrolled in the affiliated MCO. An 

MA plan designated as a FIDE SNP may 

qualify for a frailty adjustment as part of 

CMS’s risk adjustment of its MA 

capitation payments under section 

1853(a)(1) of the Act and § 422.308(c). 

Section 422.2 also defines the term 

‘‘aligned enrollment’’ as referring to 

when full-benefit dually eligible 

individuals who are enrolled in a D– 

SNP also receive coverage of Medicaid 

benefits from the D–SNP or from a 

Medicaid MCO that is: (1) The same 

organization as the MA organization 

offering the D SNP; (2) its parent 

organization; or (3) another entity that is 

owned and controlled by the D SNP’s 

parent organization. When State policy 

limits a D–SNP’s membership to 

individuals with aligned enrollment, 

§ 422.2 refers to that condition as 

exclusively aligned enrollment. 

Exclusively aligned enrollment is an 

important design feature for maximizing 

integration of care for all the D–SNP’s 

enrollees. As discussed on 87 FR 1861, 

it facilitates the use of integrated 

beneficiary communication materials 

and clarifies overall accountability for 

outcomes and coordination of care. 

FIDE SNPs and HIDE SNPs with 

exclusively aligned enrollment are 

applicable integrated plans subject to 

the requirement to use (beginning 

January 1, 2021) unified grievance and 

appeals procedures for both Medicare 

and Medicaid benefits. 

As explained at 87 FR 1861, the 

current regulatory definition of FIDE 

SNP permits certain forms of unaligned 

enrollment between Medicare and 

Medicaid coverage. That is, a 

beneficiary may be in one parent 

organization’s FIDE SNP for coverage of 

Medicare services but a separate 

company’s Medicaid managed care plan 

(or in a Medicaid FFS program) for 

coverage of Medicaid services. 

We proposed to amend the definition 

of ‘‘fully integrated dual eligible special 

needs plan’’ at § 422.2 with a new 

paragraph (5) to require, for 2025 and 

subsequent years, that all FIDE SNPs 

have exclusively aligned enrollment. 

Requiring all FIDE SNPs to have 

exclusively aligned enrollment would 

allow all enrollees to have their 

Medicare and Medicaid benefits under 

the FIDE SNP and affiliated Medicaid 

MCO explained clearly, which is made 

more difficult when some enrollees are, 

but others are not, also enrolled in the 

affiliated Medicaid MCO. Our proposed 

change would promote higher levels of 

Medicare-Medicaid integration by 

ensuring that that all FIDE SNPs can 

deploy integrated beneficiary 

communication materials and unify 

appeals and grievance procedures for all 

the Medicare and Medicaid benefits 

covered through the FIDE SNP and 

affiliated Medicaid MCO; such unified 

procedures are not feasible when some 

FIDE SNP enrollees do not receive their 

Medicaid benefits from the same 

organization. 

Under our proposed definition, all 

FIDE SNPs would, by virtue of the same 

legal entity holding the MA and the 

Medicaid MCO contracts, (1) be 

capitated for Medicaid services, with 

some permissible exceptions proposed 

at §§ 422.107(g) and (h) and discussed 

later in this section, for all of their 

enrollees, and (2) based on meeting the 

definition of applicable integrated plans 

in § 422.561, operate unified appeals 

and grievance processes and continue 

delivery of benefits during an appeal. 

As discussed in the proposed rule, 

absent a State Medicaid policy change 

in select States, our proposal would 

result in 12 current D–SNPs losing FIDE 

SNP status. However, our proposal 

would not prohibit those States and 

plans from operating as they currently 


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do but would simply mean that the 

affected plans would be HIDE SNPs 

rather than FIDE SNPs beginning 

January 1, 2025, and a consequence of 

this would be that the MA plans would 

not qualify for the frailty adjustment, as 

described in § 422.308(c)(4). States may 

also choose to require, through their 

State Medicaid agency contracts under 

§ 422.107, that MA organizations create 

separate MA plan benefit packages (that 

is, separate D–SNPs), with one for 

exclusively aligned enrollment and the 

other for unaligned enrollment, the 

former of which would meet our 

proposed criteria and allow the 

organization to maintain FIDE SNP 

status for a share of its current FIDE 

SNP enrollment while using one or 

more new, separate D–SNPs for the 

unaligned enrollment. MA organizations 

would need to submit a request to CMS 

for a crosswalk exception under 

§ 422.530(c)(4)(i), which we proposed in 

section II.A.6.a. of the proposed rule to 

redesignate from § 422.530(c)(4) without 

substantive change, for such enrollment 

transitions. 

Finally, because the definition of 

aligned enrollment is specific to fullbenefit dually eligible individuals, our 

proposal would also mean that D–SNPs 

enrolling new or continuing the 

enrollment of partial-benefit dually 

eligible individuals could not achieve 

FIDE SNP designation beginning in 

2025. As discussed at 87 FR 1861 

through 1862, we do not believe this 

would have any meaningful impact for 

plans currently operating as FIDE SNPs. 

Further we believe that the benefits to 

be achieved with FIDE SNPs having 

exclusively aligned enrollment for 

Medicare beneficiaries eligible for full 

Medicaid benefits, and the associated 

greater levels of integration in the 

provision and coverage of benefits and 

plan administration outweigh the 

potential negative effects of excluding 

partial-benefit dually eligible 

individuals. Partial-benefit dually 

eligible individuals would be limited to 

enrollment in HIDE SNPs, coordinationonly D–SNPs, other MA plans, or the 

original Medicare FFS program. 

Comment: Many commenters 

supported the proposal and noted that 

exclusively aligned enrollment 

advances full integration, strengthens 

care coordination between Medicare 

and Medicaid, improves enrollee 

communications, and better allows the 

FIDE SNP to unify processes that 

improve the beneficiary experience, 

such as through a single set of member 

materials and a unified appeals and 

grievances process. MACPAC 

commented that the proposal is 

consistent with its desire to move more 

States toward exclusively aligned 

enrollment. A few commenters 

expressed that FIDE SNPs should 

represent the highest level of integration 

and that this change would help clarify 

the currently confusing levels of 

integration among D–SNP categories. 

In supporting the requirement for 

FIDE SNPs to have exclusively aligned 

enrollment, other commenters 

expressed that the current FIDE SNP 

structure is not designed to address the 

needs of enrollees who receive 

Medicaid services through fee-forservice or a misaligned Medicaid MCO. 

In these cases, commenters noted that a 

current FIDE SNP might be required to 

coordinate with different Medicaid 

MCOs or Medicaid fee-for-service and 

that lack of exclusively aligned 

enrollment is inconsistent with the 

otherwise-integrated FIDE SNP model. 

A commenter indicated including 

beneficiaries in FIDE SNPs who receive 

their Medicaid services elsewhere 

diverts plan resources, and another 

commenter indicated it does not afford 

a meaningfully integrated experience for 

enrollees, providers, or payers. 

A few commenters indicated that 

exclusively aligned enrollment enabled 

plans and providers to develop and 

implement care models that are payeragnostic, and a commenter indicated a 

FIDE SNP may enable a provider to 

submit a single claim for all services 

and cost-sharing. 

Some commenters expressed 

appreciation for CMS’s proposal to 

provide a crosswalk exception that 

would allow current FIDE SNPs that 

operate in States that do not require 

exclusively aligned enrollment to create 

separate PBPs for aligned and unaligned 

enrollees to maintain access to the 

frailty adjustment for aligned enrollees. 

Several commenters asked CMS to 

provide more detail on how this 

crosswalk would be initiated and 

approved. 

A commenter agreed with CMS’s 

analysis that making exclusively aligned 

enrollment a criterion for FIDE SNP 

status would cause minimal disruption 

to existing arrangements and leave 

ample fallback options for HIDE SNP 

status for the small number of plans that 

would be impacted by this change. 

Response: We appreciate the 

widespread support for requiring 

exclusively aligned enrollment for FIDE 

SNPs. We agree that this proposed 

requirement would encourage a deeper 

level of integration of Medicare and 

Medicaid, improve beneficiary 

communications about covered 

Medicare and Medicaid benefits and 

services, and promote unified appeals 

and grievances. As we noted in the 

proposed rule at 87 FR 1861, we believe 

our proposal would clarify overall 

accountability for outcomes and 

coordination of care. We appreciate that 

it could also reduce provider 

administrative burden for contracting 

with FIDE SNPs. We agree that 

transitioning to HIDE SNP status is an 

option for existing FIDE SNPs in States 

where exclusively aligned enrollment is 

not in place by 2025 and that a small 

number of existing plans would be 

impacted by this change. 

We clarify that the crosswalk 

exception being redesignated in this 

final rule to § 422.530(c)(4)(i) is 

available under current law. This 

crosswalk exception is available when a 

renewing D–SNP has another new or 

renewing D–SNP and the two D–SNPs 

are offered to different populations; the 

crosswalk exception permits withincontract movement of the enrollees who 

are no longer eligible for their current 

D–SNP into the other new or renewing 

D–SNP offered by the same MA 

organization if the enrollees meet the 

eligibility criteria for the new or 

renewing D–SNP and CMS determines 

the movement is in the best interest of 

the enrollees in order to promote access 

to and continuity of care for enrollees 

relative to the absence of a crosswalk 

exception. This existing crosswalk 

exception may be available to 

implement a State’s requirement to 

separate exclusively aligned enrollment 

from unaligned enrollment in separate 

PBPs. Our proposal was only to 

redesignate the regulatory provision to a 

different paragraph. When we issue the 

additional information on timelines and 

procedures for requesting crosswalks 

and crosswalk exceptions in subregulatory guidance, we intend to 

consider current timeframes and 

procedures for submission of 

applications, bids, and other required 

material to CMS, in addition to the need 

for MA organizations to make business 

decisions in a timely manner. 

Comment: Several commenters 

opposed our proposal. A few 

commenters indicated that finalizing the 

proposal would limit the ability of 

States that exclude coverage of certain 

Medicaid benefits from their Medicaid 

MCO contracts (that is, States with 

Medicaid carve-outs) from pursuing 

more integrated models, may require 

modification of State-specific Medicaid 

processes for managed care enrollment, 

and could restrict enrollee choice in 

coverage. Another commenter 

discouraged any requirements that limit 

FIDE SNP offerings to Medicaid 

managed care organizations with 

contracts under section 1903(m) of the 

Act. Another commenter noted that a 


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State Medicaid agency decision not to 

facilitate exclusively aligned enrollment 

could lead to loss of FIDE designation 

and impact the frailty adjustment for an 

MA organization. 

Another commenter expressed 

concern that the proposal limits plan 

choice where a beneficiary wanted to 

maintain access to a trusted provider or 

case manager in one Medicaid plan, 

while selecting an alternative Medicare 

plan based on supplemental benefits. 

MACPAC recognized potential burden 

on States with FIDE SNPs that do not 

have exclusively aligned enrollment 

(Arizona, Pennsylvania, and Virginia) to 

make this adjustment and suggested 

CMS work with States to ensure there is 

a glidepath for these States. A 

commenter encouraged CMS to ensure 

that unaligned individuals and 

impacted providers in FIDE SNPs 

receive notices and counseling about the 

change and have access to continuity of 

care protections in Medicaid. 

Response: We thank the commenters. 

We agree that requiring FIDE SNPs to 

have exclusively aligned enrollment 

would, in the absence of State policy 

changes, impact 12 existing FIDE SNPs 

in a few States (we identified Arizona, 

Pennsylvania, and Virginia in the 

proposed rule). States may also choose 

to require—through their State Medicaid 

agency contracts under § 422.107—that 

MA organizations create separate plan 

benefit packages, with one for 

exclusively aligned enrollment and the 

other for unaligned enrollment, which 

would allow the organization to 

maintain FIDE SNP status for a share of 

the existing FIDE SNP enrollment, as 

discussed at 87 FR 1861. As discussed 

in the proposed rule, these affected 

plans would be designated as HIDE 

SNP, rather than FIDE SNPs, beginning 

January 1, 2025, if the plans were 

unable to meet the new FIDE SNP 

requirements, and as such, we disagree 

that the proposal would limit States 

pursuing integrated care options, restrict 

member choice, or restrict the ability of 

States to facilitate access to D–SNPs. 

States and MA organizations may 

continue to use other structures for D– 

SNPs where enrollment is not 

exclusively aligned; those other plans, 

however, would not be FIDE SNPs. 

Unaligned beneficiaries transitioned 

to a separate PBP would receive that 

information in the Annual Notice of 

Changes. We do not anticipate all 

beneficiaries will be disenrolled from 

existing FIDE SNPs that do not have 

exclusively aligned enrollment since an 

existing FIDE SNP could become a HIDE 

SNP or create separate PBPs, with one 

for exclusively aligned enrollment and 

the other for unaligned enrollment. In 

cases where an MA organization does 

transition unaligned beneficiaries to a 

separate PBP, we do not expect 

transitioning beneficiaries to encounter 

issues accessing providers since, in our 

experience, MA organizations tend to 

have the same provider networks across 

PBPs with overlapping service areas 

under the same contract. For these 

reasons, we disagree that we should 

require additional notification to 

enrollees in the affected plans. 

The proposed rule did not ease the 

requirement in § 422.2 that FIDE SNPs 

provide coverage of comprehensive 

Medicaid benefits under a capitated 

contract between a Medicaid MCO and 

the State Medicaid agency under section 

1903(m) of the Act. States may contract 

with HIDE SNPs and coordination-only 

D–SNPs if their Medicaid contracting 

strategies are not consistent with the 

new FIDE SNP requirements. We seek to 

move FIDE SNPs toward greater 

integration in the provision of Medicare 

and Medicaid benefits but this final rule 

does not eliminate less integrated 

approaches for other types of D–SNPs. 

We believe the benefits of exclusively 

aligned enrollment, including 

simplifying enrollee communication, 

allowing Medicare and Medicaid 

benefits to be explained more clearly, 

and unified appeal and grievance 

processes will differentiate FIDE SNPs 

from other plans. It will simplify the 

ways we, States, and benefit counselors 

communicate about FIDE SNPs by 

eliminating some of the confusing 

scenarios related to unaligned 

enrollment, as described in 87 FR 1861 

of the proposed rule, and will allow 

FIDE SNPs to consistently and more 

clearly be the most integrated D–SNP 

option in the market. Exclusively 

aligned enrollment lays the groundwork 

for further integration of Medicare and 

Medicaid, giving States and plans the 

ability to improve the beneficiary 

experience such as through access to 

integrated beneficiary communication 

materials that describe available 

benefits, improve the enrollee 

experience, and decrease confusion by 

providing a simplified set of beneficiary 

materials. 

Comment: A commenter 

recommended enrollee communications 

clearly articulate the features of 

integration and be communicated by a 

neutral party to support enrollee choice 

among coverage options. Another 

commenter asked CMS to assist States 

in understanding marketing materials. 

Response: We appreciate the 

comments and we noted in the 

proposed rule that we believe the 

proposed changes to how we define 

FIDE SNP and HIDE SNP will help 

differentiate the types of D–SNPs and 

clarify options for beneficiaries. We will 

continue to work with States, plans, 

advocates, beneficiaries, and providers 

to improve model MA plan materials 

that describe D–SNPs and ensure that 

the features enabled by exclusively 

aligned enrollment are clearly 

communicated to beneficiaries. We will 

also continue to work with States to 

help them develop State materials and 

educate State Health Insurance 

Assistance Program (SHIP) counselors 

and Medicaid choice counselors to 

assist beneficiaries in understanding 

their coverage options. States may also 

want to leverage their beneficiary 

support systems as described in 

§ 438.71. 

Comment: A commenter noted the 

Massachusetts Senior Care Options D– 

SNPs and MMPs also limit enrollment 

in the Medicaid managed care plan to 

those members enrolled for Medicare, 

explaining that it substantially improves 

integration for all enrollees. 

Response: We appreciate the 

commenter’s perspective on this issue 

and we agree with the commenter that 

Massachusetts has achieved a high level 

of integration through Senior Care 

Options and One Care. We did not 

propose regulations limiting enrollment 

in the Medicaid managed care plan. As 

proposed and finalized, the 

amendments to the definition of FIDE 

SNP do not require that the State limit 

enrollment in the capitated Medicaid 

MCO to only those enrollees in the FIDE 

SNP for Medicare. Rather, this 

amendment limits the FIDE SNP 

designation to D–SNPs with State 

contracts requiring exclusively aligned 

enrollment. However, our proposal to 

require all FIDE SNPs to have 

exclusively aligned enrollment would 

not preclude a State from choosing to 

replicate Massachusetts’ approach. 

Comment: Another commenter 

encouraged CMS to continue to allow 

HIDE SNPs and coordination-only D– 

SNPs to operate alongside FIDE SNPs. 

Response: We thank the commenter 

and clarify that the proposal would not 

restrict a State from allowing HIDE 

SNPs and coordination-only D–SNPs to 

operate in the same market as FIDE 

SNPs. 

Comment: Several commenters 

supported the January 1, 2025, proposed 

effective date of this provision, while 

several other commenters suggested a 

delay to 2025 was not required, 

particularly for newly qualifying FIDE 

SNPs. Another commenter 

acknowledged the benefits of full 

alignment but noted implementation 

would require plan operational, policy, 

and system changes that would be 


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burdensome to implement by contract 

year 2025. 

Response: We thank the commenters 

for their perspectives on the January 1, 

2025 effective date. We believe there is 

sufficient time for FIDE SNPs to 

implement exclusively aligned 

enrollment for January 1, 2025. Through 

the Integrated Care Resource Center and 

CMS Medicare-Medicaid Coordination 

Office, we will provide technical 

assistance to States and plans interested 

in facilitating exclusively aligned 

enrollment and we are actively planning 

for upcoming technical assistance 

opportunities. We reiterate that MA 

organizations that are not interested in 

offering FIDE SNPs that meet the new 

requirements applicable beginning 

January 1, 2025 are not required by the 

changes finalized in this rule to do so 

because such MA organizations may 

offer coordination-only D–SNPs or HIDE 

SNPs that are subject to lower 

integration standards. The new 

requirement for exclusively aligned 

enrollment applies only to FIDE SNPs. 

Comment: A commenter requested 

that the crosswalk option not be limited 

to States requiring or requesting 

exclusively aligned enrollment, but that 

the crosswalk option also include MA 

plan-initiated implementation of 

exclusively aligned FIDE SNPs and the 

creation of separate MA contracts. 

Response: While we appreciate the 

request for MA organizations to initiate 

separate contracts in order to facilitate 

exclusively aligned enrollment, we 

clarify that under § 422.107(e) the 

separate contract would only be 

provided after CMS receives a request 

from a State. Section II.A.6.a. of this 

final rule discusses the proposal 

regarding § 422.107(e) and the 

corresponding crosswalk exception in 

more detail. The existing crosswalk 

exception at § 422.530(c)(4)(i) 

(redesignated in this final rule) is not 

limited to situations where a State has 

required or requested exclusively 

aligned enrollment but is limited to 

specific situations described in the 

regulation text where a renewing D–SNP 

has another new or renewing D–SNP 

under the same overall contract and the 

two D–SNPs are offered to different 

populations. In such instances, 

enrollees who are no longer eligible for 

their current D–SNP may be 

crosswalked into the other D–SNP. 

Comment: A few commenters 

expressed support for the proposal to 

limit FIDE SNP enrollment to fullbenefit dually eligible individuals and 

allow separate D–SNP PBPs for partialbenefit dual eligible individuals. A few 

commenters indicated that partialbenefit dually eligible individuals’ 

characteristics are similar to full-benefit 

dually eligible individuals and that 

partial-benefit enrollees can benefit 

from access to stronger care 

coordination models not generally 

available in non-SNP MA organizations. 

The commenter believed this provision 

would allow the necessary distinctions 

in communications and enrollee 

materials describing access to Medicaid 

benefits for partial-benefit dually 

eligible enrollees compared to fullbenefit dually eligible enrollees. A few 

commenters noted that separate PBPs 

based on whether enrollees are eligible 

for partial Medicaid benefits or full 

Medicaid benefits allows for targeting 

supplemental benefits to partial-benefit 

dually eligible individuals, and a 

commenter indicated it could 

potentially lead to some financial 

incentives for States to support D–SNP 

enrollment and possible shared savings 

opportunities. 

Another commenter indicated any 

additional burden these changes may 

place on FIDE SNPs is preferable to 

disallowing enrollment of partial-benefit 

dually eligible individuals in D–SNPs as 

some policy makers have advocated and 

are far less restrictive than some other 

integration legislative proposals that 

have been promoted. 

A few commenters expressed the 

proposal may create additional 

administrative burden for States, plans, 

and CMS for oversight and another 

commenter indicated that States may 

not have experience or processes to 

track PBPs, particularly when States 

may have a single MLTSS contract with 

a comprehensive benefit package with 

all enrollees included. The commenter 

indicated that having separate MA PBPs 

could create the need for additional 

Medicaid MCO contracts and additional 

rate-setting and contract review burdens 

both internally and with CMS. Another 

commenter asked CMS to provide 

technical assistance to States on 

procurement timing, contract support, 

full- and partial-benefit dually eligible 

individuals and applicability of unified 

appeals and grievances, and to 

encourage the use of crosswalks into 

PBPs for partial-benefit dually eligible 

individuals. 

Response: We thank the commenters 

for the feedback. We noted at 87 FR 

1861 through 1862 of the proposed rule 

that for contract year 2021, no FIDE 

SNPs enrolled partial-benefit dually 

eligible individuals. As such, we do not 

believe the preclusion of enrollment 

into FIDE SNPs by partial-benefit dually 

eligible individuals places additional 

burden on States, MA plans, or CMS for 

oversight or necessitates any new 

notifications to beneficiaries. We intend 

to provide education and outreach to 

States about changes codified in this 

final rule. To the extent that this new 

requirement for exclusively aligned 

enrollment for FIDE SNPs causes 

concerns for MA organizations or States 

that wish to have a single PBP for all 

dually eligible individuals, HIDE SNPs 

and coordination-only D–SNPs remain 

an option. 

Comment: Several commenters 

recommended CMS provide training 

and technical assistance around 

exclusively aligned enrollment and its 

processes to States, plans, benefits 

counselors, and community partners. A 

few commenters asked CMS to provide 

more information and education to 

States and plans about operationalizing 

crosswalks to separate FIDE SNP PBPs 

with aligned enrollment with a 

companion Medicaid managed care plan 

from unaligned enrollment, as well as to 

separate PBPs for partial-benefit dually 

eligible individuals. A commenter 

recommended an intentional effort to 

ensure that dually eligible individuals, 

including those with limited English 

proficiency, understand how their 

enrollment works. The commenter 

recommended Community Catalyst’s 

publication, ‘‘Person-Centered 

Enrollment Strategies for Integrated Care 

Toolkit,’’ for additional details on 

creating person-centered enrollment 

practices. 

Response: We thank the commenters 

and agree that it is important for CMS 

to provide education and technical 

assistance to MA organizations in 

operationalizing provisions codified in 

this rule. In particular, we are working 

closely with California Department of 

Health Care Services to develop their 

exclusively aligned enrollment policies 

and procedures for 2023 and we will 

offer similar support to other interested 

States, regardless whether the use of 

exclusively aligned enrollment or FIDE 

SNPs is tied to transition out of a FAI 

demonstration or part of efforts to 

increase integration for dually eligible 

individuals. 

Comment: Some commenters 

encouraged CMS to consider extending 

the requirement for exclusively aligned 

enrollment to HIDE SNPs, expressing 

that the rationale for exclusively aligned 

enrollment for FIDE SNPs is applicable 

to HIDE SNPs. MedPAC recommended 

requiring that HIDE SNPs have 

exclusively aligned enrollment, noting 

integration would depend on States and 

plan sponsors, who could either adopt 

exclusively aligned enrollment so the 

existing HIDE SNPs could continue to 

keep that designation or instead let 

those plans meet the lower 

coordination-only D–SNP standard for 


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integration. Further, MedPAC noted the 

use of exclusively aligned enrollment 

would also entail some disruption for 

full-benefit dually eligible beneficiaries 

who are enrolled in HIDE SNPs but have 

misaligned enrollment, as well as for 

any partial-benefit dually eligible 

individuals who are now enrolled in a 

HIDE SNP. MedPAC went on to state 

that requiring HIDE SNPs to use 

exclusively aligned enrollment could 

enable CMS to implement a range of 

policies that promote integration (such 

as requiring more D–SNPs to have 

Medicaid contracts to cover Medicare 

cost-sharing, integrated member 

materials, and a unified process for 

handling appeals and grievances) on a 

wider scale. 

Also, a commenter stated opposition 

to extending exclusively aligned 

enrollment to HIDE SNPs. 

Response: We appreciate the support 

for requiring exclusively aligned 

enrollment for both FIDE SNP and HIDE 

SNP. However, applying this 

requirement to HIDE SNPs is outside of 

the scope of this rulemaking. Further, 

additional factors, such as the potential 

burden and our goal of adopting 

requirements to more readily 

distinguish FIDE SNPs and HIDE SNPs, 

warrant continued consideration of this 

policy. We will consider these 

comments for future rulemaking. 

Comment: A commenter requested 

CMS require matching Medicare and 

Medicaid effective dates for enrollment 

and disenrollment into FIDE and HIDE 

SNPs, leverage CMS mechanisms that 

can promote alignment, and provide 

technical assistance and encouragement 

to States to adjust their processes to 

ensure matching effective dates. 

Response: We appreciate the 

commenter’s perspective and agree that 

an important component of exclusively 

aligned enrollment is aligning the 

Medicare and Medicaid effective dates. 

There are operational challenges for 

aligning the timing of Medicaid and 

Medicare enrollment and disenrollment 

processes. States may have annual 

enrollment periods or continuous 

enrollment and many establish a mid-tolate month cutoff date for processing 

enrollments into Medicaid managed 

care plans. Medicare Advantage plans 

are required to utilize various election 

periods described at 42 CFR 422.62 and 

often must accept enrollments through 

the end of the month. We will work 

with States to support operationalizing 

exclusively aligned enrollment to 

maximize the ability to align enrollment 

and disenrollment dates. We plan to 

make available both written resources 

and technical assistance events 

promoting best practices that highlight 

States that successfully facilitate 

exclusively aligned enrollment, as well 

as offer direct State-specific technical 

assistance through the Integrated Care 

Resource Center. To maximize 

flexibility for States that newly 

implement exclusively aligned 

enrollment, we decline to codify in 

regulation the requirement that the 

effective dates are matching. However, 

we will monitor where there are 

misaligned effective dates upon 

implementation of this rule, and we will 

strive to provide technical assistance 

and share promising practices. 

Comment: A commenter 

recommended that CMS, instead of 

finalizing the proposal, provide 

guidance and incentives to States to 

transition to exclusively aligned 

enrollment, such as adopting a shared 

savings component for FIDE SNPs, 

noting shared savings was used as an 

incentive to encourage States to 

participate in FAI. The commenter 

further recommended CMS consider a 

request for information to identify 

potential options and guardrails to 

address benefits, access, and quality. 

Response: We appreciate the 

comment. CMS will continue to provide 

guidance and support to States that 

transition to exclusively aligned 

enrollment for FIDE SNPs, leveraging 

promising practices from States that 

already implement it, such as Idaho, 

Massachusetts, Minnesota, New Jersey, 

and New York. We decline to accept the 

commenter’s recommendation to collect 

information in lieu of finalizing our 

proposal to amend the requirements for 

FIDE SNPs but instead will finalize as 

proposed. We intend to concurrently 

continue to collect promising practices 

and feedback and share it with States 

and plans. Finally, we note that 

payment requirements for MA plans are 

set by section 1853 of the Act so we 

have limited ability outside of the 

context of a demonstration or test of a 

payment model under section 1115A of 

the Act to change payment parameters 

in the MA program. 

After considering the comments we 

received and for the reasons outlined in 

the proposed rule and our responses to 

comments, we are finalizing without 

modification our proposed amendment 

to the definition of FIDE SNP at § 422.2 

with a new paragraph (5) to require 

FIDE SNPs, beginning January 1, 2025, 

to have exclusively aligned enrollment. 

b. Capitation for Medicare Cost-Sharing 

for FIDE SNPs and Solicitation of 

Comments for Applying to Other D– 

SNPs 

We proposed to specify in § 422.2 that 

FIDE SNPs are required to cover 

Medicare cost-sharing as defined in 

section 1905(p)(3)(B), (C), and (D) of the 

Act, without regard to how section 

1905(n) limits that definition to 

qualified Medicare beneficiaries 

(QMBs), as part of the FIDE SNP’s 

coverage of primary and acute care; this 

means that the proposed amendment 

would require FIDE SNPs to cover 

Medicare cost-sharing for both QMB and 

non-QMB full-benefit dually eligible 

FIDE SNP enrollees. This proposal 

would cover Medicare cost-sharing in 

the form of coinsurance, copayments, or 

deductibles for Medicare Part A and 

Part B benefits covered by the FIDE 

SNP. Under this proposal, a FIDE SNP 

would cover Medicare payment for 

primary care and acute care covered by 

Medicare and the Medicaid payment for 

any Medicare cost-sharing in such cases. 

We proposed this change only for 

FIDE SNPs because FIDE SNPs are the 

only type of D–SNP that must have 

capitated Medicaid contracts for 

coverage of Medicaid acute and primary 

care benefits and are better equipped, 

compared to other D–SNPs, to make 

improvements for coordination of 

benefits and adjudication of claims. 

This is especially true when capitation 

for Medicare cost-sharing is combined 

with a requirement for exclusively 

aligned enrollment (as discussed in 

section II.A.5.a. of this final rule to 

amend the FIDE SNP definition at 

§ 422.2). Under our proposal, a provider 

serving a dually eligible individual 

enrolled in a FIDE SNP with exclusively 

aligned enrollment would submit a 

single claim to the FIDE SNP for both 

Medicare and Medicaid coverage of the 

service; the FIDE SNP would adjudicate 

the claim for a covered service for any 

applicable Medicare payment, Medicaid 

payment, and Medicaid payment of 

Medicare cost-sharing. As reflected in 

paragraph (1) of the definition of FIDE 

SNPs at § 422.2, the MA organization 

offering a FIDE SNP is also a Medicaid 

MCO with a contract under section 

1903(m) of the Act, which must be a 

Medicaid managed care comprehensive 

risk contract as defined in § 438.2. In 

order to satisfy the new requirement, we 

proposed for FIDE SNPs, the Medicaid 

MCO contract will include capitated 

coverage of the Medicare cost-sharing 

for Medicare Part A and Part B benefits. 

(Like all MA plans, the FIDE SNP will 

cover Medicare Part A and Part B 

benefits, subject to limited exclusions 

for hospice, certain new benefits, and 

costs of acquisition of kidneys for 

transplant.) We expect the single legal 

entity to process and pay claims to the 

extent there is coverage under its MA 

contract and its Medicaid managed care 


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contract without the need for additional 

claims filing by providers. In this way, 

the additions we proposed to the 

definition of FIDE SNPs at § 422.2 

would ensure that all FIDE SNPs 

include elements—capitation for 

Medicare cost-sharing and exclusively 

aligned enrollment—that result in 

improved beneficiary and provider 

experiences. 

As discussed in the proposed rule (87 

FR 1863), this policy does not include 

Medicare Parts A and B premiums in 

the requirement for FIDE SNPs to cover 

Medicare cost-sharing. The State 

Medicaid agency would continue to pay 

the Medicare Parts A and B premiums 

on behalf of dually eligible beneficiaries 

in accordance with §§ 406.26 and 

406.32(g) and part 407, subpart C, of the 

chapter. 

We received the following comments 

on this proposal and respond to them 

below: 

Comment: All commenters supported 

the requirement of FIDE SNPs to cover 

Medicare cost-sharing for both QMB and 

non-QMB full-benefit dually eligible 

FIDE SNP enrollees as part of the FIDE 

SNP’s coverage of Medicaid-covered 

primary and acute care services. 

Response: We thank commenters for 

their support for our proposal. 

Comment: A commenter supported 

the proposal but requested that CMS 

delay the applicability date of this 

provision to allow adequate time to 

implement in Tennessee where the 

capitated contracts do not currently 

include Medicare cost-sharing. 

Response: In the proposed rule (87 FR 

1863), we stated our belief that all FIDE 

SNPs already receive Medicaid 

capitation for Medicare cost-sharing 

consistent with our proposal. Therefore, 

we assumed no impact on current FIDE 

SNPs and did not believe there was any 

reason to delay the implementation of 

this new requirement. However, 

comments and our subsequent analysis 

illustrate that, in contrast to our 

assertion in the proposed rule, FIDE 

SNPs in one State (Tennessee) do not 

currently cover Medicare cost-sharing. 

As a result, we anticipate that there will 

be a need for the State and those FIDE 

SNPs to implement changes to come 

into compliance with this new 

requirement. Therefore, we are 

finalizing a change to make this 

provision applicable beginning in 2025. 

Comment: A commenter encouraged 

CMS to ensure that capitation rates 

adequately and appropriately reflect the 

scope of services covered. 

Response: We appreciate the 

opportunity to clarify that the 

requirements that apply to Medicaid 

capitation rates, including actuarial 

soundness requirements at 42 CFR 

438.4, are applicable to Medicaid 

capitation rates developed for the 

affiliated Medicaid MCO for a FIDE 

SNP. As reflected in paragraph (1) of the 

definition of FIDE SNPs at § 422.2, the 

MA organization offering a FIDE SNP is 

also a Medicaid MCO with a contract 

under section 1903(m) of the Act, which 

must be a Medicaid managed care 

comprehensive risk contract as defined 

in § 438.2. As required by section 

1903(m)(2)(A) of the Act and § 438.4, 

capitation rates for MCO contracts must 

be actuarially sound, meaning that the 

rates are projected to provide for all 

reasonable, appropriate, and attainable 

costs for the enrolled population that 

are required under the terms of the 

contract. CMS reviews such rates under 

Medicaid managed care regulations in 

42 CFR part 438. We anticipate that 

capitated coverage of the Medicare costsharing for Medicare Part A and Part B 

benefits that will be required for FIDE 

SNPs will be included in the MCO 

contract that the single legal entity 

offering both the FIDE SNP and the 

MCO must have with the State. As such, 

the requirement for actuarially sound 

capitation rates will apply. 

Comment: The commenter requested 

clarification whether this proposal is 

limited to covering Medicare costsharing for ‘‘primary care and acute 

care’’ and excluded providers and 

suppliers of other services (for example, 

pharmacists providing Part B drugs, 

DME suppliers, etc.) and, if the 

exclusion is intentional, why other 

providers and suppliers should be 

excluded. 

Response: Thank you for the 

opportunity to clarify our proposal. The 

reference in paragraph (2)(i) of the FIDE 

SNP definition encompasses Medicare 

cost-sharing for all Medicare Part A and 

B services, including Part B drugs and 

DME to the extent the Medicaid 

program covers Medicare cost-sharing 

for full-benefit dually eligible 

individuals. We clarify here that in 

using the definition in section 

1905(p)(3)(B) of the Act without regard 

to the limitation of that definition to 

QMB dually eligible beneficiaries, we 

are not requiring that a State expand the 

categories of full-benefit dually eligible 

beneficiaries for whom the State covers 

all Medicare cost-sharing in order to 

contract with a FIDE SNP. 

Comment: A commenter asked if the 

Medicare cost-sharing for non-QMB 

dually eligible beneficiaries would be 

the financial obligation of the FIDE SNP 

and not included in the calculation of 

the State’s capitated Medicare costsharing payment. 

Response: Under this proposal, the 

FIDE SNP would cover Medicare costsharing, which includes coinsurance, 

copayments, or deductibles for 

Medicare Part A and Part B benefits 

covered by the FIDE SNP, for all 

enrollees of the FIDE SNP beginning 

January 1, 2025. As detailed in section 

B.5.a of this rule, FIDE SNPs must have 

exclusively aligned enrollment 

beginning January 1, 2025, FIDE SNPs 

will only enroll full-benefit dually 

eligible individuals, which can include 

non-QMB full-benefit dually eligible 

beneficiaries, and cover Medicare costsharing for these enrollees beginning 

January 1, 2025. 

For full-benefit QMB dually eligible 

individuals (that is, QMB+ 

beneficiaries), ‘‘Medicare cost-sharing’’ 

includes costs incurred with respect to 

dually eligible individuals in the QMB 

program ‘‘without regard to whether the 

costs incurred were for items and 

services for which medical assistance 

[Medicaid] is otherwise available under 

the plan’’ as described in section 

1905(p)(3) of the Act. Therefore, under 

the new requirement we are finalizing 

here, the FIDE SNP capitated contract 

with the State must include State 

payment of Medicare cost-sharing for 

full-benefit QMB dually eligible 

beneficiaries. States may elect to extend 

coverage of Medicare cost-sharing, 

including coinsurance, for Medicare 

beneficiaries eligible for full Medicaid 

benefits who are not QMBs, (such as 

SLMB+ beneficiaries), as specified in 

the Medicaid State plan. For non-QMB 

full-benefit dually eligible beneficiaries, 

the FIDE SNP capitated contract with 

the State must include State payment of 

all Medicare cost-sharing when the State 

has elected to extend such coverage for 

these individuals. Absent such an 

election, the FIDE SNP’s affiliated 

Medicaid MCO capitated contract must 

cover Medicare cost-sharing for these 

non-QMB full benefit dually eligible 

individuals only for services covered 

under the State plan. In this last 

circumstance, the State might adjust the 

capitation rate paid under the Medicaid 

MCO contract to reflect coverage of 

Medicare cost-sharing for non-QMB fullbenefit dually eligible individuals only 

for those services, such as inpatient 

hospitalization, that are also covered 

under the Medicaid State plan. In our 

experience, however, States do not 

adjust the capitation rate for Medicare 

cost-sharing for a FIDE SNP’s fullbenefit dually eligible enrollees to 

account for those few Medicare-covered 

services not covered under the Medicaid 

State plan because the difference in per 


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member per month costs is not 

significant. 

Comment: A commenter asked how 

the State coverage of cost-sharing occurs 

in situations where a FIDE SNP makes 

alternate payment arrangements with 

providers (for example, if a FIDE SNP 

capitates per patient per month 

payments, quality bonuses, or within a 

network with salaried providers and 

facilities directly owned by the plan). 

Response: When the State contract 

with the Medicaid MCO affiliated with 

a FIDE SNP capitates for Medicaid 

payment of Medicare cost-sharing, 

providers no longer bill the State 

Medicaid agency for Medicare costsharing; the FIDE SNP assumes 

responsibility for making these 

payments. As proposed and finalized, 

the requirement for FIDE SNPs to cover 

the Medicaid payment of Medicare costsharing for their enrollees under the 

capitated contract between the Medicaid 

MCO affiliated with the FIDE SNP and 

the State does not dictate the particular 

payment amounts for covered services. 

Nor does this final policy address all 

operational details for identifying 

Medicare cost-sharing obligations for 

specific services in the context of 

specific provider payment 

arrangements. This new provision only 

requires that the FIDE SNP’s coverage of 

Medicaid benefits include the Medicare 

cost-sharing otherwise applicable for 

Medicare Part A and B benefits for the 

FIDE SNP’s enrollees, which will result 

in the FIDE SNP’s payment to a provider 

including the FIDE SNP’s coverage of 

the service and any Medicaid-covered 

Medicare cost-sharing amount. 

CMS does not interfere in the 

negotiations between MA organizations 

and their contracted providers and does 

not directly participate in the 

negotiations between FIDE SNPs and 

States regarding the capitation amount 

paid for FIDE SNP’s Medicaid coverage 

(other than to assure that Medicaid 

managed care requirements for 

actuarially sound rates in §§ 438.4 

through 438.7 are met). CMS will not be 

in a position, nor have the 

responsibility, to assess payment 

methodologies for how the FIDE SNP 

pays the covered Medicare cost-sharing 

amounts to their contracted providers or 

whether those payments are equivalent 

to comparable payments through 

Medicare and Medicaid FFS. States can 

require use of particular payment 

methodologies for certain providers, 

such as primary care, mental health, and 

other high value providers, through 

contracts with D–SNPs to ensure 

sufficient access and quality of care 

meets the needs of D–SNP members. In 

addition, Medicaid managed care 

regulations permit States to direct 

Medicaid managed care plans to use 

certain payment arrangements in 

connection with Medicaid coverage 

provided certain requirements are met 

at § 438.6(c). Finally, as previously 

noted in this rule, we review Medicaid 

capitation rates to ensure they are 

actuarially sound. 

Comment: A commenter requested 

CMS consider clarifying elements of the 

Medicare cost-sharing billing process 

during a beneficiary’s Medicare 

deeming period to prohibit MA 

providers from billing Medicare costsharing to dually eligible beneficiaries 

during the Medicare deeming period in 

order to strengthen balance billing 

protections for dually eligible 

beneficiaries. 

Response: We share the commenter’s 

concern about the billing of Medicare 

cost-sharing during the deeming period 

when a D–SNP enrollee has lost 

Medicaid eligibility. However, the loss 

of Medicaid eligibility also means that 

the prohibition on providers billing the 

beneficiary for Medicare cost-sharing 

has also been lost, since the individual 

is no longer dually eligible for Medicare 

and Medicaid. We will take this 

comment into consideration as we work 

to develop ways to protect individuals 

from undue expenses and potential 

access to care barriers during the 

deeming period. Although these 

individuals have lost eligibility for 

Medicaid, they almost always still have 

very low income, very few resources, 

and substantial health care needs. 

Comment: A commenter requested 

clarification on how best to apply this 

requirement in instances where the 

HIDE SNP or FIDE SNP includes 

language on capitation for Medicare 

cost-sharing in the plan’s contract with 

the State, but the State is not paying the 

plan for the Medicare cost-sharing in 

accordance with the contract language. 

Response: As proposed and finalized, 

capitated coverage of the Medicare costsharing for Medicare Part A and Part B 

benefits that will be required for FIDE 

SNPs will be included in the Medicaid 

MCO contract that the single legal entity 

offering both the FIDE SNP and the 

Medicaid MCO must have with the 

State. Future contract disputes regarding 

the implementation of State capitated 

payment for Medicare cost-sharing to a 

FIDE SNP should be addressed per the 

Medicaid MCO contract language for 

dispute resolution. The requirement for 

capitated coverage of Medicare costsharing does not extend to HIDE SNPs; 

however, States and HIDE SNPs (and 

other MA plans) are free to negotiate 

capitated arrangements for facilitating 

Medicaid coverage of Medicare costsharing for dually eligible individuals. 

We appreciate the support for our 

efforts. We are finalizing our proposed 

revisions for paragraph (2)(i) of the 

definition of a FIDE SNP at § 422.2 with 

a delay in the applicability date until 

the 2025 plan year for the requirement 

that FIDE SNPs cover Medicare costsharing in their capitated contracts with 

State Medicaid agencies. 

In the proposed rule (87 FR 1862 

through 1863) we also solicited 

feedback on the feasibility, 

implementation, estimated time to 

enact, and impact of requiring all D– 

SNPs to have contracts with State 

Medicaid agencies for capitated 

coverage of Medicare cost-sharing to 

inform future rulemaking. We received 

many comments in response to our 

request for information. All comments 

supported the benefits to requiring 

capitated Medicare cost-sharing for all 

D–SNPs, however commenters 

expressed substantial concerns 

regarding the implementation of such a 

policy and how to determine if such a 

policy achieves the purpose of 

improving provider access for dually 

eligible individuals. Commenters 

provided suggestions regarding 

implementation timeline, development 

of resources, and technical assistance. 

As we discussed in the proposed rule, 

we also considered proposing a 

requirement for State Medicaid data 

exchanges to provide real-time 

Medicaid managed care plan enrollment 

data to D–SNPs to enable better 

coordination between the D–SNP and 

the State and/or Medicaid managed care 

plan. To allow more time for us to 

consider the operational challenges for 

States, we did not propose a 

requirement. We solicited feedback on 

the pros and cons of requiring State 

Medicaid data exchanges to provide 

real-time Medicaid FFS program and 

Medicaid managed care plan enrollment 

data with D–SNPs, and the impact of 

such a requirement on States, Medicaid 

managed care plans, D–SNPs, providers, 

and beneficiaries. We received a number 

of comments in response to our request 

for information on the pros and cons of 

requiring State Medicaid data exchanges 

of Medicaid FFS program and Medicaid 

managed care plan enrollment data with 

D–SNPs. All commenters agreed with 

CMS’s assessment of the importance of 

this data to enable better coordination 

between D–SNPs and the Medicaid FFS 

program or Medicaid managed care plan 

for dually eligible beneficiaries that are 

not in aligned plans. Many commenters 

suggested a technical expert panel of 

States and plans to develop the concept 

and identify considerations, obstacles, 


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34Since 2005, State Medicaid agencies have been 

submitting files at least monthly to CMS to identify 

all dually eligible beneficiaries in each State. This 

includes full-benefit dually eligible individuals and 

partial-benefit dually eligible individuals. The file 

is called the ‘‘MMA File’’ (after the Medicare 

Prescription Drug Improvement and Modernization 

Act of 2003), or State Phasedown File. See here for 

more information. 

and implementation timeline for the 

described data exchange. Finally, we 

received a couple comments that were 

concerned with the uniformity of 

individual State Medicaid data 

exchanges, and a commenter suggested 

leveraging the State MMA File 

Exchange 34 as a better alternative for 

sharing the Medicaid FFS program and 

Medicaid managed care plan enrollment 

data. 

We appreciate the support for our 

efforts to raise this issue and will 

consider comments and suggestions 

received for future rulemaking, 

technical assistance, and related work. 

c. Scope of Services Covered by FIDE 

SNPs 

(1) Need for Clarification of Medicaid 

Services Covered by FIDE SNPs 

CMS first defined the term ‘‘fully 

integrated dual eligible special needs 

plan’’, or FIDE SNP, at § 422.2 in the 

‘‘Medicare Program; Changes to the 

Medicare Advantage and the Medicare 

Prescription Drug Benefit Programs for 

Contract Year 2012 and Other Changes’’ 

final rule (76 FR 21432) (hereinafter 

referred to as the April 2011 final rule) 

to implement section 3205(b) of the 

Affordable Care Act (which amended 

section 1853(a)(1)(B)(vi) of the Act to 

add a frailty adjustment to the risk 

adjustment payments for certain FIDE 

SNPs). That definition provided that a 

FIDE SNP must have a capitated 

contract with a State Medicaid agency 

that includes coverage of specified 

primary, acute, and long-term care 

benefits and services, consistent with 

State policy. 

As discussed in more detail in the 

proposed rule (87 FR 1864), despite 

discussion in the April 2011 final rule 

that FIDE SNPs would provide all 

primary, acute, and long-term care 

services and benefits covered by the 

State Medicaid program, we did not 

operationalize review of State Medicaid 

agency contracts in that way. Over the 

years, CMS has determined D–SNPs to 

be FIDE SNPs even where the State 

carved out certain primary care, acute 

care, and LTSS benefits from the 

Medicaid coverage required from the D– 

SNP. In effect, we allowed States 

flexibility in the coverage provided by 

FIDE SNPs, not only to accommodate 

differences in the benefits covered 

under various State Medicaid programs 

but to accommodate differences in State 

contracting strategies for managed care 

broadly, and for FIDE SNPs in 

particular. In the April 2019 final rule 

(84 FR 15706 through 15707), we 

revised the FIDE SNP definition at 

§ 422.2 to add Medicaid behavioral 

health services to the list of services that 

a FIDE SNP must include in its 

capitated contract with the State 

Medicaid agency. But, consistent with 

how we were operationalizing this 

definition, we explained that our 

amendment would allow plans to meet 

the FIDE SNP definition even where the 

State excluded Medicaid behavioral 

health services from the capitated 

contract. 

As discussed in the January 2022 

proposed rule (87 FR 1863 through 

1864), the way we have applied the 

definition of FIDE SNPs has not enabled 

us to ensure FIDE SNPs fully integrate 

Medicare and Medicaid services for 

dually eligible individuals. We 

proposed to revise paragraph (2) of the 

definition of a FIDE SNP at § 422.2 to 

clearly specify which services and 

benefits must be covered under the FIDE 

SNP capitated contract with the State 

Medicaid agency, and thus bring fuller 

integration of Medicaid benefits to 

individuals enrolled in FIDE SNPs. Our 

proposal would revise paragraph (2) of 

the existing definition into paragraphs 

(2)(i) through (v), with each of the new 

paragraphs addressing specific coverage 

requirements. We believe the proposals 

described in this section strike the 

appropriate balance between flexibility 

for variations in State Medicaid policy 

and our goal of achieving full 

integration in FIDE SNPs. In addition, as 

discussed more fully in section II.A.5.e., 

our proposed revision of the definition, 

in conjunction with a proposal to add 

§ 422.107(g) and (h), included flexibility 

for approval of some limited carve-outs 

of LTSS and behavioral health services. 

As described in the proposed rule (87 

FR 1864), we proposed that the updates 

to the FIDE SNP definition at § 422.2 

would mean that all Medicaid benefits 

in these categories would be covered by 

the MCO that is affiliated with the FIDE 

SNP, to the extent Medicaid coverage of 

such benefits is available to individuals 

eligible to enroll in the FIDE SNP, and 

we did not propose any exceptions. 

Because the same legal entity must have 

the MA contract with CMS for the D– 

SNP and the Medicaid MCO contract 

with the State, and the enrollment in the 

FIDE SNP must be limited to dually 

eligible individuals who are also 

enrolled in the MCO, this entity is 

functionally all the FIDE SNP. 

Comment: Several commenters 

supported CMS’s proposed clarification 

of the services that must be covered by 

a FIDE SNP through a capitated contract 

with the State Medicaid agency. Other 

commenters supported CMS’s proposed 

changes to the FIDE SNP requirements 

and believed that they would help 

ensure that FIDE SNPs are fully 

integrated with Medicaid. Several 

commenters expressed that the 

proposed changes would make it easier 

for beneficiaries to understand how 

FIDE SNPs differ from other, less 

integrated D–SNPs. A commenter stated 

that all full benefit dually eligible 

individuals should have access to fully 

integrated care, which should include 

one benefit package that encompasses 

all Medicare- and Medicaid-covered 

services, including primary and acute 

care benefits, behavioral health, LTSS 

and dental benefits. A commenter 

supported CMS’s proposal because they 

experienced firsthand in the Financial 

Alignment Initiative how MedicareMedicaid integration greatly benefits 

enrollees, providers, and payers. 

Another commenter believed that 

providers would experience lower 

administrative burden when contracting 

with FIDE SNPs that provide 

comprehensive coverage of all the 

services described in our proposal. A 

commenter supported CMS’s proposal 

because it accounts for variations in 

State Medicaid programs, honors 

beneficiary choice, and promotes 

quality and value through competition. 

Response: We appreciate the 

widespread support for our proposal to 

clarify the scope of Medicaid-covered 

services that must be covered by the 

affiliated Medicaid MCO for a D–SNP to 

be a FIDE SNP. We agree that the 

proposed changes will help ensure 

fuller integration of benefits for FIDE 

SNP enrollees. We also agree that the 

proposal will improve stakeholder 

understanding of how integrated plan 

options differ and improve clarity of 

what those plans cover. 

Comment: A commenter believed that 

the proposed changes to the definition 

of a FIDE SNP would negatively impact 

Medicaid programs in a number of 

States because some plans currently 

designated as FIDE SNPs would no 

longer be considered FIDE SNPs. 

Another commenter opposed CMS’s 

proposal because they believed that the 

proposal would discourage States 

wishing to pursue further integration 

from doing so as it may not align with 

the State’s other Medicaid contracting 

priorities. The commenter noted that 

Pennsylvania, Virginia, and Arizona 

have made the decision to permit D– 


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SNPs other than those that have MLTSS 

contracts to operate in the State. 

Response: We acknowledge the 

comments and recognize the concern 

that some current FIDE SNPs may no 

longer meet the requirements to be a 

FIDE SNP. As we described at 87 FR 

1865 through 1866, our analysis found 

that if our proposed changes went into 

effect, relatively few FIDE SNPs would 

lose FIDE SNP distinction. D–SNPs that 

do not meet the proposed FIDE SNP 

definition at § 422.2 may still meet the 

HIDE SNP definition at § 422.2, which 

we are also updating in this rulemaking. 

In addition, coordination-only D–SNPs 

remain permissible, which means that 

States have flexibility in permitting 

various types of D–SNPs with different 

levels of integration and coordination 

with the States’ Medicaid managed care 

programs. We believe the benefits of our 

proposed changes outweigh the benefit 

of continuing to allow FIDE SNP 

designation for plans that do not have 

the level of integration achieved by the 

same legal entity covering Medicare Part 

A and Part B benefits (subject to limited 

exclusions required by the Medicare 

statute) and comprehensive Medicaid 

benefits as outlined in our proposal. 

Further, we acknowledge that States 

may take different pathways toward 

integrated care, and we believe the 

proposed change preserves flexibility 

for States. 

Comment: A commenter requested 

clarification on how States would 

conform to the changes to the FIDE SNP 

definition. Another commenter 

requested clarification on what would 

happen if a State refused to clarify their 

State Medicaid agency contract. The 

commenter also requested clarification 

on how and whether dental benefits 

would be considered under this 

proposal as some State Medicaid 

programs cover limited dental benefits. 

Response: We appreciate the requests 

for clarification. As proposed and 

finalized, the amendments to paragraph 

(2) of the definition of FIDE SNP will 

require the Medicaid MCO affiliated 

with the FIDE SNP to cover specified 

Medicaid benefits under a capitated 

contract under section 1903(m) of the 

Act. For contract year 2023 and 2024, 

the required Medicaid-covered benefits 

are all primary and acute care benefits 

and long-term services and supports, 

including coverage of nursing facility 

services for a period of at least 180 days 

during the coverage year, which is 

consistent with the current regulation 

and practice (because we currently 

permit a complete carve-out of Medicaid 

behavioral health benefits). Beginning 

with contract year 2025, the required 

Medicaid-covered benefits are all 

primary and acute care benefits 

(including Medicare cost-sharing for 

Medicare Part A and Part B benefits), 

long-term services and supports, 

including coverage of nursing facility 

services for a period of at least 180 days 

during the coverage year, Medicaid 

home health (as defined in § 440.70), 

medical supplies, equipment, and 

appliances (as described in 

§ 440.70(b)(3)), and Medicaid behavioral 

health services. We expect that States 

that wish to have FIDE SNPs operate in 

their State will review and, as 

necessary, update their MCO Medicaid 

managed care contracts to include this 

full scope of services for the necessary 

time periods. 

If the FIDE SNP’s MCO contract with 

the State Medicaid agency does not 

cover the required scope of Medicaid 

benefits, the MA organization could still 

offer a HIDE SNP, as defined at § 422.2, 

or a coordination-only D–SNP. Under 

the proposed regulation, CMS is not 

requiring the FIDE SNP to cover 

Medicaid dental benefits in order to 

meet the definition of FIDE SNP, but 

States may choose to include dental 

benefits in their Medicaid MCO contract 

with a FIDE SNP. 

Comment: A commenter urged CMS 

to exercise the appropriate oversight to 

ensure that D–SNP enrollees have 

access to the full range of Medicare 

benefits for which they are eligible, and 

that D–SNPs adhere to Medicare 

requirements for access to medically 

necessary services. The commenter 

stated that MA plans have limited 

understanding of Medicare benefit and 

coverage criteria, leading to 

inappropriate denials of medically 

necessary care for vulnerable enrollees. 

The commenter urged CMS to (1) 

develop and implement a regulatory 

mechanism to ensure plan compliance 

with MA requirements, and (2) allow 

State Medicaid agencies greater 

authority over the operations of D–SNPs 

on the level of care determinations and 

access to medically necessary services, 

for example, by including certain 

reporting requirements in State 

contracts and using that information in 

public reporting and when establishing 

ongoing agreements. 

Response: We appreciate the 

comment. CMS conducts regular 

program audits of MA plans to assess 

compliance with Medicare Advantage 

requirements, which include coverage 

of almost all Medicare Part A and Part 

B benefits. As discussed in the proposed 

rule (87 FR 1869), section 164(c)(4) of 

MIPPA does not require a State to enter 

into a contract with an MA organization 

with respect to a D–SNP (as described 

in section 1859(b)(6)(B)(ii) of the Act), 

which therefore provides States with 

significant control over the availability 

of D–SNPs in their markets. The State’s 

discretion to contract with D–SNPs, 

combined with the State’s control over 

its Medicaid program, creates flexibility 

to require greater integration of 

Medicare and Medicaid benefits from 

the D–SNPs that operate in the State. 

States have broad authority to include 

specific requirements for D–SNPs in 

their State Medicaid agency contracts 

(and some States currently do so). We 

believe that State Medicaid agencies 

have sufficient oversight authority over 

the operations of D–SNP plans and 

flexibility to allow States to require that 

MA organizations provide reports to the 

States under the State Medicaid agency 

contracts so long as such reports and 

information sharing, and/or specific 

performance standards are consistent 

with applicable law and do not violate 

42 CFR part 422 requirements. In the 

proposed rule (87 FR 1869 through 

1870), we gave examples of States that 

require specific care coordination or 

data sharing activities in their contracts 

with D–SNPs. 

(2) Requiring FIDE SNPs To Cover 

Medicaid Primary and Acute Care 

Benefits 

Primary and acute care benefits for 

dually eligible beneficiaries are 

generally covered by Medicare as the 

primary payer rather than Medicaid. We 

proposed revisions to the FIDE SNP 

definition in paragraph (2)(i) of § 422.2 

to limit the FIDE SNP designation to D– 

SNPs that cover primary care and acute 

care services and Medicare costsharing—to the extent such benefits are 

covered for dually eligible individuals 

in the State Medicaid program—through 

their capitated contracts with State 

Medicaid agencies. As described in the 

proposed rule (87 FR 1864), we 

proposed that this requirement would 

mean that all primary and acute care 

services, including the Medicare costsharing covered by the State Medicaid 

program (as discussed and finalized for 

2025 in section II.A.5.b. of this final 

rule) must be covered by the FIDE SNP 

under the MCO contract between the 

State and the organization that offers the 

FIDE SNP and the MCO; we did not 

propose any exceptions or mechanism 

for carving out coverage of primary and 

acute care. However, we did clarify that 

Medicaid non-emergency medical 

transportation (NEMT) as defined in 

§ 431.53 is not a primary or acute care 

service included in the scope of this 

provision. We solicited comment on 

whether we should allow for specific 

carve-outs of some of these benefits and 

services. We welcomed specific 


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35Medicaid and CHIP Payment and Access 

Commission. ‘‘Integration of Behavioral and 

Physical Health Services in Medicaid.’’ March 2016. 

Available at: https://www.macpac.gov/wp-content/ 

uploads/2016/03/Integration-of-BehavioralandPhysical-Health-Services-in-Medicaid.pdf. 

examples of primary and acute care 

benefits that are either currently carved 

out of FIDE SNP capitated contracts 

with State Medicaid agencies or should 

be carved out and requested that 

comments include the reason for the 

existing and proposed future carve-outs. 

Comment: Several commenters 

supported CMS’s proposed requirement 

that all primary and acute care benefits 

must be covered by FIDE SNPs through 

a capitated contract with the State 

Medicaid agency. 

Response: We thank the commenters 

for their support. 

Comment: A commenter expressed 

support and agreement with CMS that 

Medicaid non-emergency medical 

transportation, while a critical service, 

should not be considered a primary or 

acute care service for the purpose of this 

definition. Other commenters expressed 

concern about excluding Medicaid 

NEMT from the services that must be 

included in a FIDE SNP’s contract with 

a State. A commenter acknowledged 

that many States cover NEMT benefit 

through Statewide contracts with an 

NEMT provider, but believed that in 

many States NEMT does not work well 

for beneficiaries, and coordination with 

doctors and other service providers has 

been poor. The commenter believed 

integrating NEMT, if done well, should 

be able to help address some of those 

current deficiencies. Other commenters 

noted that NEMT is vital to ensure 

dually eligible individuals with 

transportation barriers have access to 

the care they need. These commenters 

cited a preliminary study on NEMT 

access in the MA program which shows 

that the use of an NEMT benefit in MA 

plans is correlated with an average 1.5 

times more primary care physician 

visits than for those beneficiaries who 

didn’t use the benefit. 

Response: We appreciate the 

comments on the inclusion of NEMT. 

We acknowledge that NEMT is a critical 

service for dually eligible individuals. 

We note that our proposal does not 

preclude States from including NEMT 

in their contracts with D–SNPs or their 

Medicaid managed care plans. However, 

we continue to believe that it is not a 

primary or acute care service and 

therefore, NEMT is not required to be 

included in the Medicaid capitated 

contract that is necessary for FIDE SNP 

designation. 

After considering the comments we 

received and for the reasons outlined in 

the proposed rule and our responses to 

comments, including those in section 

II.A.5.b., we are finalizing our proposed 

revisions for paragraph (2)(i) of the 

definition of a FIDE SNP at § 422.2 with 

a delay in applicability date until the 

2025 plan year for the requirement that 

FIDE SNPs cover Medicare cost-sharing 

in their capitated contracts with State 

Medicaid agencies. 

(3) Requiring FIDE SNPs To Cover 

Medicaid Behavioral Health Services 

We described at 87 FR 1865 the need 

for and importance of behavioral health 

services among dually eligible 

individuals. We explained earlier in this 

section that, consistent with how we 

were operationalizing the FIDE SNP 

definition since first adopting it at 

§ 422.2 as established in the April 2011 

final rule, we have allowed plans to 

meet the FIDE SNP definition even 

where a State excluded Medicaid 

behavioral health services from the 

capitated contract with the State 

Medicaid agency. In the April 2019 final 

rule, we added behavioral health 

services to the list of benefits that a D– 

SNP must cover, consistent with State 

policy, to obtain the FIDE SNP 

designation. We stated that complete 

carve out of behavioral health by a State 

from the scope of the Medicaid coverage 

provided by a FIDE SNP would be 

permissible (84 FR 15706 through 

15707). We believe that a revision to 

that policy is appropriate and proposed 

to establish in a new paragraph (2)(iii) 

in the FIDE SNP definition at § 422.2 

requiring that, for 2025 and subsequent 

years, the capitated contract with the 

State Medicaid agency must include 

coverage of Medicaid behavioral health 

services. This proposal would require 

the Medicaid MCO that is offered by the 

same entity offering the FIDE SNP to 

cover all behavioral health services 

covered by the State Medicaid program 

for the enrollees in the FIDE SNP. Our 

proposal to require FIDE SNPs to cover 

Medicaid behavioral health services is 

consistent with sections 

1853(a)(1)(B)(iv) and 1859(f)(8)(D)(i)(II) 

of the Act. We proposed the 2025 date 

to allow time for MA organizations and 

States to adapt to our proposal. In 

addition, we proposed (as discussed in 

section II.A.5.e. of this final rule) an 

amendment to § 422.107 to add a new 

paragraph (h) to adopt a standard for 

limited exclusions from the scope of 

Medicaid benefits coverage by FIDE 

SNPs and HIDE SNPs of certain 

behavioral health services. 

Restricting FIDE SNP designation to 

D–SNPs that cover Medicaid behavioral 

health services, as well as other benefits, 

under a capitated Medicaid MCO 

contract with the State Medicaid agency 

has two advantages. First, it better 

comports with a common understanding 

of being ‘‘fully integrated’’—the term 

used in sections 1853(a)(1)(B)(iv) and 

1859(f)(8)(D)(i)(II) of the Act—because 

of the importance of behavioral health 

services for dually eligible individuals. 

Second, coverage of Medicaid 

behavioral health services also 

facilitates integrating behavioral health 

and physical health services, which can 

result in improved outcomes for dually 

eligible beneficiaries.35 In addition, our 

proposal would more clearly distinguish 

a FIDE SNP—which would have to 

cover both LTSS and behavioral health 

services—from a HIDE SNP—which 

must cover either LTSS or behavioral 

health services. This would reduce 

confusion among stakeholders. As we 

discussed at 87 FR 1865 through 1866, 

most FIDE SNPs already have contracts 

with States to cover Medicaid 

behavioral health benefits, indicating 

that the market has already moved in 

this direction and relatively few FIDE 

SNPs would be impacted by our 

proposal. We believe the benefit of 

restricting FIDE SNP designation to 

plans that cover Medicaid behavioral 

health services in the capitated contract 

with the State Medicaid agency 

outweighs the benefit of continuing to 

allow FIDE SNP designation for plans 

that do not cover these benefits. 

Increasing the minimum scope of 

services that FIDE SNPs must cover in 

an integrated fashion is consistent with 

how section 1859(f)(8)(D) of the Act 

identifies Medicaid LTSS and 

behavioral health services as key areas 

for the integration of services. While the 

statute generally describes the increased 

level of integration that is required by 

referring to coverage of behavioral 

health or LTSS or both, we believe that 

exceeding that minimum standard is an 

appropriate goal for FIDE SNPs. The 

most integrated D–SNPs—FIDE SNPs— 

should cover the broadest array of 

Medicaid-covered services, including 

the behavioral health treatment and 

LTSS that are so important to the dually 

eligible population. 

Further, increasing the minimum 

scope of services for FIDE SNPs is not 

inconsistent with section 

1853(a)(1)(B)(iv) of the Act, which states 

that such plans are fully integrated with 

capitated contracts with States for 

Medicaid benefits, including LTSS. 

While section 1853(a)(1)(B)(iv) does not 

specify coverage of behavioral health 

services, it does not exclude coverage of 

behavioral health services either given 

that the section speaks generally to FIDE 

SNPs having fully integrated contracts 

with States for Medicaid benefits. As 


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discussed at 87 FR 1865, behavioral 

health services are critical for dually 

eligible individuals and benefit from 

coordination with Medicare services 

and, we believe, coverage of Medicaid 

behavioral health benefits by a D–SNP 

is key to achieving fully integrated 

status. 

Comment: Numerous commenters 

expressed support for CMS’s proposal to 

require FIDE SNPs to cover behavioral 

health services. Several commenters 

believed the proposal addresses the 

intent of the BBA of 2018 to increase 

Medicare-Medicaid integration. A few 

commenters stated that behavioral 

health is a critical component of a fully 

integrated model of care and that 

inclusion of behavioral health is 

essential to providing high-quality, 

effective care for dually eligible 

individuals. A commenter stated that 

issues related to behavioral health and 

substance use have been exacerbated 

due to the COVID–19 pandemic, 

heightening the importance of access to 

behavioral health and substance use 

disorder treatment. Several commenters 

believed that strengthening access to 

behavioral health services is a growing 

concern that merits greater attention and 

that CMS’s proposal is an important 

step in the direction toward improving 

and protecting access to behavioral 

health services. A commenter supported 

the proposal for FIDE SNPs to cover 

Medicaid behavioral health services 

along with continued flexibility of 

allowing some limited carve-outs. A 

commenter encouraged CMS to require 

all D–SNPs—not just FIDE SNPs—to 

cover Medicaid behavioral health 

services to address misalignment of 

services for dually eligible individuals 

with behavioral health diagnoses or 

addition, but the commenter recognized 

the proposal as a glide path toward 

greater integration. 

Response: We appreciate the 

widespread support for our proposal. 

We agree that requiring FIDE SNPs to 

cover Medicaid behavioral health 

services as proposed at paragraph (2)(iii) 

of the definition of FIDE SNPs in § 422.2 

would improve Medicare-Medicaid 

integration for beneficiaries. 

Comment: A few commenters 

opposed the proposal because States 

with behavioral health carved out of 

Medicaid managed care, including 

California, New York and Pennsylvania, 

would not be permitted to have FIDE 

SNPs if the proposal is finalized. A 

commenter stated that operationalizing 

this change in Pennsylvania would 

require legislative action, that a 

multitude of stakeholder groups would 

oppose the proposal, and that the 

current Commonwealth administration 

would not support the proposal. The 

commenter noted that there would be 

no way for the current Pennsylvania 

FIDE SNPs to meet the proposed CMS 

requirements beginning in 2025 to 

maintain their FIDE SNP status. 

Another commenter noted that all D– 

SNPs in Oregon are required to 

coordinate with all Medicaid benefits, 

including dental and behavioral health. 

However, this commenter emphasized 

that D–SNPs in Oregon would not be 

able to easily achieve FIDE SNP status 

because of statutory carve-outs of LTSS. 

Several commenters requested 

clarification from CMS to address 

situations where benefits such as 

behavioral health or LTSS are carved 

out at a State level, including California 

and Pennsylvania, which prevents D– 

SNPs from receiving the HIDE SNP and 

FIDE SNP designation despite meeting 

other criteria. A commenter explained 

that some States believe a specialty 

behavioral health plan with a focused 

suite of intense services on the highest 

utilizers to improve outcomes among 

people with serious mental illness is the 

most effective way to decrease health 

care costs and improve quality. The 

commenter stated that, should D–SNPs 

in those States lose the ability to receive 

the HIDE SNP and FIDE SNP 

designation, it would result in the loss 

of flexibilities, such as the frailty 

adjustment, which could limit the D– 

SNPs’ ability to provide complete care 

and supplemental benefits to their 

enrollees. To assist with any 

implementation of this provision, the 

commenter asked that CMS provide 

further clarification on the effect of this 

provision in States where a carve-out 

exists. 

Response: We appreciate the 

perspective raised by these commenters. 

We recognize that not all States 

currently include Medicaid behavioral 

health and Medicaid LTSS benefits in 

their capitated Medicaid contracts. We 

believe the advantages of restricting 

FIDE SNP designation to plans that 

cover behavioral health and Medicaid 

LTSS benefits in the capitated contract 

with the State Medicaid agency 

outweigh the advantages of continuing 

to allow FIDE SNP designation for plans 

that do not cover these benefits. As 

stated in the proposed rule, increasing 

the minimum scope of services that 

FIDE SNPs must cover in an integrated 

fashion is consistent with how section 

1859(f)(8)(D) of the Act identifies 

Medicaid LTSS and behavioral health 

services as key areas for the integration 

of services. While the statute generally 

describes the increased level of 

integration that is required by referring 

to coverage of behavioral health or LTSS 

or both, we believe that exceeding that 

minimum standard is an appropriate 

goal for FIDE SNPs. The most integrated 

D–SNPs—FIDE SNPs— should cover the 

broadest array of Medicaid-covered 

services, including the behavioral health 

treatment and LTSS that are so 

important to the dually eligible 

population. As we discussed in the 

proposed rule (87 FR 1866), based on a 

New York State Medicaid policy 

change, we expect FIDE SNPs in New 

York to cover Medicaid behavioral 

health services effective January 1, 2023, 

so we do not anticipate our proposal 

will negatively impact FIDE SNPs in 

New York. If other States choose to keep 

behavioral health carved out of their 

SNP contracts, the remaining FIDE SNPs 

in those States would not meet the new 

requirements for FIDE SNPs that we are 

finalizing in the definition at § 422.2. 

Such plans may still meet the HIDE SNP 

definition at § 422.2, which we are also 

revising in this rulemaking. 

Comment: Some commenters 

expressed concern about continuity and 

quality of care with behavioral health 

being carved into FIDE SNPs. A few 

commenters supported the provision to 

require FIDE SNPs cover behavioral 

health, but cautioned that CMS should 

require strong steps to avoid disruption 

in behavioral health care when 

transitioning individuals in the 24 FIDE 

SNPs that do not currently have 

behavioral health in their contracts. A 

commenter highlighted the importance 

of consistency, continuity, and ongoing 

access to trusted providers in behavioral 

health, and that even small disruptions 

in provider networks or changes in 

procedures to access providers can set 

back progress for affected beneficiaries. 

A commenter urged CMS to consider, 

when approving carve-ins of behavioral 

health in any D–SNP, the importance of 

ensuring that the move does not degrade 

the quality of care. The commenter 

shared the following example: Some 

county systems have experience in 

behavioral health for persons with 

serious mental illness that is difficult to 

duplicate. In some jurisdictions, carvedout behavioral service systems, which 

serve many individuals who are 

homeless or in danger of homelessness, 

are closely integrated with housing 

service providers, working together to 

bring stability to this high need 

population. This commenter stated that, 

in the States where behavioral services 

were integrated into the FAI 

demonstrations, the path was often 

rocky, particularly where plan sponsors 

had little experience in the area. 

Another commenter believed that the 

agencies with which States contract to 

provide behavioral health services often 


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provide inadequate support for 

individuals needing behavioral health 

treatment facilities and do not assist 

with finding community providers. 

Response: We appreciate the 

comments and agree that continuity of 

care is important for enrollees receiving 

behavioral health care treatment and the 

valuable care and supports delivered by 

behavioral health providers who 

operating outside of FIDE SNPs. 

However, our proposal to require FIDE 

SNPs to cover Medicaid LTSS and 

Medicaid behavioral health services 

would not require any enrollees to 

transition from their current D–SNPs, 

nor would it require a State to carve-in 

behavioral health services. If the 24 

FIDE SNPs do not meet the proposed 

FIDE SNP definition at § 422.2 due to a 

behavioral health carve-out in 2025, 

they may still meet the HIDE SNP 

definition at § 422.2 or the definition of 

a coordination-only D–SNP; therefore, 

enrollees could remain in these MA 

plans without disruption. In addition, 

States have the ability to establish 

linkages between behavioral health 

providers and D–SNPs to facilitate 

coordination of care if the State believes 

that is preferable to including such 

behavioral health services in the 

Medicaid MCO contract held by the 

FIDE SNP (or a less comprehensive 

Medicaid managed care contract held by 

a HIDE SNP). If States decide to carve 

in behavioral health services into FIDE 

SNPs or other D–SNPs, they can work 

with the plans and providers to ensure 

existing delivery systems for behavioral 

health are not disrupted. 

While we proposed to allow limited 

carve-outs from the scope of Medicaid 

LTSS and Medicaid behavioral health 

services that must be covered by FIDE 

SNPs and HIDE SNP, as discussed in 

II.A.5.e., we clarify that we did not 

propose to establish requirements 

related to approving a State’s decision to 

include certain services in their 

Medicaid programs. Our proposal, and 

the provisions finalized on this point in 

this rule, are specific to the minimum 

standards we believe are necessary for 

an MA plan to be designated as a fully 

integrated or highly integrated special 

needs plan for dually eligible 

individuals. 

In addition, if a State newly includes 

Medicaid LTSS and/or Medicaid 

behavioral health services into its 

contract with a D–SNP, the D–SNPs 

must ensure continuity of care and 

integration of services, including with 

community programs and social 

services, as described at § 422.112(b). 

This requirement applies to all MA 

plans, including all types of D–SNPs. 

Comment: A commenter expressed 

appreciation for the delayed effective 

date of 2025 but also suggested 

considering a longer timeframe for 

compliance or additional temporary 

exclusions from the scope of Medicaid 

coverage required for FIDE SNPs to 

allow for transitions. Another 

commenter urged CMS to consider 

allowing an extended timeframe beyond 

2025 for States that demonstrate 

commitment to integrating behavioral 

health services in FIDE SNPs to account 

for the State’s procurement strategy, 

demonstrate commitment to developing 

or refining a FIDE SNP model to 

integrate care for dually eligible 

individuals, or demonstrate a 

commitment to designing a Statespecific solution to fully coordinate 

behavioral health services with all 

Medicare and Medicaid benefits that 

results in seamless coverage. The 

commenter requested that CMS offer 

supports to States that currently carve 

out behavioral health but wish to pursue 

more integrated models of care for 

dually eligible individuals, including 

technical assistance, additional 

resources for identifying the most 

appropriate pathway for carving 

behavioral health benefits into FIDE 

SNPs or more generally to Medicaid 

managed care contracts. 

Response: We thank the commenters 

and appreciate their perspectives. We 

appreciate that States will have different 

pathways and considerations for 

including Medicaid behavioral health 

services in the MCO contracts held by 

FIDE SNPs by 2025, but we do not agree 

with extending the timeline. As we 

discuss in the proposed rule (87 FR 

1865 through 1866), our review of State 

Medicaid agency contracts for FIDE 

SNPs in contract year 2021 indicates 

that States include full coverage of 

Medicaid behavioral health services for 

most FIDE SNPs (45 of the 69 FIDE 

SNPs) and policy changes in New York 

to be effective in 2023 will increase this 

number. If the remaining FIDE SNPs in 

California and Pennsylvania do not 

meet the additional requirements we 

proposed and are finalizing as part of 

the FIDE SNP definition at § 422.2, these 

plans may still meet the requirements to 

be a HIDE SNP, consistent with the 

revised definition that we proposed and 

are finalizing in this rule at § 422.2. We 

believe the benefit of restricting FIDE 

SNP designation to plans that cover 

Medicaid behavioral health services in 

the capitated contract with the State 

Medicaid agency outweigh the benefit of 

continuing to allow FIDE SNP 

designation for plans that do not cover 

these benefits. 

We are available to assist States 

interested in pursuing more integrated 

models of care for dually eligible 

individuals, and we are actively 

planning for upcoming technical 

assistance opportunities. 

Comment: A commenter highlighted 

the benefits of the behavioral health 

carve-out model used in Pennsylvania, 

in which a wide variety of behavioral 

health services are delivered through a 

specialized Mental Health and 

Substance Use Disorder provider 

network. The commenter stated that the 

carve-out model implements evidencebased and promising practices in the 

area of behavioral health, ensures a 

single point of accountability, better 

utilization management of services, and 

overall better management of costs 

while ensuring improved outcomes for 

the individuals served. 

The commenter did not agree with 

CMS’s logic that FIDE SNPs have an 

incentive to steer beneficiaries toward 

behavioral health Medicaid covered 

services for which they are not 

financially responsible. The commenter 

wrote that, since Medicaid is always the 

payor of last resort, if the service is a 

covered Medicare service, Medicare 

would be the primary payor. 

The commenter also believes it is 

possible that changes in the health of 

enrollees or changes in membership 

over time could change a FIDE SNP’s 

population mix to the point that it 

would impact their frailty score and 

thus make them eligible for the 

increased revenue from the frailty 

adjustment. The commenter expects this 

issue concerning potential future frailty 

adjustment payments would create 

pushback from current FIDE SNPs in 

Pennsylvania if they no longer qualify 

as FIDE SNPs. 

Response: We appreciate that, in 

Pennsylvania and other States, 

policymakers may prefer to maintain 

existing delivery systems for behavioral 

health rather than to include those 

services in the MCO contracts held by 

FIDE SNPs. In those States, current FIDE 

SNPs would be re-designated as HIDE 

SNPs in 2025 and thus be ineligible for 

the frailty adjustment, even if the level 

of frailty in those D–SNPs would 

otherwise qualify the plan for frailty 

adjustment. That is a downside to our 

proposal but we do not believe it 

outweighs the other benefits outlined 

here of limiting FIDE SNP designation 

to plans that cover Medicaid behavioral 

health services, subject to minimal 

exclusions that CMS has approved 

under proposed § 422.107(h) (which is 

discussed and finalized in section 

II.A.5.e. of this final rule). 


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After considering the comments we 

received and for the reasons outlined in 

the proposed rule and our responses to 

comments, we are finalizing our 

proposed revisions for paragraph (2)(iii) 

of the definition of a FIDE SNP at 

§ 422.2 without modification. 

(4) Requiring FIDE SNPs To Cover 

Medicaid Home Health and Medical 

Supplies, Equipment, and Appliances 

We proposed to require that, effective 

beginning in 2025, each FIDE SNP must 

cover additional Medicaid benefits to 

the full extent that those benefits are 

covered by the State Medicaid program. 

Two categories of Medicaid benefits we 

proposed to add include home health 

services, as defined in § 440.70, and 

medical supplies, equipment, and 

appliances, as described in 

§ 440.70(b)(3). We believe that FIDE 

SNPs should be required to cover the 

Medicaid home health benefits and 

medical supplies, equipment, and 

appliances (to the full extent these 

benefits are covered by Medicaid) 

because both are critical services for 

dually eligible individuals, necessitate 

coordination due to being covered by 

both the Medicare and Medicaid 

programs, and are not clearly captured 

under other parts of the existing 

definition. Based on our review of State 

coverage requirements for Medicaid 

MCOs affiliated with FIDE SNPs, all 

current FIDE SNPs already cover 

Medicaid home health services and 

medical supplies, equipment, and 

appliances, so we did not expect our 

proposal to impact any existing FIDE 

SNPs. However, we proposed that this 

change in the scope of required coverage 

by FIDE SNPs would not apply until 

2025 in case there were other 

circumstances of which we were not 

aware that would necessitate additional 

time to adapt to our proposal. 

As such, we proposed to add new 

paragraphs (2)(iv) and 2(v) to the FIDE 

SNP definition at § 422.2 to require that 

the capitated contract between the State 

Medicaid agency and the legal entity 

that offers the FIDE SNP must include 

Medicaid home health services as 

defined at § 440.70 and Medicaid DME 

as defined at § 440.70(b)(3). In this final 

rule, we are correcting the terminology 

to use the phrase ‘‘medical equipment, 

supplies, and appliances’’ to better track 

the regulation text at § 440.70(b)(3). As 

described in the proposed rule (87 FR 

1864), we proposed that this new 

requirement would mean that all 

Medicaid benefits in these categories 

would be covered by the MCO that is 

affiliated with the FIDE SNP, to the 

extent Medicaid coverage of such 

benefits is available to individuals 

eligible to enroll in the FIDE SNP, and 

we did not propose any exceptions. 

Because the same legal entity must have 

the MA contract with CMS for the D– 

SNP and the Medicaid MCO contract 

with the State and the enrollment in the 

FIDE SNP must be limited to dually 

eligible individuals who are also 

enrolled in the MCO, this entity is 

functionally all the FIDE SNP. 

Comment: A number of commenters 

expressed support for CMS’s proposal to 

require FIDE SNPs to cover Medicaid 

home health and DME under their 

Medicaid MCO contracts. Several 

commenters noted that home health 

services and DME are critical services 

for dually eligible individuals. A 

commenter noted that home health is 

important because it curtails the need 

for more expensive health care options 

such as emergency room visits, hospital 

readmissions, and skilled nursing 

facility stays. The commenter also stated 

that DME benefits are important as they 

can assist with mobility and 

independence for beneficiaries and 

therefore improve quality of life. Several 

commenters highlighted that 

beneficiaries have long faced complex 

barriers to acquiring certain DME. A 

commenter noted that the proposal 

addresses the intent of the BBA of 2018 

to increase Medicare-Medicaid 

integration. A commenter expressed 

their support and noted that D–SNP 

State Medicaid agency contracts in 

Arizona already conform to CMS’s 

proposed definition. 

Several commenters agreed with CMS 

that 2025 implementation is appropriate 

in case any unforeseen issues arise. A 

few commenters suggested that the 

requirement for integration of home 

health and DME go into effect 

immediately rather than waiting until 

2025. 

Response: We appreciate the 

widespread support of our proposal that 

FIDE SNPs must cover Medicaid home 

health and DME under their Medicaid 

MCO contracts. We agree with 

commenters who stated that accessing 

DME (that is, medical equipment, 

supplies, and appliances) can be a 

challenge for beneficiaries, and we 

believe this proposal is a step towards 

addressing that issue. While a few 

commenters questioned if it is necessary 

to wait until 2025 to implement the 

proposal, we believe waiting until 2025 

to require coverage will allow adequate 

time to adapt to any unforeseen 

circumstances that may arise and will 

not cause loss of any integration in 

current FIDE SNPs that already cover 

Medicaid home health services and 

DME. 

Comment: A commenter stated that 

States will need to ensure that D–SNPs 

understand the details of Medicaid 

coverage of the required services to 

ensure that enrollees receive the full 

extent of benefits they are currently 

eligible to receive under Medicaid. This 

will require State oversight and 

reporting by D–SNPs to the State. 

Response: We thank the commenter. 

As proposed and finalized, this new 

requirement for FIDE SNPs must be met 

through the Medicaid MCO contract 

held by the legal entity that offers both 

the FIDE SNP and the Medicaid MCO. 

We anticipate that the Medicaid MCO 

contract addresses reporting by the 

entity (as would any Medicaid managed 

care contract whether associated with a 

HIDE SNP or coordination-only D–SNP 

or not) to the State and oversight by the 

State over Medicaid benefit delivery and 

administration. Medicaid managed care 

regulations, such as § 438.66, require 

States to monitor their Medicaid 

managed care programs. Further, under 

current regulation at § 422.107(c)(1), the 

State Medicaid agency contract must 

document the D–SNP’s responsibility to 

coordinate the delivery of Medicaid 

benefits for its enrollees. States and D– 

SNPs should already be communicating 

related to Medicaid benefits. This 

communication will be important to 

successful implementation of this final 

rule. 

Comment: A commenter supported 

the proposal to require that FIDE SNPs 

cover Medicaid home health services 

and DME as defined in § 440.70(b)(3) 

but recommended a modification. The 

commenter highlighted that the 

terminology used in § 440.70(b)(3) is 

‘‘medical supplies, equipment, and 

appliances suitable for use in any 

setting in which normal life activities 

take place.’’ The commenter 

recommended that CMS require FIDE 

SNPs to cover ‘‘medical supplies, 

equipment and appliances’’ as 

referenced in that subsection to ensure 

that the regulation is not interpreted to 

require coverage of only a subset of that 

category of services. The commenter 

believed that allowing nurse 

practitioners to order and certify 

Medicare and Medicaid home health 

services, and Medicaid medical 

supplies, equipment and appliances for 

their patients, as authorized in the 

CARES Act, has been integral to patients 

receiving medically necessary services 

in a timely fashion. 

Response: We appreciate the 

commenter’s support and suggestion. 

We believe that it is important to utilize 

the prevailing Federal definitions for 

Medicaid services and therefore will use 

the terminology in § 440.70(b)(3), 


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‘‘medical supplies, equipment, and 

appliances,’’ along with the reference to 

§ 440.70(b)(3), in the new paragraph 

(2)(v) of the FIDE SNP definition at 

§ 422.2 to clearly identify the mandatory 

scope of coverage. 

Comment: A commenter stated that 

the current Puerto Rico D–SNP program 

offered with the local government, 

Platino, is fully coordinated but the D– 

SNPs do not cover certain LTSS and 

nursing home services because Congress 

chose not to provide funding to Puerto 

Rico for these Medicaid services. The 

commenter urged CMS to allow plans in 

Puerto Rico to be eligible as FIDE SNPs 

and receive the frailty adjustment even 

though those D–SNPs do not cover these 

benefits. 

Response: We appreciate the 

comment about Puerto Rico’s Medicaid 

program and understand the lack of 

Medicaid long term care benefits in 

Puerto Rico prevents D–SNPs in Puerto 

Rico from meeting the FIDE SNP 

requirements. As a result, no D–SNPs in 

Puerto Rico currently meet the 

requirements to be a FIDE SNP, and this 

rulemaking does not change those 

circumstances. 

After considering the comments we 

received and for the reasons outlined in 

the proposed rule and our responses to 

comments, we are finalizing without 

modification our proposed revisions in 

paragraph (2)(iv) of the definition of 

FIDE SNP at § 422.2. We are finalizing 

paragraph (2)(v) of the FIDE SNP 

definition with a technical change to 

clarify that for plan year 2025 and 

subsequent years, the Medicaid 

capitated contract required for a FIDE 

SNP must cover medical supplies, 

equipment, and appliances as described 

in § 440.70(b)(3). 

d. Clarification of Coverage of Certain 

Medicaid Services by HIDE SNPs 

CMS first defined the term ‘‘highly 

integrated dual eligible special needs 

plan’’, or HIDE SNP, at § 422.2 in the 

April 2019 final rule. As currently 

defined at § 422.2, a HIDE SNP is a type 

of D–SNP offered by an MA 

organization that has—or whose parent 

organization or another entity that is 

owned and controlled by its parent 

organization has—a capitated contract 

with the Medicaid agency in the State 

in which the D–SNP operates that 

includes coverage of Medicaid LTSS, 

Medicaid behavioral health services, or 

both, consistent with State policy. As 

stated in the April 2019 final rule (84 FR 

15705), the HIDE SNP designation is 

consistent with section 

1859(f)(8)(D)(i)(II) of the Act that 

recognizes a level of integration that 

does not meet the requirements of the 

FIDE SNP with respect to the breadth of 

services provided under a Medicaid 

capitated contract with the State. 

We proposed to revise the HIDE SNP 

definition at § 422.2 consistent with 

proposed changes to the FIDE SNP 

definition described earlier in section 

II.A.5.c. of this final rule to more clearly 

outline the services HIDE SNPs must 

include in their contracts with State 

Medicaid agencies. Similar to our 

proposal for the revised FIDE SNP 

definition, we proposed to move away 

from the current use of ‘‘coverage, 

consistent with State policy’’ language 

in favor of more clearly articulating the 

minimum scope of Medicaid services 

that must be covered by a HIDE SNP by 

using the phrase ‘‘to the extent 

Medicaid coverage of such benefits is 

available to individuals eligible to enroll 

in a highly integrated dual eligible 

special needs plan (HIDE SNP) in the 

State.’’ In section II.A.5.e. of this final 

rule, we also discuss our proposal to 

adopt new provisions in § 422.107 to 

permit limited carve-outs from the 

required scope of services. 

Later in this section, we describe our 

proposal to require that the capitated 

Medicaid contract applies in the entire 

service area for the D–SNP in more 

detail. Otherwise, our proposal was 

generally a reorganization and 

clarification of the scope of Medicaid 

benefits that must be covered by a HIDE 

SNP. 

Comment: Numerous commenters 

supported CMS’s proposal for HIDE 

SNPs to be required to cover the vast 

majority of Medicaid behavioral health 

services or the vast majority of Medicaid 

LTSS. MACPAC expressed support for 

CMS’s proposed changes to the HIDE 

SNP definition because the proposed 

change would further integration and 

clarify the definitions of these plans. 

Several other commenters supported the 

proposal and believed that it would 

further clarify the distinction between 

HIDE SNP and FIDE SNP coverage 

requirements. A commenter expressed 

support because they believed that there 

has been a significant lack of clarity and 

comprehension around HIDE SNP 

definitions, and, in general, what can be 

expected of particular types of SNPs. 

Another commenter expected that the 

proposal would reduce confusion, 

provide more transparency of State 

Medicaid agency contract review, and 

allow continued flexibility for D–SNPs 

to provide either LTSS or behavioral 

health services. Another commenter 

expressed support because CMS’s 

proposal maintains flexibility for States 

to leverage integrated plans even if they 

cannot meet all the requirements for 

FIDE SNPs. 

Response: We appreciate the 

numerous comments of support for our 

proposal to revise the definition of HIDE 

SNPs at § 422.2. We agree that these 

changes, as proposed and finalized in 

this rule, and in conjunction with the 

proposed changes to § 422.107(g) and 

(h), will clarify the scope of 

responsibilities for HIDE SNPs, better 

distinguish them from FIDE SNPs and 

coordination-only D–SNPs, and provide 

flexibility to States in how they use D– 

SNPs in connection with their Medicaid 

programs. 

Comment: A commenter expressed 

concern that the proposed revisions may 

not adequately account for variation in 

State approaches to Medicaid managed 

care. The commenter recommended 

CMS reconsider limiting the HIDE SNP 

definition to the extent that it would 

disqualify otherwise integrated 

agreements. The commenter believed 

the proposed changes only serve to 

complicate administration, particularly 

if States with carve-outs beyond the 

proposed limits were required to pivot 

to coordination-only agreements to 

preserve D–SNPs. 

Another commenter recommended 

that CMS permit a HIDE SNP with a 

Medicaid MCO contract that covers 

behavioral health services to operate, 

without requiring the contract to 

include LTSS. The commenter also 

suggested that CMS clarify that a HIDE 

SNP with a State Medicaid agency 

contract that includes Medicaid 

services, including behavioral health, 

does not need to also have separate 

Medicaid MCO contract. 

Response: While we appreciate the 

commenters’ perspectives, we believe 

that the HIDE SNP designation should 

be consistent with a high level of 

integration in which the vast majority of 

Medicaid LTSS or the vast majority of 

Medicaid behavioral health services are 

covered by the capitated contract with 

the State. These proposed changes are 

consistent with our proposal to amend 

the FIDE SNP definition described in 

section II.A.5.c. to more clearly outline 

the services integrated D–SNPs, 

meaning both FIDE SNPs and HIDE 

SNPs, must include in their contracts 

with State Medicaid agencies. We 

clarify that if the MA organization 

offering a D–SNP—or the MA 

organization’s parent organization, or 

another entity that is owned and 

controlled by its parent organization— 

has a Medicaid managed care contract 

with the State that includes coverage of 

Medicaid behavioral health benefits but 

excludes coverage of Medicaid LTSS, 

the MA organization may qualify as a 

HIDE SNP provided other applicable 

requirements (such as a compliant 


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36CMS, ‘‘Additional Guidance on CY 2021 

Medicare-Medicaid Integration Requirements for 

Dual Eligible Special Needs Plans’’, January 17, 

2020. Retrieved from: https://www.cms.gov/ 

httpseditcmsgovresearch-statistics-data-andsystemscomputer-data-and-systemshpmshpmsmemos-archive/hpms-memo-5. 

Medicaid State agency contract, as 

required by § 422.107 and, beginning 

January 1, 2025, minimum service area 

requirements) are met. We further 

clarify that the HIDE SNP definition, 

either currently or as amended in this 

final rule, does not require the affiliated 

Medicaid plan to be an MCO contract, 

it could be a PAHP or PIHP; Medicaid 

managed care regulations in 42 CFR part 

438 establish the requirements for a 

managed care contract (that is, a 

capitated contract) for coverage of 

Medicaid benefits. 

Comment: A few commenters 

requested clarification on whether these 

provisions limit HIDE SNP enrollments 

to exclusively aligned enrollment. A 

commenter noted that while they 

support greater clarification around 

alignment for HIDE SNPs, they 

recognized the challenges of exclusively 

aligned enrollment and that States may 

need to contract with D–SNPs in ways 

that promote integration but also allow 

States to design programs that meet 

their specific needs and fit within the 

parameters of current State benefit 

offerings. The commenter believed 

additional clarity may be helpful in 

defining alignment options for HIDE 

SNPs. 

Response: We welcome the 

opportunity to clarify our proposal. We 

clarify that HIDE SNP plans are not 

required to have exclusively aligned 

enrollment. Please see the discussion in 

section II.A.5.f. for more detail about 

our proposal to require the capitated 

contract in the entire service area for the 

D–SNP. 

Comment: Some commenters 

requested that CMS apply the frailty 

adjustment to all highly integrated 

products, including HIDE SNPs. A few 

commenters specifically encouraged 

CMS to allow HIDE SNPs that provide 

LTSS to be eligible for the frailty 

adjustment. Several commenters noted 

that there are strong similarities 

between enrollees in HIDE SNPs and 

FIDE SNPs, and since both plan types 

serve enrollees that are generally frailer 

than the typical Medicare population, 

both should be eligible to receive higher 

adjustment payments if they have a 

similar average frailty as the PACE 

program. A commenter stated that 

allowing HIDE SNPs to receive the 

frailty adjustment would more 

appropriately apply the frailty 

adjustment to integrated plans serving 

people dually eligible for both Medicare 

and Medicaid, while acknowledging 

State contracting differences. A few 

commenters stated that allowing HIDE 

SNPs to receive the frailty adjustment 

would make the HIDE SNP market more 

competitive or incentivize further 

integration of plans. 

Response: We appreciate the 

comments regarding the frailty 

adjustment provided by section 

1853(a)(1)(B)(iv) of the Act; however, 

they are beyond the scope of this 

rulemaking. 

After considering the comments we 

received and for the reasons outlined in 

the proposed rule and our responses to 

comments, we are finalizing our 

proposed revisions for the definition of 

a HIDE SNP at § 422.2 without 

modification. 

e. Medicaid Carve-Outs and FIDE SNP 

and HIDE SNP Status 

As discussed earlier, we proposed to 

require FIDE SNPs and HIDE SNPs to 

cover the full scope of the Medicaid 

coverage under the State Medicaid 

program of the categories of services 

that are specified as minimum 

requirements for these plans as outlined 

in sections II.A.5.c. and II.A.5.d. We 

also proposed that coverage of the full 

scope of the specified categories of 

Medicaid benefits is subject to an 

exception that may be permitted by 

CMS under § 422.107(g) or (h). We 

proposed to codify at § 422.107(g) and 

(h), respectively, current CMS policy 

allowing limited carve-outs from the 

scope of Medicaid LTSS and Medicaid 

behavioral health services that must be 

covered by FIDE SNPs and HIDE SNPs. 

As discussed in section II.A.5.c.1. of this 

final rule, CMS has historically 

determined D–SNPs to be FIDE SNPs 

even where the State carved out certain 

primary care, acute care, LTSS, and 

behavioral health services from the 

Medicaid coverage furnished by the 

MCO offered by the FIDE SNP. CMS has 

similarly permitted carve-outs of the 

scope of Medicaid coverage furnished in 

connection with HIDE SNPs. We believe 

that codifying these policies permitting 

exclusions from the scope of Medicaid 

behavioral health and Medicaid LTSS 

would improve transparency for 

stakeholders and allow us to better 

enforce our policies to limit benefit 

carve-outs. We did not propose to 

permit exclusions from coverage of 

Medicaid primary care or acute care for 

FIDE SNPs. 

Our proposal is consistent with the 

policy described in a memorandum 

CMS issued in January 2020,36 with 

some revisions to improve clarity and 

avoid misinterpretations of our policy 

that might result from language in the 

memorandum that differs in the allowed 

carve-outs for LTSS and behavioral 

health services. Like the memorandum, 

our proposal was designed to 

accommodate differences in State 

Medicaid policy—for example, the 

desire to retain delivery through the 

Medicaid FFS program of specific 

waiver services applicable to a small, 

specified population, or to retain 

coverage in the Medicaid FFS program 

for specific providers—without 

significantly undermining the level of 

Medicaid integration provided by HIDE 

SNPs and FIDE SNPs. While we 

generally favor integration and worry 

that Medicaid benefit carve-outs work 

against integration, we believe our 

proposal strikes a balance between the 

current realities of State Medicaid 

managed care policy, applicable 

statutory provisions, and our 

implementation of those statutory 

provisions toward the goal of raising the 

bar on integration. 

Currently and under our proposal to 

revise the definition, a D–SNP may meet 

the criteria for designation as a HIDE 

SNP if it covers either Medicaid LTSS 

or Medicaid behavioral health services 

under a State Medicaid agency contract. 

We currently grant HIDE and FIDE SNP 

status despite Medicaid LTSS carve-outs 

of limited scope if such carve-outs (1) 

apply to a minority of the full-benefit 

dually eligible LTSS users eligible to 

enroll in a HIDE or FIDE SNP who use 

long-term services and supports or (2) 

constitute a small part of the total scope 

of Medicaid LTSS provided to the 

majority of full-benefit dually eligible 

individuals eligible to enroll in a HIDE 

or FIDE SNP who use Medicaid LTSS. 

We provided examples of permissible 

LTSS carve-outs at 87 FR 1867. D–SNPs 

can currently obtain the HIDE or FIDE 

SNP designation with limited carve-outs 

of Medicaid behavioral health services 

from their capitated contracts. A 

behavioral health service carve-out 

would be of limited scope if such a 

carve-out (that is, exclusion from 

coverage by the Medicaid managed care 

plan affiliated with the D–SNP): (1) 

Applies primarily to a minority of the 

full-benefit dually eligible users of 

behavioral health services eligible to 

enroll in a HIDE or FIDE SNP; or (2) 

constitutes a small part of the total 

scope of behavioral health services 

provided to the majority of beneficiaries 

eligible to enroll in a HIDE or FIDE SNP. 

We specified that only a small part of 

the Medicaid behavioral health services 

may be carved out in order to ensure 

that the innovative services that many 


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Medicaid programs provide to 

individuals with severe and moderate 

mental illness are covered through the 

D–SNP (through the MA organization’s 

Medicaid managed care capitated 

contract) or the affiliated Medicaid 

managed care plan (through the 

Medicaid managed care capitated 

contract with the MA organization’s 

parent organization or another entity 

that is owned or controlled by the 

parent organization). We believe that 

level of integrated coverage is a 

minimum standard for a D–SNP to be 

considered highly or fully integrated. 

We provided examples of permissible 

LTSS carve-outs at 87 FR 1868. 

We described our intent to administer 

this proposed regulation consistent with 

our current policy and therefore 

anticipated little disruption to occur 

because of this proposed change. 

Comment: Numerous commenters 

supported the codification of current 

CMS policy allowing limited carve-outs 

from the scope of Medicaid LTSS and 

Medicaid behavioral health services that 

must be covered by FIDE SNPs and 

HIDE SNPs. Several commenters agreed 

with CMS that limited or narrow carveouts of LTSS and behavioral health 

services are essential given the wide 

variation in how States choose to 

provide those services. Another 

commenter suggested the refined 

definitions of FIDE and HIDE SNPs 

could encourage States to carve in LTSS 

for individuals who need the services 

the most. Another commenter 

recognized that the proposed revisions 

to the HIDE SNP and FIDE SNP 

definitions are intended to enhance the 

level of integration in such plans. 

Response: We appreciate the 

widespread support we received for our 

proposal. While we generally favor 

integration and worry that Medicaid 

benefit carve-outs work against 

integration, we believe our proposal 

strikes a balance between the current 

realities of State managed care policy, 

applicable statutory provisions, and our 

current implementation of those 

statutory provisions toward the goal of 

raising the bar on integration. Our 

proposal is consistent with the policy 

described in a memorandum CMS 

issued in January 2020, and we believe 

that these revisions will improve clarity 

and avoid misinterpretations of our 

policy that might result from language 

in the memorandum that differs in the 

allowed carve-outs for Medicaid LTSS 

and behavioral health services. We agree 

with commenters that monitoring the 

impact of carve-outs for impacts on 

enrollees’ access to services and care 

coordination processes is important. 

Comment: A commenter 

recommended that CMS standardize 

Medicaid benefit carve-out requirements 

for States implementing a FIDE SNP 

model. The commenter further 

suggested that CMS set rules for how 

many benefit carve-outs States will be 

allowed, whether the carve-outs include 

benefits that do not qualify as primary 

and acute care services (for example, 

non-emergency transportation), and 

how the carve-outs would integrate 

operationally with the FIDE SNPs if the 

underlying benefit is handled by a 

delegated vendor. 

Response: We thank the commenter 

for their perspectives. However, we do 

not believe it is feasible to establish a 

uniform set of carve-out limits or a 

numerical limit on carve-outs due to the 

variation across States. The 

requirements we are finalizing at 

§ 422.107(g) and (h) permit only limited 

carve-outs from the Medicaid LTSS and 

Medicaid behavioral health services 

coverage that HIDE SNPs and FIDE 

SNPs must have included in their 

managed care contract with the State 

Medicaid agency. We will apply this 

evaluation looking at coverage of 

Medicaid LTSS benefits and/or 

Medicaid behavioral health services as a 

whole in connection with the scope of 

coverage in the Medicaid managed care 

contract affiliated with the FIDE SNP or 

HIDE SNP. While the limits in the 

regulations we are adopting do not 

equate to or specify how many Medicaid 

LTSS and/or Medicaid behavioral 

health services carve-outs a State may 

have, it does act as a substantive limit 

when we make determinations that a D– 

SNP qualifies as a FIDE SNP or HIDE 

SNP. 

The finalized paragraph (2)(i) of the 

FIDE SNP definition at § 422.2 

(discussed earlier in sections II.A.5.c. of 

this final rule) requires each FIDE SNP 

to cover primary and acute care 

services, including Medicare costsharing covered by the State Medicaid 

program as of 2025, under the MCO 

contract between the State and the 

organization that offers the FIDE SNP. 

We did not propose and are not 

adopting any exceptions or permissible 

carve-outs for this required coverage. 

We solicited comment on whether we 

should allow for specific carve-outs of 

some primary and acute care benefits 

and welcomed examples of such 

benefits that are either currently carved 

out of FIDE SNP capitated contracts 

with State Medicaid agencies or should 

be carved out. We did not receive any 

comments in response to this 

solicitation and are finalizing our 

proposal without modification. We 

stated in section II.A.5.c. that Medicaid 

NEMT as defined in § 431.53 is not a 

primary or acute care service included 

in the scope of this provision, but that 

goes to identifying the scope of acute 

and primary care services, not 

establishing permissible carve outs for 

categories of acute and primary care 

services. 

Comment: Another commenter 

believed carve-outs interfere with true 

integration but indicated that some 

Medicaid services may have, 

historically, not been provided 

appropriately by managed care plans. 

The commenter suggested that a State 

carve-out may be necessary to ensure 

that enrollees have access to the care 

they need and recommended that CMS 

work closely with States to determine 

why certain carve-outs exist and what 

the impact may be on access to care if 

the carve-outs are eliminated. Another 

commenter stated that the application of 

a carve-out to a minority of enrollees 

has less of an impact on individuals 

needing Medicaid LTSS services and 

behavioral health services, and several 

commenters advocated that States 

should monitor the impact of any 

service carve-out on enrollees and their 

quality of care and life. 

Response: We thank the commenters 

and appreciate their perspectives. We 

agree that monitoring and oversight of 

carve-outs is important and will work 

with States to ensure quality of care is 

not compromised and enrollees are 

educated about changes to the scope of 

benefits available through a HIDE SNP 

or FIDE SNP, particularly in the case of 

Medicaid LTSS and behavioral health 

services. We clarify that our proposal 

would not require that States carve in 

benefits if they prefer not to do so 

because MA program regulations permit 

a D–SNP to be offered without the MA 

organization (or its parent organization 

or an entity also owned by its parent 

organization) having a capitated 

contract for coverage of Medicaid 

behavioral health or LTSS benefits. As 

proposed and finalized, § 422.107(g) and 

(h) are specific to the required scope of 

coverage of Medicaid benefits by FIDE 

SNPs and HIDE SNPs with regard to 

behavioral health and LTSS benefits. 

Comment: A commenter provided an 

example whereby beneficiaries who 

may consider enrolling in plans with 

carve-outs are notified that the 

integrated services do not include 

Medicaid LTSS and/or behavioral 

health services to the extent they are 

carved-out. 

Response: We appreciate this 

comment and example. Per 

§ 422.2267(e)(5)(ii)(D), all D–SNPs must 

clearly state which services are included 

in their plan benefit packages, including 


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Medicaid benefits, by either including 

the description in the required summary 

of benefits or putting the description in 

a separate document that is provided to 

enrollees with the summary of benefits. 

In addition, § 422.111 requires annual 

disclosures by all MA plans, including 

D–SNPs, of the scope of and rules for 

coverage under the plan. 

Comment: Another commenter 

supported full integration and described 

experience with State carve-outs of 

Medicaid behavioral health and LTSS 

services, which the commenter 

indicated prevents D–SNPs from 

receiving the HIDE SNP and FIDE SNP 

designation. The commenter suggested 

addressing the needs of the dually 

eligible population which may require 

specialized programs and tailored 

methods to support recovery-oriented 

systems of care. 

Response: We thank the commenter 

and agree that addressing the needs of 

the dually eligible population is vital for 

improving health outcomes and is 

greatly facilitated when the broadest 

scope of Medicaid behavioral health and 

LTSS services are integrated into HIDE 

SNP and FIDE SNP benefit packages. 

Comment: Several commenters 

requested guidance and technical 

assistance in various areas. A 

commenter suggested guidance to States 

to promote interoperability and data 

sharing between plans specifically when 

a benefit is carved out. Another 

commenter suggested CMS provide 

guidance to States on how to implement 

a model of care that allows for complete 

integration. 

Response: We thank the commenters 

and appreciate these suggestions. We 

anticipate offering technical assistance 

and providing sub-regulatory guidance 

based on this final rule. 

Comment: Several commenters 

requested clarification on what is meant 

by ‘‘a minority of beneficiaries eligible 

to enroll’’ and ‘‘small part of the total 

scope of services’’ as those phrases are 

used in proposed § 422.107(g) and (h). 

These commenters suggested that CMS 

provide additional examples or further 

description of the review process that 

would be utilized to make these 

determinations. 

Response: We appreciate the 

commenters’ desire for additional 

clarification. We believe the examples 

we provided in the proposed rule at 87 

FR 1867 through 1868 are instructive of 

the type of Medicaid LTSS and 

behavioral health carve-outs we would 

permit under § 422.107(g) and (h). We 

prefer to not inadvertently limit the 

terms ‘‘minority of beneficiaries eligible 

to enroll’’ or ‘‘small part of the total 

scope of services’’ by providing 

additional examples, given the potential 

variation across States. We determine 

the integration status for MA 

organizations offering D–SNPs through 

our annual review of State Medicaid 

agency contracts (that is, the contracts 

between States and D–SNPs required by 

§ 422.107) in July. As part of that 

review, we will assess the scope of 

existing or proposed carve-outs against 

the §§ 422.2 and 422.107(g) and (h) 

requirements and determine whether a 

D–SNP meets the FIDE SNP or HIDE 

SNP designation. Where the State 

Medicaid agency contract is a separate 

contract from the Medicaid MCO 

contract, we may review the Medicaid 

MCO contract available on the State 

Medicaid agency’s website when that is 

necessary to our evaluation. We strongly 

encourage States and MA organizations 

to seek technical assistance from CMS 

as necessary. As the scope of coverage 

of Medicaid benefits must be set in the 

Medicaid capitated contract with the 

Medicaid managed care plan, we 

anticipate that States may seek technical 

assistance outside of the timeline for 

MA organizations to submit their State 

Medicaid agency contracts that are 

required by § 422.107(a) through (c). 

Comment: In addition, a commenter 

suggested CMS clarify what happens in 

certain States that impose caps on 

Medicaid LTSS eligibility resulting in 

enrollment limits and how this carveout provision would be applied or 

affected in those cases. This commenter 

also urged CMS take into consideration 

that, when determining criteria for 

carve-outs in applicable integrated 

plans, even minor Medicaid carve-outs 

can greatly complicate the unified 

grievances and appeals process to which 

they are subject, causing more confusion 

for beneficiaries and providers as well. 

The commenter suggested that CMS 

educate States about these impacts as 

part of the process. 

Response: We thank the commenter. 

FIDE SNPs and HIDE SNPs are required 

by this rule to provide the minimum 

required Medicaid benefits to the extent 

that Medicaid coverage is available to 

beneficiaries who are eligible to enroll 

in the FIDE SNP or HIDE SNP. So, if the 

Medicaid State plan excludes coverage 

altogether of certain benefits for certain 

beneficiaries (that is, there is no 

Medicaid coverage at all, as opposed to 

Medicaid coverage being carved out of 

a managed care program or contract), 

our regulatory provision will not 

withhold designation of the D–SNP as a 

FIDE SNP or HIDE SNP solely based on 

that. Thus, FIDE SNPs are required to 

provide Medicaid LTSS to all who meet 

the State eligibility criteria for LTSS (for 

example, nursing home level of care) 

but not to all FIDE SNP enrollees, some 

of whom might not be eligible for the 

Medicaid benefit at all. HIDE SNPs are 

required to provide Medicaid LTSS, 

and/or Medicaid behavioral health 

services. To the extent Medicaid LTSS 

is not available to an enrollee because 

there is an enrollment cap or waiting list 

(for example, such as those related to 

Medicaid home and community-based 

services waivers), then the enrollee has 

not met the State eligibility criteria and 

the D–SNP could still meet the 

requirements at proposed § 422.107(g) 

and (h) to be a HIDE or FIDE SNP. 

Regarding applicable integrated plans, 

only the services covered by the 

applicable integrated plans are subject 

to the unified appeals and grievances 

processes. However, all D–SNPs that 

receive an appeal for a carved-out 

Medicaid services have a responsibility 

to assist the enrollee in the appeals 

process for that service, per 

§ 422.562(a)(5). 

Comment: Several commenters 

expressed concern that carve-outs may 

lead to disjointed and uncoordinated 

care and that carve-outs do not enhance 

care coordination. Another commenter 

indicated that they believe the proposal 

at § 422.107(g) and (h) impinges on State 

autonomy and flexibility. 

Response: We appreciate the 

commenters’ concerns and we 

acknowledge the commenters’ 

perspective on this issue. However, we 

believe that the requirements proposed 

at § 422.107(g) and (h) strike an 

appropriate balance between the current 

realities of State managed care policy, 

applicable statutory provisions, and our 

implementation of those statutory 

provisions toward the goal of raising the 

bar on integration, while permitting 

State flexibility. 

Comment: A commenter expressed 

concerns regarding the carve-out 

examples provided by CMS. 

Specifically, the commenter questioned 

use of substance abuse treatment, rural 

health clinic (RHC) and FQHC services 

as examples of permissible carve-outs, 

and requested feedback on whether the 

examples provided were appropriate. 

The commenter opined that these 

services are not limited in scope and 

should not be included as permissible 

carve-outs. The commenter noted that, 

according to the Substance Abuse and 

Mental Health Administration, dually 

eligible beneficiaries have a 

significantly higher rate of behavioral 

health and substance use disorder 

conditions than the non-dually eligible 

population. The commenter noted that, 

for many dually eligible individuals, 

RHCs and FQHCs are their primary 

source of behavioral health and 


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37CMS has acknowledged this and encouraged 

MA organizations to align these service areas in 

guidance issued on January 17, 2020, regarding D– 

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

cy2021dsnpsmedicare

medicaidintegrationrequirements.pdf. 

substance use disorder treatment. 

Therefore, the commenter requested that 

CMS not include these services as 

permissible carve-outs. 

Response: We appreciate the 

comment and agree that the services 

identified are important to dually 

eligible individuals and care 

coordination would be facilitated if 

these services were not carved out from 

FIDE SNP or HIDE SNP Medicaid 

benefits. However, to our knowledge, 

only one State carves out FQHC and 

RHCs from Medicaid benefits covered 

under the FIDE SNP’s or HIDE SNP’s 

MCO contract with the State Medicaid 

agency. That State, Minnesota, has 

carved out Medicaid FQHC and RHC 

services from the benefits delivered by 

FIDE SNPs and HIDE SNPs because of 

the complexity in adjudicating 

Medicaid payments for these provider 

types and services. The State has 

implemented a data exchange process 

between these providers and the State’s 

FIDE SNPs and HIDE SNPs to facilitate 

care coordination. At least six States 

carve substance use disorder services 

out from the services delivered by HIDE 

SNPs and FIDE SNPs. We believe the 

frequency of such carve-outs may be 

indicative of the difficulty in subsuming 

these services under Medicaid managed 

care. We do not have any information 

indicating that Medicaid behavioral 

health services or LTSS delivered by 

FQHCs and RHCs or substance use 

disorder services do not constitute a 

small part of the total scope of such 

services provided to the majority of 

beneficiaries eligible to enroll in these 

D–SNPs. Thus, we are finalizing 

language at § 422.107(g) and (h) that will 

continue to allow such limited carveouts of Medicaid LTSS and Medicaid 

behavioral health services from the 

services covered by FIDE SNPs and 

HIDE SNPs. We will continue to assess 

whether these specific carve-outs meet 

our criteria in light of the specific facts 

in a given situation. In addition, we may 

consider future rulemaking to revise the 

standard in § 422.107(g) and (h) if 

necessary. 

Comment: A commenter agreed with 

CMS that personal care services should 

not be carved out but also suggested that 

there could be instances where FIDE 

SNPs and HIDE SNPs do carve out 

services, such as behavioral health and 

Medicaid LTSS, and integration could 

still be achieved. This commenter 

provided an example where county 

personnel from the In-Home Supportive 

Services Program, California’s carvedout personal care program, participated 

in care planning meetings with the 

MMP. 

Response: We appreciate the 

comment and an example of 

engagement between personal care 

services staff and the MMP under 

circumstances where personal care 

services are carved out. While we 

recognize there may be other similar 

examples, as we discussed at 87 FR 

1867 through 1868, our current policy, 

which we proposed and are finalizing in 

the definitions of FIDE SNP and HIDE 

SNP in § 422.2 and in § 422.107(g) and 

(h), is that FIDE SNP or HIDE SNP 

designation is not available for D–SNPs 

where the Medicaid coverage has 

extensive carve-outs of Medicaid 

behavioral health and/or Medicaid 

LTSS benefits. While we encourage the 

use of additional means of coordinating 

services, we do not believe that to be the 

appropriate standard to use. 

Comment: A commenter requested 

additional clarification on how CMS 

views Medicaid carve-outs, including 

how CMS would address circumstances 

where a State’s configuration of services 

and coverage differs from CMS’s 

proposed requirements at §§ 422.2 and 

422.107(g) and (h) for FIDE SNP and 

HIDE SNP coverage of Medicaid LTSS 

and Medicaid behavioral health 

services, as is the case in California. 

This commenter sought clarification of 

CMS’s expectation that the FIDE SNP 

and/or HIDE SNP cover communitybased LTSS. Similarly, the commenter 

requests information on CMS’s view of 

behavioral health carve-outs in 

California, where behavioral health 

services for individuals with serious 

mental illness are the responsibility of 

the county mental health plan. 

Response: Our proposal at 

§ 422.107(g) through (h) does not change 

States’ abilities to make decisions about 

its Medicaid managed care program or 

how services are delivered in Medicaid. 

Instead, our regulations at § 422.107(g) 

and (h) as well as the revisions to the 

definitions of FIDE SNP and HIDE SNP 

in § 422.2 limit the HIDE SNP and FIDE 

SNP designation based on the extent of 

carve-outs or exclusions from Medicaid 

coverage furnished under the Medicaid 

capitated contract required with the D– 

SNP or an affiliated Medicaid managed 

care plan. The current combination of 

LTSS and behavioral health carve-outs 

in California precludes most D–SNPs 

operating in California from qualifying 

for HIDE SNP or FIDE SNP designation. 

After considering the comments we 

received and for the reasons outlined in 

the proposed rule and our responses to 

comments, we are finalizing our 

proposed provisions at § 422.107(g) 

through (h) without modification. 

f. Service Area Overlap Between FIDE 

SNPs and HIDE SNPs and Companion 

Medicaid Plans 

MA organizations can achieve greater 

integration when they maximally align 

their FIDE SNP and HIDE SNP service 

areas with the service areas of the 

affiliated Medicaid managed care plan 

(meaning the entities that offer capitated 

Medicaid benefits for the same enrollees 

under a capitated contract with the 

State). Service area alignment also better 

comports with the minimum MedicareMedicaid integration standards 

established by section 50311(b) of the 

BBA of 2018, which amended section 

1859 of the Act. We codified the 

required level of integration for D–SNPs 

in paragraph (4) of the definition of D– 

SNP at § 422.2 in the April 2019 final 

rule. 

Currently, under § 422.2, a D–SNP can 

meet the requirements to be designated 

as a FIDE SNP or HIDE SNP even if the 

service area within a particular State 

does not fully align with the service area 

of the companion Medicaid plan (or 

plans) affiliated with their 

organization.37 For FIDE SNP or HIDE 

SNP enrollees outside the companion 

Medicaid plan’s service area, this lack of 

alignment does little to integrate 

Medicare and Medicaid benefits as the 

D–SNP enrollee does not have the 

option to join the companion Medicaid 

plan. We believe requiring service area 

alignment in the definitions of FIDE 

SNP and HIDE SNP would encourage 

MA organizations and States to create 

better experiences for beneficiaries and 

move toward greater integration, which 

would be consistent with the 

amendments to section 1859(f) of the 

Act made by section 50311(b) of the 

BBA of 2018. 

Under our authority at section 

1859(f)(8)(D) of the Act to require that 

all D–SNPs meet certain criteria for 

Medicare and Medicaid integration, we 

proposed to amend the FIDE SNP 

definition at § 422.2 by adding new 

paragraph (6) and the HIDE SNP 

definition at § 422.2 by adding new 

paragraph (3) to require that the 

capitated contracts with the State 

Medicaid agency cover the entire 

service area for the D–SNP for plan year 

2025 and subsequent years. Requiring 

the service area of the D–SNP contract 

to completely overlap with the service 

area of the Medicaid capitated (that is, 

managed care) contract will facilitate all 


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38CMS, SNP Comprehensive report, January 

2022. Retrieved at: https://www.cms.gov/ResearchStatistics-Data-and-Systems/Statistics-Trends-andReports/MCRAdvPartDEnrolData/Special-NeedsPlan-SNP-Data. 

39 Internal analysis based on data from: CMS, 

Monthly Enrollment by Contract, January 2022. 

Retrieved from: https://www.cms.gov/ResearchStatistics-Data-and-Systems/Statistics-Trends-andReports/MCRAdvPartDEnrolData/MonthlyEnrollment-by-Contract; CMS, Monthly Enrollment 

by Contract/Plan/State/County, January 2022. 

Retrieved from: https://www.cms.gov/ResearchStatistics-Data-and-Systems/Statistics-Trends-andReports/MCRAdvPartDEnrolData/MonthlyEnrollment-by-Contract-Plan-State-County; CMS, 

D–SNP Integration Levels for CY 2022. Retrieved 

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

smacdsnpintegrationstatusesdatacy2022.xlsx; and 

service area information from State Medicaid 

agency websites. 

FIDE SNP and HIDE SNP enrollees 

having access to both Medicare and 

Medicaid benefits from a single parent 

organization. 

Our proposal addressed an 

unintended loophole to the minimum 

D–SNP integration criteria we adopted 

as part of the definitions of FIDE SNP 

and HIDE SNP: Where a D–SNP can 

qualify as either a FIDE SNP or HIDE 

SNP by only having a small portion of 

its service area (and therefore, 

enrollment) in the same service area as 

the companion Medicaid plan. We do 

not believe that the existing definitions 

are consistent with the goals and 

purposes of increasing MedicareMedicaid integration for D–SNPs as a 

whole or particularly for FIDE SNPs and 

HIDE SNPs, which are supposed to have 

more than a bare minimum level of 

integration. 

We did not intend for the proposal to 

limit State options for how they contract 

with managed care plans for their 

Medicaid programs, but to require the 

FIDE and HIDE SNPs to limit their MA 

service areas to areas within the service 

areas for the companion Medicaid plan. 

We did not propose to limit the service 

area of the companion Medicaid plan to 

that of the D–SNP service area. 

Therefore, the companion Medicaid 

plan may have a larger service area than 

the D–SNP. States, in their contracting 

arrangements for Medicaid managed 

care programs, may wish to limit the 

service areas of the affiliated Medicaid 

managed care plans, but we recognize 

that States may have other policy 

objectives better met with larger service 

areas in their Medicaid managed care 

programs. 

In plan year 2022, all FIDE SNPs met 

the service area requirement being 

proposed. Most, but not all, HIDE SNPs 

also met the proposed requirement. Of 

the 219 HIDE SNP plan benefit packages 

across 18 States,38 only 15 HIDE SNPs 

in four States had service area gaps with 

their affiliated Medicaid managed care 

plans, leaving 106,075 enrollees in 194 

counties with no corresponding 

Medicaid plan.39 As noted in our 

proposed rule, an MA organization 

impacted by our proposal would have 

several pathways to comply with the 

change to the definition of HIDE SNP at 

§ 422.2. The options include using the 

crosswalk exception currently at 

§ 422.530(c)(4) (which we are 

redesignating as § 422.530(c)(4)(i) in 

section II.A.6.a. of this final rule) in 

conjunction with dividing an existing 

FIDE or HIDE SNP into two (or more) 

separate D–SNPs, with the service area 

of the FIDE or HIDE SNP being within 

the service area of the affiliated 

Medicaid managed care plan. We 

solicited comment on whether this 

proposal would likely result in 

additional, unintended disruption for 

current FIDE SNP and HIDE SNP 

enrollment. We direct readers to the 

proposed rule, at 87 FR 1869, for a more 

detailed description of our projected 

impacts on HIDE SNPs and options 

available for MA organizations impacted 

by this change. 

We explained in the proposed rule 

how we were considering an alternative 

of establishing a minimum percentage of 

enrollment or service area overlap 

between the D–SNP affiliated Medicaid 

plan and having FIDE SNPs and HIDE 

SNPs attest to meeting the minimum 

overlap requirement. We were also 

considering an amendment to explicitly 

codify how the current requirements 

permit D–SNPs to be designated as a 

FIDE SNP or HIDE SNP even if their 

service area within a particular State 

does not fully align with the service area 

of the companion Medicaid plan (or 

plans). We did not propose either of 

these alternative approaches because we 

believed these alternatives would create 

greater operational complexity (in the 

case of establishing a minimum 

percentage overlap) and would fail to 

help us achieve our objectives of 

clarifying options for beneficiaries and 

creating better coordination of Medicare 

and Medicaid benefits for all enrollees 

of the FIDE SNP or HIDE SNP compared 

to current practice. 

Comment: A number of commenters 

supported of the proposal to require 

FIDE SNPs and HIDE SNPs have 

capitated contracts with the State 

Medicaid agency covering the entire 

service area for the D–SNP. A 

commenter noted that existing 

unaligned service areas for HIDE SNPs 

resulted in confusion among enrollees, 

providers, and plan staff and limited 

opportunities for integrated notices and 

appeals. Some commenters believed 

that CMS’s proposal would increase 

Medicare-Medicaid integration. Several 

commenters noted CMS’s proposal 

would facilitate the ability to offer 

exclusively aligned enrollment for D– 

SNP and the affiliated Medicaid plan. A 

commenter believed most, if not all, 

beneficiaries enrolled in HIDE SNPs and 

FIDE SNPs should have access to 

companion Medicaid plans. Another 

commenter noted that dually eligible 

individuals should be in Medicare and 

Medicaid plans under one parent 

company. Some commenters stated that 

CMS’s proposal would clarify the 

definitions of FIDE SNPs and HIDE 

SNPs, and prevent less integrated plans 

from claiming these designations. 

Response: We thank commenters for 

their support of our proposal. We agree 

that this change to the FIDE SNP and 

HIDE SNP definitions at § 422.2, and 

therefore in the requirements for these 

types of D–SNPs, will improve 

Medicare-Medicaid integration for 

dually eligible beneficiaries. 

Comment: A commenter supported 

this proposal at the plan benefit package 

(PBP) level, rather than the contract 

level, in States where Medicare 

Advantage contracts include non-FIDE 

and non-HIDE PBPs that are D–SNPs. 

Another commenter supported the 

proposal and encouraged CMS to extend 

this requirement to all D–SNPs that 

operate in the same area as a Medicaid 

managed care plan, unless the State 

requests an exception. The commenter 

believed that when a State has risk 

contracts with managed care plans to 

provide Medicaid coverage to the dually 

eligible population, D–SNPs should 

only be permitted to operate if they have 

one of these Medicaid managed care 

contracts. This commenter believed that 

allowing integrated D–SNPs to compete 

with non-integrated D–SNPs confuses 

beneficiaries and degrades the 

definition of a D–SNP. 

Response: We appreciate the support 

from these commenters. We confirm 

that the service area requirement we 

proposed and are finalizing here applies 

to FIDE SNPs and HIDE SNPs at the PBP 

level. While we did not accept the 

recommendation to deny D–SNP MA 

contracts to plans that do not 

(themselves or through an affiliated 

entity) have a capitated contract for 

Medicaid benefits with the State 

Medicaid agency in States where such 

contracts exist, we do note that States 

can choose to execute State Medicaid 

agency contract only with those D–SNPs 

that also cover Medicaid benefits under 

Medicaid managed care contracts, 

through a direct contract with the State 

or through an affiliated Medicaid 

managed care plan. Our final policy 


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40MACPAC, Report to Congress on Medicaid and 

CHIP, ‘‘Chapter 6: Improving Integration for Dually 

Eligible Beneficiaries: Strategies for State Contracts 

with Dual Eligible Special Needs Plan,’’ June 2021. 

Retreived at https://www.macpac.gov/wp-content/ 

uploads/2021/06/June-2021-Report-to-Congress-onMedicaid-and-CHIP.pdf. 

41 Internal analysis based on data from: CMS, 

Monthly Enrollment by Contract, March 2021. 

Retrieved from: https://www.cms.gov/ResearchStatistics-Data-and-Systems/Statistics-Trends-andReports/MCRAdvPartDEnrolData/MonthlyEnrollment-by-Contract; CMS, Monthly Enrollment 

by Contract/Plan/State/County, March 2021. 

Retrieved from: https://www.cms.gov/ResearchStatistics-Data-and-Systems/Statistics-Trends-andReports/MCRAdvPartDEnrolData/MonthlyEnrollment-by-Contract-Plan-State-County; CMS, 

D–SNP Integration Levels for CY 2021. Retrieved 

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

smacdsnpintegrationstatusesdata.xlsx; and service 

area information from State Medicaid agency 

websites. 

provides flexibility for States to permit 

coordination-only D–SNPs. 

Comment: Some commenters opposed 

the requirement to align the FIDE SNP 

or HIDE SNP service area with the 

affiliated Medicaid plan service area. A 

few commenters expressed concern that 

the requirement will create significant, 

unnecessary disruption to existing D– 

SNP enrollees. A commenter believed 

requiring a Medicaid contract to cover 

the entire HIDE SNPs service area 

would limit the ability of small or new 

plans to offer a HIDE SNP and this 

would not be in beneficiaries’ best 

interests. 

Response: We appreciate the 

commenters’ concern about the 

disruption to enrollees of FIDE SNPs 

and HIDE SNPs. We clarify that an 

impacted MA organization can keep 

operating in the existing service area for 

both the D–SNP and Medicaid plan; the 

difference would be that beginning with 

plan year 2025, the D–SNP would not 

qualify for FIDE SNP or HIDE SNP 

designation. Therefore, there is no need 

for a D–SNP to terminate and disrupt 

the coverage provided to current 

enrollees. The impacted MA 

organization that is not changing its 

service area or PBP offerings as a result 

of this rule would be required to update 

the contract with the State Medicaid 

agency required by § 422.107 to include 

the notification requirement specified at 

§ 422.107(d). We note that, based on our 

review of D–SNP contracts for 2022, no 

FIDE SNPs are impacted by this 

requirement, and the States with 

impacted HIDE SNPs also offer nonHIDE D–SNPs; therefore, these States 

have established and are experienced 

with the notification requirement at 

§ 422.107(d). 

Comment: Several commenters also 

noted their concern about how the new 

service area requirement would 

negatively impact the State Medicaid 

agencies’ contracting priorities and their 

ability to contract with D–SNPs. A few 

commenters requested CMS engage with 

impacted States to prevent any potential 

impacts and beneficiary disruption. A 

commenter requested further analysis 

and explanation of how the proposal 

would work with current State laws, 

and requested CMS research why there 

may be regions where a capitated 

contract does not extend to the entire D– 

SNP service area. Another commenter 

noted States may need some flexibility 

to come into compliance with the 

requirement and design programs and 

benefit offerings to meet their needs. 

Response: We thank the commenters. 

However, we do not believe that this 

change will impact the flexibility that 

States have to use their contracts with 

D–SNPs to design programs that meet 

the needs of dually eligible 

beneficiaries. States can continue to 

contract with D–SNPs that have an 

affiliated Medicaid managed care plan 

in only a portion of the service area. 

While we agree with MACPAC’s 

recommendation that States use the 

State Medicaid agency contracts that are 

required for D–SNPs by § 422.107(b) to 

completely align service areas between 

a D–SNP and a Medicaid managed care 

plan to better integrate coverage and 

care,40 our proposal only mandates such 

alignment for HIDE SNP and FIDE SNPs 

with their affiliated Medicaid managed 

care plans. Coordination-only D–SNPs 

can continue to operate without 

alignment of the service area of the D– 

SNP with an affiliated Medicaid 

managed care plan. We continue to 

conduct outreach and technical 

assistance to States to better understand 

their use of capitated contracts (that is, 

Medicaid managed care contracts under 

42 CFR part 438) and their MedicareMedicaid integration goals. 

Comment: A commenter noted that 

the proposed changes have already been 

implemented in Arizona. Another 

commenter expressed concern that the 

requirement would impact the 

landscape of D–SNPs in Oregon. 

Response: We thank the commenters 

for offering their perspective. In our 

analysis of FIDE SNP and HIDE SNP 

service areas,41 we identified some 

service areas in which HIDE SNPs in 

Arizona do not offer an affiliated 

Medicaid plan; however, we believe the 

impacted plans and the State have 

sufficient time to choose an approach to 

come into compliance (or default to 

coordination-only D–SNP status) that is 

in line with the State’s integration goals. 

Our analysis also showed that HIDE 

SNPs in Oregon would not be impacted 

by this proposal because each of 

Oregon’s HIDE SNPs’ service areas 

completely overlap with an affiliated 

Medicaid plan. We will reach out to 

States impacted by this change to 

provide technical assistance in advance 

of the contract year 2025 MA bidding 

cycle. 

Comment: A few commenters 

requested that CMS clarify the scope of 

the proposed requirement. A commenter 

requested clarification on whether this 

provision, or others in the rule, would 

limit HIDE SNP enrollments to 

exclusively aligned enrollment or 

otherwise limit HIDE SNPs with 

unaligned enrollment. Another 

commenter requested confirmation that 

an MA organization that has a Medicaid 

MCO contract that covers the applicable 

geography and that includes behavioral 

health benefits for dually eligible 

beneficiaries would be allowed to 

operate HIDE SNPs, even if the MA 

organization does not have a managed 

long-term services and supports 

(MLTSS) contract. The commenter also 

requested CMS confirm that an MA 

organization that offers a HIDE SNP that 

includes Medicaid services (including 

behavioral health) in the State Medicaid 

agency contract should not need to also 

have separate Medicaid MCO contract. 

Lastly, the commenter requested CMS 

clarify that an MA organization is not 

required to also have a general Medicaid 

MCO contract or MLTSS contract to 

offer a HIDE SNP if the State has 

separate selection process for integrated 

plans. 

Response: We thank the commenters 

for their request for clarity on the scope 

of the proposals. We confirm that this 

provision and others being finalized in 

this rule do not require HIDE SNPs to 

have exclusively aligned enrollment. 

(The definitional change to require 

exclusively aligned enrollment 

beginning in 2025 is limited to FIDE 

SNPs.) We also note that in addition to 

requiring that the capitated contract 

with the State Medicaid agency cover 

the entire service area for the HIDE SNP 

starting in plan year 2025, the HIDE 

SNP definition as finalized in this rule 

requires: (1) The capitated contract be 

between the State Medicaid agency and 

the MA organization, it’s parent 

organization, or another entity that is 

owned and controlled by its parent 

organization; (2) coverage of LTSS or 

behavioral health services. HIDE SNPs 

are not required to have a capitated 

contract with the State for both 

behavioral health and LTSS. These 

capitated contracts with the State 

Medicaid agency are Medicaid managed 

care risk contracts between the State 

and MA organization offering the HIDE 

SNP, its parent organization, or another 

entity owned and controlled by the 


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parent organization and the Medicaid 

managed care risk contracts must 

comply with 42 CFR part 438 provisions 

for Medicaid managed care contracts. 

Therefore, the Medicaid managed care 

plan that is affiliated with a HIDE SNP 

may be an MCO, a PIHP, or a PAHP, so 

long as coverage of at least Medicaid 

LTSS or Medicaid behavioral health 

services is included. Under this 

additional amendment, the D–SNP’s 

service area must be completely 

overlapped by the service area of this 

affiliated Medicaid managed care plan 

beginning in 2025 in order for the D– 

SNP to be a HIDE SNP; actual 

enrollment in the HIDE SNP and the 

affiliated Medicaid managed care plan is 

not required to be aligned. We note that 

some States directly contract with D– 

SNPs under a single contract that meets 

both the managed care contract 

requirements under 42 CFR part 438 

and the D–SNP contract requirements 

under § 422.107, but this is not required 

and a State may use a Medicaid 

managed care contract under part 438 

and a separate contract for § 422.107 

purposes. 

Comment: A few commenters 

supported CMS giving impacted MA 

organizations the opportunity to 

crosswalk enrollees from the existing D– 

SNP that includes the service area 

outside of the companion Medicaid plan 

service area into a new D–SNP PBP. 

However, several commenters noted 

creating two different PBPs creates 

additional burdens for MA 

organizations. A commenter also noted 

there is additional burden for the States 

to operate and oversee additional D– 

SNP PBPs. 

Response: We thank the commenters 

for this feedback and recognize that 

creating a new PBP (that is, a new MA 

plan) creates additional burden for MA 

organizations. We reiterate that MA 

organizations do not need to change 

how they operate an impacted HIDE 

SNP. The HIDE SNP would lose its 

HIDE SNP designation and become a 

coordination-only D–SNP, which 

requires compliance with § 422.107(d). 

However, the D–SNP’s contract with the 

State Medicaid agency under 

§ 422.107(a) through (c) would likely 

need to be amended to include the 

notification requirement at § 422.107(d). 

We believe any burden to the State from 

an additional D–SNP PBP due to the 

notification requirement at § 422.107(d) 

or other State oversight of D–SNPs 

would be minimal. As noted previously 

in this section, all States with D–SNPs 

impacted by this provision already have 

coordination-only D–SNPs in their 

markets. 

Comment: Some commenters 

suggested that CMS delay the proposed 

2025 effective date of the requirement 

for service area overlap. While these 

commenters did not suggest an 

alternative effective date for this 

provision, they stated that it may take 

States and current HIDE SNPs longer to 

comply given State legislative and 

budgetary cycles. 

Response: We recognize the 

commenters’ concerns and acknowledge 

the difficulty with aligning State 

Medicaid agency and Medicare 

Advantage contracting timelines. 

However, we decline to make this 

change. For the HIDE SNPs that are not 

able to align their MA service area with 

the affiliated Medicaid plan’s service 

area for contract year 2025, they may be 

able to continue operating as a nonHIDE D–SNP and regain HIDE status 

once the service areas align. We note, 

however, that this final rule is effective 

in 2022, more than two years before the 

beginning of 2025 when this new 

service area requirement will apply. 

Comment: Several commenters 

requested CMS provide guidance to 

impacted States and MA organizations. 

A few commenters requested CMS 

educate States on how service area 

alignment impacts integrated care, and 

provide resources to help States address 

challenges such as different Medicaid 

procurement and D–SNP contract 

timelines. A commenter noted SHIP and 

MA brokers would also benefit from 

educational resources. Another 

commenter suggested that CMS educate 

beneficiaries ahead of this change. 

Response: We thank the commenters 

for their input. We will continue to 

engage with States to understand 

challenges and priorities in establishing 

Medicare-Medicaid integration to 

improve beneficiary experience and 

integration options. We will provide 

education and outreach to States about 

changes in this final rule through the 

Integrated Care Resource Center (see 

https://www.integratedcareresource

center.com/). We are also exploring 

ways to improve awareness of available 

integrated care options for dually 

eligible beneficiaries. 

Comment: A few commenters did not 

support the alternatives CMS 

considered to establish a minimum 

percentage of enrollment or service area 

overlap between the D–SNP and 

affiliated Medicaid plan. A commenter 

noted that these alternatives would 

cause confusion and limit opportunities 

for integration. A commenter supported 

the alternative of establishing a 

minimum percentage of enrollment at 

75 percent or higher. This commenter 

noted that this percent would limit the 

number of FIDE SNP or HIDE SNP 

enrollees who find themselves without 

access to both Medicare and Medicaid 

benefits from a single parent 

organization but allow FIDE SNPs and 

HIDE SNPs in areas of the State where 

the companion Medicaid managed care 

plan may not be able to attract enough 

providers to meet network adequacy 

standards required by the State. 

Response: We thank these 

commenters for their input. We 

acknowledge the difficulty for health 

plans to meet both Medicare and 

Medicaid network adequacy standards 

in rural areas. We are not finalizing the 

alternative considered of setting a 

minimum percentage of enrollment as 

we believe requiring FIDE SNPs and 

HIDE SNPs to have, beginning with the 

2025 plan year, MA service areas that 

are entirely covered by the service area 

of the Medicaid capitated contact will 

create sufficiently better coordination of 

Medicare and Medicaid benefits 

compared to current practice. 

Comment: Some commenters 

suggested that CMS allow existing HIDE 

SNPs to continue operating as HIDE 

SNPs and allow beneficiaries to choose 

to remain in unaligned plans. A 

commenter requested that CMS clarify 

network requirements to ensure 

alignment between a FIDE SNP’s 

Medicare and Medicaid provider 

network. Another commenter suggested 

an attestation process which would 

require increasing levels of network 

alignment to maintain HIDE SNP status, 

similar to an initiative in Washington 

State. 

Response: We thank commenters for 

their recommendations. We decline to 

accept the recommendation to allow 

existing HIDE SNPs to operate as HIDE 

SNPs despite not meeting this new 

requirement because this alternative 

may create greater operational 

complexity for overseeing HIDE SNPs 

and would fail to meet the objectives 

that underpinned our proposal. 

Regarding network requirements to 

align the D–SNP’s and companion 

Medicaid plan’s provider networks, we 

will consider issuing future guidance 

and rulemaking on this topic. While we 

recognize the potential for improved 

continuity of care for dually eligible 

enrollees from State initiatives to 

increase the proportion of Medicaid 

plan providers in the D–SNP network 

alignment like the example from 

Washington State, this alternative is 

outside of the scope of this rulemaking. 

After consideration of the comments 

we received and for the reasons outlined 

in the proposed rule and our responses 

to comments, we are finalizing our 

proposed amendments at § 422.2 to the 


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42The following memo outlines the policy for CY 

2020, which has been in effect for several years: 

CMS HPMS Memo, ‘‘Release of Notice of Intent to 

Apply for Contract Year 2021 Medicare Advantage 

(MA), Medicare-Medicaid Plans (MMP), and 

Prescription Drug Benefit (Part D) and Related CY 

2021 Application Deadlines’’, October 17, 2019. 

Retrieved from https://www.cms.gov/files/ 

document/2021-noia-partcpartd-mmp.pdf. 

FIDE SNP definition by adding new 

paragraph (6) and the HIDE SNP 

definition by adding new paragraph (3) 

to require that the capitated contracts 

with the State Medicaid agency cover 

the entire service area for the D–SNP for 

plan year 2025 and subsequent years. 

6. Additional Opportunities for 

Integration Through State Medicaid 

Agency Contracts (§ 422.107) 

Section 164 of MIPPA amended 

section 1859(f) of the Act to require that 

each D–SNP contract with the State 

Medicaid agency to provide benefits, or 

arrange for the provision of Medicaid 

benefits, to which an enrollee is 

entitled. Implementing regulations are 

codified at § 422.107. Notwithstanding 

this State contracting requirement for 

D–SNPs, section 164(c)(4) of MIPPA 

does not obligate a State to contract with 

a D–SNP, which therefore provides 

States with significant control over the 

availability of D–SNPs in their markets. 

The State’s discretion to contract with 

D–SNPs, combined with the State’s 

control over its Medicaid program, 

creates flexibility for the State to require 

greater integration of Medicare and 

Medicaid benefits from the D–SNPs that 

operate in the State. 

Even among States that have used the 

State Medicaid agency contract at 

§ 422.107 to promote integration, we 

believe additional opportunities exist to 

improve beneficiary experiences and 

health plan oversight. 

We proposed a new paragraph (e) at 

§ 422.107 to describe conditions under 

which CMS would facilitate compliance 

with certain contract terms that States 

require of D–SNPs that operate in the 

State. As discussed in the proposed rule 

at 87 FR 1870, CMS would take certain 

steps when a State Medicaid agency’s 

contracts with D–SNPs require 

exclusively aligned enrollment and 

require the D–SNPs to request (from 

CMS) MA contracts that only include 

one or more State-specific D–SNPs and 

that such D–SNPs use integrated 

member materials. As discussed below 

and in the proposed rule beginning at 87 

FR 1870, the requirements described in 

proposed paragraph (e)(1) require work 

on the part of CMS to facilitate 

compliance by D–SNPs with the State’s 

requirements. Therefore, proposed 

paragraphs (e)(2) and (3) described steps 

CMS would take when the conditions of 

proposed paragraph (e)(1) were met. 

a. Limiting Certain MA Contracts to D– 

SNPs 

Special needs plans, including D– 

SNPs, are currently included as separate 

MA plans, also known as ‘‘plan benefit 

packages (PBPs),’’ under the same 

contract number along with any other 

MA plans of the same product type (for 

example, health maintenance 

organization (HMO), preferred provider 

organization (PPO), etc.) offered by the 

legal entity that is the MA organization. 

As described in the proposed rule at 87 

FR 1870, PBPs under a single contract 

may offer different benefit packages and 

serve multiple populations but still 

report medical loss ratios and certain 

quality measures at the contract level. 

While some quality measures are 

collected at the PBP level, unless a D– 

SNP is the only PBP in a contract, it is 

not possible to ascertain a full and 

complete picture of the quality 

performance of the D–SNP 

distinguished from other PBPs in the 

contract. In addition, there is currently 

no formal pathway for States to 

coordinate with CMS to require D–SNP 

PBPs to utilize model materials that 

integrate information regarding 

Medicare and Medicaid coverage. 

It has been a long-standing CMS 

policy that CMS only award a legal 

entity one contract for each product 

type (for example, HMO, PPO, regional 

preferred provider organization (RPPO), 

etc.) it seeks to offer for all PBPs for the 

totality of the States, with limited 

exceptions.42 Given the important 

distinctions of D–SNPs in comparison to 

other MA plans, States and other 

stakeholders have expressed an interest 

in better understanding performance of 

these plans without data being 

combined with non-D–SNPs and 

tailoring the information provided in 

member materials to more aptly suit the 

dually eligible population. 

Therefore, we proposed to codify a 

pathway where if a State requires an 

MA organization to establish a MA 

contract that only includes one or more 

D–SNPs with exclusively aligned 

enrollment within a State and for that 

D–SNP to then utilize integrated 

materials, the MA organization may 

apply for such a contract using the 

existing MA application process. The 

proposed language at § 422.107(e)(1)(i) 

would give States the flexibility to 

require an MA organization to apply 

and seek CMS approval for one or more 

D–SNP-only contracts, which would 

provide more transparency in D–SNP 

plan performance within States. We 

direct readers to the proposed rule 87 

FR 1870 for a more detailed explanation 

of the benefits and challenges of this 

proposal. 

We described at proposed 

§ 422.107(e)(2) how the CMS 

administrative steps to permit a new D– 

SNP-only contract would be initiated by 

receipt of a letter from the State 

Medicaid agency indicating its intention 

to include the contract requirements 

under § 422.107(e)(1) in its contract 

with specific MA organizations offering, 

or intending to offer, D–SNPs with 

exclusively aligned enrollment in the 

State. While we would provide States 

with additional information on 

timelines and procedures in subregulatory guidance, we would follow 

the steps consistent with existing 

timeframes and procedures for the 

submission of applications, bids, and 

other required materials to CMS. 

Examples of those activities are 

summarized in the proposed rule at 87 

FR 1871. Our proposal did not include 

exemptions or changes in the current 

regulations and process for contract 

applications. 

To avoid any significant beneficiary 

disruption while implementing the 

proposed change, we proposed a new 

crosswalk exception (to be codified at 

§ 422.503(c)(4)(ii)) to allow MA 

organizations to seamlessly move 

existing D–SNP enrollees into a D–SNPonly contract created under this 

proposal. Our proposed crosswalk 

exception would apply only for 

movement between plans of the same 

product type (HMO, PPO, etc.) under 

the same parent organization for the 

following contract year when the new 

D–SNP is created under a new D–SNPonly contract based on a State 

requirement as described in proposed 

§ 422.107(e). To add this new crosswalk 

exception, we proposed redesignating 

the existing paragraph (c)(4) as new 

paragraph (c)(4)(i) and creating a new 

paragraph (c)(4)(ii) in § 422.530. Under 

this proposal, the processes used for 

other crosswalk exceptions (for 

example, the notice to CMS and CMS’s 

review and approval of the crosswalk 

exception) would apply to this new 

crosswalk exception. 

We solicited comment on limiting 

certain MA contracts to D–SNPs and 

whether any additional beneficiary 

protections should apply. 

Comment: Many commenters support 

this proposal as a step to improve 

quality, transparency, plan performance, 

and oversight of D–SNPs. Several 

commenters indicated having D–SNPonly contracts established under 

§ 422.107(e) would enable a clearer 

understanding of the dually eligible 

population outcomes and needs in each 


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State. MACPAC commented that the 

proposal aligned with prior work 

highlighting how States can use 

authority under the Medicare 

Improvements for Patients and 

Providers Act of 2008 (MIPPA, Pub. L. 

110–275) to promote integration in their 

contracts with D–SNPs. 

Response: We thank commenters for 

their support. We agree that having D– 

SNPs with exclusively aligned 

enrollment separated into distinct 

contracts will provide greater 

transparency into plan performance and 

ultimately improve quality for dually 

eligible enrollees. 

Comment: Several commenters 

expressed support for efforts to 

encourage greater integration; however, 

they also expressed concerns with 

permitting States to request to CMS that 

D–SNPs with exclusively aligned 

enrollment be in separate MA contracts. 

Some commenters were concerned that 

the ability to have D–SNP-only contracts 

established under § 422.107(e) 

complicates State contracting 

requirements and could create barriers 

to new market entrants, thereby limiting 

enrollee choice and decreasing 

competition. A commenter encouraged 

CMS to ask States to implement the 

provisions of D–SNP-only contracts 

established under § 422.107(e) in a 

manner that does not discriminate 

between existing and new plans. 

Another commenter indicated that the 

proposal would create more 

heterogeneity among States in terms of 

State requirements for integrated plans 

and for quality assessments that will not 

improve evaluating or comparing plan 

quality for dually eligible individuals, 

indicating that D–SNPs already provide 

extensive quality information to States 

and CMS. 

Response: We appreciate the 

commenters’ perspectives on the 

potential impacts of having D–SNP-only 

contracts established under § 422.107(e); 

however, we do not believe that this 

proposal would cause States to 

discriminate between new and existing 

plans. Some States already limit market 

entry by only executing State Medicaid 

agency contracts with organizations 

with Medicaid MCO contracts or by 

utilizing competitive bidding and 

procurements to select organizations to 

participate as Medicaid MCOs. Our 

proposal does not change this existing 

State flexibility. As noted in the 

proposed rule at 87 FR 1869, section 

164(c)(4) of MIPPA does not obligate a 

State to contract with a D–SNP, and 

therefore provides States with 

significant control over the availability 

of D–SNPs in their markets. States have 

flexibility in pursuing D–SNP-only 

contracts through § 422.107(e), but that 

flexibility is not unlimited. As we 

proposed and are finalizing, this 

pathway will only be available for D– 

SNPs that have exclusively aligned 

enrollment (which means that all the D– 

SNPs’ enrollees are also enrolled in an 

affiliated Medicaid MCO) and where 

both a D–SNP-only contract and a 

minimum set of integrated materials are 

used. We believe in most circumstances 

it will be most beneficial if use of D– 

SNP-only MA contracts is implemented 

consistently for all D–SNPs with 

exclusively aligned enrollment within a 

State so that all these D–SNPs are on the 

same footing and these plan enrollees 

benefit from the use of integrated 

materials and greater transparency of 

quality ratings. 

We disagree with the commenter that 

D–SNP-only contracts established under 

§ 422.107(e) would not provide States 

with insight on D–SNP quality and 

performance. Unless a D–SNP is the 

only PBP in a contract, it is not possible 

to ascertain a complete picture of 

performance on HEDIS, CAHPS, HOS, 

and Star Ratings. As discussed below, 

the Star Ratings methodology includes 

both measure-level adjustments (where 

specified by measure stewards) and the 

CAI to adjust disparities in performance 

caused by social risk factors beyond the 

MA organizations’ control. 

Comment: A few commenters 

requested that CMS revisit the number 

of MA contracts a legal entity can hold 

or this proposal would limit the 

viability of some D–SNPs. Some 

commenters expressed concern that 

creating new legal entities is an 

expensive endeavor, including meeting 

State licensure and capital 

requirements. These commenters sought 

clarification if separate entities would 

be needed to enter into the D–SNP-only 

contracts established under § 422.107(e). 

Response: We appreciate commenters’ 

concerns regarding the number of MA 

contracts a legal entity can hold and 

agree that establishing new legal entities 

may be a burden to MA organizations. 

In the limited instance set forth in 

§ 422.107(e), MA organizations with 

existing contracts that are required by 

the State to separate out the D–SNP with 

exclusively aligned enrollment would 

not be required to create a new legal 

entity and would be permitted the 

additional MA contract. CMS has 

authority, at § 422.503(e), to sever 

specific MA plans from a MA contract 

that covers multiple MA plans. While 

we have established an operational 

policy of requiring an MA contract to 

cover all MA plans of the same type for 

the same MA organization, we would 

create exceptions to that policy when 

§ 422.107(e) applies. 

Comment: Some commenters, as 

further discussed in section II.A.6.d., 

indicated that the proposal sets a 

framework that provides a clearer 

assessment of financial performance of 

D–SNPs. 

Response: We thank the commenters 

for their input related to assessment of 

D–SNPs’ financial performance. We 

agree that having D–SNP-only contracts 

established under § 422.107(e) will 

enhance States’ and other stakeholder’s 

ability to examine the financial 

performance of D–SNPs. 

Comment: Some commenters noted 

D–SNP-only contracts established under 

§ 422.107(e) would allow for better 

oversight of network adequacy for the 

dually eligible population. 

Response: We thank commenters for 

their perspective related to oversight of 

network adequacy for the dually eligible 

population. We agree that having 

network submissions from D–SNP-only 

contracts established under § 422.107(e) 

will provide better oversight of network 

adequacy and insight on patterns of care 

unique to the dually eligible population 

in the covered service areas. 

Comment: Some commenters 

supported the State flexibility in the 

proposal. A commenter indicated that 

the flexibility is necessary since States 

are at different points on the D–SNP 

integration pathway and noted that the 

requirements in the proposal would add 

duties for both State and D–SNP staff. A 

few commenters from one State 

indicated support for the proposal 

because current State policy would 

align with the ability to limit D–SNPs to 

D–SNP-only contracts specific to that 

State. A commenter acknowledged that 

they are actively considering 

implementing the option for D–SNP 

contracts established under § 422.107(e) 

should the proposal be finalized. 

Response: We thank commenters for 

their support towards State flexibility. 

We anticipate that different States will 

implement this flexibility at different 

times as they progress along the 

pathway towards more integration of 

Medicaid and Medicare through their 

D–SNP contracts and engage with their 

contracted D–SNPs and CMS on this 

issue. 

Comment: A commenter indicated 

that while the proposal could advance 

the goal for better alignment, care 

management, provider service and 

quality monitoring, many States will 

benefit from additional guidance and 

support to operationalize the proposal. 

Another commenter urged CMS to aid 

States in making these changes and 

proposed that CMS provide that support 


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43See https://

www.integratedcareresourcecenter.com/. 

through grants or enhanced Federal 

medical assistance percentage (FMAP) 

to address capacity issues. The 

commenter indicated that one-on-one 

intensive technical assistance and 

template materials would also be 

needed. 

Response: We thank the commenters 

for their input. In addition to our own 

direct outreach to States, we will 

provide education and resources to 

States to support implementation of this 

rule through the Integrated Care 

Resource Center.43 As discussed in the 

section that follows, we will develop 

template materials (see Integrated 

Member Materials). 

We appreciate the commenter’s 

request that CMS provide support 

through grants or enhanced FMAP to 

help States develop capacity to 

implement D–SNP-only contracts 

established under § 422.107(e). We will 

consider ways that CMS can provide 

support to States to further integration 

but note that there are limits on CMS’s 

ability to issue grants or change FMAP 

levels. 

Comment: A commenter expressed 

concern that timing of State decisions 

regarding D–SNP-only contracts 

established under § 422.107(e) will be 

unclear and inconsistent across markets, 

resulting in administrative challenges 

for plans. 

Response: We agree with the 

commenter that the timing of State 

decisions regarding D–SNP-only 

contracts may not be consistent. To 

address this potential issue, we 

established at § 422.107(e)(2) that— 

because the timing of applications, bids, 

and other contracting procedures under 

§§ 422.250 through 422.530 remain 

applicable—CMS will work in good 

faith following receipt of a letter from a 

State Medicaid agency indicating their 

intent to pursue D–SNP-only contracts 

and the use of integrated materials to 

implement these provisions for a future 

contract year. We further direct the 

commenter’s attention to the proposed 

timeline discussed in the proposed rule 

at 87 FR 1871. When we issue the 

additional information on timelines and 

procedures in sub-regulatory guidance, 

we will consider current MA timeframes 

and procedures for submission of 

applications, bids and other required 

materials to CMS, in addition to the 

need for MA organizations to make 

business decisions in a timely manner. 

We anticipate that efforts to achieve D– 

SNP-only MA contracts in a State may 

take two years or more, depending on 

current MA and Medicaid managed care 

contract arrangements, such as whether 

a current D–SNP has exclusively aligned 

enrollment, and the level of effort 

needed to develop integrated enrollee 

materials. 

Comment: A commenter indicated 

support for the proposal only where the 

State and the plans agree to have D– 

SNP-only contracts established under 

§ 422.107(e). Another commenter 

suggested limiting the option for D– 

SNP-only contracts established under 

§ 422.107(e)(1) to those States where 

separate contracts are needed for 

additional State quality programs. 

Response: We appreciate the 

commenter’s support for establishing D– 

SNP-only contracts under § 422.107(e) 

where the State and the plans agree to 

take such steps. We recommend that the 

State consult with CMS, MA 

organizations, and other stakeholders on 

whether and how to pursue this step 

toward integration, but we recognize 

that section 164(c)(4) of MIPPA does not 

obligate a State to contract with a D– 

SNP, and therefore provides the States 

with significant control over which MA 

organizations offer D–SNPs in their 

markets. We disagree that the State 

requirements to establish D–SNP-only 

contracts under § 422.107(e) should be 

limited to circumstances where it is 

needed for additional State quality 

programs. While State quality programs 

may be facilitated by D–SNP-only 

contracts under § 422.107(e), there are 

other reasons, including transparency of 

MLRs and improved State oversight, 

that are also valid reasons for States to 

require such contracts. 

Comment: A few commenters 

opposed the proposal indicating it may 

create additional administrative burden. 

A commenter cited burdens for the 

industry including transitioning 

enrollees to the new contract, providing 

separate Star Ratings measure support 

and reporting, managing additional 

HEDIS hybrid sample reviews and 

supplemental data work streams, and 

administering separate HOS and CAHPS 

surveys. In addition, the commenter 

noted that providers could be adversely 

impacted by additional HEDIS medical 

record reviews for hybrid measures and 

supplemental data collection efforts. 

Response: We acknowledge the 

concerns raised by commenters that 

there may be additional administrative 

burden for MA organizations and 

providers. We anticipate that there will 

be impacts shared by CMS, States, and 

MA organizations as discussed in the 

proposed rule at 87 FR 1846 and in 

section V.C.3.b of this final rule; 

however, we believe the benefits from 

having separate D–SNP-only contracts 

established under § 422.107(e) outweigh 

these concerns. Further, we do not 

expect a large volume of new contracts 

would be created in the foreseeable 

future because most States do not meet 

the prerequisite of requiring exclusively 

aligned enrollment, and among those 

States that do, some D–SNPs are already 

in D–SNP-only contracts. 

Comment: Many commenters 

expressed concerns regarding quality 

measurement for D–SNP-only contracts 

established under § 422.107(e). Citing 

anticipated smaller enrollment in D– 

SNP-only contracts established under 

§ 422.107(e), many commenters believed 

CMS’s proposal could create pervasive 

issues with small sample sizes, which 

may diminish reportability and 

reliability of various quality measures, 

thereby producing less visibility into D– 

SNP performance than with the current 

system. Some commenters were 

concerned that the variability in 

measure reporting would also affect the 

reliability of Star Ratings. Additionally, 

many commenters conveyed 

consternation based on their expectation 

that Star Ratings would be lower for D– 

SNP-only contracts established under 

§ 422.107(e) because they would be 

scored against MA contracts with few or 

no dually eligible enrollees. A 

commenter noted that CMS research has 

shown a link between the length of time 

a contract has been in place and its Star 

Ratings performance. A few commenters 

noted that lower Star Ratings could 

reduce bonus payments and therefore 

rebates and supplemental benefits 

offered to beneficiaries. A commenter 

noted that lower bonus and rebate 

dollars may make it harder to address 

disparities. Finally, several commenters 

indicated that the impact to specific 

components of Star Ratings would need 

to be assessed further, including the 

Categorical Adjustment Index (CAI). A 

commenter noted that the CAI is 

insufficient to address concerns 

regarding lower Star Ratings for plans 

that disproportionately serve the most 

vulnerable populations. Additionally, a 

commenter expressed concern that 

moving to a separate contract would 

impact the Members Choosing to Leave 

the Plan measure, and asked CMS to 

exclude D–SNP enrollees switching 

between unaligned and aligned D–SNPs 

that are under the same parent 

organization. 

Response: It is not clear to us that 

measure data from D–SNP-only 

contracts established under § 422.107(e) 

would be unreliable. Under the FAI 

demonstrations, MMPs have not 

experienced pervasive sample size 

issues, even with lower enrollment 

relative to broader MA contracts, and 

therefore we do not anticipate 


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44See 2022 SNP Landscape Source Files (v_10_

26_21) retrieved at https://www.cms.gov/Medicare/ 

Prescription-Drug-Coverage/ 

PrescriptionDrugCovGenIn. 

widespread measurement issues for D– 

SNP-only contracts established under 

§ 422.107(e). We also note that we 

would work with States interested in 

this opportunity to be sure they 

understand whether there is high risk of 

sample size problems and possible 

strategies for mitigation. That said, there 

are methodologies that prevent 

unreliable data from impacting Star 

Ratings. Star Ratings measures have 

minimum sample size and/or 

denominator requirements to ensure 

measure data are reliable. Further, to 

improve stability of cut points and 

prevent cut points from being 

influenced by outliers, Tukey outlier 

deletion will be implemented beginning 

with the 2024 Star Ratings. Through the 

use of Tukey outlier deletion, extreme 

outliers will be removed from measure 

scores prior to clustering to prevent 

outliers from impacting cut points for 

all contracts. 

We do not believe that a new D–SNPonly contract created under § 422.107(e) 

would likely have lower Star Ratings by 

virtue solely of being a new contract. 

The lower Star Ratings associated with 

new contracts is likely due to the time 

MA organizations need to implement 

quality improvement initiatives that 

impact Star Ratings. Such quality 

improvement initiatives should already 

be in place for MA contracts from which 

the new D–SNP-only contracts are 

carved out using the process under 

§ 422.107(e). We anticipate that an MA 

organization would continue 

administrative and operational 

initiatives that are currently in place 

across multiple plans even if the D– 

SNP(s) in a particular State are placed 

into a D–SNP-only contract. 

While we understand the concern that 

D–SNP-only contracts established under 

§ 422.107(e) would be scored against 

MA contracts that may have few or no 

dually eligible enrollees, the Star 

Ratings methodology includes both 

measure-level adjustments where 

specified by measure stewards and the 

CAI to adjust for within-contract 

disparities in performance on social risk 

factors. There are currently 84 D–SNPonly contracts, and the CAI 

methodology works as intended in the 

presence of these contracts.44 CAI 

values are assigned to contracts based 

on the contracts’ percentage of LIS or 

dual eligible (DE) (LIS/DE) beneficiaries 

and the percentage of beneficiaries with 

disabilities. The percentage of LIS/DE 

beneficiaries is set to 100 percent for D– 

SNP-only contracts. 

We are aware of the commenters’ 

concern that the CAI does not fully 

address the challenge of achieving high 

Star Ratings for D–SNP-only contracts 

whose ratings are based on comparisons 

to MA contracts with few dually eligible 

enrollees. We continue to monitor the 

impact of the CAI, particularly to 

evaluate whether an increase in D–SNPonly contracts limits the statistical basis 

for the within-contract performance 

differences on which it is based, and 

whether any methodological 

enhancements are necessary. In 

addition, we refer commenters to the CY 

2023 Advance Notice (https://

www.cms.gov/files/document/2023- 

advance-notice.pdf https://

www.cms.gov/files/document/2023- 

advance-notice.pdf) and CY 2023 Rate 

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

files/document/2023- 

announcement.pdf) for information 

regarding a health equity index to 

potentially replace the current reward 

factor. The addition of a health equity 

index to the Star Ratings would need to 

be proposed through rulemaking. 

Regarding the commenter’s concern 

about the Members Choosing to Leave 

the Plan measure, we note that this 

measure currently excludes enrollees 

that are affected by a PBP termination. 

Therefore, we do not anticipate a 

negative impact to this measure when 

enrollees are crosswalked from the nonrenewing D–SNP PBP into the new D– 

SNP-only contract established as 

described in § 422.107(e). 

Comment: In lieu of creating D–SNPonly contracts established under 

§ 422.107(e), many commenters 

suggested that the goals of this proposal 

could be met via other strategies. Many 

commenters recommended that CMS 

work with plans and States to either 

create D–SNP reporting and quality 

measures or expand the number of SNPonly measures reported at the PBP level. 

A commenter suggested that CMS 

require more detailed, stratified 

reporting of Star Ratings measures for 

D–SNPs. A commenter suggested that 

CMS consider additional reporting 

requirements in State Medicaid 

contracts, while a few commenters 

noted that States already have the 

option to require supplemental 

reporting for their Medicaid enrollees. A 

commenter noted the importance of 

ensuring that any State-specific quality 

measures are collected in a way that 

does not impose additional burden on 

D–SNPs. 

Response: While we acknowledge that 

there are other strategies to collect 

quality data regarding D–SNPs other 

than permitting (or requiring) use of D– 

SNP-only contracts as described in 

§ 422.107(e), the commenters’ 

suggestions would not fully meet the 

goal of providing States and the public 

with greater transparency on MA quality 

ratings for D–SNPs. This can only be 

accomplished through separate Star 

Ratings specific to the performance of 

D–SNPs within a State. Although States 

may separately collect quality data for 

D–SNP enrollees, those data would not 

feed into Star Ratings. States also would 

not be able to collect CAHPS or HOS 

data specific to a D–SNP PBP, because 

the surveys are administered at the 

contract level. Furthermore, separate 

reporting reinforces unaligned 

measurement systems that exacerbate 

burden for plans and States, and may 

cause confusion for consumers as they 

attempt to consider quality information 

from different sources. 

We note that in the CY 2023 Advance 

Notice and CY 2023 Rate 

Announcement, we discuss confidential 

stratified reporting of certain quality 

measures by dual eligible status, which 

will aid MA organizations in focusing 

quality improvement on dually eligible 

enrollees. Such reporting would not, 

however, feed into Star Ratings at this 

time. 

Comment: A few commenters 

requested that CMS delay finalizing the 

proposal until a further evaluation can 

be done to determine all the 

consequences, while another 

commenter requested that CMS apply 

this provision prospectively for new D– 

SNP contracts awarded after the 

implementation date rather than 

requiring existing D–SNP PBPs to 

transition to separate D–SNP-only 

contracts. A commenter suggested that 

CMS not finalize the proposal at this 

time and instead monitor impacts of the 

changes occurring in California between 

2023 and 2025. 

Response: We acknowledge the 

commenters’ interest in seeking a delay 

to implement this provision. Because of 

the timing of MA applications, bids, and 

contract execution, the earliest time that 

a separate D–SNP-only contract could 

be established using the process created 

by § 422.107(e) would be for the 2024 

plan year, and then only if CMS receives 

a timely request from a State that is 

willing to meet the criteria set forth in 

§ 422.107(e), the MA organization 

submits a timely notice of intent to 

apply and subsequent application for a 

D–SNP-only contract for a service area 

in the State, and the State and the MA 

organization successfully negotiate and 

execute the State Medicaid agency 

contract required by § 422.107(a) 

through (c). Therefore, we do not 


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believe a delay in the implementation of 

these provisions is necessary. Further, 

we believe that only implementing these 

provisions for new D–SNPs would 

constrain States that desire consistency 

in their contracting and oversight 

strategies and would preclude CMS, 

States, MA organizations, and other 

stakeholders from gaining a full 

understanding of plan performance to 

improve the quality of care and level of 

integration for the dually eligible 

population within a State. 

Comment: Many commenters 

indicated that having D–SNP-only 

contracts established under § 422.107(e) 

would provide a complete picture of 

plan performance in areas like HEDIS, 

HOS, CAHPS, and Star Ratings. Several 

commenters encouraged transparency 

on the quality ratings for D–SNPs to 

better reflect experiences unique to the 

population. They noted that separate 

reporting will enable CMS, States, and 

plans to more fully analyze the data, 

thereby improving oversight and 

accountability. A commenter indicated 

that the proposal would provide more 

accurate benchmarks for plans serving 

dually eligible individuals. Another 

commenter noted that it may also 

provide insight into whether D–SNPs 

are measured on the right outcomes, and 

whether different or additional 

measures should be considered. 

Another commenter noted that this 

change could enable CMS to modify 

Star Rating criteria in the future to 

specifically account for the unique 

challenges of providing care for D–SNP 

beneficiaries. 

Response: We thank commenters for 

their acknowledgement that our 

proposal would provide greater 

transparency on quality measurement 

for D–SNPs. We believe that separate 

reporting for D–SNP-only contracts has 

the potential to deliver many benefits, 

including enhancing oversight efforts 

and creating clearer performance 

expectations. We agree that separate 

reporting for D–SNP-only contracts will 

enable CMS to consider possible 

adjustments to the D–SNP measurement 

strategy in the future. 

Comment: A commenter noted that 

this proposal would allow potential 

enrollees to compare Star Ratings more 

accurately across D–SNPs, since it 

would remove the impact of healthier 

MA membership on the Star Ratings for 

D–SNPs that are operated by plans with 

significant non-SNP MA membership. 

Another commenter noted that this 

proposal would allow agents and 

brokers to provide beneficiaries with 

more accurate plan metrics and enable 

better consumer decision-making. 

Response: We agree with the 

commenters that separate Star Ratings 

for D–SNP-only contracts will provide 

valuable insights for consumers and the 

professionals who advise them. We 

believe that Star Ratings that are specific 

to local D–SNP(s) would be an 

important tool for comparison shopping 

and enhancing consumer choice. 

Comment: Some commenters 

expressed concern for unintended 

consequences of assessing D–SNP-only 

contracts established under § 422.107(e) 

separately under the current Star 

Ratings methodology, and urged CMS to 

undergo a thorough evaluation and 

analysis on the impact of this proposal 

on Star Ratings. A few commenters 

asked CMS to consider developing 

modifications that account for 

differences with MA plans, while 

another commenter asked CMS to 

account for differences in population 

rather than quality of care provided by 

plans. A commenter wondered if further 

consideration should be given to 

comparing D–SNP performance 

exclusively to other D–SNPs when 

assessing Star Ratings, while another 

commenter contended that separate 

baselines and cut points may need to be 

created for the D–SNP-only contracts 

established under § 422.107(e). A few 

commenters referenced discussion in 

the CY 2023 Advance Notice about 

potential improvements to quality 

measurement to address social risk 

factors, and encouraged CMS to 

complete that effort before trying to 

measure D–SNP-only contracts 

established under § 422.107(e). A 

commenter urged CMS to work with 

plans to identify a long-term and more 

comprehensive solution to the impact of 

beneficiary demographics and social 

risk factors on Star Ratings. Another 

commenter suggested that CMS convene 

a technical expert panel to look at 

options for adjusting Star Ratings for D– 

SNPs. Finally, a commenter suggested 

that CMS evaluate D–SNPs with a 

different quality payment structure 

entirely, similar to the strategy used for 

MMPs. 

Response: We are aware that for 

certain Star Ratings measures, it is 

challenging for most plans to achieve 

the same outcomes for groups with 

higher rates of disability, functional 

impairment, or social risk factors. This 

may be due to transportation issues, 

lower health literacy, communication 

challenges, residential instability, and 

other factors. As noted previously, the 

Star Ratings methodology includes both 

measure-level adjustments where 

specified by measure stewards and the 

CAI to adjust for within-contract 

disparities in performance on social risk 

factors. The CAI is a data-driven 

approach designed to improve the 

accuracy of performance measurement, 

while not masking true differences in 

performance between contracts. Many 

D–SNP contracts do well in the Star 

Ratings with 44 percent of D–SNP-only 

contracts earning 4 or more stars for the 

2021 Star Ratings. 

CMS continually seeks to refine the 

Star Ratings approach, and we 

encourage commenters to review the CY 

2023 Advance Notice and CY 2023 Rate 

Announcement for information 

regarding potential new methodological 

enhancements related to expanding 

stratified reporting and developing a 

health equity index, both of which may 

help support efforts to address 

disparities in care and advance health 

equity. Substantive changes to the Star 

Ratings are adopted through the 

rulemaking process, which provides an 

opportunity for public notice and 

comment before CMS finalizes policy 

changes for the Star Ratings program. 

Regarding the suggestion to create a 

different quality payment structure 

entirely for D–SNP-only contracts, MA 

payment requirements are set under 

statute, specifically section 1853 of the 

Act. We believe that Star Ratings are an 

effective motivator for performance that 

incentivize MA and Part D plans to 

provide quality care for all enrollees, 

including those that are socially at-risk. 

Furthermore, using the same ratings 

approach for all contracts helps 

consumers understand and compare 

quality across plan offerings. 

Comment: A commenter expressed 

support that D–SNP-only contracts 

established under § 422.107(e) provide a 

pathway to D–SNP specific 

measurement. However, the commenter 

noted that combining D–SNP-only 

contracts established under § 422.107(e) 

with the transition of MMPs to D–SNPs 

would shift which populations are 

combined in a single Medicare contract 

with aggregated Star Ratings. The 

commenter recommended maintaining 

the ability to manage and see reporting 

at the product level for each of these 

distinct offerings to allow States to 

effectively measure and manage both 

programs. 

Response: We appreciate the 

commenter’s support that D–SNP-only 

contracts established under § 422.107(e) 

provide a pathway to D–SNP specific 

measurement. Our proposal does not 

preclude a State from requiring separate 

D–SNP-only contracts under 

§ 422.107(e) for separate D–SNP 

programs serving distinct populations 

(for example, separate integrated care 

programs for dually eligible enrollees 

over and under age 65). In discussions 


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45See https://

www.integratedcareresourcecenter.com/resource/ 

sample-language-state-medicaid-agency-contractsdual-eligible-special-needs-plans. 

46Because D–SNPs must offer Part D benefits, 

they are subject to both MA requirements in part 

422 and Part D requirements in part 423. See 

§§ 422.2 (definition of specialized MA plans for 

special needs individuals) and 422.500. 47Refer to www.cms.gov/Regulations-andGuidance/Legislation/ 

PaperworkReductionActof1995 and 

www.govinfo.gov/content/pkg/FR-1995-08-29/pdf/ 

95-21235.pdf. 

with States considering requiring such 

separate contracts, we would raise the 

issue with the applicable State(s) 

whether those contracts had sufficient 

enrollment for the calculation of Star 

Ratings. 

Comment: Some commenters 

indicated that if CMS moves forward 

with this proposal, it should remove 

past performance as a factor in issuing 

the D–SNP-only contracts established 

under § 422.107(e). A commenter noted 

that low Star Ratings could prevent an 

organization from getting a D–SNP-only 

contract established under § 422.107(e) 

if CMS finalizes the proposal to include 

Star Ratings in past performance. 

Response: We agree with commenters 

that MA organizations entering into a 

D–SNP-only contract based on the 

provisions set forth at § 422.107(e) 

should not be included in the past 

performance analysis as described in 

§§ 422.502 and 422.504. MA 

organizations that currently offer D– 

SNPs with exclusively aligned 

enrollment would not otherwise be 

seeking to enter into a D–SNP-only 

contract. We note that since the existing 

regulations at § 422.502(b)(1) provide 

CMS the flexibility of when to deny an 

application related to past performance 

that no changes are needed. 

Comment: Several commenters, 

including MACPAC, suggested that 

CMS expand the ability of States to 

request that CMS allow D–SNP-only 

contracts established under § 422.107(e) 

beyond those D–SNPs with exclusively 

aligned enrollment. MACPAC and other 

commenters noted that a State’s ability 

to assess quality in D–SNPs is important 

regardless of whether the D–SNP 

operates with exclusively aligned 

enrollment. A few commenters 

indicated that in order to ensure 

disparities between dual eligible 

enrollees are assessed on a level playing 

field, all D–SNPs should be in separate 

contracts from non-D–SNP MA plans. A 

commenter requested that CMS use the 

process as a template for a wider 

required, not optional, separation of D– 

SNP contracts in the future. 

Response: We thank commenters for 

sharing their concerns on the 

parameters of this proposal to only 

apply to D–SNPs with exclusively 

aligned enrollment; however, we believe 

starting at this point is an incremental 

step on the integration platform. We 

will consider future rulemaking on 

whether to expand the ability for States 

to request to CMS separate D–SNP 

contracts for D–SNPs that do not have 

exclusively aligned enrollment. 

Comment: A few commenters urged 

CMS to do more to allow for precise 

understanding of the policies, qualities, 

and obligations of specific D–SNPs by 

requiring separate contracts and public 

posting of model State Medicaid agency 

contracts. The commenters believe that 

this would improve oversight and allow 

data to more clearly reflect the 

outcomes, needs, satisfaction, and 

quality of care for people in D–SNPs. 

Response: We appreciate the 

commenters’ request that CMS require 

separate D–SNP-only contracts and 

public posting of model State Medicaid 

agency contracts in order to increase 

transparency about D–SNP obligations. 

We point the commenters to the 

Integrated Care Resource Center for 

sample language that State Medicaid 

agencies can use in their contracts.45 As 

noted in response to other comments, 

we may also consider opportunities to 

expand or modify the approach for D– 

SNP-only contracts through future 

rulemaking. 

Comment: A few commenters 

provided feedback regarding the ability 

of the MA organization offering a D– 

SNP under this proposal to crosswalk 

enrollees to the new D–SNP-only 

contract established under § 422.107(e). 

Some commenters expressed support for 

the new crosswalk proposed at 

§ 422.530(c)(4)(ii) as it provides a 

smooth process for organizations to 

retain their enrollees. Some commenters 

expressed concern that moving the 

impacted enrollees to the new D–SNPonly contract would require a new 

enrollee identification card and could 

change bill routing by providers. 

Another commenter indicated that it 

would be important for plans to 

demonstrate how they will 

communicate the shift to beneficiaries 

in plain language and where to go for 

options counseling. 

Response: We agree that these 

enrollees will need to receive a new 

identification card with the correct 

information. Our goal is to minimize 

enrollee disruption as we work towards 

more integrated care for the dually 

eligible population. We will work with 

States and the D–SNPs with exclusively 

aligned enrollment to appropriately 

communicate to the impacted enrollees 

why they are receiving new 

identification cards. 

After considering the comments we 

received and for the reasons outlined in 

the proposed rule and our responses to 

comments, we are finalizing our 

proposed provisions at § 422.107(e) 

regarding the creation of D–SNP-only 

contracts without modification, and we 

are finalizing our provisions at 

§ 422.530(c)(4) with minor edits for 

clarification. 

b. Integrated Member Materials 

Communicating information to 

enrollees and potential enrollees is an 

important function of MA plans, Part D 

plans, and Medicaid managed care 

plans—and D–SNPs with exclusively 

aligned enrollment must comply with 

all of those rules.46 There are advantages 

for enrollees in D–SNPs with 

exclusively aligned enrollment in 

receiving one set of communications 

that integrates all of the required 

content, as discussed later in this 

section. We proposed a mechanism and 

some parameters to facilitate a State’s 

election to have D–SNPs with 

exclusively aligned enrollment use 

certain communications materials that 

integrate content about Medicare and 

Medicaid. As proposed and finalized, a 

State is only able to elect this if the State 

has also required the D–SNP with 

exclusively aligned enrollment to also 

apply for and seek CMS approval for a 

D–SNP-only MA contract. Under this 

rule, the applicable Medicaid managed 

care and MA requirements and 

standards continue to apply to the 

integrated materials. 

CMS requires MA plans and Part D 

plans to furnish specific information to 

enrollees and potential enrollees, with 

some specific requirements outlined in 

§§ 422.111 and 423.128 and additional 

requirements at §§ 422.2261, 422.2267, 

423.2261, and 423.2267. For 

information that CMS deems vital to 

Medicare beneficiaries, including 

information related to enrollment, 

benefits, health, and rights, CMS may 

develop and provide materials or 

content for MA organizations and Part D 

sponsors in either standardized or 

model form. These materials are subject 

to requirements of the Paperwork 

Reduction Act of 1995 (PRA) (44 U.S.C. 

3501 et seq.) and the Office of 

Management and Budget (OMB) 

collection of information approval 

process no less than every three years.47

CMS creates standardized materials and 

content that MA organizations and Part 

D sponsors must use in the form and 

manner CMS provides under a separate 

OMB collection of information approval 

process. CMS model materials and 


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content are examples of how to convey 

information to beneficiaries. MA 

organizations and Part D sponsors may 

use CMS’s model materials or craft their 

own materials or content, provided the 

MA organization or Part D sponsor 

accurately conveys the vital and 

required information in the required 

material or content to the beneficiary 

and follows CMS’s order of content, 

when specified. In §§ 422.2267 and 

423.2267, we refer to such materials and 

content collectively as required 

materials. 

CMS also includes similar, minimum 

Federal requirements in § 438.10 for 

Medicaid managed care plans 

(including MCOs) to furnish certain 

materials and information to enrollees 

and potential enrollees in a manner that 

is easily understood and readily 

accessible (OMB control number 0938– 

0920). Among the materials that 

Medicaid managed care plans must 

distribute are Enrollee Handbooks, 

Provider Directories, and Formularies. 

As summarized in our proposed rule 

at 87 FR 1872 through 1873, the 

required materials that MA 

organizations and Part D sponsors must 

provide to current and prospective 

members and post to their websites by 

October 15 prior to the beginning of the 

plan year include the Evidence of 

Coverage (EOC) and the Annual Notice 

of Changes (ANOC), which are 

standardized communication materials. 

The required model communications 

materials include the Summary of 

Benefits (SB), Formulary, and Provider 

and Pharmacy Directories. 

CMS encourages D–SNPs to add 

related Medicaid information in the 

EOC, ANOC, SB, and Provider 

Directory. Further integrating Medicare 

and Medicaid information in these 

required materials, as well as in the 

Formulary and Pharmacy Directory, 

would improve beneficiary experiences 

by providing a more seamless 

description of health care coverage and 

enhancing the understanding of, and 

satisfaction with, the coverage both 

programs provide. 

In the proposed rule at 87 FR 1873, 

we described previous studies that 

assessed the effectiveness of integrated 

required materials for beneficiaries in 

the MMPs in the FAI and the Minnesota 

Senior Health Options (MSHO) plans in 

the Demonstration to Align 

Administrative Functions for 

Improvements in Beneficiary 

Experience. Beneficiaries provided 

positive feedback on the combined 

materials, as compared to separate 

Medicare and Medicaid materials. In 

addition, since 2019 CMS has worked 

with States and FIDE SNPs that are not 

demonstration participants to develop 

and annually update certain integrated 

materials that the States require and 

issue to plans. 

For the States and FIDE SNPs we have 

worked with, we typically begin 

development of integrated national 

templates and State-specific models 

with the SB; a Formulary that contains 

Medicare Part D, Medicaid, and over the 

counter (OTC) drugs as well as non-drug 

OTC products; and one combined 

Medicare and Medicaid Provider and 

Pharmacy Directory. As described in our 

proposed rule, starting with these 

materials has several advantages, 

including that these materials integrate 

key Medicare and Medicaid 

information, they are required materials 

but are not standardized and, therefore, 

are not subject to the PRA clearance 

process, and the models are not lengthy 

or overly complex. They also offer 

opportunities for D–SNPs in different 

States with different Medicaid 

requirements to provide prospective and 

current dually eligible enrollees a more 

seamless presentation of essential 

information about their Medicare and 

Medicaid coverage. This would 

contribute to increased understanding of 

and satisfaction with the coverage both 

programs provide. 

To provide a more coordinated 

beneficiary experience, we proposed at 

§ 422.107(e) to codify a pathway by 

which, following receipt of a letter from 

a State Medicaid agency indicating their 

intent to pursue D–SNP-only contracts 

and the use of integrated model 

materials, CMS would coordinate with a 

State that chooses to require, through its 

State Medicaid agency contract, that a 

D–SNP with exclusively aligned 

enrollment use an integrated SB, 

Formulary, and combined Provider and 

Pharmacy Directory. CMS will work 

with States to ensure these integrated 

materials comply with §§ 422.111, 

422.2267(e)(11), 423.128, 423.2267(e), 

and 438.10(h). Proposed § 422.107(e)(1) 

established factual circumstances that 

would commit CMS to certain actions 

under proposed paragraphs (e)(2) and 

(3). We anticipate that there would be 

operational and administrative steps at 

the CMS and State level that would be 

necessary before a D–SNP could 

implement use of integrated 

communications materials, such as 

collaboration and coordination by CMS 

and the State on potential template 

materials, identification of potential 

conflicts between regulatory 

requirements at 42 CFR parts 422 and 

423 for D–SNPs generally and 42 CFR 

part 438 and State law for the D–SNP’s 

affiliated Medicaid MCO, and setting up 

a process for joint or coordinated review 

and oversight of the integrated 

materials. CMS annually reviews the 

contracts between States and D–SNPs 

that are required by § 422.107(b) each 

July for the following plan year. There 

would generally be insufficient time for 

the necessary operational and 

administrative steps to implement 

integrated communications materials 

between the review of the contract and 

the dates by which communications 

materials must be provided to current 

enrollees and made available for 

prospective enrollees during the annual 

coordinated election period that begins 

October 15 each year. Additionally, an 

MA organization would need to apply 

for a D–SNP-only contract consistent 

with existing timeframes for submission 

of applications, bids, and other required 

materials to CMS, and in accordance 

with forthcoming sub-regulatory 

guidance on timelines and procedures. 

Therefore, paragraph (e)(2) would 

require that CMS work in good faith 

with States upon receipt of a letter of 

intent regarding the State’s inclusion of 

a requirement for a D–SNP with 

exclusively aligned enrollment to use 

integrated materials and apply for a D– 

SNP-only contract. We intended that 

these efforts include the work to 

develop model integrated materials 

before the State Medicaid agency 

contract submissions are due for the 

contract year for which the D–SNP 

would use the integrated materials, and 

before D–SNP-only contracts are 

finalized. 

We did not intend through this rule 

to significantly change timelines for 

plans to prepare materials nor did we 

intend to require any State to mandate 

that D–SNPs use integrated materials. 

We intended for this rule to assure 

interested States that CMS would do its 

part to make it possible for D–SNPs to 

comply with State Medicaid agency 

contract terms to use materials that 

integrate Medicare and Medicaid 

content, including at a minimum the 

Summary of Benefits, Formulary, and 

combined Provider and Pharmacy 

Directory if a State Medicaid agency 

seeks to require D–SNPs with 

exclusively aligned enrollment to 

perform as described at § 422.107(e)(1). 

We considered including the EOC and 

ANOC as part of the minimum scope of 

integrated materials identified in 

§ 422.107(e)(1)(ii). We explained in the 

proposed rule at 87 FR 1874 why we did 

not propose to include these alternative 

materials but solicited comment on 

whether these alternative materials 

should be included as part of the 

minimum scope of integration for D– 

SNPs. This rule would not preclude 

CMS and States from collaborating on 


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other integrated materials, including an 

integrated EOC or ANOC. As proposed, 

§ 422.107(e) would apply only when a 

State required D–SNPs with exclusively 

aligned enrollment to use the minimum 

scope of integrated materials specified 

in paragraph (e)(1)(ii) and to seek CMS 

approval of D–SNP-only contracts. 

While we proposed minimum 

parameters, a State that wishes to 

require D–SNPs with exclusively 

aligned enrollment to do more (for 

example, use additional integrated 

materials) may do so using, or in 

conjunction with, the process in 

§ 422.107(e). Further, we did not intend 

to prohibit or foreclose the possibility 

that CMS would work with States on 

other potential integration efforts that 

are not within the scope of 

§ 422.107(e)(1). 

Comment: Many commenters 

expressed support for the proposal to 

codify a pathway by which CMS would 

coordinate with a State that chooses to 

require, through its State Medicaid 

agency contract, that certain D–SNPs 

use an integrated Summary of Benefits 

(SB), Formulary, and combined Provider 

and Pharmacy Directory. 

Numerous commenters stated that the 

proposed regulation would lead to 

reduced enrollee confusion because 

integrated materials would simplify and 

more clearly articulate the full scope of 

benefits across Medicare and Medicaid 

that are available through a given plan. 

A commenter noted that this proposed 

regulation would also simplify 

information for caregivers and 

advocates. Other commenters also stated 

that the proposed regulation would 

improve enrollee quality of and access 

to care and help enrollees understand 

how plan benefits can work together. 

A commenter stated that integrated 

materials would create consistency for 

beneficiaries when evaluating plan 

choices. Another commenter noted that 

integrated materials would improve 

beneficiary awareness of integrated care 

options. A commenter also stated that 

integrated materials would help States 

and D–SNPs to provide clearer 

explanations of the advantages of 

integrated care, improve navigation of 

the health care system, and reduce 

health system fragmentation and 

administrative misalignment. Another 

commenter stated that the benefit of 

having Medicare and Medicaid plan 

information integrated into the same 

document is the reduction in mailings, 

a common request among enrollees. 

Other commenters noted that States 

have successfully partnered with CMS 

to implement integrated materials. A 

commenter stated that the proposed 

regulation would create a pathway for 

States to continue to integrate materials. 

Response: We appreciate the 

widespread support we received for our 

proposal to create a pathway for States 

to require certain D–SNPs with 

exclusively aligned enrollment and D– 

SNP-only contracts to use integrated 

materials. We concur that the 

integration of materials will increase 

understanding of available benefits, 

improve the enrollee experience, and 

decrease confusion by providing a 

simplified set of beneficiary materials. 

Comment: A few commenters 

recommended that States be required to 

use their authority to standardize 

materials and ensure consistent 

messaging wherever possible. Other 

commenters noted their support of the 

flexibility in requiring the use of 

integrated materials, noting that States 

are at different points of integration, and 

that CMS’s proposal would result in 

additional responsibilities for State and 

D–SNP staff. 

Response: We acknowledge the 

interest in increasing the prevalence of 

integrated materials. However, we 

decline to require that States integrate 

materials, recognizing that States are at 

different phases of integration, and may 

have limited resources to devote to 

integrating materials. We concur that 

States should work to integrate 

materials when feasible and CMS will 

coordinate with them when possible. 

Comment: A few commenters stated 

that CMS should provide States with 

clear direction and authority to ensure 

State-specific policies and requirements 

are included in integrated materials. A 

commenter continued to note that 

without such State-specific policy and 

requirements, integrated materials may 

not accurately reflect programmatic 

realities including important 

beneficiary-facing information such as 

cost-sharing responsibilities and 

eligibility rules. 

Response: We acknowledge the 

commenters’ concerns and, as we 

currently do with D–SNPs and 

Medicare-Medicaid Plans with 

integrated materials, we will work with 

States to ensure that, when a State 

requires a D–SNP to have integrated 

materials under § 422.107(e), the 

integrated materials accurately reflect 

applicable requirements for both 

Medicare Advantage and Medicaid 

managed care plans. 

Comment: A few commenters 

recommended that States and CMS 

review materials in partnership, which 

is critical to develop comprehensive, 

accurate, and clear materials. Another 

commenter noted that States will need 

to provide information to D–SNPs and 

receive information from D–SNPs to 

ensure that information is kept up-todate for materials such as integrated 

Provider Directories and information 

repositories for Medicaid. 

Response: We thank the commenters 

for raising the importance of close 

collaboration and communication. We 

agree that coordination between CMS, 

States, and D–SNPs is necessary to 

ensure effective integration of model 

materials. 

Comment: A commenter noted the 

operational challenges of integrating 

materials such as the different types of 

materials CMS and the State Medicaid 

agency require to be provided and 

differences in naming. 

Response: We appreciate the 

comment and note that this rule focuses 

on materials which are required by both 

Medicare Advantage and Medicaid 

managed care regulations. We believe 

that integrating these materials will 

eliminate differences in naming and 

material formats and simplify the 

information for enrollees. 

Comment: A few commenters noted 

that unaligned enrollment dates 

complicate efficient and timely 

distribution of integrated materials and 

suggested that CMS should work with 

States to implement necessary State and 

Federal changes that support alignment 

of enrollment dates. Another commenter 

urged CMS to limit its proposal to States 

where effective dates for Medicare and 

Medicaid plan years are aligned on the 

first day of the month. A commenter 

noted unaligned enrollment dates could 

cause members to receive duplicative 

information. The commenter also stated 

that there is no coordination between 

CMS and the State sending enrollment 

data to plans. They also noted that 

integrated materials can be 

operationally complex, as many plans 

automate the generation of enrollee 

materials on different platforms for 

Medicare and Medicaid plans. 

Response: We appreciate the 

commenters’ perspectives on this issue. 

We understand the potential for 

differences in enrollment dates between 

Medicare Advantage and Medicaid 

managed care plans and will continue to 

work with States to minimize enrollee 

disruption. In advance of 

implementation of integrated materials, 

CMS will discuss with participating 

States any differences in enrollment 

dates between Medicare Advantage and 

Medicaid managed care plans that may 

result from annual Medicare Advantage 

enrollment periods or State-specific 

enrollment timelines. Where differences 

in enrollment dates occur, CMS and the 

State will jointly decide on a strategy to 

implement integrated materials while 


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minimizing beneficiary confusion. Per 

§ 422.107(e)(2), CMS will continue to 

work with a State so long as the State 

chooses to work with CMS on integrated 

materials. We believe that requiring 

integrated materials for enrollees with 

exclusively aligned enrollment in 

applicable States will help to reduce 

beneficiary confusion by providing one 

set of materials that combines Medicare 

and Medicaid information instead of 

two. 

Comment: A commenter requested 

that CMS consider the challenges 

associated with Medicaid benefit and 

service carve-outs before implementing 

a requirement for D–SNPs to use 

integrated materials. 

Response: We acknowledge the 

commenter’s concern. We intend to 

work with States to ensure that the 

model materials include sufficient 

flexibility in order to adapt the 

description of benefits when needed. 

Comment: A commenter stated that 

CMS should require States to indicate in 

their letters of intent that they have 

support from D–SNP partners to require 

integrated materials. The commenter 

believes CMS should require 

involvement and cooperation with 

participating D–SNPs in this process. 

The commenter suggested that CMS 

outline and require a standardized 

coordinated process across States for 

including or consulting with all plans in 

a given State with the goal of reaching 

consensus with all participating plans 

on basic models and changes. 

Response: We thank the commenter 

for their input and suggestion. We 

intend to raise with States the 

importance of early and consistent 

collaboration with D–SNPs in advance 

of implementing any requirement for 

integrated materials. However, we 

believe the decision of whether to 

include this requirement in the State 

Medicaid agency contract should be left 

to the State. 

Comment: A commenter stated that 

model documents for creating integrated 

materials have been invaluable, and 

especially helpful when models are 

developed for a particular State. These 

materials have State-specific references 

and data, which allows States to ensure 

enrollees across plans receive the same 

accurate State-specific information. 

Other commenters urged CMS to 

establish a consistent, standardized 

format for integrated materials that have 

been globally approved by States, 

instead of allowing each State to 

determine for itself. 

Response: We appreciate the 

commenters perspectives on this issue. 

CMS will be creating models based off 

our experience on the FAI and a related 

demonstration in Minnesota for State 

use and will also collaborate with States 

to ensure that they appropriately 

integrate Medicare and Medicaid 

information for beneficiaries. 

Comment: A commenter 

recommended that CMS should 

collaborate with States to develop a 

regulatory or other framework that 

aligns Medicaid managed care and D– 

SNP requirements into one clear set of 

governing rules for integrated materials. 

Response: We thank the commenter 

for their suggestion and modified the 

regulation text at § 422.107(e)(1)(ii) to 

require that the integrated member 

materials meet Medicare and Medicaid 

managed care requirements consistent 

with applicable regulations in parts 422, 

423, and 438 of the chapter. As we work 

with States that take advantage of the 

new pathway created by § 422.107(e) 

and we gain additional experience in 

developing integrated materials with 

States, we may consider future 

rulemaking to establish integrated 

disclosure and communication 

materials where the applicable statutory 

authority permits sufficient flexibility. 

Comment: Some commenters 

expressed concerns or were unsure of 

the timeframe for developing and 

implementing integrated materials. A 

commenter expressed concern that if a 

State is working on the State Medicaid 

agency contract during the same 

timeframe as it is developing integrated 

materials, the State may not have the 

ability to complete both tasks in a 

competent and thorough manner. A few 

commenters noted that CMS should take 

into consideration the timeframe of 

when States release their model 

materials, since State timeframes may 

differ from CMS timeframes. Another 

commenter recommended that the 

production schedule for integrated 

notices provide adequate time for use of 

focus groups to ensure that information 

is communicated effectively and meets 

the real needs of beneficiaries; the focus 

groups should consist of a diverse group 

of beneficiaries that is representative of 

each plan’s demographic mix. A few 

commenters noted that they have 

experienced State backlogs in reviewing 

materials. A commenter requested that 

CMS work with the States to ensure 

State review is timely. Another 

commenter recommended that CMS 

require States to review plan materials 

within the existing HPMS platform and 

minimize template versions used at the 

State level. Other commenters believe 

States do not need to review all 

materials, noting that this can lead to 

backlogs in materials and place 

additional administrative burden on 

plans. MACPAC stated that States 

should have the opportunity to review 

all D–SNP integrated materials to ensure 

accuracy and improve beneficiary 

understanding of integration. 

Response: We thank the commenters 

for sharing concerns about the timeline 

needed to implement integrated 

materials. We will work in good faith 

with participating States, following 

receipt of a letter from a State Medicaid 

agency indicating their intent to pursue 

D–SNP-only contracts and the use of 

integrated materials, to ensure that 

integrated models are provided to D– 

SNPs in a timely manner and intend to 

set clear timelines for review with the 

States. We note that that this proposal 

pertains only to those States that choose 

to require, through their State Medicaid 

agency contracts, that D–SNPs with 

exclusively aligned enrollment use 

integrated materials (and that these D– 

SNPs also apply for a D–SNP-only MA 

contract with CMS). We anticipate that 

there would be operational and 

administrative steps at CMS and each 

State that would be necessary before a 

D–SNP could implement integrated 

materials, such as collaboration and 

coordination by CMS and the State to 

identify potential conflicts between 

Federal regulatory requirements for D– 

SNPs and Medicaid managed care plans 

and State law and setting up a process 

for coordinated review and oversight of 

the integrated materials. Additionally, 

we modified the regulation text at 

§ 422.107(e)(1)(ii) to require that the 

integrated member materials meet 

Medicare and Medicaid managed care 

requirements consistent with applicable 

regulations in parts 422, 423, and 438 of 

the chapter; this change makes it clearer 

that § 422.107(e) does not create 

exceptions to other laws that govern the 

content and timing of materials 

provided to enrollees. Rather, our intent 

is to create a pathway for integrated 

materials to present all of the required 

information to enrollees in a more 

understandable and streamlined way. 

CMS will work with the State to 

create model integrated materials before 

the State Medicaid agency contract 

submissions are due for the contract 

year for which the D–SNP would use 

the integrated materials upon a receipt 

of a letter of intent regarding the State’s 

inclusion of a requirement to use 

integrated materials and apply for a D– 

SNP-only contract. While these 

materials will be created based on 

models that have been tested as part of 

the FAI, we will ensure that the timeline 

accounts for any additional beneficiary 

testing, as necessary. 

In order to allow sufficient time for 

the D–SNPs to populate required 

materials with plan-specific 


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information, submit applicable 

materials through HPMS, translate into 

any non-English language of at least five 

percent of the individuals in the service 

area, and make them available to 

beneficiaries by the required dates, we 

will aim to work with States to issue to 

the affected D–SNPs the required 

materials and instructions annually by 

the end of May for the following plan 

year. While we acknowledge that State 

review of only a subset of materials 

would save time and reduce 

administrative burden, we disagree with 

the suggestion to limit State review, 

because we believe that States should 

determine which integrated materials 

they want to review and then clarify this 

information with applicable D–SNPs. 

Comment: A commenter 

recommended that CMS pilot this 

proposal with a small subset of plans 

and States before formalizing this 

proposal as an option for all States. 

They asked that CMS make this 

requirement effective no earlier than 

2024. 

Response: We thank the commenter 

for their suggestion and note that we 

have been piloting this approach with 

several States. Since 2019, we have 

worked with Massachusetts and New 

Jersey to develop and update certain 

integrated materials for FIDE SNPs in 

each State. For contract years 2020 and 

2021, we provided high-level assistance 

to New York as the State developed 

select integrated materials that its 

exclusively aligned D–SNPs and 

Medicaid managed care plans, called 

Medicaid Advantage Plus plans, could 

use. We are also working with California 

to develop integrated materials for 

contract year 2023 for D–SNPs with 

exclusively aligned enrollment. We note 

that, based on the timeframes involved, 

the regulatory authority adopted in 

§ 422.107(e) will apply to integrated 

materials that D–SNPs create for 

enrollment dates beginning with 

contract year 2024 if CMS receives a 

timely request from a State that is 

willing to meet the criteria set forth in 

§ 422.107(e). 

Comment: A few commenters 

requested more granular details and 

implementation guidance on this 

proposal. 

Response: We appreciate the 

comments and anticipate that there will 

be operational and administrative steps 

at the CMS and State level before a D– 

SNP could implement integrated 

materials. D–SNPs required to use these 

integrated materials will receive 

additional information through State 

Medicaid agency contracts and model 

materials. 

Comment: A number of commenters 

requested that CMS pay particular 

attention to linguistic and cultural 

competence and accessibility for people 

with disabilities. A commenter stated 

that greater effort is needed to ensure 

the information itself is more 

understandable to those at all levels of 

health literacy. They suggested that 

States test different messaging with 

dually eligible individuals, including 

individuals from diverse backgrounds 

and/or those with limited English 

proficiency, to create understandable 

materials with consistent messaging. 

They also noted that, to design 

messaging that resonates with dually 

eligible individuals, States should 

collaborate with community-based 

organizations and enrollment assisters. 

Some commenters stated that CMS 

should include a provision that 

accessibility, cultural competency, and 

translation requirements for integrated 

model materials should follow the 

standard (either State or Federal) which 

is more favorable to the beneficiary. A 

commenter recommended that CMS 

consider incorporating infographics, 

which may be easier for some enrollees 

to understand, into specific model 

documents. Another commenter noted 

that Provider Directories should be 

updated at least monthly and be 

available in multiple formats and 

languages, including American Sign 

Language. The commenter stated that 

beneficiaries should be able to access 

Provider Directories without submitting 

an account or policy number and should 

be able to distinguish between providers 

who are in network accepting new 

patients and providers who are not 

accepting new patients. They also noted 

that beneficiaries should be able to 

easily search Provider Directories by 

tier, product, languages spoken by 

provider in addition to languages 

available by interpreter, disability 

accessibility (accessible examination 

equipment, dressing room, parking etc.) 

and information about specialty and 

subspecialty providers. 

Response: We appreciate the 

commenters’ perspective on this issue 

and believe these are important goals. 

We did not propose and are not 

finalizing any waiver or exclusion from 

other, generally applicable, MA or Part 

D regulations concerning these 

mandatory disclosure documents from 

D–SNPs. In addition, as discussed in the 

proposed rule, the regulation at § 438.10 

also addresses disclosure requirements 

for Medicaid managed care plans; we 

did not propose and are not finalizing 

exceptions to that regulation or other 

generally applicable rules for Medicaid 

managed care plans that apply to these 

mandatory disclosures either. In order 

to make that clear, we are finalizing a 

modification to the regulation text at 

§ 422.107(e)(1)(ii) to require that the 

integrated model materials meet 

Medicare and Medicaid managed care 

requirements consistent with applicable 

regulations in parts 422, 423, and 423 of 

the chapter. Because D–SNPs must 

cover Part D benefits, they are subject to 

both the MA and Part D requirements 

when furnishing Provider and Pharmacy 

Directories. We note that 

§§ 422.2267(a)(2) and 423.2267(a)(2) 

require translation of required materials 

and content into any non-English 

language that is the primary language of 

at least 5 percent of the individuals in 

a plan benefit package (PBP) service 

area. Similarly, § 438.10(d)(3) requires 

that Medicaid managed care contracts 

make available written materials that are 

critical to obtaining services, including, 

at a minimum, provider directories, 

enrollee handbooks, appeal and 

grievance notices, and denial and 

termination notices, in the prevalent 

non-English languages in a Medicaid 

managed care plan’s particular service 

area. These requirements will continue 

to apply to a D–SNP with exclusively 

aligned enrollment and its affiliated 

Medicaid MCO when integrated 

materials are used as provided in 

§ 422.107(e). 

In § 422.112(a)(8), we require that MA 

organizations that offer MA coordinated 

care plans ensure that services are 

provided in a culturally competent 

manner to all enrollees, including to 

beneficiaries with limited English 

proficiency or reading skills, and 

diverse ethnic and cultural 

backgrounds. In addition, 

§ 422.2267(e)(11)(iv) requires that MA 

organizations update Provider 

Directories any time the MA 

organization becomes aware of changes. 

Integrated materials must also meet 

requirements at § 438.10(h)(3), which 

requires Medicaid managed care plans 

to update an electronic provider 

directory no later than 30 calendar days 

after receiving updated provider 

information. We note that States can 

choose to include more stringent 

requirements for models in their State 

Medicaid agency contracts. We will take 

the additional recommendations 

regarding the Provider Directory into 

consideration when creating a model. 

Comment: A commenter requested 

that CMS amend § 422.629 or § 422.630 

or both to require D–SNPs to have 

specific publicly published procedures 

for making reasonable accommodation 

requests under the Americans with 

Disabilities Act, for D–SNP 


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consideration of such requests, and 

procedures for disputing denials of 

reasonable accommodation requests. 

Response: While this comment is not 

strictly within the scope of this final 

rule, we note that MA plans, including 

D–SNPs, must comply with the 

applicable Federal civil rights 

authorities. Section 504 of the 

Rehabilitation Act of 1973 prohibits 

disability discrimination and includes 

requirements for effective 

communication for individuals with 

disabilities (45 CFR 84.52), accessibility 

standards for buildings and facilities (45 

CFR 84.22 and 84.23), and the filing of 

grievances and complaints (45 CFR 

84.61 and 84.7). 

Comment: Some commenters 

requested that CMS extend this proposal 

beyond only those D–SNPs with 

exclusively aligned enrollment to those 

without D–SNP-only contracts or to all 

FIDE and HIDE SNPs. Other 

commenters suggested it apply to all D– 

SNPs. A commenter noted that having 

to implement separate material 

development and review processes can 

present operational challenges. A 

commenter requested that CMS define 

the ‘‘certain D–SNPs’’ in the proposal. A 

few commenters also requested that 

CMS clarify which materials require 

integration as well as which materials, 

or sections of materials, would require 

State feedback. 

Response: We acknowledge that 

increased integration of materials for D– 

SNP enrollees and potential enrollees 

can help to reduce confusion and 

increase satisfaction. However, we 

proposed and are finalizing § 422.107(e) 

to adopt a pathway for States to require, 

through their State Medicaid agency 

contract, the use of integrated materials 

(at a minimum, an integrated SB, 

Formulary, and combined Provider and 

Pharmacy Directory) by D–SNPs with 

exclusively aligned enrollment, where 

the State is also requiring the D–SNP to 

apply for and request from CMS a D– 

SNP-only MA contract. By ‘‘certain D– 

SNPs’’ in the preamble of the proposed 

rule, we meant the D–SNPs that meet 

these specific requirements and are in 

this specific situation. Our proposal and 

final policy are limited to this group of 

D–SNPs because we believe exclusively 

aligned enrollment and a motivated 

State partner are both critical to 

effectively integrate materials. We will 

clarify through models and 

communication with States the sections 

of materials that require State feedback. 

We continue to work to improve current 

MA models for all D–SNPs, such as the 

ANOC and EOC, which allow D–SNPs 

to adjust the material to accurately 

reflect information such as Medicaid 

benefits and cost-sharing. 

Comment: A number of commenters 

support the inclusion of the ANOC and 

the EOC as part of the minimum scope 

of integrated materials. Several 

commenters noted that they appreciate 

the ability to use the Member Handbook 

as the integrated model, noting that the 

Member Handbook is more enrolleefriendly than the EOC. A commenter 

stated that the ANOC provides critical 

information about the changes that 

beneficiaries need to consider during 

the Open Enrollment Period. They 

noted that the ANOC is relatively short 

and most likely to be read by the 

beneficiary. In addition, they stated that 

it helps to prevent surprises and 

disruptions because of unanticipated 

changes in coverage or providers. 

Another commenter noted that, since 

CMS cannot change timelines for 

preparation of materials, CMS should 

start with the SB, Formulary, and 

combined Provider and Pharmacy 

Directory and reassess integration of 

ANOCs and EOCs once these first 

documents are in place, except in cases 

where collaboration on those additional 

documents already exists. They request 

that as part of the reassessment of the 

ANOC and EOC documents in the PRA 

process, CMS should facilitate allowing 

D–SNPs to use the Member Handbook 

format and approach upon request and 

agreement with the State. If this is not 

possible, they request that CMS clarify 

what additional authorities are needed 

in order to do so. 

Response: We appreciate the 

commenters’ support for integrated 

ANOCs and EOCs. We have determined 

that we will take an incremental 

approach and finalize § 422.107(e)(1)(ii) 

as identifying the SB, Formulary, and 

combined Provider and Pharmacy 

Directory as the minimum set of 

documents to be integrated; these 

integrated materials must also meet 

Medicare and Medicaid managed care 

requirements in 42 CFR parts 422, 423, 

and 438. However, as stated in the 

proposed rule (87 FR 1874), we do not 

intend to preclude CMS and States from 

collaborating on other integrated 

materials, including an integrated 

ANOC or EOC. 

We intend to develop an integrated 

Member Handbook (also known as the 

EOC) and ANOC for contract year 2024 

through the PRA process, which will 

include making the documents available 

to the public for review and comment 

during the publication of 60- and 30-day 

Federal Register notices. These models 

will be based off of models that we 

created for the FAI and a related 

demonstration in Minnesota. We intend 

to make the integrated versions of these 

models available for States that want to 

collaborate with CMS in furthering the 

use of integrated materials by D–SNPs 

with exclusively aligned enrollment. 

Comment: A commenter suggested 

that CMS consider establishing a CMScentralized repository of State 

information that includes accurate State 

agency addresses, phone numbers, and 

State Pharmaceutical Assistance 

Program information that MA 

organizations can access and utilize for 

beneficiary communications such as 

ANOC and EOC. The commenter noted 

that this State information could be 

displayed in the same way CMS already 

provides Quality Improvement 

Organization information for each State. 

Response: We thank the commenter 

for this suggestion and may re-examine 

it in the future. However, this comment 

is not within the scope of this 

rulemaking, as the proposed rule did 

not discuss a regulatory requirement for 

centralized State information. 

Comment: The commenter suggested 

that an integrated ID card include 

information on the beneficiary’s dual 

eligibility status, D–SNP type, the party 

that should receive and pay provider 

claims, and the party that is responsible 

for paying the beneficiary’s cost-sharing 

obligations. The commenter stated that 

this will reduce administrative burden 

and reduce risk that a beneficiary is 

improperly billed. 

Response: We thank the commenter 

for this suggestion. While setting new 

standards for the content of an 

integrated ID card is outside the scope 

of the regulation, we will consider 

including this information on ID cards 

in the future. 

After considering the comments we 

received and for the reasons outlined in 

the proposed rule and our responses to 

comments, we are finalizing the 

provision at § 422.107(e)(ii) with a 

modification to require that the 

integrated member materials meet 

Medicare and Medicaid managed care 

requirements consistent with applicable 

regulations in 42 CFR parts 422, 423, 

and 438. 

c. Joint State/CMS Oversight 

MA organizations receiving capitated 

payments through MA and from the 

State Medicaid agency must comply 

with different sets of Medicare and 

Medicaid requirements. This includes 

requirements imposed at the State level 

that are not identical to Federal 

minimum standards for Medicaid 

managed care plans in 42 CFR part 438. 

We explained in the proposed rule, at 

87 FR 1874, three drawbacks to CMS 

and States’ separate infrastructures to 


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monitor compliance: (1) State regulators 

and CMS may be unaware of important 

compliance or performance problems 

related to the delivery of Medicare and 

Medicaid services; (2) State and CMS 

officials may pursue different 

performance improvement priorities; 

and (3) uncoordinated oversight by CMS 

and the States can create inefficiencies 

for health plans. We proposed to 

address these drawbacks by giving 

States the opportunity to collaborate 

with CMS on oversight activities for the 

specific D–SNPs that operate under the 

conditions described at proposed 

paragraph (e)(1). We received several 

comments supporting our overall 

approach to provide States an 

opportunity to collaborate with CMS on 

oversight activities. 

Comment: Many commenters 

expressed support for State and CMS 

collaboration for joint oversight 

activities. Several commenters believed 

that improved data exchange and 

transparency would better align the 

State and CMS’s improvement activities 

for D–SNPs. These commenters also 

noted that joint oversight would help 

the State and CMS establish awareness 

and appropriate accountability for plan 

performance. A few commenters noted 

that joint oversight is needed for quality 

of care and providing enrollees with a 

better integrated care experience. 

Several commenters indicated that 

increased collaboration would help the 

D–SNPs better manage staff resources in 

areas where there might be duplicative 

oversight activities. One commenter 

generally supports the opportunities for 

joint oversight and suggested guardrails 

to ensure that coordinated oversight 

activities are limited to D–SNPs to avoid 

overreach and promote improved 

outcomes and efficiencies. 

Response: We thank the commenters 

for their support on our proposed rule. 

We agree that State and CMS 

collaboration for oversight activities of 

D–SNPs can increase transparency and 

improve efficiency of integrated care for 

Medicare and Medicaid services. 

(1) State Access to the Health Plan 

Management System 

The CMS Health Plan Management 

System (HPMS) is web-enabled 

information system where health and 

drug plans, plan consultants, third party 

vendors, and pharmaceutical 

manufacturers work with CMS to fulfill 

the plan enrollment, operational, and 

compliance requirements of the MA and 

Prescription Drug programs. We 

proposed in paragraph (e)(3)(i) that CMS 

would grant State access to HPMS to 

facilitate monitoring and oversight for 

D–SNPs operating under the specific 

contract terms required by the State that 

are described in proposed paragraph 

(e)(1). 

The proposal would permit approved 

State Medicaid officials to use HPMS for 

a number of information sharing and 

oversight activities for these D–SNPs. 

This access would allow State users the 

ability to directly view D–SNP 

information without requiring the D– 

SNP to send the information separately. 

We proposed that State access would 

be limited to approved users and subject 

to compliance with HHS and CMS 

policies and standards and with 

applicable laws in the use of HPMS data 

and the system’s functionality. This 

proposal would not limit CMS’s 

discretion to make HPMS accessible in 

other circumstances not described in 

our proposal. State access authorization 

would include access to information 

about the MA organization and the 

applicable D–SNP(s) and D–SNP-only 

contract, and information submitted by 

the MA organization through HPMS, 

under the specific circumstances 

described in the proposed regulation. 

We solicited feedback on our proposal, 

including feedback from MA 

organizations about CMS providing 

approved State officials with access to 

HPMS as a means to share information 

as it relates to the provisions of this 

final rule. 

Comment: Many commenters 

expressed support for our proposal to 

grant State access to HPMS to facilitate 

monitoring and oversight of for D–SNPs 

operating under the specific contract 

terms required by the State that are 

described in § 422.107(e)(1). Some 

commenters noted that HPMS access is 

important for better information and 

oversight of D–SNPs. Other commenters 

noted that providing States with access 

to HPMS will give the State officials 

important insight into areas such as 

marketing materials, models of care, 

enrollee complaints, plan benefits, 

formulary, network, and other basic 

contract information without having to 

ask the D–SNP and as a result will 

streamline the oversight process. A 

commenter noted that granting certain 

State Medicaid agency officials access to 

HPMS, which CMS has identified as a 

useful practice, aligns with their 

recommendation that CMS apply best 

practices from the FAI to FIDE SNPs. 

Response: We appreciate the 

commenters’ support for providing State 

Medicaid officials with HPMS access. 

We agree that providing States with 

access to these areas of HPMS will 

improve the coordination and oversight 

of D–SNPs by States and CMS. 

Comment: A commenter supported 

our proposal to grant States access to 

HPMS and suggested that CMS 

encourage States to update their State 

Medicaid agency contracts to reflect 

State access to this information. 

Specifically, the commenter encouraged 

States to eliminate the requirement that 

plans provide notices of audits since 

States will now be able to get the 

information through HPMS and will be 

able to have access to audit findings 

from CMS. 

Response: We appreciate the 

commenter’s perspective on this issue. 

We are not proposing to limit what 

States can include in their State 

Medicaid agency contracts, which are 

required by § 422.107(b) for all D–SNPs, 

but we hope that this new pathway for 

sharing information with States that 

require certain D–SNPs to use certain 

integrated materials and request a D– 

SNP-only MA contract with CMS will 

result in less burden for sharing 

information among the States that use 

this pathway, the affected D–SNPs, and 

CMS. 

Comment: MACPAC and another 

commenter noted that limiting HPMS 

access to D–SNPs meeting the criteria of 

§ 422.107(e) would mean that States 

would only be able to view information 

for a small number of D–SNPs with 

exclusively aligned enrollment and 

requested that CMS consider allowing 

States to view information for all D– 

SNPs. A commenter stated they 

understood there could be systems 

complexities with allowing States to 

access information for only a subset of 

enrollees when MA contracts include 

both D–SNP and non-D–SNP plan 

benefit packages. They suggest that CMS 

ensure that any language in the final 

rule is flexible enough to allow broader 

State access to HPMS without 

additional rulemaking. They believe 

that this was CMS’s intent based on the 

language in the proposed rule stating: 

‘‘This proposal would not limit CMS’s 

discretion to make HPMS accessible in 

other circumstances . . .’’ 

Response: CMS appreciates the 

commenters’ support for providing State 

Medicaid officials with HPMS access. 

We will consider other options for 

permitting expanded HPMS access for 

State Medicaid officials over time. 

Under § 422.107(e), the regulation we 

proposed and are adopting here, access 

to States is tied to the D–SNP-only 

contracts for D–SNPs with exclusively 

aligned enrollment that are required to 

use specified integrated enrollee 

materials. 

Comment: A commenter reiterated the 

importance of de-identifying 

information that could reveal the 

identity of the enrollee that has made a 

complaint, to ensure that their privacy 


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48Medicare Advantage and Section 1876 Cost 

Plan Network Adequacy Guidance (Last updated: 

June 17, 2020). Retrieved at Medicare Advantage 

and Section 1876 Cost Plan Network Adequacy 

Guidance (cms.gov). 

is upheld and to prevent any actions 

that could lead to or be perceived as 

enrollee retaliation. Another commenter 

requested CMS and State assurance of 

appropriate safeguards in place so that 

State employees accessing HPMS assure 

protection of proprietary information. 

Response: CMS understands the 

commenters’ concerns regarding 

enrollee privacy and the protection of 

proprietary information. Our experience 

granting States access to HPMS through 

the FAI and a related demonstration in 

Minnesota suggests that State access is 

without known problematic unintended 

consequences. In addition, we refer 

readers to our discussion in the 

proposed rule (87 FR 1874) that State 

users would be subject to compliance 

with HHS and CMS policies and 

standards and with applicable laws in 

the use of HPMS data and the system’s 

functionality. 

Comment: A commenter proposed 

that enrollee complaint information be 

aggregated and stratified and that the 

information be utilized by health plans 

for quality improvement and 

performance purposes. 

Response: We appreciate the 

comment. MA organizations have access 

to all of their enrollee complaints in 

HPMS and we encourage them to utilize 

the data for quality improvement 

purposes. 

Comment: A commenter strongly 

recommend interoperability between 

State monitoring systems and HPMS. 

Response: We appreciate the 

comment; however, it is outside the 

scope of this rulemaking. 

After consideration of the comments 

received and for the reasons provided in 

the proposed rule and our responses to 

comments, we are finalizing 

§ 422.107(e)(3)(i) as proposed to provide 

State Medicaid officials with access to 

HPMS for purposes of oversight of D– 

SNP contracts described in 

§ 422.107(e)(1). We are also finalizing 

§ 422.107(e)(1) and (2) as discussed 

elsewhere in this final rule. 

(2) State-CMS Coordination on Program 

Audits 

We proposed in paragraph (e)(3)(ii) 

that CMS would coordinate with State 

Medicaid officials on program audits. 

This coordination would include 

sharing major audit findings for State 

awareness related to the D–SNPs subject 

to proposed paragraph (e)(1). 

As summarized in the proposed rule 

at 87 FR 1874 through 1875, we believe 

that there are benefits for CMS, States, 

and MA organizations to increasing 

coordination in connection with such 

audits. As proposed, CMS would also 

offer to work with States to attempt to 

avoid scheduling simultaneous State 

and Federal audits. This process would 

reduce the likelihood of concurrent 

Medicare and Medicaid program audits, 

thereby reducing the risk that an MA 

organization is insufficiently responsive 

to auditors or its performance slips 

because it is managing concurrent 

audits. While we described examples of 

how we may coordinate activities under 

the proposal, we did not intend to limit 

our discretion to coordinate with States 

in the audit process outside of the 

parameters in proposed 

§ 422.107(e)(3)(ii); we would evaluate 

the extent of coordination in each 

circumstance relevant to the D–SNPonly contract established as a result of 

the State’s contract requirements 

described in paragraph (e)(1). 

Comment: Many commenters 

expressed support for the proposal for 

CMS-State coordination on program 

audits. Some commenters noted that 

greater State involvement provides 

States with valuable information and 

provides a stronger vantage point to 

determine plan performance. A few 

commenters indicated that program 

audits are resource intensive and plans 

face administrative burdens and 

challenges when State and Federal 

audits are concurrent. A commenter 

noted that when audits are concurrent 

this may decrease the plan’s ability to 

respond appropriately and timely to 

audit inquires. 

Response: CMS appreciates the 

commenters’ support and agrees that 

there are benefits in increasing CMS, 

State, and MA organization 

coordination. 

Comment: A few commenters 

recommended additional steps to 

coordinate audits across Medicare and 

Medicaid. A commenter suggested that 

CMS provide States with additional 

guidance on current Federal audits and 

NCQA model of care review 

requirements. The commenter believed 

that this type of coordination would 

allow regulators to consider if one audit 

could satisfy the requirements for both 

a Federal and State audit. The 

commenter also urged CMS to consider 

collaborating with States to develop a 

crosswalk for auditors and plans to 

reference to ensure all audit parameters 

are clear and not in conflict. Another 

commenter encouraged States to 

consider what audits have been 

performed by CMS and whenever 

possible the audits should be linked, 

deeming the D–SNPs that have clean 

audits as meeting standards. A 

commenter suggested that CMS improve 

coordination with States for other audit 

types and between audit divisions in 

CMS. This commenter indicated that it 

would be advantageous to have an 

increased level of scheduling 

coordination between Federal audit 

types; for example, between program 

audits and other routine reviews such as 

the one-third financial audit. 

Response: CMS appreciates the 

perspectives and recommendations of 

the commenters for additional ways to 

coordinate audits and will take these 

into consideration for future auditrelated work. 

After consideration of the comments 

received and for the reasons provided in 

the proposed rule and our responses to 

comments, we are finalizing 

§ 422.107(e)(3)(ii) as proposed address 

how CMS will coordinate with States on 

program audits for the D–SNP contracts 

described in § 422.107(e)(1). 

(3) State Input on Provider Network 

Exceptions 

As described in the proposed rule at 

87 FR 1875, CMS expects to use existing 

authority and flexibility as it pertains to 

the review of MA plan provider 

networks, particularly in CMS’s review 

of network exceptions, to solicit and 

receive input from State Medicaid 

agencies. CMS requires all MA 

organizations to maintain a network of 

appropriate providers that is sufficient 

to provide adequate access to covered 

services. Currently, MA organizations 

submit their provider networks to CMS 

for review at the overall contract level 

on a triennial basis or when there is a 

triggering event such as an application 

or a significant provider/facility 

termination.48 As discussed in the 

proposed rule at 87 FR 1875, if an MA 

organization that offers one or more D– 

SNPs seeks an exception to our network 

adequacy standards in § 422.116, State 

Medicaid officials may be uniquely 

positioned to provide relevant 

information to CMS. We did not 

propose to adopt specific regulation text 

in § 422.107(e)(3) regarding potential 

collaboration with State Medicaid 

agencies in connection with 

adjudicating requests for an exception to 

network adequacy requirements for D– 

SNPs that operate under the conditions 

described at proposed paragraph (e)(1) 

because a regulatory amendment is not 

necessary to support this process; 

however, the proposed rule outlined 

how we expect this type of engagement 

between CMS and States to work. 

When an MA plan fails to meet the 

network adequacy criteria in 

§ 422.116(b) through (e), the MA plan 


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may request an exception. Exceptions 

are limited to specific situations and 

conditions identified in § 422.116(f)(1) 

and, in considering whether to grant an 

exception, CMS considers whether 

current access to providers and facilities 

is different from what appears to be 

indicated by the data CMS uses to 

evaluate and set minimum standards for 

network adequacy for MA plans. 

In the proposed rule, CMS proposed 

to amend § 422.116(a)(1)(ii) to require 

compliance with network adequacy 

standards as part of an application for 

a new or expanding MA service area 

(see section II.C. of this final rule). In 

addition, we described our intent to 

reach out to States to learn if there is 

any information that would meet the 

requirement at § 422.116(f)(2)(ii) when a 

MA organization with a D–SNP contract 

described in § 422.107(e) submits an 

exception request. CMS may consult 

with the respective State to identify if 

there are other factors, as described at 

§ 422.112(a)(10), that may be relevant 

before making a determination on the 

exception request. We solicited 

comment on this approach. 

Comment: We received a number of 

comments expressing support for our 

efforts to consult with States when an 

MA organization with a D–SNP contract 

described in § 422.107(e)(1) submits an 

exception request that does not meet the 

requirements at § 422.116(f)(1). A few 

commenters indicated that the States 

have information that would be 

pertinent to CMS’s determinations. 

Some commenters noted that States 

have a deep knowledge of their local 

markets and can help CMS determine 

the validity of plans’ exception requests. 

A commenter also suggested that States’ 

involvement in the network exception 

process can highlight provider 

shortages. 

Response: CMS appreciates the 

commenters’ support for our efforts to 

consult with and solicit input from 

States in these circumstances. 

Comment: A few commenters 

recommended that we add a provision 

that CMS notify the D–SNP of the 

consultation with the State so that the 

D–SNP is fully informed of additional 

factors being considered in the 

exception request. 

Response: We appreciate the 

commenters’ interest in having CMS 

notify a D–SNP when CMS consults 

with or solicits input from a State on a 

specific exception request. We decline 

to adopt a requirement that CMS notify 

the D–SNP whenever we consult with a 

State on an exception request because it 

would be too burdensome given the 

short timeframe we take to review all 

exception requests, in general. The D– 

SNP will ultimately be informed of the 

basis for CMS’s approval or denial of the 

exception request, and we do not 

believe there is any added benefit to the 

D–SNP knowing about the State 

outreach during the exception review 

process. 

Comment: A commenter requested 

that we consider the timeliness in 

receiving responses from the State(s). 

Response: We thank the commenter 

for their request and note that we expect 

States to respond timely to our requests 

to engage with CMS and to provide us 

with information that will be relevant to 

our determinations on exception 

requests submitted by MA organizations 

with D–SNP contracts described in 

§ 422.107(e). To the extent States are not 

willing or able to provide information in 

a timely fashion, we will proceed with 

the network adequacy determination 

with the information available to us. 

Comment: We received a few 

comments that did not support the 

proposal for State input of Medicare 

network exception requests on the 

grounds that States already have 

network standards in place and may not 

have specific insights into the Medicare 

requirements. 

Response: We believe the commenters 

misinterpreted the discussion of CMS’s 

authority under § 422.116(f) and our 

intent to solicit and receive input from 

State Medicaid agencies. Our 

consultations with States in the context 

of our proposal are limited to exception 

requests to the MA network adequacy 

standards and do not involve State 

Medicaid network standards. The 

purpose of the consultation with the 

State is to help CMS gain access to 

information that may be relevant to our 

determinations on exception requests 

from MA organizations with D–SNP 

contracts described in § 422.107(e). 

The discussion in the proposed rule 

on this topic was not a proposal, and we 

are not finalizing any rules or 

regulations about CMS’s ability to solicit 

comment from and consult with a State 

regarding a request from certain MA 

organizations (specifically, MA 

organizations with a D–SNP-only MA 

contract described in § 422.107(e)) for 

an exception from the MA network 

adequacy requirements in § 422.116. As 

described in the proposed rule and our 

responses to comments, we intend to 

solicit comment from and engage with 

States as appropriate and necessary 

when evaluating requests for exceptions 

from the network adequacy 

requirements in § 422.116. 

d. Comment Solicitation on Financing 

Issues 

Based on our experience in the FAI, 

we solicited comments on two 

opportunities to advance financial 

integration for integrated plans: (1) 

Medicare medical loss ratios (MLRs) 

that include only D–SNP experience 

and other options to evaluate the 

financial performance of integrated 

plans; and (2) consideration of the 

expected impact of benefits provided by 

MA organizations on Medicaid cost and 

utilization in the evaluation of Medicaid 

actuarial soundness. 

We did not propose new Medicare or 

Medicaid policies in this discussion. 

Instead, we requested public comments 

on possible future initiatives. In this 

section of this rule, we summarize our 

requests for comments, comments 

received, and provide our responses. 

At 86 FR 1870, we proposed at 

§ 422.107(e) to make an option available 

through which States could require D– 

SNPs with exclusively aligned 

enrollment to operate under MA 

contracts that only include one or more 

D–SNPs that operate in that State. Such 

D–SNPs would still have to calculate 

and report separate Medicare and 

Medicaid MLRs, and having a separate 

contract for certain D–SNPs would 

better allow evaluation of MLRs and 

financial performance specific to that 

D–SNP product. We solicited feedback 

on the extent to which the proposal at 

§ 422.107(e) would better allow States to 

evaluate the performance of integrated 

plans. 

In the discussion at 87 FR 1877, we 

noted that we believe that Medicaid 

managed care capitation rates can be 

actuarially sound as required by § 438.4 

when those rates consider the impact of 

MA supplemental benefits and any 

State-specific requirements for dually 

eligible individuals on the projected 

costs and utilization of the Medicaid 

benefits covered by the Medicaid 

managed care capitation rates. We 

solicited feedback on the extent to 

which this consideration of the impact 

of Medicare-covered benefits on costs 

and utilization of Medicaid services 

advances integration goals and is 

consistent with actuarial standards of 

practice. We also requested input on 

what information States, actuaries, and 

others would need to evaluate actuarial 

soundness under this approach. 

Finally, we solicited feedback on 

other options related to financing for 

integrated plans CMS should evaluate 

and consider for future rulemaking or 

sub-regulatory clarification. 

Comment: Several commenters 

expressed support for approaches to 


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MLR reporting that meaningfully 

improve stakeholders’ visibility into the 

financial performance of integrated 

plans. Some commenters agreed that the 

proposal at § 422.107(e) would provide 

for MLR results exclusive to D–SNPs 

with exclusively aligned enrollment, 

thus enhancing transparency and 

relevancy of the MLR data used to 

assess and oversee financial 

performance for these plans in a way 

not currently possible. A commenter 

noted stakeholders already collect and 

analyze Medicare and Medicaid 

financial data and the benefits of the 

proposal would depend on the extent to 

which CMS facilitated or standardized 

analysis of MLR data in ways not 

possible today. Finally, a commenter 

recommended CMS explore how MLR 

calculations can improve services and 

outcomes for dually eligible individuals, 

especially those enrolled in HIDE and 

FIDE SNPs. 

Response: We thank the commenters 

for their input and suggestions and will 

take them under advisement for future 

rulemaking and in developing technical 

assistance for States in analyzing MLR 

data. 

Comment: Some commenters stated 

separate Medicaid and Medicare MLR 

requirements create challenges to 

meeting integration goals, such as 

inhibiting flexibility and not 

incentivizing integrated care, while 

another commenter stated the 

inconsistent availability of encounter 

data and lack of framework for 

allocating cost to Medicare versus 

Medicaid pose significant challenges. 

A commenter objected to CMS ending 

the FAI capitated financial alignment 

model and expressed that this 

represents an undesirable move away 

from an integrated MLR, a change they 

believed would erode transparency in 

medical spending and increase the risk 

that plans will pad allowable 

administrative costs. 

Response: We thank the commenters 

for their input and suggestions and will 

take them under advisement for future 

rulemaking. We address other 

comments on the FAI later in this final 

rulemaking. 

Comment: Many commenters 

supported maintaining separate 

Medicare and Medicaid MLR 

requirements and several commenters 

expressed opposition to any changes. A 

few commenters expressed uncertainty 

that the benefits of an integrated MLR 

would outweigh the burden of reporting 

integrated MLR data. A commenter 

opposed any requirement for D–SNPs to 

report an integrated MLR or any other 

changes to current D–SNP financing and 

infrastructure. Many commenters also 

noted barriers to or concerns with 

integrated MLR reporting that they 

believe CMS should take into 

consideration, including misalignments 

between Medicare and Medicaid 

funding, cost reporting definitions, and 

program requirements; the lack of a 

standardized methodology for 

calculating an integrated MLR; and the 

fact that current Medicaid rate 

development guidance does not provide 

for an integrated MLR to be used in 

Medicaid rate development for an 

integrated D–SNP. Some commenters 

indicated plans’ operational and 

financial workflows are not currently 

structured to support or yield encounter 

or financial data of sufficient quality to 

support integrated MLR reporting. 

A few commenters expressed support 

for integrated MLR reporting. A few 

commenters responded that they do not 

believe the current MLR approach 

provides sufficient data for State 

decision making and policy 

development; they instead supported an 

integrated MLR approach, including 

CMS requiring an integrated MLR for 

integrated products, as a better way to 

track and oversee plan spending, set 

actuarially sound rates, and establish 

plan performance targets. Several 

commenters supported States having the 

flexibility to determine MLR 

requirements. A commenter stated the 

integrated MLR reports that MMPs 

submit under FAI offer a more complete 

picture of plan financial performance 

than would otherwise be available. 

Another commenter acknowledged what 

while there are significant technical and 

legal hurdles to achieving integrated 

MLR reporting, overcoming these would 

support data-driven decision making 

and policy. A commenter noted the 

potential benefit to States of CMS’s 

proposed requirement to reinstate the 

detailed MLR reporting requirements 

under §§ 422.2460 and 423.2460 (87 FR 

1902 through 1906) as it may better 

support States to compare Medicare and 

Medicaid MLR reporting under a D–SNP 

contract. 

Response: We would like to clarify 

that we did not propose to require an 

integrated MLR for integrated products; 

as we stated at 87 FR 1876, we do not 

believe we have the statutory authority 

to include Medicaid experience as part 

of the Medicare MLR requirement. We 

thank the commenters for providing 

thoughtful input on these issues. We 

will take these comments and concerns 

into consideration for any future 

guidance on this topic. 

Comment: Several commenters agreed 

with CMS’s interpretation that Medicaid 

managed care capitation rates can be 

actuarially sound, as required by 

§ 438.4, when those rates consider the 

impact of MA supplemental benefits 

and State-specific requirements for 

dually eligible individuals, as included 

in the State Medicaid agency contract, 

D–SNP MOC, or MMP contract, on 

Medicaid costs and utilization. A few 

other commenters did not reference 

Medicaid actuarial soundness 

requirements but stated that MA 

supplemental benefits and State-specific 

requirements should be considered in 

setting Medicaid managed care 

capitation rates or supported States 

having the flexibility to consider the 

impact of such benefits and 

requirements when setting Medicaid 

managed care capitation rates. Several 

commenters indicated they expect MA 

supplemental benefits or other Statespecific requirements to have minimal 

impact on the cost and utilization of 

Medicaid benefits. A commenter 

recommended that Medicaid actuaries 

be required to consider the impact of 

Medicare costs and utilization in 

Medicaid rate setting. 

A few commenters expressed concern 

with States considering the impact of 

MA supplemental benefits and other 

State-specific requirements for dually 

eligible individuals when establishing 

Medicaid managed care capitation rates, 

citing potential negative impacts 

including: Reductions in Medicaid 

managed care capitation rates without 

sufficient transparency; Medicaid rates 

not meeting actuarial soundness 

requirements; and States offering less 

robust Medicaid benefits by substituting 

these benefits with MA supplemental 

benefits. A few commenters expressed 

concern about the impact of these 

Medicaid-rate setting considerations on 

MA market dynamics or beneficiaries’ 

access to certain benefits, including: the 

potential for D–SNPs to be less 

competitive; or for such benefits to only 

be made available in MA plans, 

resulting in less beneficiary choice. For 

example, a commenter stated that 

significant expansion of MA 

supplemental benefits could give States 

less incentive to expand their Medicaid 

benefit package if coverage, such as for 

dental care, were widely provided in 

MA plans that are available to dually 

eligible individuals; in such scenario, 

beneficiary choice could be limited if 

needed dental coverage were only 

available in MA plans. A commenter 

also expressed concern that for 

integrated products, Medicare financial 

information alone might suggest funds 

are available to support funding 

Medicaid benefits, but that combined 

Medicare and Medicaid funding could 

indicate otherwise, limiting an 


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integrated plan’s ability to fund 

investments in Medicaid services with 

savings from reduced Medicare acute 

care utilization. A few commenters 

stated that CMS should also consider 

the impact of Medicaid benefits in 

lowering Medicare costs and utilization. 

Response: We thank the commenters 

for providing thoughtful input on this 

issue. We appreciate the support for 

CMS’s interpretation that Medicaid 

managed care capitation rates can be 

actuarially sound when those rates 

consider the impact of MA 

supplemental benefits and any Statespecific requirements on the projected 

costs and utilization of the Medicaid 

benefits. We thank the commenters for 

providing input on the potential 

unanticipated impacts of such an 

approach. We will take these comments 

and concerns into consideration for any 

future guidance on this topic. 

Comment: A number of commenters 

provided input on the types of 

information States, actuaries, and others 

would need to evaluate actuarial 

soundness under this approach. A 

commenter noted that Medicaid rate 

development for programs with 

enrollment aligned across Medicare and 

Medicaid may currently use a wide 

variety of information that generally 

meets actuarial soundness needs. 

However, this commenter and a number 

of others provided feedback on potential 

implementation challenges CMS should 

consider that could impact States’ and 

actuaries’ ability to estimate the impact 

of such supplemental benefits on 

Medicaid costs and utilization. 

Commenters noted barriers including: 

Timing differences between the MA 

bidding cycle and Medicaid rate-setting 

periods; the lack of uniformity and 

sameness in supplemental benefits 

across MA plans or within MA plans as 

a result of MA uniformity flexibility or 

provision of SSBCI; States not having 

sufficient MA bid data that describes 

supplemental benefits, and the lack of a 

consistent framework for allocating 

Medicare versus Medicaid costs or 

claims. 

Some commenters encouraged CMS to 

provide additional guidance to ensure 

consistency in how States and actuaries 

consider of the impact on MA 

supplemental benefits or State-specific 

requirements in Medicaid managed care 

rate setting, in areas including: CMS’s 

expectations for plan-specific Medicaid 

rates to account for plan differences in 

MA supplemental benefits; using a 

historical MA benefits package to 

establish Medicaid rates; and what 

quantitative support would be necessary 

to support CMS’ review of Medicaid 

rates in these scenarios. 

Response: We appreciate the feedback 

on the additional information States, 

actuaries and others would need to 

evaluate actuarial soundness under this 

approach, as well as other potential 

implementation challenges. We also 

thank the commenters for their input 

concerning what guidance would be 

useful for States and Medicaid actuaries. 

We will take this input into account as 

we consider updates to CMS’s Medicaid 

Managed Care Rate Development Guide, 

as well as other avenues to provide 

guidance and technical assistance on 

this topic. 

Comment: We received many 

comments on other options related to 

financing for integrated plans. For any 

future rulemaking, a commenter 

requested CMS collaborate with 

stakeholders in advance, while another 

commenter requested CMS take into 

consideration plans’ need for flexible 

deadlines and written guidance. 

Many commenters recommended that 

CMS work with States, managed care 

organizations, and actuaries on 

opportunities to improve financial 

alignment between Medicare and 

Medicaid. Other commenters expressed 

interest in CMS sharing best practices, 

such as how experience from the FAI 

could be applied in the context of a D– 

SNP or a FIDE SNP, or continuing to 

explore topics related to financial 

alignment, such as curbing incentives 

for cost shifting, methodologies to value 

supplemental benefits, and investments 

that target social determinants of health. 

A commenter that believes CMS should 

increase the level of coordination 

between CMS and States regarding 

community supports and in-lieu-of 

services that impact Medicare costs and 

utilization requested a new requirement 

for advance notification of changes in 

community support services. 

A few commenters emphasized their 

support for CMS examining 

experienced-based rate setting 

approaches for adoption in integrated 

products outside of FAI, where cost 

neutrality was required. A commenter 

noted States participating in other 

aligned approaches may want to 

consider requesting more explicit cost 

offsets from CMS, such as sharing in the 

Medicare MLR remittances. A few 

commenters encouraged CMS to 

continue to offer States financial 

incentives for integration, with a 

commenter suggesting CMS offer States 

alternative value-adds such as access to 

implementation resources; ongoing 

increased FFP for administrative and IT 

changes; and improved coordination, 

quality, access, and simplification for 

beneficiaries. 

Finally, a few commenters disagreed 

with the degree of emphasis they 

believe is placed on financial savings 

derived from integrated products, 

arguing CMS should pursue integration 

because it is an alternative to the current 

fragmented, inefficient system. A 

commenter disagreed with designing 

integrated approaches under a standard 

of budget neutrality, noting this is a 

standard to which MA organizations 

and Medicaid capitation payments for 

D–SNPs are not likewise held. Another 

commenter expressed support for 

replacing Titles 18 and 19 of the SSA to 

fund integrated services through a single 

source of financing used to fund 

benefits; this commenter stated this 

alternative model should feature State 

contracting with administering entities, 

financing mechanisms to ensure 

accountability and eliminate incentives 

for cost shifting, and required 

reinvestments of savings into efforts to 

support the population. 

Response: We appreciate the 

commenters’ input and suggestions on 

how to improve financial alignment 

across the Medicare and Medicaid 

programs and will take them under 

advisement for future rulemaking. 

7. Definition of Applicable Integrated 

Plan Subject to Unified Appeals and 

Grievances Procedures (§ 422.561) 

In § 422.561, we proposed to expand 

the universe of D–SNPs that are 

required to have unified grievance and 

appeals processes by revising the 

definition of an applicable integrated 

plan. The April 2019 final rule 

introduced the concept of applicable 

integrated plans, which we defined as 

FIDE SNPs and HIDE SNPs in which 

Medicare and Medicaid enrollment is 

exclusively aligned (meaning State 

policy limits a D–SNP’s enrollment to 

those whose Medicare and Medicaid 

enrollment is aligned as defined in 

§ 422.2) and the companion Medicaid 

MCOs for those D–SNPs, thereby 

making it feasible for these plans to 

implement unified grievance and 

appeals processes. We limited the 

universe of potential applicable 

integrated plans to FIDE SNPs and HIDE 

SNPs with exclusively aligned 

enrollment to ensure, first, that all 

enrollees are covered with the same 

scope of benefits and, second, that the 

plans implementing unified grievances 

and appeals offered a sufficiently 

substantial range of Medicaid benefits to 

make the unification of Medicare and 

Medicaid processes meaningful for 

beneficiaries and worthwhile for States 

and plans. 

Because the landscape of integrated 

plans has evolved in the past several 


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49The Addendum to the Parts C & D Enrollee 

Grievances, Organization/Coverage Determinations, 

and Appeals Guidance, Coverage Decision Letter 

(Form CMS–10716), Letter about Your Right to 

Make a Fast Complaint, and Appeal Decision Letter 

can be found at https://www.cms.gov/MedicareMedicaid-Coordination/Medicare-and-MedicaidCoordination/Medicare-Medicaid-CoordinationOffice/D-SNPs. 

years, we believe there are integrated D– 

SNPs other than FIDE SNPs and HIDE 

SNPs for which a unified grievance and 

appeals process is feasible. Expanding 

the process to these plans would 

simplify the grievance and appeals steps 

for beneficiaries enrolled in these plans 

for their Medicare and Medicaid 

benefits and extend the protection of 

continuation of benefits pending appeal 

as described in § 422.632 to additional 

beneficiaries. Accordingly, we 

proposed, effective January 1, 2023, to 

expand the definition of the term 

applicable integrated plan to include an 

additional type of D–SNP and the 

affiliated Medicaid managed care plan 

subject to the rule. 

We proposed to include as applicable 

integrated plans certain combinations of 

Medicaid managed care plans and D– 

SNPs that are not FIDE SNPs or HIDE 

SNPs but meet three other conditions. 

First, State policy must limit the D– 

SNP’s enrollment to beneficiaries 

enrolled in an affiliated Medicaid 

managed care plan that provides the 

beneficiary’s Medicaid managed care 

benefits. Second, each enrollee’s 

Medicaid managed care benefits must be 

covered under a capitated contract 

between (1) the MA organization, the 

MA organization’s parent organization, 

or another entity that is owned and 

controlled by its parent organization, 

and (2) a Medicaid MCO or the State 

Medicaid agency. Third, the Medicaid 

coverage under the capitated contract 

must include primary care and acute 

care, including Medicare cost-sharing as 

defined in section 1905(p)(3)(B), (C) and 

(D) of the Act, without regard to the 

limitation of that definition to qualified 

Medicare beneficiaries, and must 

include at least one of the following: 

Medicaid home health services (as 

defined in § 440.70), Medicaid medical 

supplies, equipment and appliances (as 

described in § 440.70(b)(3)), or Medicaid 

nursing facility services. The affiliated 

Medicaid MCO in which all of the D– 

SNP’s enrollees are also enrolled in this 

scenario would also be included in our 

proposed expansion of applicable 

integrated plans. As a result, the 

following arrangements would be 

applicable integrated plans under our 

proposal, where both plans include 

membership that is fully aligned 

between the D–SNP and an affiliated 

MCO: (1) A D–SNP and affiliated 

Medicaid MCO where the D–SNP holds 

a contract with a separate Medicaid 

MCO to cover all capitated managed 

care benefits in the State and the 

separate Medicaid MCO holds the 

contract with the State for those benefits 

(2) a D–SNP and affiliated Medicaid 

MCO where the affiliated Medicaid 

MCO holds a contract with the State for 

the capitated Medicaid benefits. 

Where each of these conditions is 

met, enrollees receive all of their 

Medicare and Medicaid benefits that are 

available through managed care in the 

State through a D–SNP and affiliated 

Medicaid managed care plan. 

We proposed to reorganize the 

definition of applicable integrated plan 

in § 422.561 by adding new subsections 

to the definition in § 422.561 to show 

separate definitions before and after 

January 1, 2023. The proposed 

definition after January 1, 2023, expands 

the universe of applicable integrated 

plans to include a D–SNP and affiliated 

Medicaid managed care plan that meets 

these three criteria. Under the proposed 

revisions to § 422.561, current 

paragraphs (1) and (2) would become 

paragraphs (2)(i)(A) and (B) and apply 

before January 1, 2023. Proposed new 

paragraph (2) of the definition would 

apply beginning January 1, 2023, and 

would include the current definition 

and the proposed new category of D– 

SNPs and affiliated Medicaid managed 

care plans that would qualify as an 

applicable integrated plan. 

Comment: We received numerous 

comments in support of our proposal to 

expand the unified plan-level appeals 

and grievance processes to cover 

additional D–SNPs and enrollees where 

the State Medicaid managed care 

program may have carve-outs of LTSS 

and behavioral health services that 

prevent the plans from qualifying as 

FIDE or HIDE SNPs. In support of our 

proposal and covering more enrollees 

with the unified procedures, several 

commenters noted that the unified 

processes are simpler and easier to 

navigate for enrollees and will expand 

access to Medicare services while an 

appeal is pending. A commenter also 

noted that our proposed benefit 

coverage criteria for affected plans are 

largely areas where overlap is most 

common, including specifically durable 

medical equipment and home health. 

Some commenters, while supportive of 

our proposal, encouraged CMS to 

extend the unified processes to 

additional D–SNPs to cover more 

enrollees, including D–SNPs that do not 

have exclusively aligned enrollment. 

Response: We appreciate the broad 

support for our proposal to expand the 

definition of applicable integrated plans 

to encompass more plans and cover 

more enrollees. We agree with those 

commenters who stated that the unified 

processes are clearer and easier to 

navigate for enrollees and provide 

additional benefits such as continuing 

Medicare services while an appeal is 

pending. As we noted in the April 2019 

final rule (CMS–4185–F), we do not 

think it is feasible to align appeals and 

grievance processes where the D–SNP is 

not affiliated with the Medicaid MCO 

covering the enrollee’s Medicaid 

benefits. This includes a plan where 

some enrollees are aligned but not all. 

We will continue to monitor for 

additional opportunities for 

streamlining and clarifying the process 

for enrollees. We also remind D–SNPs 

that they have obligations under 

§ 422.562(a)(5) to assist enrollees with 

obtaining and appealing Medicaid 

benefits covered by Medicaid, including 

when those Medicaid benefits are 

covered by unaffiliated Medicaid 

managed care plans or Medicaid FFS 

programs, as discussed in the April 

2019 final rule (84 FR 15723), and that 

States may include additional 

integration requirements in their State 

Medicaid agency contracts with D– 

SNPs. 

Comment: Some commenters, while 

supportive of our proposal, requested 

that CMS delay the implementation 

date. A commenter also asked how CMS 

would work with States that resist 

modifying appeals and grievance 

procedures to comply with the rule. 

Response: We acknowledge that plans 

newly covered by the definition of 

applicable integrated plan will have less 

than a year to ensure that they have 

appropriate processes in place. 

However, most of the plans that we 

anticipate will be covered by the revised 

definition in 2023 currently operate as 

MMPs in California, and thus have 

several years’ experience operating very 

similar unified appeals and grievance 

processes. With the transition of Cal 

MediConnect, we would like for 

enrollees who transition to D–SNPs and 

MCOs operated by the same parent 

organization to continue to benefit from 

the unified appeals and grievance 

processes that they have come to know 

in Cal MediConnect. We also note that 

materials and guidance already exist for 

applicable integrated plans 49 and the 

Medicare-Medicaid Coordination Office 

provides technical assistance to States 

on integration issues. We will continue 

to engage States, plans, and other 

stakeholders as we implement the 

unified appeals and grievance processes 

for additional plans, particularly in 


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27780 Federal Register / Vol. 87, No. 89 / Monday, May 9, 2022 / Rules and Regulations 

50The Coverage Decision Letter (Form CMS– 

10716) can be found at https://www.cms.gov/ 

Medicare-Medicaid-Coordination/Medicare-andMedicaid-Coordination/Medicare-MedicaidCoordination-Office/D-SNPs. 

California. We are also committed to 

continuing our work with States to 

gather and disseminate best practice 

information and to engage stakeholders 

to ensure a successful implementation. 

Comment: Some commenters 

requested clarification, or through their 

comments suggested a need for 

clarification, with respect to whether 

the applicable integrated plans must 

have exclusively aligned enrollment to 

be covered under our proposed 

expansion of the definition of applicable 

integrated plans. A few commenters 

specifically suggested that we apply the 

applicable plan definition to HIDE 

SNPs, in addition to FIDE SNPs. 

Response: We clarify that only D– 

SNPs with exclusively aligned 

enrollment, as defined in § 422.2 as 

those D–SNPs where State policy limits 

enrollment to full-benefit dual eligible 

individuals also covered by the 

affiliated Medicaid managed care 

organization, will be newly covered by 

the expanded definition of applicable 

integrated plans. Exclusively aligned 

enrollment, as a practical matter, 

generally refers to HIDE SNPs and FIDE 

SNPs. In this rule we are including in 

the definition of applicable integrated 

plans a subset of D–SNPs that are not 

HIDE SNPs or FIDE SNPs but still share 

membership with the Medicaid MCO. 

Plans covered under the existing 

definition of applicable integrated plans 

at § 422.561, meaning FIDE and HIDE 

SNPs that have exclusively aligned 

enrollment, will continue to be 

applicable integrated plans. 

Comment: Several commenters 

opposed finalizing our proposal based 

on the misunderstanding that the 

unified procedures would apply to 

benefits beyond those covered by the D– 

SNP and Medicaid capitated contracts, 

potentially making the unified processes 

unworkable for plans. A few 

commenters requested clarification on 

how Medicaid benefits that are carved 

out of managed care in a State would be 

covered by the unified appeals and 

grievance process, and suggested that 

CMS facilitate data sharing between 

States and plans so that plans know 

what Medicaid benefits are covered and 

what the State requirements are for 

processing Medicaid appeals. A 

commenter also questioned the value of 

unified appeals and grievance processes 

that do not cover all of an enrollee’s 

benefits due to benefits being carved out 

of managed care in the State. 

Response: The Medicaid benefits 

covered by the applicable integrated 

plan will be delineated as covered 

benefits in the Medicaid managed care 

contract that the D–SNP has with the 

State Medicaid agency or other 

Medicaid MCO. These will be the only 

Medicaid benefits subject to the unified 

appeals and grievance process. To the 

extent that the Medicaid MCO covering 

the Medicaid managed care benefits is 

not the same legal entity as the D–SNP, 

both the Medicaid MCO and the D–SNP 

must collaborate to implement a unified 

appeals and grievance process to cover 

the enrollees’ full capitated Medicaid 

and Medicare benefits, and ensure they 

are complying with the regulations at 

§§ 422.629 through 422.634. The 

appeals and grievances processes for 

Medicaid benefits that are not capitated 

to the applicable integrated plan (that is, 

the plan is not responsible for covering) 

remain unchanged. For example, if an 

enrollee appeals the denial of a 

Medicaid service that is carved out, that 

appeal would continue to be processed 

and decided through the State’s appeal 

process as it is today. Similarly, 

Medicare benefits that are not covered 

by the D–SNP, specifically hospice 

benefits, acquisition costs of kidneys for 

transplant, and certain new benefits that 

are the subject of an NCD or legislative 

change in benefits, will not be subject to 

the unified appeal and grievance 

process. Benefits that are not covered by 

the D–SNP or MCO contract will not be 

covered by the unified grievance and 

appeals procedures. However, we 

believe that bringing as many benefits as 

the plans cover, under the MA contract 

and under the capitated contract for 

Medicaid managed care benefits, into 

the unified procedures still benefits the 

enrollee by providing the enrollee a 

single pathway for appeals and 

grievances for those overlapping 

benefits, as opposed to separate paths 

for appeals and grievances based on 

Medicare or Medicaid coverage. We 

note that, with respect to the 

workability of unified appeals and 

grievance procedures generally, 95 

applicable integrated plans in eleven 

states are currently operating, and we 

have heard very few questions or 

concerns. We also reiterate the 

requirement for all D–SNPs to assist 

enrollees with obtaining, including 

appealing, access to all Medicaid 

benefits, including those that the plan 

does not cover, per § 422.562(a)(5). 

Comment: We received a comment 

requesting that applicable integrated 

plans be permitted to use the MA 

Integrated Denial Notice for ease of plan 

process and for less enrollee confusion. 

Another commenter raised questions 

about the impact of the unified 

processes on Part C reporting. 

Response: We decline to allow 

applicable integrated plans to use the 

Integrated Denial Notice (Form CMS– 

10003–NDMCP) and note that we have 

issued a specific denial notice for 

applicable integrated plans, the 

Coverage Decision Letter (Form CMS– 

10716). The Coverage Decision Letter 50

is tailored to the unified process and 

appeal rights and covers the 

requirements at § 422.631. It is currently 

in use by existing applicable integrated 

plans. We have not heard concerns 

about difficulties in using this notice or 

confusion on the part of enrollees. As 

far as Part C reporting requirements, we 

can confirm that we previously 

reviewed these requirements and made 

minor adjustments prior to the 

implementation of the unified appeals 

and grievance processes in 2021. 

After considering the comments we 

received and for the reasons outlined in 

the proposed rule and our responses to 

comments, we are finalizing the 

amendment to the definition of 

applicable integrated plans in § 422.561 

with slight modifications to increase 

clarity. We are revising the definition to 

be clearer where there are references to 

other paragraphs within the definition 

and to clarify in paragraph (2)(ii)(C) 

that, in addition to primary care and 

acute care (including Medicare costsharing), the capitated contracts for 

Medicaid coverage must cover at a 

minimum, one of the following 

categories of Medicaid benefits: Home 

health services as defined in § 440.70 of 

the chapter, medical supplies, 

equipment, and appliances as described 

in § 440.70(b)(3) of the chapter, or 

nursing facility services as defined in 

§ 440.155 of the chapter. 

8. Permitting MA Organizations With 

Section 1876 Cost Contract Plans To 

Offer Dual Eligible Special Needs Plans 

(D–SNPs) in the Same Service Area 

(§ 422.503(b)(5)) 

Section 1876(h) of the Act established 

reasonable cost reimbursement contracts 

or ‘‘cost contracts,’’ as defined at 

§ 417.401, as Medicare contracts under 

which CMS pays an HMO or 

competitive medical plan on a 

reasonable cost basis. By contrast, MA 

plans bear the risk of coverage of 

Medicare and supplemental benefits for 

their enrollees and are paid risk 

adjusted capitation by CMS. Cost 

contracts arrange for Medicare services 

and provide enrollees several 

flexibilities not offered to MA plan 

enrollees, such as the ability to enroll in 

a plan that offers only Part B benefits 

and to receive health care services 

outside of the cost contract plan’s 


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51Retrieved from: https://www.cms.gov/ResearchStatistics-Data-and-Systems/Statistics-Trends-andReports/MCRAdvPartDEnrolData/MonthlyEnrollment-by-Contract. 

52See https://www.cms.gov/Medicare-MedicaidCoordination/Medicare-and-MedicaidCoordination/Medicare-Medicaid-CoordinationOffice/FinancialAlignmentInitiative/ 

Minnesota.html. 

53Anderson, W.L., Feng, Z., & Long, S.K. 

Minnesota Managed Care Longitudinal Data 

Analysis, prepared for the U.S. Department of 

Health and Human Services Assistant Secretary for 

Planning and Evaluation (ASPE) (March 31, 2016). 

Retrieved from https://aspe.hhs.gov/report/ 

minnesota-managed-care-longitudinal-dataanalysis. 

network of providers through original 

Medicare. As of March 2022, 

approximately 184,000 beneficiaries 

were enrolled in six cost contracts 

offered in nine States.51

We direct readers to the proposed 

rule, 87 FR 1878, for discussion of how 

Federal statute and regulation restrict 

cost contracts in several ways. We 

proposed to modify the prohibition at 

§ 422.503(b)(5) on an entity accepting 

new enrollees in a cost contract plan 

while offering an MA plan in the same 

service area applicable to: (1) A parent 

organization owning a controlling 

interest in a separate legal entity 

accepting new enrollees under a cost 

contract plan, and (2) another separate 

legal entity owned by the same parent 

organization as the legal entity 

accepting new enrollees under a cost 

contract plan. 

As described in our proposed rule, 

since CMS finalized the policy at 

§ 422.503(b)(5), we have gained more 

experience relevant to this D–SNP 

policy decision through the 

Demonstration to Align Administrative 

Functions for Improvements in 

Beneficiary Experience conducted in 

partnership with the State of 

Minnesota.52 Three of the seven MA 

organizations offering Minnesota D– 

SNPs participating in the 

demonstration—comprising almost 60 

percent of the demonstration 

enrollment—also sponsored cost 

contract plans in overlapping counties. 

To prevent potential disruption to the 

demonstration, we waived 

§ 422.503(b)(5) for these entities, using 

our authority under section 1115A of 

the Act. This waiver avoided the risk 

that these entities would, instead of 

closing the cost contract plans to new 

enrollment where the service areas 

overlapped with D–SNPs, non-renew 

their D–SNPs during the demonstration, 

which would undermine our ability to 

carry out successfully the model test. In 

addition, non-renewal of these D–SNPs 

could potentially have led to large-scale 

disenrollment from Minnesota Senior 

Health Options, a D–SNP and Medicaid 

MCO program with evidence of strongly 

favorable outcomes for dually eligible 

older adults.53

Although the waiver and model were 

not designed to test this specific issue, 

the waiver of § 422.503(b)(5) provided 

an opportunity to test whether creating 

an exception for D–SNPs would result 

in substantial shifts of D–SNP enrollees 

to cost contract plans offered under the 

same parent organization. We direct 

readers to the proposed rule, 87 FR 1878 

through 1879, for a more detailed 

description of the data reported by D– 

SNPs with cost contract plans in 

Minnesota. The data from the Minnesota 

demonstration showed allowing both a 

D–SNP and a cost contract plan under 

the same parent organization did not 

result in a substantial number of 

enrollees moving from the D–SNP to the 

cost contract plan. 

Based on this evidence, we believe 

that allowing a parent organization to 

accept new enrollees in a cost contract 

plan it offers in the same service area as 

the entity offers a D–SNP or seeks to 

offer a new D–SNP would not 

undermine the policy goals that 

underlie § 422.503(b)(5)—that is, 

prohibiting entities from steering highcost enrollees to their cost contract 

plans and lower cost enrollees to their 

risk-bearing MA plans. In addition, 

creating an exception to § 422.503(b)(5) 

for D–SNPs would allow the entities in 

Minnesota that currently offer both D– 

SNPs (through the demonstration) and 

cost contract plans in the same market 

to continue enrollment in both plans 

after the end of the demonstration, thus 

avoiding potentially significant 

disruption to Medicare beneficiaries 

that would result from each MA 

organization’s non-renewal of one of the 

two types of products. More broadly, the 

exception removes a regulatory barrier 

that, in Minnesota and several other 

States, can impede D–SNPs from 

entering a market where cost contract 

plans remain. Therefore, we proposed to 

revise paragraph § 422.503(b)(5)(i) and 

(ii) to allow an MA organization to offer 

a D–SNP and also— 

• Offer an 1876 reasonable cost plan 

that accepts new enrollees; 

• Share a parent organization with a 

cost contract plan that accepts new 

enrollees; 

• Be a subsidiary of a parent 

organization offering a cost contract 

plan that accepts new enrollees; or 

• Be a parent organization of a cost 

contract plan that accepts new 

enrollees. 

In our proposed rule, we solicited 

comment on the proposed exception for 

D–SNPs and our process for monitoring 

for unintended consequences. We also 

explained how we were considering 

more limited exceptions to the 

requirements at § 422.503(b)(5) that may 

more closely fit our policy goal of 

removing regulatory obstacles to the 

availability of D–SNPs that further 

Medicare-Medicaid integration. 

Specifically, we were considering 

limiting the exception to: 

• D–SNPs designated as HIDE SNPs, 

as defined at § 422.2, and FIDE SNPs, as 

defined at § 422.2; 

• D–SNPs that only enroll full-benefit 

dually eligible individuals; 

• D–SNPs that charge no beneficiary 

premium for individuals eligible for the 

full Part D low income subsidy; 

• D–SNPs that are affiliated with cost 

contract plans that charge premiums for 

enrollees eligible for the full Part D low 

income premium subsidy; or 

• Combinations of these types of D– 

SNPs. 

We did not propose these alternatives, 

citing our belief that they would add 

complexity to the regulation that we did 

not believe would be necessary to 

achieve our primary aim of removing 

regulatory obstacles to the availability of 

D–SNPs that integrate Medicare and 

Medicaid services and improve care for 

dually eligible individuals. However, 

we solicited comment on whether 

inclusion of some or all of these 

additional alternative criteria in the 

revisions to § 422.503(b)(5) would 

strengthen the overall policy. 

Comment: A few commenters 

supported our proposal to allow a 

parent organization to accept new 

enrollees in a cost contract plan it offers 

in the same service area as the entity 

offers a D–SNP or seeks to offer a new 

D–SNP. No commenters opposed the 

proposal. A few commenters noted that 

the proposal would ensure continuity of 

care for Minnesota’s D–SNP enrollees as 

the Minnesota administrative alignment 

demonstration phases out. A commenter 

noted that the proposal would reduce 

potential barriers to integrated care for 

Medicare and Medicaid, allow for the 

expansion of coverage options in other 

geographies, and ease administrative 

burden on States. Another commenter 

expressed general support for policies 

that address barriers to integration 

across States, particularly in rural areas, 

and those that apply best practices from 

demonstrations. 

Response: We thank the commenters 

for their support of this proposal and 

agree it would reduce barriers to 

integration of Medicare and Medicaid. 

Comment: A commenter expressed 

support for CMS’s close monitoring of 


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27782 Federal Register / Vol. 87, No. 89 / Monday, May 9, 2022 / Rules and Regulations 

54The Addendum to the Parts C & D Enrollee 

Grievances, Organization/Coverage Determinations, 

and Appeals Guidance, Coverage Decision Letter 

(Form CMS–10716), Letter about Your Right to 

Make a Fast Complaint, and Appeal Decision Letter 

can be found at https://www.cms.gov/MedicareMedicaid-Coordination/Medicare-and-MedicaidCoordination/Medicare-Medicaid-CoordinationOffice/D-SNPs. 

enrollment, should we finalize the 

proposed regulation. 

Response: We appreciate the 

commenter’s statement. We will 

monitor patterns of dually eligible 

enrollment and disenrollment in 

applicable cost contract plans and D– 

SNPs. To the extent we see any pattern 

that suggests that plan sponsors are 

persuading D–SNP enrollees to move 

into cost contract plans, we would 

investigate and pursue corrective 

actions or additional rulemaking, 

potentially removing or restricting the 

exemption finalized in this rule. 

Comment: A commenter suggested 

that organizations should be permitted 

to offer both a national MA Employer 

Group Waver Plan (EGWP) option and 

continue to offer an individual cost 

contract plan in certain rural areas of 

the Midwest with limited Medicare 

options. The commenter posited that 

cost contract plans and EGWPs would 

not compete for the same beneficiaries 

since, unlike cost contract plans, 

EGWPs are offered specifically to 

Medicare-eligible retirees of a particular 

employer. 

Response: We thank the commenter 

for this suggestion. We note that we 

limited our proposal to D–SNPs 

operating in the same area as a cost 

contract plan to remove regulatory 

obstacles to the availability of D–SNPs 

that further Medicare-Medicaid 

integration. Therefore, this comment is 

not strictly within the scope of the 

rulemaking, as the proposed rule does 

not discuss limitations on EGWPs. 

Although we are not offering an opinion 

on the merits of the commenter’s 

suggestion, we would clarify that 

EGWPs need not restrict enrollment to 

the Medicare-eligible retirees of a 

particular employer. For example, 

Chapter 9 of the Medicare Managed Care 

Manual provides that professional or 

other types of group associations with 

members that do not all have the same 

employer are not precluded from 

enrolling Medicare beneficiaries in 

EGWPs, provided the members of the 

association are eligible for employmentbased health coverage. Further, our 

regulations do not preclude a Medicare 

beneficiary who would be eligible for an 

MA EGWP from electing to enroll in a 

different coverage option, like a cost 

plan offered in the area where the 

beneficiary lives. As a result, it is not as 

clear as the commenter suggests that the 

concerns underlying our original 

adoption of § 422.503(b)(5) would not 

apply in the context of an EGWP. 

After consideration of the comments 

and for the reasons provided in the 

proposed rule and our responses to the 

comments, we are finalizing without 

modification our proposal to allow a 

parent organization to accept new 

enrollees in a cost contract plan it offers 

in the same service area as the entity 

offers a D–SNP, or seeks to offer a new 

D–SNP. 

9. Requirements To Unify Appeals and 

Grievances for Applicable Integrated 

Plans (§§ 422.629, 422.631, 422.633, and 

422.634) 

Section 50311 of the BBA of 2018 

amended section 1859 of the Act to add 

new requirements for D–SNPs to unify 

Medicare and Medicaid appeals and 

grievance procedures for integrated D– 

SNPs. We codified the regulations for 

unified appeal and grievance 

procedures §§ 422.629 through 422.634 

(84 FR 15720). These procedures apply 

to applicable integrated plans, which 

are currently defined at § 422.561 as 

FIDE SNPs and HIDE SNPs with 

exclusively aligned enrollment. We are 

finalizing an amendment to the 

definition of applicable integrated plan 

in section II.A.7. of this final rule, 

which will add new categories of 

applicable integrated plans beginning 

January 1, 2023. Based on our initial 

implementation experience and 

feedback from stakeholders, we 

proposed several adjustments, 

clarifications, and corrections to the 

regulations governing unified appeal 

and grievance procedures at §§ 422.629 

through 422.634. 

Comment: Numerous commenters 

expressed general support of our 

proposals for updates to the unified 

appeals and grievance rules with 

commenters noting the benefits to 

enrollees of having a single pathway for 

Medicare and Medicaid appeals and 

grievances, integrated notices, and 

access to continuation of benefits while 

the appeal is pending for Medicare. 

Response: We appreciate the broad 

support for unified appeals and 

grievance processes and agree that the 

unified process is simpler and provides 

more protections for enrollees. 

Comment: Several commenters 

requested that we delay implementation 

of the proposed changes until at least 

2024 to give plans more time to 

implement the updates, and to provide 

more time for CMS to release additional 

guidance and best practices on the 

unified appeals and grievance 

processes. 

Response: While we acknowledge the 

commenters’ concern, the updates we 

proposed are relatively minor, so we are 

not delaying the implementation date. 

Comment: We received several 

comments requesting that CMS work 

with States to ensure State-specific 

requirements are clear and conveyed 

timely, and additional guidance to plans 

is released. Commenters also requested 

that CMS share best practices and 

additional materials about integrated 

appeals and grievance processes. 

Response: We appreciate the 

commenters’ request for clarity. We will 

make timely updates to the Addendum 

to the Parts C & D Enrollee Grievances, 

Organization/Coverage Determinations, 

and Appeals Guidance 54 to incorporate 

the updates made in this rule. CMS is 

also committed to continuing to engage 

States, plans, and other stakeholders as 

we gather and disseminate best practice 

information, providing technical 

assistance on integration issues as needs 

arise. 

Comment: Several commenters 

proposed changes to the existing unified 

and grievance rules. A commenter 

suggested that CMS revise § 422.629(e) 

to require plans to assist providers in 

filing appeals. A commenter suggested 

additional information should be 

required to be included in each 

organization determination, some of 

which is already included (for example, 

the enrollee’s right to get a free copy of 

the information used in making the 

decision and how to get it and how to 

continue services while and appeal is 

pending, and receiving the notice in 

alternate formats), and details on the 

second level appeals process (to the 

Independent Review Entity (IRE) or a 

State fair hearing). A commenter 

requested that we add additional 

specificity on how plans should 

consider, approve, and provide for 

appeals of reasonable accommodation 

requests. A commenter requested 

clarification on how continuation of 

benefits work while and appeal is 

pending. A commenter requested 

changes to § 422.633(e)(3) to no longer 

allow circumstances where an enrollee’s 

payment request appeal may be 

expedited. A commenter requested 

clarification related to the language in 

§ 422.633(e)(3) on how a plan should 

determine if non-payment will create 

material life or health consequences and 

how quickly decisions and payments 

must be processed in these cases. 

Response: We appreciate the 

commenters’ suggestions. We note, 

generally, that these comments are on 

regulations for which we did not 

propose changes and therefore are 


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55The guidance can be found at https://

www.cms.gov/Medicare-Medicaid-Coordination/ 

Medicare-and-Medicaid-Coordination/MedicareMedicaid-Coordination-Office/DSNPs. 

56The Coverage Decision Letter (Form CMS– 

10716), Letter about Your Right to Make a Fast 

Complaint, and Appeal Decision Letter can be 

found at https://www.cms.gov/Medicare-MedicaidCoordination/Medicare-and-MedicaidCoordination/Medicare-Medicaid-CoordinationOffice/D-SNPs. 

57CMS, ‘‘Addendum to the Parts C & D Enrollee 

Grievances, Organization/Coverage Determinations, 

and Appeals Guidance for Applicable Integrated 

Plans’’. Retrieved from: https://www.cms.gov/files/ 

document/dsnpartscdgrievances

determinationsappealsguidanceaddendum.pdf. 

58CMS, ‘‘Addendum to the Parts C & D Enrollee 

Grievances, Organization/Coverage Determinations, 

and Appeals Guidance for Applicable Integrated 

Plans’’. Retrieved from: https://www.cms.gov/files/ 

document/dsnpartscdgrievancesdeterminations

appealsguidanceaddendum.pdf. 

beyond the scope of this rulemaking. 

We included an extensive discussion of 

the unified appeals and grievance 

process in the April 2019 final rule (84 

FR 15727 through 15744) and in the 

Addendum to the Parts C & D Enrollee 

Grievances, Organization/Coverage 

Determinations, and Appeals Guidance. 

We direct readers to those documents 

for additional information and 

explanation of the existing appeals and 

grievance system rules for applicable 

integrated plans, and how to 

operationalize them.55 We also direct 

commenters to the current model 

notices for applicable integrated plans 

for reference as to what is currently 

covered in the notices.56 We also note 

that this rule does not impact the 

requirements for applicable integrated 

plans to continue benefits while an 

appeal is pending (please see the April 

2019 final rule (84 FR 15737) for more 

information on how continuation of 

benefits works in the unified process). 

These continuation of benefits 

requirements will be applied to 

additional applicable integrated plans 

and their enrollees, per our discussion 

related to the revised, expanded 

definition of applicable integrated plans 

in section II.A.7. 

We urge commenters to review the 

April 2019 final rule (84 FR 15741) for 

a discussion of expedited payment 

appeals, which provides the rationale 

for inclusion of the right for an enrollee 

to request one. In addition, with respect 

to the language in § 422.633(e)(3) related 

to considering whether the standard 

timeframe could seriously jeopardize 

the enrollee’s life, physical or mental 

health, or ability to attain, maintain, or 

regain maximum function, we note that 

all MA organizations and Medicaid 

managed care organizations must apply 

this standard today in various contexts 

of appeals cases, since this language 

also exists in §§ 422.566, 422.570, 

422.584, 438.210, and 438.410. 

Finally, we note that MA plans, 

including D–SNPs, must comply with 

applicable Federal civil rights 

authorities. Section 504 of the 

Rehabilitation Act prohibits disability 

discrimination and includes 

requirements for effective 

communication for individuals with 

disabilities (45 CFR 84.52), accessibility 

standards for buildings and facilities (45 

CFR 84.22, 84.23), and filing of 

grievances and complaints (45 CFR 

84.61, 84.7). 

a. Providing Enrollees Information on 

Presenting Evidence and Testimony 

(§ 422.629(d)) 

We proposed adding additional 

language to § 422.629(d) to codify in 

regulation a provision from existing subregulatory guidance.57 We proposed to 

revise § 422.629(d) to require that, as 

part of its responsibilities pertaining to 

an enrollee’s presenting evidence for an 

integrated grievance or appeal, an 

applicable plan provide an enrollee 

with information on how evidence and 

testimony should be presented to the 

plan. In addition, our proposal would 

reorganize § 422.629(d) to improve the 

readability of the provision. 

Comment: Several commenters 

requested that CMS clarify when, in the 

appeals process, applicable integrated 

plans should offer enrollees the 

opportunity to provide live testimony, 

and how long such testimony should be 

allowed to be. 

Response: We note that the 

requirement to provide enrollees with 

an opportunity to present evidence and 

testimony is an existing rule, at 

§ 422.629(d). This same requirement to 

provide an opportunity for evidence and 

testimony also exists in both the 

Medicaid managed care requirements at 

§ 438.406(b)(4) for appeals, and for MA 

plans at § 422.586 for reconsiderations. 

Our proposed update is to require that 

applicable integrated plans provide 

enrollees information on how to present 

the evidence and testimony. For the 

evidence and testimony to be 

meaningful to the plan’s decision, it 

must be accepted prior to the plan’s 

decision and taken into account in that 

decision. The regulation does not set 

forth a specific amount of time that 

must be provided for an enrollee to 

provide evidence, including testimony, 

but enrollees must be provided a 

reasonable opportunity and sufficient 

flexibility in terms of what is presented 

as needed to provide relevant 

information. 

After consideration of the comments 

and for the reasons provided in the 

proposed rule and our response to the 

comments, we are finalizing this 

provision as proposed without 

modification. 

b. Technical Correction (§ 422.629(k)) 

We proposed technical changes to 

§ 422.629(k)(4)(ii) to correct a minor 

error from the April 2019 final rule (84 

FR 15835). We proposed to replace the 

word ‘‘organization’’ with 

‘‘reconsideration’’ and remove the word 

‘‘decision’’ from the end of the sentence 

in § 422.629(k)(4)(ii) for clarity and 

consistency in the text. 

We received no comments on this 

proposal. For the reasons outlined in the 

proposed rule, we are finalizing the 

proposed change without modification. 

c. Accommodate State Medicaid 

Representation Rules (§ 422.629(l)) 

At § 422.629(l)(1), we proposed 

adding additional language to codify in 

regulation current sub-regulatory 

guidance 58 regarding the appointment 

of a representative. We proposed to add 

language to clarify that an enrollee’s 

representative includes any person 

authorized under State law to 

accommodate State Medicaid program 

appointments. We proposed to 

reorganize paragraph (l)(1) as part of this 

amendment. Specifically, we proposed 

to revise paragraph (l)(1)(i) to list the 

enrollee and to revise paragraph (l)(1)(ii) 

to list the enrollee’s representative, 

including any person authorized under 

State law. We also proposed to move the 

content of current paragraph (l)(1)(ii) 

that deals with rights of assignees to a 

new § 422.629(l)(4) as discussed in 

section II.A.9.d. of this final rule. 

Comment: A commenter requested 

that CMS clarify the types of 

documentation applicable integrated 

plans should accept, and if the 

documentation requirements would be 

different depending on whether the 

underlying benefit is covered by 

Medicaid or Medicare. 

Response: We appreciate the 

commenters’ requests for clarity. 

Applicable integrated plans should treat 

all appeals and grievances subject to the 

rules at §§ 422.629 through 422.634, and 

authorization of representation 

documentation, the same whether the 

underlying benefit is covered by 

Medicare, Medicaid, or both. If the 

documentation that the applicable 

integrated plan receives from a 

representative meets either State 

Medicaid or Medicare standards for 

representation, the plan should accept 

the documentation. For example, even if 

the underlying benefit at issue in the 


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appeal is covered only by Medicare, and 

the representation documentation meets 

State Medicaid representation 

requirements, the plan should accept 

the authorization as sufficient. This is 

consistent with how the appeal 

processes for applicable integrated plans 

were designed to take into account 

differences in Medicaid State programs, 

be easily navigable by enrollees, and 

provide unified procedures and 

processes. 

We did not receive any comments 

recommending changes to this proposal. 

For the reasons outlined in the proposed 

rule, we are finalizing this provision 

without modification. 

d. Clarifying the Role of Assignees and 

Other Parties (§ 422.629(l)) 

In the April 2019 final rule, we 

finalized § 422.629(l)(1)(ii) to include 

assignees of the enrollee and other 

providers with appealable interests in 

the proceedings as individuals who 

could file an integrated grievance, 

request an integrated organization 

determination, or request an integrated 

reconsideration to clarify the rights of 

non-contracted providers. We therefore 

proposed to move the content of 

§ 422.629(l)(1)(ii) to new paragraph 

(l)(4). As noted in section II.A.9.c. of 

this final rule, we proposed to add new 

language at § 422.629(l)(1)(ii) in its place 

addressing who can be an enrollee’s 

representative. 

In new paragraph (l)(4) we proposed 

to clarify which individuals or entities 

can request an integrated 

reconsideration and are considered 

parties to the case but who do not have 

the right to request an integrated 

grievance or integrated organization 

determination. In paragraph (l)(4)(i), we 

proposed to permit an assignee of the 

enrollee (that is, a physician or other 

provider who has furnished or intends 

to furnish a service to the enrollee and 

formally agrees to waive any right to 

payment from the enrollee for that 

service) to request an integrated 

reconsideration. In paragraph (l)(4)(ii) 

we proposed to permit any other 

provider or entity (other than the 

applicable integrated plan) who has an 

appealable interest in the proceeding to 

request an integrated reconsideration. 

Comment: A few commenters 

requested that CMS clarify what an 

appealable interest means and clarify 

the language in § 422.629(l)(1)(ii) that 

provides that ‘‘parties with appealable 

interest’’ may appeal. 

Response: We appreciate the 

commenters’ request for clarity and note 

that we did not propose any changes to 

the language in § 422.629(l) related to 

appealable interest (that is, any other 

provider or entity—other than the 

applicable integrated plan—who has an 

appealable interest). This is existing 

language in § 422.629(l) and in the 

longstanding MA appeal rules at 

§ 422.574(d). We point commenters to 

the discussion on § 422.574 in the June 

1998 final rule titled ‘‘Medicare 

Program; Establishment of the 

Medicare+Choice Program’’ (63 FR 

35026) which noted that the phrase 

includes not just the enrollee, but also 

allows other parties to exercise appeal 

rights (excluding the MA organization). 

As noted in that discussion, parties who 

may have an appealable interest in a 

case may include certain physicians and 

other providers who are assignees of the 

enrollee, legal representatives of a 

deceased enrollee’s estate, and the broad 

category of any other entity determined 

to have an appealable interest in the 

proceeding. These parties can continue 

to have an interest in the proceedings 

throughout each level of an appeal. We 

decline to add a definition for this 

phrase in this rule. In our proposal we 

are only reorganizing where this 

language is in § 422.629(1). 

We did not receive any comments 

recommending changes to this proposal. 

After consideration of the comments 

and for the reasons outlined in our 

responses, we are finalizing this 

provision without modification. 

e. Timelines for Processing Payment 

Requests (§ 422.631) 

In the April 2019 final rule, we 

neglected to specify how the MA 

‘‘prompt payment’’ rules at § 422.520 

governing payment of claims apply to 

applicable integrated plans. 

Accordingly, at § 422.631(d), we 

proposed to add a new paragraph (d)(3) 

to require applicable integrated plans to 

process payment requests according to 

the prompt payment provisions set forth 

in § 422.520, which would mirror the 

current provision at § 422.568(c). 

We did not receive any comments 

recommending changes to this proposal. 

For the reasons provided in the 

proposed rule, we are finalizing the 

proposed amendment without 

modification. 

f. Clarifying Integrated Reconsideration 

Request (§ 422.633(e) and (f)) 

We proposed changes to 

§ 422.633(e)(1) to clarify who may file a 

request for an expedited post-service 

integrated reconsideration (that is, one 

that is related to payment). Our proposal 

would clarify that an enrollee may 

request an expedited integrated 

reconsideration related to payment that 

can qualify as expedited, but a 

provider’s right to request an expedited 

integrated reconsideration on behalf of 

an enrollee is limited to pre-service 

integrated reconsideration requests. We 

proposed to specify in § 422.633(e)(1)(i) 

that expedited post-service integrated 

reconsideration requests are limited to 

those requested by an enrollee, and in 

§ 422.633(e)(1)(ii) that providers acting 

on behalf of an enrollee may only 

request pre-service expedited integrated 

reconsiderations. 

We solicited comment regarding 

whether allowing a 60-day timeframe 

for non-contracted provider payment 

requests where the provider has 

obtained a waiver of liability from the 

enrollee would simplify plan operations 

without adversely affecting beneficiaries 

or access to care. We noted that any 

changes to this timeframe would impact 

§ 422.633(f), and the timing for 

applicable integrated plans to make 

integrated reconsideration 

determinations in cases involving 

payment requests from providers where 

the provider has obtained and filed a 

waiver of liability from the enrollee. We 

also solicited comment regarding 

whether adopting such a timeframe for 

non-contracted provider payment 

requests would conflict with any Statespecific Medicaid rules or processes 

concerning provider appeals. 

Lastly, we proposed at § 422.633(f)(3) 

to add language to clarify that 

extensions of up to 14 days are available 

for any integrated reconsiderations 

(either standard and expedited) other 

than those regarding Part B drugs. We 

proposed to exclude integrated 

reconsiderations about Part B drugs 

from the authority for extensions in 

order to be consistent with current 

§ 422.633(f), which provides that 

integrated reconsidered determinations 

regarding Part B drugs must comply 

with the timelines governing Part B 

drugs established in §§ 422.584(d)(1) 

and 422.590(c) and (e)(2). Our current 

sub-regulatory guidance addresses this 

as well. 

Comment: A few commenters 

requested that CMS add language 

clarifying that when providers are 

appealing on behalf of enrollees, and the 

services have been rendered and the 

enrollee is not financially responsible, 

they should not be doing so for 

purposes of their own (provider) 

reimbursement. A commenter also 

requested that CMS confirm whether 

enrollees would need to provide a 

waiver of liability in these cases. 

Response: We appreciate the 

commenters’ perspective on this issue, 

but we decline to add further detail in 

the rule on this issue. If a provider is 

acting on behalf of the beneficiary in the 

appeals process, the provider’s motive 


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for assisting the enrollee is not relevant; 

beneficiaries are permitted to have a 

provider act on their behalf consistent 

with these rules. In addition, a noncontract provider may appeal in their 

own right consistent with these rules 

when a waiver of liability is properly 

filed. If the provider is acting on behalf 

of the enrollee, the enrollee does not 

need to provide a waiver of liability. A 

waiver of liability would only be 

provided if the non-participating 

provider is appealing on their own 

behalf (not on behalf of the enrollee). 

We decline to add the suggested 

additional detail to the regulation at this 

time. 

After consideration of the comments 

we received and for the reasons outlined 

in the proposed rule and our responses 

to comments, we are finalizing the 

amendments to § 422.633(e) and (f) as 

proposed without substantive 

modification. We are finalizing a 

grammatical revision to paragraph 

(e)(1)(ii). 

g. Timeframes for Service Authorization 

After a Favorable Decision 

(§ 422.634(d)) 

We proposed changes, in § 422.634(d), 

to more clearly describe timeframes for 

authorizing services in all situations 

where an applicable integrated plan’s 

decision is reversed. We proposed 

reorganizing § 422.634(d) to more 

explicitly address each scenario that an 

applicable integrated plan would face 

when effectuating a reversal. In 

proposed paragraph (d)(1), we proposed 

to address cases where the applicable 

integrated plan reverses its own 

decision in an appeal for services that 

were not furnished while the appeal 

was pending. We proposed that an 

applicable integrated plan must 

authorize or provide the service as 

expeditiously as the enrollee’s condition 

requires and within the sooner of: (1) 72 

hours from the date of the reversed 

decision; or (2) 30 calendar days (7 

calendar days for a Part B drug) after the 

date that the applicable integrated plan 

received the integrated reconsideration 

request. 

We also proposed to include the Part 

B drug timeframe from § 422.618(a)(3) in 

§ 422.634(d)(1)(ii)(B) to ensure enrollees 

of applicable integrated plans get the 

same timely effectuation of a favorable 

appeal decision on coverage of a Part B 

drug; this is consistent with how current 

§ 422.633(f) provides that integrated 

reconsidered determinations regarding 

Part B drugs must comply with the 

timelines governing reconsidered 

determinations regarding Part B drugs 

established in §§ 422.584(d)(1) and 

422.590(c) and (e)(2), which apply to 

other MA plans. 

In proposed paragraph (d)(2), for the 

sake of clarity we proposed to place in 

its own paragraph the requirement for 

the applicable integrated plan to 

authorize or provide a Medicaidcovered service no later than 72 hours 

from the date the plan is notified of a 

decision reversed by a State fair hearing. 

We proposed no changes to this 

effectuation timeline. 

Lastly, we proposed to add a new 

paragraph (d)(3) to require the same 

timelines for an applicable integrated 

plan to effectuate reversals by the 

Medicare IRE, an administrative law 

judge or attorney adjudicator at the 

Office of Medicare Hearings and 

Appeals, or the Medicare Appeals 

Council as apply to other MA plans at 

§§ 422.618 and 422.619. 

We requested comment on whether 

the additional language provides clarity 

to applicable integrated plans on their 

responsibility to provide a service after 

an integrated organizational 

determination or integrated 

reconsideration is overturned. 

Comment: A commenter 

recommended that § 422.634 more fully 

integrate the Medicare and Medicaid 

processes, specifically requesting that 

the regulations parallel the integrated 

process in the Massachusetts One Care 

FAI demonstration since some services 

are covered by both programs. The 

commenter further noted, as an 

example, that the One Care contract 

requires the IRE to review both the 

Medicare and MassHealth medical 

necessity criteria. 

Response: We thank the commenter 

for this suggestion, but we did not 

propose, and therefore will not finalize, 

a further integration of the appeals 

process at this time. We leave open the 

future possibility of furthering the 

integration of the unified appeals and 

grievance process to include the postplan appeal procedures, as we noted in 

the April 2019 final rule (84 FR 15743). 

With respect to the unique aspects of 

the One Care demonstration three-way 

contract, though the IRE cannot review 

Medicaid cases for Medicaid benefits, it 

does use Medicaid medical necessity 

criteria, along with Medicare criteria, 

when reviewing Medicare supplemental 

benefit cases under One Care because, 

in the One Care demonstration, 

Medicare supplemental benefits are 

defined by State Medicaid criteria. 

Applicable integrated plans are not 

subject to the same requirements in 

designing and offering MA 

supplemental benefits. We would need 

to further evaluate whether there are 

any viable scenarios in which the IRE 

may be required to review any 

particular State’s Medicaid coverage 

criteria in reviewing coverage for a 

Medicare benefit. 

Comment: A commenter requested 

that CMS clarify whether the timeframes 

in § 422.634 apply to expedited appeal 

decisions, and whether CMS intends to 

issue further guidance on timelines for 

effectuating reversals after the plan has 

issued an authorization and when the 

plan seeks next-level review of the 

initial appeal decision. 

Response: Timeframes for applicable 

integrated plans to effectuate all 

decisions are covered in § 422.634; this 

includes effectuation after reversal by 

the applicable integrated plan, the IRE, 

a State fair hearing, or at the Office of 

Medicare Hearings and Appeals, or the 

Medicare Appeals Council. With the 

amendments made by this final rule, 

timeframes for effectuation are as 

follows: 

As expeditiously as the enrollee’s 

health condition requires, but no later 

than: 

1. For a reversal by the applicable 

integrated plan (reversing its integrated 

organization determination), no later 

than the earlier of: (1) 72 hours from the 

date it reverses its decision or, (2) with 

the exception of a Part B drug, 30 

calendar days after the date the 

applicable integrated plan receives the 

request for the integrated 

reconsideration (or no later than upon 

expiration of an extension described in 

§ 422.633(f)). For a Part B drug, 7 

calendar days after the date the 

applicable integrated plan receives the 

request for the integrated 

reconsideration. 

2. For reversals by the IRE, in 

accordance with MA requirements at 

§ 422.618 the applicable integrated plan 

must, for standard, non-Part B drug, and 

non-payment cases, authorize the 

service under dispute within 72 hours 

from the date it receives notice reversing 

its determination, or provide the service 

under dispute as expeditiously as 

possible no later than 14 calendar days 

from that date; for standard Part B drug 

cases, 72 hours from the date it receives 

notice reversing the determination; and 

payment cases, pay for the service no 

later than 30 calendar days from the 

date it receives notice reversing the 

integrated organization determination; 

and, in accordance with MA 

requirements at § 422.619, for 

expedited, non-Part B drug cases, 

authorize or provide the service under 

dispute as expeditiously as the 

enrollee’s health condition requires but 

no later than 72 hours from the date it 

receives notice reversing the 

determination, and for expedited Part B 


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59See https://www.cms.gov/medicare/healthplans/healthplansgeninfo/downloads/mc86c02.pdf. 

60CMS Medicare-Medicaid Coordination Office, 

‘‘Additional Guidance on CY 2021 MedicareMedicaid Integration Requirements for Dual Eligible 

Special Needs Plans’’, January 17, 2020. Retrieved 

from: https://www.cms.gov/ 

httpseditcmsgovresearch-statistics-data-andsystemscomputer-data-and-systemshpmshpmsmemos-archive/hpms-memo-5. 

drug cases, authorize or provide the Part 

B drug no later than 24 hours from the 

date it receives notice reversing the 

determination. 

3. If a State fair hearing reverses the 

applicable integrated plan’s integrated 

reconsideration regarding a Medicaid 

benefit not furnished while the appeal 

was pending, the applicable integrated 

plan must provide or authorize the item 

or service as expeditiously as the 

enrollee’s health condition requires but 

no later than 72 hours from the date it 

receives notice reversing the 

determination for all cases, both 

standard and expedited, in accordance 

with § 422.634(d)(2) (which is the same 

timeframe as required under Medicaid 

regulations at § 438.424). 

4. For a reversal by an administrative 

law judge or attorney adjudicator at the 

Office of Medicare Hearings and 

Appeals, or the Medicare Appeals 

Council, the applicable integrated plan 

must effectuate a reversal under same 

timelines applicable to other MA plans 

as specified in §§ 422.618 and 422.619. 

With respect to a MA plan’s appeal 

rights, these proposed changes do not 

impact plans’ appeal rights, and CMS 

does not anticipate issuing guidance on 

that topic as a result of this rule. 

Sections 422.592 and 422.600 of the MA 

rules apply to applicable integrated 

plans that have issued an integrated 

reconsideration that is adverse, in whole 

or in part, to the enrollee with regard to 

coverage or provision of a Medicare 

benefit. We note that § 422.634(b) 

addresses adverse integrated 

reconsiderations; this rulemaking does 

not revise § 422.634(b). An applicable 

integrated plan, like all other MA plans, 

must effectuate a decision in favor of the 

enrollee from the IRE; the plan does not 

have the authority to appeal the 

decision to an administrative law judge. 

After consideration of the comments 

and for the reasons outlined in the 

proposed rule and our responses to 

comments, we are finalizing the 

proposed amendment to § 422.634(d) 

without modification. 

10. Technical Update to State Medicaid 

Agency Contract Requirements 

(§ 422.107) 

Section § 422.107(c) lists minimum 

requirements for State Medicaid agency 

contracts. Paragraph (c)(6) requires that 

the contract document the verification 

of an enrollee’s eligibility for ‘‘both 

Medicare and Medicaid.’’ We proposed 

to strike the reference to Medicare in 

paragraph (c)(6) as it is not essential for 

the contract between the State Medicaid 

agency and the D–SNP to document 

how the D–SNP verifies Medicare 

eligibility. All MA plans, including D– 

SNPs, already verify Medicare eligibility 

as part of accepting beneficiary coverage 

elections under § 422.60. See also 

Chapter 2 of the Medicare Managed Care 

Manual for additional details.59

Comment: Several commenters 

expressed support for this technical 

update as it is a logical simplification of 

the State Medicaid agency contract 

minimum requirements. 

Response: We thank the commenters 

for their support of this technical 

update. 

Comment: A few commenters 

recommended that CMS should not 

finalize this proposal but should retain 

the contract requirement that a D–SNP 

must verify an enrollee’s Medicare 

eligibility. These commenters believed 

that the existing regulatory text clarifies 

the State’s obligation to identify dually 

eligible individuals and provide MA 

organizations with information that 

distinguishes between types of dual 

eligibility, such as full-benefit, and 

partial-benefit dually eligible 

individuals. A few commenters 

recommend that CMS require States to 

provide a crosswalk or translations to 

category identifiers, such as eligibility 

for Medicare Savings Programs (MSP), 

needed to manage benefits for enrollees. 

This would also serve as a tool to better 

understand differences in dual 

eligibility categories for D–SNPs, 

including partial-benefit dually eligible 

individuals. 

Response: We thank commenters for 

raising their concerns. We note that we 

did not propose a change to the contract 

requirement that the D–SNP validate the 

enrollee’s Medicaid eligibility. As noted 

in our proposal, all MA plans, including 

D–SNPs, already verify Medicare 

eligibility as part of accepting 

beneficiary coverage elections under 

§ 422.60. See also Chapter 2 of the 

Medicare Managed Care Manual for 

additional details. Therefore, it is not 

essential for the contract between the 

State Medicaid agency and the D–SNP 

to document how the D–SNP verifies 

Medicare eligibility. 

We note that § 422.107(c)(2) states 

that the contract must document the 

categories and criteria for eligibility for 

dually eligible individuals to be 

enrolled under the SNP, including as 

described in sections 1902(a), 1902(f), 

1902(p), and 1905 of the Act. Therefore, 

the D–SNP contracts with States should 

describe how States provide D–SNPs 

with information needed to enroll 

dually eligible individuals. For 

example, if a State limits D–SNP 

enrollment to full-benefit dually eligible 

individuals, that State should note in 

the contract with a D–SNP how the D– 

SNP will determine an enrollee’s status. 

We encourage D–SNPs to discuss with 

States any issues in obtaining this 

information. 

After consideration of the comments 

we received and for the reasons outlined 

in the proposed rule, we are finalizing 

our proposed amendments to 

§ 422.107(c)(6) to strike the reference to 

Medicare. 

11. Compliance With Notification 

Requirements for D–SNPs That 

Exclusively Serve Partial-Benefit Dually 

Eligible Beneficiaries (§ 422.107(d)) 

We codified minimum MedicareMedicaid integration requirements for 

D–SNPs at § 422.2, stating that a D–SNP 

must either (i) be a HIDE SNP or FIDE 

SNP or (ii) meet the additional 

requirement specified in § 422.107(d) 

that requires that the D–SNP notify the 

State Medicaid agency, or individuals or 

entities designated by the State 

Medicaid agency, of hospital and skilled 

nursing facility (SNF) admissions for at 

least one group of high-risk full-benefit 

dually eligible individuals, as 

determined by the State Medicaid 

agency. 

While implementing these minimum 

integration standards, CMS identified 

some MA organizations that have 

separate D–SNP PBPs for partial-benefit 

and full-benefit dually eligible 

individuals, which enable the MA 

organizations to more clearly explain 

and coordinate the Medicaid benefits 

that those enrollees are entitled to 

receive. However, the D–SNP PBPs for 

partial-benefit dually eligible 

individuals (hereinafter referred to as 

‘‘partial-benefit-only D–SNPs’’) have no 

explicit pathway to meaningfully meet 

one of the three integration standards 

under § 422.2. In a partial-benefit-only 

D–SNP, no plan enrollees are eligible for 

the minimum set of Medicaid services 

that a D–SNP must cover to qualify as 

a HIDE SNP or FIDE SNP. Additionally, 

there are no full-benefit dually eligible 

individuals that the plan could identify 

for notification of hospital and SNF 

admissions (and no Medicaid services to 

coordinate post notification) as required 

by § 422.107(d). 

We proposed to largely codify the 

guidance issued in January 2020 60 that 

would allow the partial-benefit-only D– 


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SNP to be considered as meeting the 

integration requirements. We proposed 

revising § 422.107(d) to provide that 

partial-benefit-only D–SNPs are not 

required to meet the notification 

requirement in § 422.100(d) when the 

MA organization also offers a D–SNP 

with enrollment limited to full-benefit 

dually eligible individuals that meets 

the integration criteria at § 422.2 and is 

in the same State and service area and 

under the same parent organization. 

As discussed in the proposed rule, we 

believe our proposal is consistent with 

the minimum integration required by 

section 1859(f)(8) of the Act because it 

achieves the same level of coordination 

with State Medicaid agencies for partialbenefit dually eligible enrollees as 

would be achieved if there were one D– 

SNP PBP covering both full-benefit and 

partial-benefit dually eligible 

individuals. Additionally, for fullbenefit dually eligible enrollees, the 

two-PBP structure facilitates a higher 

level of integration of Medicare and 

Medicaid benefits (for example, where 

the two-PBP structure would result in 

more applicable integrated plans with 

unified appeals processes). We did not 

anticipate any negative impact for 

beneficiaries or partial-benefit-only D– 

SNPs as a result of this rule. 

Comment: Some commenters 

supported this provision, and no 

commenters opposed it. A few 

commenters noted the proposal 

supports continued enrollment of 

partial-benefit dually eligible 

beneficiaries in D–SNPs where they 

have access to additional care 

coordination. A commenter noted that 

partial-benefit dually individuals often 

can experience a change in 

circumstances making them eligible for 

the full Medicaid benefit; this proposal 

that a plan sponsor also operate a D– 

SNP serving full-benefit dually eligible 

individuals could be helpful for care 

continuity in a transition. Another 

commenter noted that this provision 

would allow D–SNP sponsors to 

continue providing supplemental 

benefits to partial-benefit dually eligible 

enrollees. 

Response: We thank the commenters 

for their support. 

Comment: A commenter noted CMS 

should continue to allow States the 

option to authorize an MA organization 

to offer a D–SNP that enrolls only 

partial-benefit dually eligible 

individuals, with the inclusion of the 

notification requirement in the State 

Medicaid agency contract, to meet the 

integration requirements outlined in the 

BBA of 2018. This commenter noted 

that as States move to more integrated 

FIDE SNP or HIDE SNP models for fullbenefit dually eligible individuals, they 

continue to seek opportunities for 

partial-benefit dually eligible 

individuals that provide the best level of 

care for this population, including by 

allowing these beneficiaries to remain 

with carriers that do not have a 

Medicaid contract. 

Response: We appreciate the 

commenter’s concern and confirm that a 

D–SNP that serves partial-benefit dually 

eligible individuals without a 

corresponding full-benefit-only D–SNP 

in the same service area would be able 

to continue operating as long as the 

contract with the State Medicaid agency 

includes the notification requirement at 

§ 422.107(d)(1). 

Comment: Another commenter 

questioned whether, if the proposal is 

adopted, States could continue to 

require MA organizations to submit 

hospital or skilled nursing facility 

admissions for partial-dually eligible 

enrollees if such a requirement in the 

State Medicaid agency contract. 

Response: We thank the commenter 

for their question and confirm that 

States remain able to use their contracts 

with D–SNPs to require MA 

organizations to notify the State 

Medicaid agency of admissions for 

partial-benefit dually eligible enrollees. 

Comment: A commenter noted that 

they have concerns about D–SNPs’ 

ability to comply with this requirement 

due to Federal and State health 

information privacy laws regarding the 

disclosure of particular sensitive health 

information without an individual’s 

consent. The commenter requested that 

CMS provide comprehensive guidance 

on how D–SNPs should reconcile the 

admission notification requirement with 

the limitations presented by 42 CFR part 

2 and State health information privacy 

laws, especially as they relate to 

substance use disorder and mental 

health services. Alternatively, the 

commenter suggested that CMS amend 

§ 422.107(d) to relieve D–SNPs of the 

obligation to submit admission 

notifications when doing so is not 

authorized by applicable law or would 

require an enrollee’s consent. 

Response: We thank the commenter 

for expressing their concerns. We 

emphasize that States must implement 

the notification requirement at 

§ 422.107(d) in a way that complies with 

all applicable State and Federal laws. 

We acknowledge there are limitations to 

D–SNPs’ ability to notify States of 

certain inpatient admissions for highrisk enrollees with substance use 

disorder, as well as to their ability to 

coordinate these individuals’ care, 

absent enrollee consent for the 

disclosure of such information. We 

encourage D–SNPs to collaborate with 

their States to identify and address 

concerns regarding compliance with 

other statutes and regulations, including 

the Health Insurance Portability and 

Accountability Act HIPAA of 1996 and 

42 CFR part 2. 

We are still gathering information on 

the initial implementation of the data 

notification requirement at § 422.107(d). 

We will use feedback received in 

response to the request for information 

described in section III.C. of this final 

rule and our work with States and D– 

SNPs to update technical guidance and 

consider any needed changes to the 

regulation. 

Comment: A commenter expressed 

concern with enrolling partial-benefit 

dually eligible individuals in D–SNPs. 

This commenter noted that there has not 

been an analysis to determine if the 

supplemental benefits offered by some 

D–SNPs are relevant to partial-benefit 

dually eligible individuals. The 

commenter urged CMS to undertake 

such an analysis and establish 

minimum criteria to ensure that D–SNPs 

have relevance and value to partialbenefit dually eligible enrollees. 

Response: We thank the commenter 

and will consider an analysis on the 

relevance of supplemental benefits to 

partial-dually eligible individuals 

enrolled in D–SNPs to determine if 

establishing minimum criteria through 

rulemaking is warranted. 

After consideration of the comments 

we received and for the reasons outlined 

in the proposed rule and our responses 

to comments, we are finalizing our 

proposed amendments to § 422.107(d) to 

provide that partial-benefit-only D– 

SNPs are not required to meet the 

notification requirement in new 

§ 422.107(d)(1) when the MA 

organization also offers a D–SNP with 

enrollment limited to full-benefit dually 

eligible individuals that meets the 

integration criteria at § 422.2 and is in 

the same State and service area and 

under the same parent organization. 

12. Attainment of the Maximum Out-ofPocket (MOOP) Limit (§§ 422.100 and 

422.101) 

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

discrimination by MA organizations on 

the basis of health status-related factors 

and directs that CMS may not approve 

an MA plan if CMS determines that the 

design of the plan and its benefits are 

likely to substantially discourage 

enrollment by certain MA eligible 

individuals. Under the authority of 

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

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

§§ 422.100(f)(4) and (5) and 

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


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61Section 1902(n)(2) of the Act permits the State 

to limit payment for Medicare cost-sharing for 

QMBs to the amount necessary to provide a total 

payment to the provider (including Medicare, 

Medicaid State plan payments, and third-party 

payments) equal to the amount a State would have 

paid for the service under the Medicaid State plan. 

For example, if the Medicare (or MA) rate for a 

service is $100, of which $20 is beneficiary 

coinsurance, and the Medicaid rate for the service 

is $90, the State would only pay $10. If the 

Medicaid rate is $80 or lower, the State would make 

no payment. See Chapter II, sections E.4 through 

E.6 of the Medicaid Third Party Liability Handbook 

at https://www.medicaid.gov/medicaid/eligibility/ 

downloads/cob-tpl-handbook.pdf. 

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). Section 

1858(b)(2) of the Act requires a 

catastrophic limit on in-network and 

out-of-pocket expenditures for enrollees 

in Regional Preferred Provider 

Organization (RPPO) MA plans. In 

addition, MA Local PPO plans, under 

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

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

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

maximum out-of-pocket (MOOP) limits 

(also referred to as catastrophic limits) 

established by CMS annually, including 

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

catastrophic (combined) limit that 

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

under Parts A and B. After the MOOP 

limit is reached, the MA plan pays 100 

percent of the costs of items and 

services covered under Parts A and B. 

In the April 2011 final rule (76 FR 

21508), CMS established the approach 

MA organizations must use to track an 

enrollee’s progress toward the plan 

MOOP limit. Under this policy, the innetwork (catastrophic) and combined 

(total catastrophic) MOOP limits 

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

tracking the enrollee’s progress toward 

the plan MOOP limit. This approach 

also applies to D–SNPs. Thus, for any 

D–SNP enrollee, MA plans currently 

have the option to count only those 

amounts the individual enrollee is 

responsible for paying net of any State 

responsibility or exemption from costsharing toward the MOOP limit rather 

than the cost-sharing amounts for 

services the plan has established in its 

plan benefit package. As a result, in 

practice, the MOOP limit does not cap 

the amount a State could pay for a 

dually eligible MA enrollee’s Medicare 

cost-sharing, nor does it cap the amount 

of Medicare cost-sharing that remains 

unpaid for providers serving dually 

eligible enrollees because of the 

prohibition on collecting Medicare costsharing from certain dually eligible 

individuals and the limits on State 

payments of Medicare cost-sharing 

under State lesser-of policies.61 Thus, 

MA plans are paying amounts for nondually eligible enrollees that they do not 

pay for dually eligible enrollees, even 

when different enrollees use the same 

volume of services; States, in certain 

circumstances, pay cost-sharing for 

dually eligible enrollees that is 

otherwise covered by the MA plans for 

non-dually eligible enrollees; and 

providers serving dually eligible MA 

enrollees are systemically 

disadvantaged relative to providers 

serving non-dually eligible MA 

enrollees, which we believe, based on 

the evidence described below, may 

negatively affect access to Medicare 

providers for dually eligible enrollees. 

We proposed to revise the regulations 

governing the MOOP limits for MA 

plans to require that all costs for 

Medicare Parts A and B services accrued 

under the plan benefit package, 

including cost-sharing paid by any 

applicable secondary or supplemental 

insurance (such as through Medicaid, 

employer(s), and commercial insurance) 

and any cost-sharing that remains 

unpaid because of limits on Medicaid 

liability for Medicare cost-sharing under 

lesser-of policy and the cost-sharing 

protections afforded certain dually 

eligible individuals, is counted towards 

the MOOP limit. This would ensure that 

once an enrollee, including a dually 

eligible individual with cost-sharing 

protections, has accrued cost-sharing 

(deductibles, coinsurance, or copays) 

that reaches the MOOP limit established 

by the plan (whether at the annual limit 

set by CMS under § 422.100(f) or some 

lesser amount), the MA plan must pay 

100 percent of the cost of covered 

Medicare Part A and Part B services. As 

a result, the State Medicaid agency and 

other secondary payers would no longer 

be billed for any Medicare cost-sharing 

for the remainder of the year. To ensure 

clarity in the regulation text for the 

policy on what costs are tracked for 

purposes of the MOOP limit, we 

proposed to amend the regulations to 

specify that MA organizations are 

responsible for tracking out-of-pocket 

spending accrued by the enrollee, and 

must alert enrollees and contracted 

providers when the MOOP limit is 

reached. In addition, we proposed to 

amend § 422.101(d)(4) to substitute 

‘‘accrued’’ for ‘‘incurred’’ in the 

description of how regional plans must 

track beneficiary out-of-pocket spending 

towards the MOOP limit. We intend this 

amendment to have only the substantive 

affect described here: That cost-sharing 

paid by any applicable secondary or 

supplemental insurance (such as 

through Medicaid) and any cost-sharing 

that remains unpaid because of limits 

on Medicaid liability for Medicare costsharing under lesser-of policy and the 

cost-sharing protections afforded certain 

dually eligible individuals, is counted 

towards the MOOP limit by MA plans. 

This proposal was not intended to and 

would not change how the word 

‘‘incurred’’ is otherwise used in the 

regulation. We believe that using a 

different term in the regulation text is 

appropriate to mark this change in 

policy from the policy, first adopted in 

the April 2011 final rule, permitting MA 

organizations not to count towards the 

MOOP limit any Medicare cost-sharing 

amounts paid by Medicaid programs 

and cost-sharing that remains unpaid 

under current law because the enrollee 

is a dually eligible individual. We noted 

that the specific regulatory amendments 

would have to change if we finalized the 

MOOP limit provisions 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 AllInclusive Care for the Elderly’’ which 

appeared in the Federal Register on 

February 18, 2020 (85 FR 9002). 

For the reasons discussed in the 

proposed rule (87 FR 1884), we 

proposed to amend §§ 422.100(f)(4) and 

(5) and 422.101(d)(4) to provide that MA 

organizations are responsible for 

tracking out-of-pocket spending accrued 

by enrollees and must alert both the 

enrollee and the contracted provider(s) 

if an enrollee has reached the MOOP 

limit. For purposes of this amendment, 

accrued cost-sharing includes all 

Medicare Parts A and B cost-sharing 

under the plan, regardless of whether 

the enrollee or another party or entity 

pays the cost-sharing, and regardless 

whether the cost-sharing is actually 

paid. Our proposed regulation text did 

not distinguish between cost that is left 

unpaid because the provider is 

prohibited from collecting cost-sharing 

from certain dually eligible enrollees or 

for other reasons. As noted in the 

proposed rule, in our experience, MA 

organizations do not impose additional 

cost-sharing liability above the MOOP 

limit on their Medicare-only enrollees if 

some of the pre-MOOP cost-sharing 

remains unpaid. We received 58 

comments on the proposal. 


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62For information on the Value Based Insurance 

Design Model, see https://innovation.cms.gov/ 

innovation-models/vbid. 

Comment: We received broad support, 

including from State Medicaid agencies, 

beneficiary advocacy organizations, and 

providers of primary, specialty, 

hospital, and long-term services and 

supports, for our proposal to require MA 

plans to calculate attainment of the 

MOOP limit based on the accrual of 

cost-sharing in the plan benefit. The 

reasons commenters gave for their 

support mirror the rationale we 

provided for the proposal in the NPRM. 

Supportive commenters noted the 

proposal would increase payments to 

providers serving dually eligible MA 

enrollees with cost-sharing above the 

MOOP limit and thereby mitigate 

disincentives to serve dually eligible 

MA enrollees and increase provider 

incentives to join D–SNP provider 

networks. One State commenter noted 

that the proposal would make it more 

financially sustainable for physicians to 

serve dually eligible MA enrollees. One 

provider commented that the proposed 

requirement would reduce the amount 

of bad debt that providers incur when 

MA plan cost-sharing goes unpaid due 

to the combination of limits on State 

cost-sharing payments and prohibitions 

on providers collecting cost-sharing 

from certain dual eligible individuals. 

Another provider organization 

commented that the proposed revision 

to how attainment of the MOOP limit is 

calculated would capture more dually 

eligible enrollees with very high 

medical costs and thereby reduce the 

administrative burden on providers of 

having to seek State payment of costsharing once the MOOP limit was 

attained. Numerous commenters wrote 

that they expected the financial benefits 

to providers from the proposal would 

improve provider access for dually 

eligible MA enrollees. 

Many commenters supportive of our 

proposal stated that it would improve 

health equity by requiring that dually 

eligible MA enrollees, and the providers 

who serve them, are treated the same as 

non-dually eligible MA enrollees under 

the MOOP policy. A commenter noted 

that the proposal would effectively 

ensure that MA plans face the same 

liability to pay 100 percent of the cost 

of services over the MOOP limit just as 

they are required to do for non-dually 

eligible enrollees. 

A number of commenters supported 

the proposal because they expect it 

would reduce State expenditures by 

ensuring the MOOP limit for dually 

eligible enrollees would be attained by 

high cost enrollees, thereby limiting 

State responsibility for payment of costsharing. One beneficiary advocacy 

organization wrote that current policy, 

by allowing MA organizations to 

exclude State paid or unpaid costsharing by dually eligible enrollees 

toward attainment of the MOOP limit, 

represented an unfair burden on State 

budgets. 

Response: We thank the commenters 

for their support of this proposal. In 

particular, we are grateful for their 

comments, based on their experience 

serving dually eligible individuals as 

providers, advocates, or State Medicaid 

agencies, that finalizing the proposal 

would reduce provider disincentives to 

serve dually eligible MA enrollees and 

potentially improve access to care. We 

agree with commenters that the 

proposal results in more equitable 

treatment of dually eligible MA 

enrollees in administration of the 

MOOP protection. 

Comment: Both MedPAC and 

MACPAC supported this proposal. 

MedPAC wrote that MA organizations 

should administer the MOOP limit in a 

consistent manner for all MA enrollees. 

MedPAC also noted that dually eligible 

beneficiaries may benefit from improved 

access to care in MA plans that change 

how they administer the MOOP to be 

consistent with the proposed 

requirement. MACPAC supported the 

proposal as it would ensure that MA 

organizations rather than States cover 

cost-sharing for dually eligible MA 

enrollees above the MOOP limit. 

Response: We thank MedPAC and 

MACPAC for their comments and value 

their expertise on this issue. 

Comment: Many of the opposing 

comments stated that dually eligible 

enrollees would receive no benefit from 

the proposal because providers in MA 

plans are already prevented from 

charging QMBs and full-benefit dually 

eligible individuals for Medicare costsharing for Parts A and B services. 

Rather, these commenters stated that the 

result of implementing the proposal 

would be a reduction in supplemental 

benefits for dually eligible enrollees, 

particularly enrollees in D–SNPs, as MA 

organizations would have to increase 

their bids to pay for effectively 

providing a MOOP to dually eligible 

enrollees and as a result have fewer 

rebate dollars available to fund 

supplemental benefits. According to 

these commenters, if CMS finalized the 

proposal, the supplemental benefits that 

MA organizations would have to reduce 

or eliminate as a result would include 

dental, hearing, vision, transportation, 

health food and meals benefits, overthe-counter medical items, health home 

services and care managers, benefits for 

individuals with serious mental illness, 

adult day care, tele-physical health, and 

benefits addressing health care 

disparities and social determinants of 

health. A commenter in particular noted 

an MA organization had recently added 

a service to address social isolation and, 

through an Innovation Center model,62

cash benefits being provided to 

enrollees in select D–SNPs in contract 

year 2022. Several commenters also 

wrote that the additional cost of 

implementing the MOOP proposal 

would make it difficult for D–SNPs to 

offer zero-premium plans as it would 

reduce rebate revenues now used to pay 

down Part D premiums. 

Commenters provided a range of 

estimates for the increases in bid costs 

and rebate reductions that would flow 

from implementation of the proposal. A 

commenter cited analysis estimating 

that the additional cost for Part A and 

B benefits for D–SNPs if implemented in 

2022 would be $23.90 per member per 

month or a 2.3 percent increase in plan 

bids. A commenter estimated that its per 

member costs would be 20 to 25 percent 

higher than this estimate, while another 

commenter stated this level additional 

costs would be shouldered by all D– 

SNPs. Another D–SNP sponsor 

projected the proposal would reduce by 

half the available funds for 

supplemental benefits. A commenter 

estimated the added cost could be as 

high as 2 percent of plan revenue. 

Another commenter cited the cost of the 

MOOP proposal estimated in the 

proposed rule. Some commenters noted 

that smaller, regional D–SNPs would be 

less able to absorb these added bid costs 

than larger MA organizations. 

Response: We recognize that 

implementation of this proposal would 

raise MA bids for basic benefits, 

especially for D–SNPs and other MA 

plans with a high percentage of dually 

eligible enrollees, and thereby 

potentially reduce rebates available for 

a range of supplemental benefits to the 

extent MA organizations are unable or 

unwilling to reduce profit margins or 

other costs to account for the added MA 

plan costs for services provided after an 

enrollee meets the MOOP limit. Along 

with many of the commenters who 

supported our proposal, we appreciate 

the value to dually eligible enrollees of 

certain supplemental benefits offered 

through D–SNPs and other MA plans. 

We disagree that the MOOP proposal 

provides no benefit to dually eligible 

enrollees. We address the potential 

benefit to improved provider access 

later in this rule. 

In the proposed rule, using contract 

year 2022 bid data to estimate the 

Medicare cost-sharing accrued by dually 


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63See chapter 12 of Medicare Payment Advisory 

Committee, March 2021 Report to the Congress: The 

Medicare Advantage Program: Status Report. 

Retrieved from: https://www.medpac.gov/wpcontent/uploads/2021/10/mar21_medpac_report_

ch12_sec.pdf. 

64 Ibid. 

65See https://www.kff.org/medicare/report/ 

medicare-advantage-how-robust-are-plansphysician-networks/ MA plan networks on average 

include 46 percent of physicians in a county, with 

lower averages for some specialists, such as 

oncologists, and for ‘‘narrow-network’’ plans. By 

contrast, 97 percent of physicians participate in 

Original Medicare. See: https://www.kff.org/ 

medicare/issue-brief/how-many-physicians-haveopted-out-of-the-medicare-program/. 

66https://www.rti.org/sites/default/files/ 

resources/StatePaymentLimits.pdf. 

67https://www.macpac.gov/publication/effect-ofstate-medicaid-payment-policies-for-medicare-costsharing-on-access-to-care-for-dual-eligibles/. 

68https://www.cms.gov/Medicare-MedicaidCoordination/Medicare-and-MedicaidCoordination/Medicare-Medicaid-CoordinationOffice/Downloads/Access_to_Care_Issues_Among_

Qualified_Medicare_Beneficiaries.pdf. 

eligible beneficiaries with cost-sharing 

protections (full-benefit dually eligible 

and QMB enrollees) above the 

mandatory MOOP level ($7,550 in 

2022), we estimated the cost of 

Medicare cost-sharing above this MOOP 

level to be on average $22.99 per 

member per month. This estimate is 

very similar to the $23.90 estimate 

provided by an analysis cited, but not 

provided, by several commenters. Both 

estimates are based on D–SNP bid data, 

and as such already reflect the higher 

medical costs of dually eligible 

enrollees. 

We believe that for most MA 

organizations, most (if not all) of the 

added costs for implementation of the 

MOOP proposal could be absorbed by 

reductions in plan profit margins and 

still allow MA organizations to achieve 

D–SNP profit margins that are 

comparable to the overall MA profit 

margins. According to MedPAC, D– 

SNPs had average profit margins of 7.8 

percent for the 2019 contract year, while 

the overall MA plan profit margin 

averaged 4.5 percent.63 A 2 percent 

increase in bid costs represents a lessthan-two percent increase in revenue, as 

plan revenue also includes rebate 

dollars and increases due to risk 

adjustment of MA payments. Thus, 

based on recent years of experience, a 2 

percent increase in bid costs could be 

fully absorbed in D–SNP profit margins 

while still allowing average D–SNP 

profit margins to exceed average MA 

plan margins. 

We recognize that MA organizations 

with smaller D–SNP margins, including 

some regional and nonprofit 

organizations, may have more difficulty 

absorbing the full costs of the proposal 

by reducing margins. MedPAC noted 

that nonprofit D–SNPs had lower 

average 2019 gain/loss (profit) margins 

of 2.5 percent (still higher than the 

overall nonprofit MA margin of 0.9 

percent).64 Although we value the 

participation of these organizations in 

the D–SNP program, we believe that the 

benefits of our proposal outweigh the 

downsides, including the differential 

difficulty that smaller, nonprofit MA 

organizations may face to come into 

compliance. Such organizations also 

have less revenue to comply with a 

range of MA requirements, including 

provision of the Part A and B benefit, 

yet we do not differentiate between the 

types of MA organizations in requiring 

delivery of such benefits. In sum, we are 

not convinced that the added bid costs 

attributable to the proposal would 

necessarily translate into reductions in 

valuable supplemental benefits for 

dually eligible enrollees. We also do not 

believe the costs of implementing the 

MOOP proposal would jeopardize the 

ability to pay down Part D premiums 

and offer zero-premium plans. For 

contract years 2021 and 2022, D–SNPs 

allocated an average of $7.50 per 

member per month to pay down the Part 

D premium to the amounts covered by 

the Part D Low Income Premium 

Subsidy, amounts that we believe D– 

SNPs would be able to continue to 

allocate as they implement this 

proposal. Finally, since promulgation of 

our proposed rule, we issued a final rule 

with comment period to finalize 

regulations regarding the MA MOOP 

and cost-sharing limits for Medicare 

Parts A and B services titled ‘‘Medicare 

Program; Maximum Out-of-Pocket 

(MOOP) Limits and Service Category 

Cost-Sharing Standards’’ (CMS–4190– 

FC4; 87 FR 22290, April 14, 2022) 

(‘‘MOOP April 2022 final rule’’), which 

will raise the in-network mandatory 

MOOP limit to $8,300 starting in 2023. 

This regulatory change will reduce the 

costs of this proposal to D–SNPs and 

other MA plans that adopt the 

mandatory MOOP limit. 

Comment: Many commenters 

opposing this proposal disagreed with 

CMS that its implementation would 

improve access to providers in D–SNPs 

and other MA plans and noted that CMS 

had provided no evidence of dually 

eligible MA enrollees having problems 

with access to providers. A commenter 

cited data from the Medicare Current 

Beneficiary Survey that showed that a 

higher percentage of dually eligible MA 

enrollees than dually eligible 

individuals in Original Medicare had a 

usual source of care (91 percent 

compared to 86 percent). Other 

commenters believed that, because D– 

SNPs and other MA plans must meet 

CMS provider network access 

requirements, CMS’s concerns about 

dually eligible enrollees’ access to care 

were misplaced. Another commenter 

opined that, to the extent that there are 

problems with access to specialists for 

dually eligible MA enrollees, the 

reasons underlying such access 

problems are more complicated than 

whether MA plans pay providers 100 

percent of the cost of services above the 

MOOP level, as they do for non-dually 

eligible enrollees. 

Response: We thank the commenters 

for their input. We recognize that D– 

SNPs and other MA plans must meet 

CMS network requirements but note 

that the number of providers who are 

participating in Original Medicare is 

much larger than the number of 

providers in the network typical of MA 

plans, and the access problems facing 

dually eligible individuals in Original 

Medicare in States where lesser-of 

policies limit payment of Medicare costsharing are well established.65

According to one study, the reductions 

in Medicare cost-sharing under these 

policies decreased the odds that a 

dually eligible individual would have 

an outpatient physician visit or mental 

health treatment visit in comparison to 

non-dually eligible Medicare 

beneficiaries.66 MACPAC found that, 

relative to non-dually eligible Medicare 

beneficiaries, lower payment of costsharing correlated with a decreased 

likelihood of evaluation and 

management visits, use of outpatient 

psychotherapy, and increased 

likelihood of using a safety net provider 

such as an FQHC or rural health 

clinic.67 A third study found decreased 

use of outpatient services among QMBonly beneficiaries and decreased 

utilization of office evaluation and 

management services and hospital 

outpatient services among QMB-plus 

beneficiaries compared to non-dually 

eligible Medicare beneficiaries.68

Although these studies all draw from 

Medicare FFS data, they establish that 

Federal and State policies on coverage 

of Medicare cost-sharing, and the 

amounts paid providers for Medicare 

cost-sharing, impact access to care for 

dually eligible individuals. Our current 

policy on attainment of the MOOP limit 

allows for a disparity in MA plan 

payment of cost-sharing for dually 

eligible compared to non-dually eligible 

MA enrollees. We believe that, to the 

extent that D–SNPs and other MA plans 

replicate the Medicare FFS structure, 

including by effectively never providing 

a MOOP above which the MA 

organization pays 100 percent of costs, 

that similar differences in access 


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between dually eligible and non-dually 

eligible would be replicated in MA 

plans, and especially in D–SNPs that 

largely replicate Original Medicare in 

their plan benefits. We are under no 

illusion that implementation of our 

MOOP proposal would eliminate all 

access barriers facing dually eligible MA 

enrollees, but, to the extent it provides 

greater parity in plan benefits between 

dually eligible and non-dually eligible 

MA enrollees, we are confident that it 

would at least incrementally improve 

dually eligible MA enrollees’ access to 

care. As previously noted in this rule, a 

range of providers commented that they 

expected parity in payment over the 

MOOP limit between non-dually 

eligible MA enrollees and dually 

eligible MA enrollees would improve 

access to care. 

Because of the strong evidence, cited 

above, of access challenges for dually 

eligible beneficiaries (relative to nondually eligible beneficiaries) in Original 

Medicare, we are unpersuaded by the 

MCBS data showing a four percentage 

point differential between dually 

eligible MA enrollees who have a usual 

source of care and their counterparts in 

Original Medicare. We think the more 

salient comparison for access to care is 

between dually eligible and non-dually 

eligible MA enrollees. We acknowledge 

that the body of evidence directly 

comparing access to care in MA 

between the two cohorts is limited. This 

is because one important source of data 

on this issue, the self-reported 

beneficiary experience measures in the 

MA CAHPS surveys, is reported at the 

contract level and thereby often 

comingles data on D–SNP performance 

within larger contracts that include nonD–SNP MA plans as well. We are 

finalizing a policy that can begin to 

address the scope of available quality 

measurement data in section II.A.6.a. in 

this final rule in our discussion of D– 

SNP-only contracts under proposed 

§ 422.107(e). We note, however, that in 

the 2022 Star Ratings, 14 percent of the 

universe of D–SNP-only MA contracts 

had a low star rating—one or two stars— 

compared to 10 percent of MA contracts 

with no D–SNP enrollment on the 

CAHPS measure C18—Getting 

Appointments and Care Quickly. Fifty 

percent of MA contracts with 100 

percent D–SNP enrollment had high star 

ratings on this measure—4 or 5 stars— 

but 65 percent of contracts with no D– 

SNP enrollment had high star ratings on 

this measure. Although imperfect, this 

data substantiates our concerns that 

access to and availability of healthcare 

for dually eligible individuals in D– 

SNPs is less than that for MA enrollees 

who are not dually eligible. These 

concerns support finalizing this 

provision as proposed. 

Comment: A commenter wrote that 

implementation of this proposal would 

have a significant impact on D–SNP 

enrollees, who constitute 35 percent of 

Medicare beneficiaries in Puerto Rico, 

and would result in higher premiums 

and/or reductions in supplemental 

benefits such as dental coverage and 

other benefits that address social 

barriers to health. 

Response: We appreciate the 

commenter drawing our attention to the 

issues affecting D–SNP enrollees in 

Puerto Rico but do not agree with this 

assessment of the potential impact to 

these enrollees. All Puerto Rico D– 

SNPs, in the Platino contracts they sign 

with ASES (Puerto Rico’s Medicaid 

agency), certify that they have no costsharing for Medicare Parts A and B 

services. Unlike States, Puerto Rico does 

not have a QMB program under which 

the State pays Medicare cost-sharing for 

Medicare services provided by these D– 

SNPs or that provides protections 

against providers billing for unpaid 

Medicare cost-sharing under the D–SNP 

benefit. That means the full cost of 

Medicare services, both before and after 

attainment of the MOOP limit, is 

already paid by the D–SNPs and funded 

by a combination of Medicare bid and 

rebate payments for the D–SNP bids and 

payments from ASES. Therefore, we do 

not believe this proposal will have an 

impact on the Puerto Rico D–SNPs’ 

costs for covering Medicare services. 

Comment: A commenter noted that 

there would be minimal to no impact on 

its provider payments above the MOOP 

limit because the D–SNP does not 

charge cost-sharing and pays providers 

a set percentage of the Medicare fee 

schedule regardless of the claim. 

Another commenter stated that FIDE 

SNPs with a negotiated single fee 

schedule for providers would also see 

no impact on provider payments under 

the MOOP provision. 

Response: We thank the commenters 

for this analysis as it provides an 

opportunity to better explain our 

proposal. FIDE SNPs and other D–SNPs 

that are capitated by the State for 

Medicare cost-sharing for all their fullbenefit dually eligible QMB members 

have the ability to negotiate a single fee 

schedule for providers that encompasses 

both the Medicare and Medicaid 

responsibility for any claim. If 

implementation of the proposal has no 

impact on these D–SNPs’ payments to 

providers above the MOOP, then there 

should be no increase in these D–SNPs’ 

bids unless there is a reduction in the 

capitation rate that the Medicaid agency 

pays for coverage of Medicare costsharing and MA organizations must 

make up the difference in their bids. We 

note that less than one third of total D– 

SNP enrollment are in D–SNPs with 

exclusively aligned enrollment that are 

capitated by the State Medicaid agency 

for Medicaid payment of cost-sharing 

for Medicare Part A and B benefits, and 

a smaller proportion still of dually 

eligible enrollees in all MA plans are in 

such D–SNPs. We do not know, 

however, whether all these D–SNPs 

with exclusively aligned enrollees 

negotiate a single fee schedule for 

Medicare services encompassing both 

Medicare and Medicaid payments. 

Comment: A few commenters 

believed implementation of the proposal 

would have a negative impact on MA 

organizations’ ability to negotiate valuebased payment arrangements with 

providers or implement State-directed 

value-based payment initiatives in 

connection with Medicaid managed care 

contracts also held by the MA 

organizations. Another commenter 

wrote that the MOOP provision would 

incentivize providers to run 

unnecessary tests and procedures to 

speed their patients’ progress toward the 

MOOP limit, after which the providers 

would receive full payment from the 

MA plan for the care they provide. A 

separate commenter stated that the chief 

beneficiaries of the proposal would be 

dialysis providers that have a duopoly 

on dialysis clinics and providers of Part 

B drugs and CMS should determine 

which providers would benefit from the 

MOOP proposal and whether access to 

these providers would be improved. 

Response: We thank commenters for 

this input but do not find it persuasive. 

We do not believe changes to the 

calculation of the MOOP to take into 

account the particular cost-sharing 

circumstances for dually eligible 

enrollees and making effective the 

requirement that MA plans pay 100 

percent of the cost of services above the 

MOOP limit would in any way limit the 

ability of MA plans to negotiate valuebased payment structures with their 

providers. As proposed and finalized, 

this policy would in no way restrict the 

ability of MA organizations to negotiate 

payment rates with their providers, 

including the ability to negotiate 

capitated or semi-capitated payment 

arrangements. Regarding incentives for 

providers to perform unnecessary tests 

and procedures to advance patients 

towards the MOOP, we expect that MA 

organizations would employ 

appropriate utilization management and 

fraud prevention techniques to prevent 

any such provider behavior, both to 

ensure program integrity and for the 


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69https://www.cms.gov/files/document/ 

ltcfdisenrollmentmemo.pdf. 

70See: https://www.cms.gov/sites/default/files/ 

repo-new/42/Access_To_Care_Issues_Among_

Qualified_Medicare_Beneficiaries.pdf. 

health of their dually eligible enrollees. 

Lastly, we are not in a position to judge 

whether special classes of providers are 

deserving of the extra payments that 

may flow to them under this new 

policy, but do not believe the evidence 

supports the belief that dialysis 

providers and providers of Part B drugs 

will be the primary recipients of 

additional MA payments above the 

MOOP limit. Nor does this amendment 

to how costs are counted toward the 

MOOP impact the relative market power 

of MA organizations and providers in 

connection with their respective ability 

to negotiate payment arrangements. 

Finally, we note that skilled nursing 

facilities may also be recipients of 

higher payments for their dually eligible 

patients that have exceeded the MOOP 

limit. These higher payments may 

reduce SNF incentives to encourage 

their patients to disenroll from their MA 

plan, despite the prohibition on such 

provider interference with beneficiary 

plan choice, a practice described to 

CMS in anecdotal reports.69 To the 

extent dually eligible enrollees remain 

in their MA plan, particularly in FIDE 

SNPs, after a SNF admission, the MA 

organization would be better able to 

participate in discharge planning and 

ensure the individual has the 

appropriate supports to return to the 

community. 

Comment: A few commenters 

objected to the proposal, citing their 

belief that it would use Medicare funds 

to subsidize Medicaid, by requiring MA 

organizations to pay 100 percent of the 

costs of care after cost-sharing in the 

plan benefit had accrued to reach the 

MOOP limit, substituting Medicare 

dollars in the form of MA capitation 

payment for the state Medicaid dollars 

that now continue to pay cost-sharing 

for dually eligible enrollees with no 

effective limit provided by the MOOP. 

Response: We disagree that the 

provision constitutes an inappropriate 

subsidization of Medicaid by Medicare. 

Any policy that impacts Medicare 

coverage of services or payment rates for 

which Medicaid is responsible to pay 

dually eligible individuals’ cost-sharing 

necessarily has the impact of increasing 

or decreasing the amount of cost-sharing 

paid by Medicaid. The fact that this 

proposed Medicare policy does result in 

significant savings to States should not 

by itself constitute a reason not to 

pursue it. 

Comment: A commenter disagreed 

with the concern we expressed in the 

proposed rule that the current policy 

may not be fully consistent with section 

1902(a)(25)(G) of the Act by allowing 

MA organizations to calculate 

attainment of the MOOP limit 

differently for non-dually eligible 

beneficiaries, for whom MA 

organizations accrue all cost-sharing in 

the plan benefit towards the MOOP 

limit, from dually eligible enrollees, for 

whom no cost-sharing in the plan 

benefit, whether paid by the State or 

unpaid because of prohibitions on 

collection of such cost-sharing, counts 

toward attainment of the MOOP. As the 

commenter notes, section 1902(a)(25) of 

the Act requires Medicaid State plans to 

prohibit any insurer from taking into 

account that an individual the insurer 

covers is eligible for or receives 

assistance from Medicaid. The 

commenter acknowledges that the 

current policy does allow MA 

organizations to take into account 

dually eligible enrollees’ receipt of 

Medicaid assistance by disregarding any 

the cost-sharing actually paid by the 

State. However, the commenter stated 

that dually eligible enrollees’ costsharing is similarly not counted towards 

attainment of the MOOP, not because of 

the enrollee’s eligibility for Medicare, 

but because it is in fact not owed by the 

enrollee or ever paid, in contrast to 

other MA enrollees who typically are 

billed for cost-sharing and pay those 

bills. The commenter suggested that 

CMS’s proposal was internally 

inconsistent by requiring MA plans to 

count towards the MOOP limit costsharing that remains unpaid because the 

enrollee is also eligible for Medicaid, 

which requires the MA plan to take into 

consideration Medicaid eligibility in a 

way that is not aligned with section 

1902(a)(25) of the Act. The commenter 

also suggested, if CMS should change 

the basis on which MA plans calculate 

attainment of the MOOP limit, the 

agency should only require MA 

organizations to count amounts the 

State actually pays in cost-sharing 

toward attainment of the MOOP. 

Response: We appreciate the 

commenter’s acknowledgement that MA 

organizations’ disregard of Medicaid 

cost-sharing does in fact ‘‘take into 

account’’ their enrollees’ receipt of 

Medicaid benefits in administration of 

the MOOP limit. We do not agree that 

the disregard of cost-sharing that is 

unpaid because of the protection 

afforded dually eligible beneficiaries 

does not similarly raise concerns about 

section 1902(a)(25)(G) of the Act, which 

also requires the State plan to prohibit 

insurers’ administration of plan benefits 

because of an individual’s eligibility for 

Medicaid. As the commenter recognizes, 

the protection against being billed 

Medicare cost-sharing is conferred on 

the individual by virtue of their 

eligibility for QMB or full Medicaid 

benefits. Further, disregarding unpaid 

cost-sharing in calculating attainment of 

the MOOP has the effect of delaying 

attainment of the MOOP and shifting 

costs onto Medicaid that would not be 

borne by non-Medicaid enrollees, which 

is the very scenario that section 

1902(a)(25)(G) is designed to prevent. 

For this reason, we disagree with the 

alternative suggested to have MA 

organizations count only Medicaid-paid 

amounts toward the MOOP limit. This 

would undermine the goal of providing 

the same plan benefit under the MOOP 

policy for both dually eligible and nondually eligible MA enrollees; the limits 

of State cost-sharing payments under 

lesser-of policies would mean that the 

effective MOOP limit for dually eligible 

MA enrollees in most States would be 

much higher than for non-dually 

eligible MA enrollees. Finally, we note 

that, while it is true that MA 

beneficiaries typically do pay their MA 

cost-sharing, it is also true that dually 

eligible beneficiaries, despite the 

prohibition against providers billing 

them for cost-sharing, do get billed and 

do pay such cost-sharing.70 The current 

policy, under which MA organizations 

assume no dually eligible enrollee pays 

cost-sharing, might not result in 

counting these vulnerable beneficiaries’ 

payment of improperly billed costsharing toward the MOOP limit. 

Comment: A few commenters 

questioned whether CMS’s proposal was 

usurping the authority Congress granted 

States to establish lesser-of policies. 

Other commenters questioned whether, 

by changing the method MA plans must 

use to calculate the MOOP limit, CMS 

was superseding the authority granted 

by Congress in MIPPA to establish state 

Medicaid agency contracts with D– 

SNPs. 

Response: We respectfully disagree 

with the commenters’ assertions that 

this proposal would usurp or supersede 

authority granted States by Congress. 

Our proposal would not limit State 

flexibility to establish rates, including 

lesser-of rates, that set limits on state 

Medicaid payment of Medicare costsharing. Instead, we proposed 

requirements for the MOOP limits 

established by MA plans and how costsharing is counted toward the MOOP 

limit, particularly with regard to costsharing for dually eligible enrollees. As 

Medicare is primary to Medicaid, the 

policy necessarily impacts Medicaid as 


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a secondary payer. We are not 

superseding State authority to establish 

the methods a State requires D–SNPs 

that operate in the State to employ in 

the administration of Medicaid’s 

responsibility for cost-sharing. Again, 

our proposal is focused on how MA 

organizations administer the MOOP 

limit, which is a benefit required, under 

§§ 422.100(f) and 422.101(d), from MA 

plans in connection with basic benefits 

(that is, the Medicare Part A and Part B 

benefits covered by MA plans). The 

authority Congress has granted under 

section 1859(f) of the Act States for their 

D–SNP contract is not limited to 

administration of Medicaid benefits that 

D–SNPs are contracted to provide. Such 

contracts can include requirements on 

D–SNPs relative to the Medicare costsharing they impose in plan benefits; 

our proposal does not impinge on or 

limit that authority. 

Comment: A few commenters 

questioned whether CMS has the legal 

authority to impose a mandatory MOOP 

limit on any MA plan other than 

regional PPOs, which are the only MA 

plans that the Part C statute specifically 

requires to have MOOP limits. A 

commenter wrote that CMS instituted a 

MOOP requirement for all plans on the 

basis of its authority to ensure MA 

organizations do not design plan 

benefits to discourage enrollment by 

Medicare beneficiaries with higher 

costs. The commenter notes that CMS 

provides no evidence that the current 

policy on dually eligible individuals’ 

attainment of the MOOP is discouraging 

enrollment in MA plans or D–SNPs. 

Moreover, the commenter argues that 

the rationale we provided for this 

proposal is not the same as the rationale 

underlying the MOOP requirement. 

Response: The overall legal 

underpinning for the current MOOP 

rules, established through notice-andcomment rulemaking over a decade ago, 

is beyond the scope of this final rule. In 

adopting the MOOP requirements in the 

April 2010 final rule titled ‘‘Medicare 

Program; Policy and Technical Changes 

to the Medicare Advantage and the 

Medicare Prescription Drug Benefit 

Programs’’ (75 FR 19804), CMS also 

relied on its authority in section 

1856(b)(1) of the Act to establish 

standards for MA organizations and MA 

plans and in section 1857(e)(1) of the 

Act to adopt additional terms and 

conditions for MA contracts that are not 

inconsistent with the Part C statute and 

that are necessary and appropriate for 

the MA program. CMS’s authority under 

the statute for the MA program is not 

limited to implementing only the 

specific requirements listed in the 

statute. 

Regarding the assertion that CMS has 

provided no data to support the claim 

that the current way that some MA 

organizations calculate attainment of the 

MOOP limit for dually eligible 

individuals substantially discourages 

enrollment by these individuals, our 

proposed rule makes no such claim to 

justify our proposal. In addition to the 

responsibility to deny an MA plan 

design that we determine is likely to 

substantially discourage enrollment by 

certain beneficiaries, CMS also has 

authority under section 1854(a) of the 

Act to negotiate MA bids similar to the 

authority given the Office of Personnel 

Management to negotiate health benefits 

plans under the Federal Employees 

Health Benefits Program, and we are not 

obligated to accept every bid. CMS also 

has established the authority, under 

§ 422.100(f)(2) to review and approve 

MA benefits and cost-sharing to ensure 

that MA organizations are not designing 

benefits to discriminate against 

beneficiaries or inhibit access to 

services. Our MOOP proposal, which 

requires that MA organizations’ MOOP 

limit is administered the same way for 

dually eligible enrollees and non-dually 

eligible enrollees, is consistent with this 

authority. In addition, by preventing a 

method of adjudicating the MOOP 

benefit that now results in providers 

serving dually eligible enrollees never 

receiving the same level of payment as 

providers serving non-dually eligible 

enrollees, our proposal prevents MA 

organizations from implementing a costsharing structure that has the potential 

to inhibit access to services for dually 

eligible enrollees. In addition, 

§ 422.100(d)(2)(i) requires MA 

organizations to offer uniform benefits 

and level of cost-sharing through the 

plan’s service area. This is not the case 

when the MA organization adjudicates 

attainment of the MOOP one way for 

non-dually eligible beneficiaries (by 

accruing all cost-sharing in the plan 

benefit) and another way for dually 

eligible beneficiaries (by accruing none 

of the cost-sharing accrued by dually 

eligible beneficiaries with cost-sharing 

protections). Similarly, D–SNPs that 

enroll both dually eligible individuals 

with cost-sharing protections and dually 

eligible individuals whose only 

Medicaid benefit is payment of their 

Part B premiums, also do not adjudicate 

the MOOP uniformly. For the dually 

eligible enrollees with cost-sharing 

protections, none of the cost-sharing 

accrues toward the MOOP limit; for the 

dually eligible enrollees without such 

projections, all of the cost-sharing in the 

plan benefit accrues toward the MOOP 

limit. 

Finally, we have learned since 

promulgation of the proposed rule that 

some MA organizations have used the 

flexibility afforded to MA organizations 

with a lower voluntary plan MOOP to 

design a benefit with higher servicespecific cost-sharing, even though the 

MOOP limit is never attained because 

no cost-sharing in the D–SNP plan 

benefit counts toward the MOOP. For 

example, some MA organizations have 

established D–SNPs with a lower, 

voluntary MOOP and subsequently 

raised cost-sharing for other Part A and 

B services above levels that are 

actuarially equivalent to the Original 

Medicare benefit for those services. 

These MA organizations have raised 

cost-sharing for services including 

inpatient and mental health hospital 

stays and imposed cost-sharing for 

home health services. In D–SNPs for 

which the bid information shows no 

cost associated with payment of costsharing above the MOOP limit, 

indicating that the MOOP is almost 

never attained by enrollees, these MA 

organizations have raised cost-sharing 

for emergency and post stabilization 

services. We believe this practice is 

manipulative of our benefit review 

process and has the potential to violate 

the requirement at § 422.254(b)(4) that 

MA plans provide a benefit that is at 

least actuarially equivalent to Original 

Medicare. Implementation of our MOOP 

proposal would ensure that the 

flexibility we allow to raise servicespecific cost-sharing to encourage use of 

the lower, voluntary MOOP would 

ensure that use of the MOOP limit 

actually limited cost-sharing under the 

plan benefit. 

Comment: A few commenters stated 

that they were grateful that the proposal 

did not exclude charitable contributions 

to cost-sharing from applying toward 

the MOOP limit. A commenter asked 

CMS to identify what beneficiary costs 

may be waived by providers. Another 

commenter noted that the proposal did 

not specifically exclude cost-sharing 

paid by pharmaceutical manufacturer 

patient assistance programs from 

counting as cost-sharing toward the 

MOOP limit and requested that similar 

pharmaceutical manufacturer assistance 

count toward the MOOP limit employed 

by Marketplace plans. 

Response: Although it is accurate that 

charitable contributions to MA 

enrollees’ cost-sharing would count 

toward the MOOP limit for MA plans 

under our proposal, we remind 

commenters that the reduction or 

waiver of cost-sharing by providers 

implicates the Federal Anti-kickback 

Statute (AKS), found in section 

1128B(b) of the Social Security Act 


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(Act), and the civil monetary penalties 

provision prohibiting inducements to 

beneficiaries (Beneficiary Inducements 

CMP), found in section 1128A(a)(5) of 

the Act. Whether any particular 

arrangement violates the AKS or the 

Beneficiary Inducements CMP would be 

based on the specific facts and 

circumstances. Similarly, subsidies 

provided by pharmaceutical 

manufacturer assistance programs that 

induce the purchase of federally 

reimbursable items, such as drugs paid 

for by Medicare Part B, also implicate 

the AKS. A subsidy for cost-sharing 

obligations provided by a 

pharmaceutical manufacturer assistance 

program may implicate the Beneficiary 

Inducements CMP, if the subsidy is 

likely to influence a Medicare or State 

health care program beneficiary’s 

selection of a particular provider, 

practitioner, or supplier. The comments 

seeking CMS guidance on what 

beneficiary costs may be waived by 

providers and seeking to require that 

pharmaceutical manufacturer patient 

assistance counts toward the MOOP 

limit used by Marketplace plans are out 

of the scope of this rule. 

Comment: Other comments we 

received asked for the MA MOOP 

protection to be extended to Part D, that 

CMS increase payment rates to MA 

plans, that CMS change the cost-sharing 

applicable to physical therapy and that 

CMS allow hospitals to collect bad debt 

for unpaid cost-sharing under MA 

plans. 

Response: These comments are 

outside the scope of this rulemaking. 

Comment: Several commenters asked 

CMS to prohibit States from using 

lesser-of policies in establishing the 

amounts paid for Medicare cost-sharing. 

Response: We do not have the 

statutory authority to prohibit States 

from using lesser-of policies in 

establishing the amounts paid for 

Medicare cost-sharing. 

Comment: We received numerous 

comments concerning how MA 

organizations would operationalize the 

proposal and how States would know 

when the MOOP limit was attained and 

should no longer be billed by providers 

for dually eligible MA enrollees’ costsharing. Several commenters questioned 

how they would obtain information on 

non-Medicaid secondary coverage in 

accruing cost-sharing toward the MOOP 

limit. A few commenters questioned 

how the cost-sharing that has 

accumulated toward the MOOP would 

be transferred to another MA 

organization if enrollees switch plans 

mid-year. A commenter objected to the 

proposed requirement to notify dually 

eligible beneficiaries when the MOOP 

limit is reached, stating that it would be 

confusing to these enrollees because 

they do not themselves owe costsharing. The commenter also opposed a 

requirement that MA organizations 

notify providers that an enrollee has 

reached the MOOP limit because 

providers have other means to access 

MOOP information. 

Response: We thank the commenters 

for this input. MA organizations would 

not need to engage in tracking nonMedicaid secondary coverage because 

all cost-sharing, whether or not paid by 

secondary coverage, that is in the plan 

benefit package for Parts A and B 

services would accumulate toward the 

MOOP limit. MA organizations can rely 

entirely on the claims for services they 

receive from providers and accumulate 

the cost-sharing in the plan benefit for 

those services toward the MOOP limit. 

Longstanding CMS guidance, as 

described at 50.1 of Chapter 4 of the 

Medicare Managed Care Manual, is that 

when an enrollee switches to another 

plan of the same type (for example, from 

one HMO to another HMO) offered by 

the same MA organization, their 

accumulated annual contribution 

toward the annual MOOP limit in the 

previous plan to date is to be counted 

towards their MOOP limit in the new 

MA plan. As applicable, this transfer of 

MOOP applies to both in-network and 

out-of-network MOOP. The MOOP limit 

is not now a transferrable benefit when 

a MA enrollee changes to a plan offered 

by a different MA organization. The 

cost-sharing that counts toward the 

MOOP limit starts anew with the costsharing that is incurred or accrued 

under the new plan offered by the 

different MA organization. Our proposal 

does not change that. 

We disagree that we should eliminate 

the requirement to alert dually eligible 

enrollees and providers when enrollees 

have reached the MOOP limit. We note 

that this requirement is already in 

§ 422.101(d)(4) (and has been for several 

years) and was explicitly added to 

§ 422.100(f)(4) and (5) in a recent MOOP 

April 2022 final rule, CMS–4190–FC4. 

Our proposal only changes how 

attainment of the MOOP limit is 

calculated. We will consider for future 

rulemaking whether there are 

circumstances where alerting enrollees 

may be unnecessary. In the interim, we 

believe providing the identical 

notification to a dually eligible 

beneficiary with cost-sharing 

protections as is provided to a nondually eligible enrollees has the 

potential to be confusing. The 

notification to dually eligible enrollees 

should be tailored to their circumstance. 

If the dually eligible enrollee should not 

ever be charged cost-sharing by MA 

plan providers, any notification alerting 

these enrollees that they attained the 

MOOP limit should reflect that. 

Attainment of the MOOP limit can be 

accurately described by telling enrollees 

they have reached the stage in their 

benefit when their plan will pay all the 

cost of your care, and that their 

providers no longer need to bill 

Medicaid. 

We disagree that providers serving 

dually eligible enrollees should not be 

alerted when the MOOP limit is 

attained, a requirement that was 

finalized in CMS–4190–FC4 at 

§ 422.100(f)(4) and (f)(5)(iii). Alerting 

providers that the MOOP limit has been 

attained, that the MA organization will 

cover 100 percent of the cost of services 

for the remainder of the year, and that 

State Medicaid agencies should no 

longer be billed for Medicare costsharing, is essential for administration 

of the MOOP limit. Remittance advice 

indicating attainment of the MOOP limit 

and the absence of any additional costsharing charges may fulfill the 

requirement. If providers have accurate 

remittance advice from MA 

organizations, they will have no claim 

for Medicaid payment of Medicare costsharing over the MOOP limit to submit 

for State payment. 

We note that remittance advice to 

providers serving dually eligible MA 

enrollees with cost-sharing protections 

under the MA plan—QMBs, SLMB+, 

and other full-benefit dually eligible 

enrollees—should explain that no costsharing may be billed whether the 

enrollee has attained the MOOP limit or 

not. 

Comment: Numerous commenters 

urged CMS, if we finalize the proposal, 

to delay the effective date until 2024 or 

2025. 

Response: We disagree that a delay is 

necessary for MA organizations to 

implement the proposal or to submit 

accurate bids for contract year 2023 that 

take this change into account. MA 

organizations already have experience 

projecting costs and utilization for their 

enrollees for purposes of bids and 

accumulating the cost-sharing accrued 

under the plan benefit; annual bids 

require projections of cost and 

utilization and MA plans must 

accumulate cost-sharing and process 

claims after the MOOP limit is reached 

now for non-dually eligible enrollees. 

There is also sufficient time before the 

start of the plan year to develop tailored 

notices for dually eligible enrollees and 

their providers. 

After considering the comments we 

received and for the reasons outlined in 

the proposed rule and our responses to 


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comments, we are finalizing the 

provision as proposed with technical 

changes to reflect changes to regulation 

text made by the MOOP April 2022 final 

rule, CMS–4190–FC4. Specifically, in 

paragraphs § 422.100(f)(4) and (f)(5)(iii) 

and in paragraph § 422.101(d)(4), we are 

removing the word ‘‘incurred’’ and 

adding in its place the word ‘‘accrued’’. 

13. Comment Solicitation on 

Coordination of Medicaid and MA 

Supplemental Benefits 

Section 422.107 requires each MA 

organization offering a D–SNP to have a 

contract with the State Medicaid agency 

that describes, among other things, the 

organization’s responsibility to 

coordinate Medicaid benefits. State 

Medicaid agencies have broad flexibility 

to include provisions in their D–SNP 

contracts. 

In the proposed rule, we described a 

number of ways that State Medicaid 

agencies can use their D–SNP contracts 

under § 422.107 to coordinate D–SNP 

supplemental benefits with Medicaid 

benefits. The proposed rule described 

specific examples of potential 

coordination of MA supplemental 

benefits and Medicaid coverage, 

including Medicaid benefits that are 

delivered through Medicaid FFS, 

through a separate Medicaid managed 

care contract, or by the State capitating 

the D–SNP for delivery of these benefits. 

The examples demonstrated how this 

coordination can ensure the overlapping 

D–SNP supplemental benefits are 

primary to Medicaid, how to ensure D– 

SNPs and Medicaid providers do not 

receive duplicative payments for 

delivery of the identical benefits to the 

same individuals, how D–SNP 

supplemental benefits can extend or 

expand on similar Medicaid benefits, 

and how D–SNP enrollees can have a 

more integrated experience of care. The 

examples included discussion of typical 

D–SNP supplemental benefits, such as 

coverage of dental services and nonemergency transportation, as well as 

delivery of supports for community 

living. We described how CMS 

considers a FIDE SNP’s supplemental 

benefits as meeting the uniformity 

requirements in cases where some 

dually eligible individuals receive the 

benefit under the FIDE SNP’s Medicaid 

managed care contract while other 

enrollees receive the benefit as an MA 

supplemental benefit because they are 

not eligible for Medicaid benefits under 

State Medicaid eligibility criteria. We 

noted that we were considering whether 

an amendment to § 422.100(d)(2) would 

be appropriate regarding this approach 

to uniformity for supplemental benefits 

when a FIDE SNP arranges 

supplemental benefits this way and 

sought comments on that issue. We also 

solicited comment on other potential 

ways that D–SNPs and States can work 

together to coordinate Medicare and 

Medicaid benefits in order to improve 

D–SNP enrollee experiences and 

outcomes. 

Comment: Several commenters 

supported the use of D–SNP contracts to 

coordinate MA supplemental benefits 

with Medicaid. A few commenters 

expressed concerns with 

operationalizing the coordination of 

supplemental benefits because of the 

complexity and limitations in data 

sharing and inadequate data systems. 

Other commenters recommended 

increasing information sharing to better 

integrate coordination of Medicare and 

Medicaid services. Several commenters 

also requested more oversight and data 

collection of supplemental benefits. A 

commenter believed that the use of D– 

SNPs to coordinate Medicare and 

Medicaid benefits would place much of 

the responsibility on the D–SNPs and 

would require expensive sophisticated 

integrated IT systems for the exchange 

of data. A few commenters raised 

concerns with enrollee access to 

services and enrollee confusion about 

D–SNP supplemental benefits when 

they overlap with Medicaid benefits. 

Response: We appreciate the 

commenters’ perspectives and thank the 

commenters for their input. These 

comments will inform our collaboration 

with States on D–SNP integration. 

(a) Using the D–SNP MOC To 

Coordinate Medicaid Services 

As described in the proposed rule, the 

D–SNP MOC, required by § 422.101(f), 

also provides a vehicle for State 

Medicaid agencies to work with D–SNPs 

to meet State goals to improve quality of 

care and address social determinants of 

health. State Medicaid agencies may 

work with D–SNPs with service areas in 

the State to include (and, through the 

State Medicaid agency contract at 

§ 422.107, require inclusion of) specific 

elements in the MOC and how the D– 

SNP delivers covered items and services 

consistent with the MOC. There is no 

prohibition on a State Medicaid agency 

imposing specific requirements for the 

D–SNP MOC that are in addition to the 

minimum requirements at § 422.101(f); 

compliance with the approved MOC is 

included in the D–SNP’s bid to provide 

basic benefits under § 422.101(f). For 

example, the State Medicaid agency 

contract under § 422.107 could require 

the D–SNP to have specific communitybased providers involved in 

development of individualized care 

plans, deploy nurse practitioners for inhome care for high-risk enrollees when 

in-home services are required by the 

individualized care plans, use health 

care providers (rather than plan staff) for 

care coordination functions, and/or set 

minimum payment amounts for such 

providers. We solicited comments on 

CMS guidance or regulations that may 

warrant clarification, and whether using 

D–SNP MOC to coordinate Medicaid 

services create any unintended obstacles 

to accessing services among dually 

eligible beneficiaries. 

Comment: A few commenters 

supported using the D–SNP MOC to 

coordinate Medicaid services and a 

commenter supported more 

transparency by incorporating the MOC 

process into the regulatory and 

contractual oversight regime. Several 

plan sponsors and their trade 

associations expressed concern with the 

State’s ability to leverage the MOC with 

Medicaid requirements and the possible 

addition of any State requirements that 

may be duplicative or in conflict with 

the MOC-specific requirements. A few 

commenters suggested potential ways to 

improve coordination such as training 

for States on Federal requirements, a 

national State specific requirements 

repository, and better alignment of MOC 

reviews. 

Response: We appreciate the 

commenters’ support and will take into 

consideration the additional comment 

on enhancing transparency. We also 

thank the commenters for suggesting 

ways to improve MOC alignment with 

the State coordination process and will 

take these into consideration in future 

rulemaking and guidance. 

(b) Coordinating Coverage of Medicare 

Cost-Sharing 

As stated in the proposed rule (87 FR 

1887), the same prohibition on 

duplicate Medicare and Medicaid 

payments for identical benefits applies 

when a D–SNP covers MA supplemental 

benefits that reduce Medicare Parts A 

and B cost-sharing, such as deductibles 

and coinsurance, as described for 

overlapping coverage of other Medicaid 

and MA supplemental benefits. How it 

works depends on whether the State 

Medicaid agency pays for Medicare 

cost-sharing through the Medicaid FFS 

program or pays the D–SNP a capitated 

amount to cover the State’s obligation to 

pay MA cost-sharing. The proposed rule 

included examples (87 FR 1887) of both 

State payment arrangements for MA 

cost-sharing. We solicited comments on 

State and MA organization experiences 

and challenges in coordinating benefits, 

CMS guidance or regulations that may 

warrant clarification, and whether our 

current policies create any unintended 


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71ATI Advisory. New, Non-Medical 

Supplemental Benefits in Medicare Advantage in 

2021. May 2021. https://atiadvisory.com/wp- content/uploads/2021/06/2021-SpecialSupplemental-Benefits-for-the-Chronically-Ill.pdf. 

obstacles to accessing services among 

dually eligible beneficiaries. 

Comment: A few commenters 

supported coordinating coverage of 

Medicare cost-sharing and noted that 

Medicaid capitation for coverage of 

Medicare cost-sharing will need to be 

projected accurately and actuarially 

sound. 

Response: We thank commenters for 

raising this issue. We will consider 

opportunities for future Medicaid ratesetting guidance on the issue. 

14. Solicitation of Comment on 

Converting MMPs to Integrated D–SNPs 

In the 10 years since the creation of 

the FAI, the integrated care landscape 

has changed substantially. Congress 

made D–SNPs permanent in 2018 and 

established, beginning in 2021, new 

minimum integration standards and 

directed the establishment of unified 

appeals and grievance procedures 

(which we tested through the MMPs). 

Changes in MA policy have also created 

a level of benefit flexibility that did not 

previously exist outside of the capitated 

model demonstrations, with MA plans 

increasingly offering supplemental 

benefits that address social 

determinants of health and long-term 

services and supports.71 These factors, 

in combination with the proposals 

discussed earlier in this final rule, offer 

the opportunity to implement integrated 

care at a much broader scale than 

existed when MMPs were first created. 

As a result, we described in the 

proposed rule at 87 FR 1888 our intent, 

contingent on finalizing other proposals 

in the rule, to work with the States 

participating in the capitated financial 

alignment model during CY 2022 to 

develop a plan for converting MMPs to 

integrated D–SNPs. Table 1 summarizes 

how our proposals finalized in this rule 

relate to MMP policies. 

BILLING CODE 4120–01–P 

BILLING CODE 4120–01–C 

We described in the proposed rule at 

87 FR 1888 the process for transitioning 

MMPs to D–SNPs and the potential 

advantages and disadvantages of such a 

transition. In order to mitigate any 

disruptions that could result from 

converting MMPs to D–SNPs, we intend 

to work closely with States and other 

stakeholders to ensure the transition is 

as seamless as possible for MMP 

enrollees, including facilitating the 

transition of MMP enrollees to D–SNPs 


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TABLE 1: PROPOSALS FINALIZED IN THIS RULE THAT APPLY MMP FEATURES 

TOD-SNPs 

MMP Characteristic FIDESNP HIDESNP Coordination-onlv D-SNP 

Enrollee advisorv committee Reauired Same as FIDE Same as FIDE 

HRA to include social risk factors Reauired Same as FIDE Same as FIDE 

Exclusively aligned enrollment Required starting 2025 Not addressed in this Not addressed in this 

rulemaking rulemaking 

Capitation for L TS S and behavioral health Required starting 2025 Not addressed in this Not addressed in this 

rulemaking rulemaking 

Capitation for Medicare cost-sharing Required starting 2025 Not addressed in this Not addressed in this 

rulemaking rulemaking 

Unified appeals & grievances' Required starting 2025 for all FIDE Not addressed in this Required for certain plans SNPs rulemaking 

Continuation of Medicare benefits pending Required starting 2025 for all FIDE Not addressed in this Required for certain plans appeal2 SNPs rulemaking 

Integrated member materials Finalized a new pathway for States to Same as FIDE Same as FIDE require for certain plans 

Contract only includes within-State plans 

limited to dually eligible individuals 

Quality data/ratings based solely on Finalized a new pathway for States to Same as FIDE Same as FIDE 

performance in contracts that only include require for certain plans 

within-State plans limited to dually eligible 

individuals' 

Mechanisms for joint Federal-State Finalized for States meeting specified Same as FIDE Same as FIDE oversight criteria at § 4 22 .107 ( e) 

State HPMS access Finalized for States meeting specified Same as FIDE Same as FIDE criteria at § 4 22 .107 ( e) 

NOTES: HPMS: Health Plan Management System; LTSS: long-term services and supports 1The requirement for unified appeals and grievances was already in place for those FIDE SNPs and HIDE SNPs that are applicable integrated 

plans, as defined at § 422.561. Our requirement for exclusively aligned enrollment for FIDE SNPs beginning 2025 means that all FIDE SNPs will 

be applicable integrated plans subject to the requirements for unified appeals and grievance systems. In addition, this final rule revises the 

definition of applicable integrated plans to extend requirements for unified appeals and grievance systems to a subset of coordination-only DSNPs. 

2The requirement for continuation of Medicare benefits pending appeal was previously adopted at§ 422.632 for those FIDE SNPs and HIDE 

SNPs that are applicable integrated plans, as defined at § 422.561. Our requirement for exclusively aligned enrollment for FIDE SNPs beginning 

2025 will mean that all FIDE SNPs will be applicable integrated plans subject to this requirement of a unified appeals system. 3CMS calculates Star Ratings at the contract level. Star Ratings will become specific to plans serving dually eligible individuals where the MA 

contract is limited to a one or more D-SNPs. We did not propose or finalize changes to require Star Ratings to be calculated at the plan level per 

se. (See§§ 422.160 through 422.166.) 
Federal Register / Vol. 87, No. 89 / Monday, May 9, 2022 / Rules and Regulations 27797 

72Centers for Medicare & Medicaid Services and 

Virginia Department of Medical Assistance 

Services. Commonwealth Coordinated Care (CCC) 

Phase-Out Plan. https://www.cms.gov/MedicareMedicaid-Coordination/Medicare-and-MedicaidCoordination/Medicare-Medicaid-CoordinationOffice/FinancialAlignmentInitiative/Downloads/ 

VAPhaseOutPlan.pdf. 

73Centers for Medicare & Medicaid Services and 

New York Department of Health. New York Fully 

Integrated Dual Advantage Demonstration PhaseOut Plan. September 2019. https://www.cms.gov/ 

Medicare-Medicaid-Coordination/Medicare-andMedicaid-Coordination/Medicare-MedicaidCoordination-Office/FinancialAlignmentInitiative/ 

Downloads/NYFIDAPhaseOutPlan.pdf. 

74California Department of Health Care Services. 

Expanding Access to Integrated Care for Dual 

Eligible Californians. March 2021. https://

www.dhcs.ca.gov/provgovpart/Documents/6422/ 

Expanding-Access-to-Integrated-Care-for-DualEligible-Californians-03–01–21.pdf. 

operated by the same parent 

organization, subject to State approval, 

unless enrollees choose otherwise. This 

could minimize disruption of services 

and ensure continuity of care to the 

greatest extent possible. As discussed in 

the proposed rule, we already have 

experience with similar transitions at 

the end of the Virginia 72 and New York 

MMP demonstrations 73 and are working 

closely with the California Department 

of Health Care Services and MMPs to 

facilitate such a transition when the Cal 

MediConnect demonstration concludes 

at the end of 2022.74 We solicited 

comment on this contemplated 

approach to working with States to 

convert MMPs to integrated D–SNPs. 

Comment: Several commenters 

expressed support for our approach to 

work with States to develop a plan for 

converting MMPs to integrated D–SNPs. 

A few commenters stated that this 

approach would simplify the number of 

products offered to dually eligible 

individuals and would be easier for 

States to administer and for 

beneficiaries and providers to 

understand while providing long-term 

predictability for stakeholders. Another 

commented that D–SNP models have 

been effective at managing 

hospitalizations and providing access to 

primary care and MLTSS services even 

without the promise of shared savings 

offered through MMPs. 

Response: We appreciate the support 

we received for our intended approach. 

As discussed in the proposed rule, 

current law as well as the new and 

amended regulations finalized in this 

rule provide opportunities and potential 

for streamlining and strengthening 

integrated care options for dually 

eligible beneficiaries. We look forward 

to working with States to address their 

unique circumstances in planning for a 

transition of MMPs to integrated D– 

SNPs. 

Comment: Numerous commenters 

opposed our approach to work with 

States to develop a plan for converting 

MMPs to integrated D–SNPs and instead 

asked to continue the FAI. Many 

commenters expressed concern that 

certain aspects of integrated coverage in 

the MMPs may be hard to replicate or 

are otherwise not currently available in 

integrated D–SNPs, including integrated 

enrollment processing in which 

enrollment and disenrollment functions 

are operationalized through State 

Medicaid agencies; the ability to 

passively enroll beneficiaries into 

integrated plans; integrated financing 

that blends Medicare and Medicaid 

capitation payments; and/or 

opportunities for States to share in 

Medicare savings. Several commenters 

recommended CMS provide additional 

guidance and opportunities for 

comment on how such a transition 

would work in States where D–SNPs are 

not offered or where certain benefits are 

carved out before making a final 

decision regarding the future of MMPs. 

A number of commenters, including 

States, plan sponsors, and advocates, 

expressed concern that ongoing funding 

for dedicated ombudsman and one-onone options counseling services would 

be lost as part of the transition out of the 

FAI and urged CMS to continue support 

for these programs. 

Response: We thank the commenters 

for the feedback on our intended 

approach for working with States. 

Several of the new and amended 

regulations adopted in this final rule 

create mechanisms and new 

requirements to replicate much of the 

programmatic or administrative 

integration found in MMPs including 

integrated member materials, unified 

appeals and grievances, continuation of 

Medicare benefits pending appeals, 

elements of joint CMS/state oversight, 

and contract-specific quality ratings. 

States can also use their State Medicaid 

agency contracts with D–SNPs, as 

described throughout this final rule, to 

establish parameters that promote 

person-centered and integrated care, 

including exclusively alignment 

enrollment, additional requirements for 

care planning and self-direction, and 

enrollment limited to certain age groups 

or other variables. Other aspects of 

integration tested in the FAI will not be 

possible under current law or the new 

and amended regulations adopted here, 

and we acknowledge commenters’ 

concerns to that end. However, we 

believe that the ability to maintain most, 

if not all, aspects of integration outside 

the confines of time-limited 

demonstrations outweighs the potential 

loss in the identified areas. Although 

outside the scope of this rule, we will 

consider whether there are additional 

opportunities to further integrate 

enrollment and/or financing in the 

future. 

We intend to work closely with States 

and other stakeholders not only to 

develop a transition plan that would 

allow States to preserve the integration 

currently available through MMPs to the 

greatest extent possible but also to 

provide subsequent technical assistance 

and resources to support these efforts, 

including in scenarios where States do 

not currently contract with D–SNPs or 

where certain benefits are carved out. 

We agree with commenters that 

dedicated ombudsman and one-on-one 

options counseling services provide 

important beneficiary protections. 

Existing grant awards already include a 

transition period as part of the 

cooperative agreements currently in 

place, and we will work closely with 

States on potential sustainability plans. 

We note that Virginia, for example, was 

able to continue its ombudsman services 

at the end of its FAI demonstration 

without grant assistance. 

Comment: We received numerous 

comments in support of the 

Massachusetts One Care demonstration. 

Several commenters expressed concern 

that the elements unique to this 

demonstration would not be applied to 

the D–SNP model of care or contracting 

requirements and, as a result, key 

attributes of the One Care model would 

be lost in such a transition. Several 

commenters highlighted the value the 

consumer-led Implementation Council 

provides in plan oversight and to ensure 

the demonstration retains its personcentric, independence-driven approach, 

and expressed concerns that the Council 

would be diminished or eliminated in 

an integrated D–SNP environment. 

Response: We appreciate the ongoing 

support for the One Care demonstration. 

We look forward to working with the 

State and other stakeholders, including 

the Implementation Council, on how to 

sustain and strengthen the personcentric, independence approach for 

which One Care is known. 

Comment: Numerous commenters, 

including States, plan sponsors, and 

advocates, urged CMS to take steps to 

ensure a smooth transition for enrollees 

if CMS moves forward with 

transitioning MMPs to integrated D– 

SNPs. Such steps included: Use of 

passive enrollment to transition MMP 

enrollees to corresponding D–SNPs; 

requiring continuity of care provisions 

to ensure stability of coverage and 

access to providers; and/or ongoing 

stakeholder engagement that includes 


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advocates, MMPs, and D–SNPs to 

promote collaborative discussion on the 

planning and implementation of 

integrated D–SNPs and ensure aligned 

messaging and coordination. Many 

commenters recommended that CMS 

provide technical assistance and 

resources for States on topics related to 

Medicaid managed care authorities, 

contracting options, and operational 

steps to assist with the transition from 

MMPs to D–SNPs. A few commenters 

strongly supported using 1115A 

authority to facilitate the transition of 

MMP enrollees to D–SNPs operated by 

the same parent organization, subject to 

State approval, unless enrollees choose 

otherwise. 

Response: We appreciate the feedback 

on the necessary transition steps, and 

we agree that ensuring an MMP to D– 

SNP transition is as seamless as possible 

for MMP enrollees is critical to 

successfully implementing this 

approach. We continue to think through 

our ability to use waiver authority under 

section 1115A of the Act as part of any 

MMP transition. We are committed to 

working closely with States and other 

stakeholders and intend to utilize and 

build from the technical assistance 

resources we already have in place, 

including the Integrated Care Resource 

Center. 

Comment: The majority of 

commenters on this section of the 

proposed rule, including States, 

advocates, and plan sponsors, stated 

that additional time would be needed 

beyond the current end date in order to 

allow sufficient runway for a seamless 

transition of operations and enrollment. 

Commenters made this statement 

regardless of whether or not they 

supported the overall approach. Most 

suggested at least two additional years 

would be needed for States to evaluate 

options and obtain necessary 

authorities, vet policy proposals with 

stakeholders, make necessary State 

system changes, and conduct 

procurements, if necessary, in order to 

ensure that MMP enrollees experience a 

seamless and easy transition from their 

MMP to a successor FIDE SNP or HIDE 

SNP. 

Response: We thank the commenters 

for these comments. We acknowledge 

the commenters’ concerns about the 

time necessary to ensure a seamless 

transition for all parties involved. 

After considering the comments we 

received and for the reasons outlined in 

the proposed rule and our responses to 

comments, we intend to adjust our 

approach to working with the States 

participating in the capitated financial 

alignment model to develop a plan for 

converting MMPs under the FAI model 

test to integrated D–SNPs. We will offer 

States the opportunity to continue 

demonstrations under the FAI, under 

conditions described in this section and 

where authorized by section 1115A of 

the Act. 

States interested in this opportunity 

will need to convert all MMPs to 

integrated D–SNPs as early as possible, 

but no later than December 31, 2025. 

This timeframe reflects the perspectives 

expressed in public comments related to 

the time needed for a smooth transition. 

States pursuing converting their 

MMPs into integrated D–SNPs should 

submit a transition plan to CMS by 

October 1, 2022. This transition plan 

should reflect each State’s individual 

circumstances and outline, for example, 

the State’s commitment to (a) maximize 

integration attained through the 

capitated financial alignment demo and 

a seamless transition to integrated D– 

SNPs, (b) sustain dedicated ombudsman 

support without Federal grant funding, 

and (c) a stakeholder engagement 

process to promote collaborative 

discussion on the planning and 

implementation of the transition to 

integrated D–SNPs. The transition plan 

should also identify specific policy and/ 

or operational steps that need to occur 

to fulfill the commitments. These could 

include, but are not limited to, 

executing Medicaid procurement and/or 

D–SNP contracting processes; obtaining 

necessary State legislative or additional 

Medicaid authorities, if applicable; and/ 

or identifying and executing system 

changes and processes to implement 

exclusively aligned enrollment. 

If a State chooses not to convert 

MMPs to integrated D–SNPs, CMS will 

work with the State on an appropriate 

MMP conclusion by December 31, 2023. 

In all cases, we look forward to working 

with States, beneficiaries, advocates, 

and other stakeholders to continue our 

work to improve outcomes and 

experiences for dually eligible 

individuals. 

B. Special Requirements During a 

Disaster or Emergency for Medicare 

Advantage Plans (§ 422.100(m)) 

In the February 12, 2015, final rule 

titled ‘‘Medicare Program; Contract Year 

2016 Policy and Technical Changes to 

the Medicare Advantage and the 

Medicare Prescription Drug Benefit 

Programs’’ (80 FR 7959) (hereinafter 

referred to as the 2015 final rule), CMS 

finalized a new paragraph (m) in 

§ 422.100 to codify and clarify an MA 

organization’s responsibilities when 

health plan services are affected by 

disasters or emergencies, including 

public health emergencies (PHEs), to 

ensure that MA enrollees continue to 

have access to care when normal 

business operations are disrupted and to 

ensure out-of-network providers are 

informed of the terms of payment for 

furnishing services to affected enrollees 

during disasters or emergencies. During 

the Coronavirus 2019 Disease (COVID– 

19) PHE, we have received questions 

about the applicability of the special 

requirements at § 422.100(m), which 

prompted us to review the regulation 

and the laws related to the declaration 

of disasters and emergencies. In light of 

this review, we proposed changes to 

clarify potential ambiguities in the 

regulation text, to further clarify the 

basis for determining the end of an MA 

organization’s obligations to comply 

with special requirements during a 

disaster or emergency and codify our 

previous guidance in Chapter 4 of the 

Medicare Managed Care Manual 

(MMCM). Specifically, we proposed to 

revise § 422.100(m) to more clearly 

specify when MA organizations must 

begin ensuring access to covered 

benefits by meeting the requirements in 

paragraphs (m)(1)(i) through (iv) and 

when MA organizations are permitted to 

stop meeting those requirements. 

Section 1852(d) of the Act requires 

MA organizations to provide continued 

availability of and access to covered 

benefits, including making medically 

necessary benefits available and 

accessible 24 hours a day and 7 days a 

week; the ability to limit coverage to 

benefits received from a plan’s network 

of providers is contingent on fulfilling 

this obligation. When a disaster or 

emergency occurs, enrollees may have 

trouble accessing services through 

network providers or sometimes must 

physically relocate to locations that are 

outside of their MA plan’s service area. 

Currently, § 422.100(m) requires MA 

organizations to ensure access, at innetwork cost-sharing, to covered 

services even when furnished by 

noncontracted providers when 

disruption in their MA plan’s service 

area during a state of disaster or 

emergency impedes enrollees’ ability to 

access covered healthcare services from 

contracted providers. Consistent with 

uniformity requirements for MA plans 

at § 422.100(d) and other regulations, 

these special requirements must be 

uniformly provided to similarly situated 

enrollees who are affected by the state 

of disaster or emergency. 

First, we proposed to amend the 

regulation to explicitly limit the 

application of the special requirements 

to when there is a disruption in access 

to health care. In the 2015 final rule, we 

stated in the preamble that the 

regulations at § 422.100(m) were added 

to require MA organizations to ensure 


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access, at in-network cost-sharing, to 

covered services even when furnished 

by noncontracted providers ‘‘when a 

disruption of care in the service area 

impedes enrollees’ ability to access 

contracted providers and/or contracted 

providers’ ability to provide needed 

services.’’ (80 FR 7953) We proposed to 

revise § 422.100(m)(1) to include that 

there must also be a disruption of access 

to health care in addition to a disaster 

or emergency declaration for the MA 

organization to be required to ensure 

access to covered benefits consistent 

with the special requirements described 

in § 422.100(m)(1). We proposed to 

define ‘‘disruption of access to health 

care’’ for purposes of these special 

requirements by adding a new 

paragraph (m)(6); as proposed, a 

‘‘disruption of access to health care’’ for 

the purpose of § 422.100(m) is an 

interruption or interference in access to 

health care throughout the service area 

such that enrollees do not have the 

ability to access contracted providers or 

contracted providers do not have the 

ability to provide needed services 

causing MA organizations to fail to meet 

the prevailing patterns of community 

health care delivery in the service area 

under § 422.112(a). The intent of these 

modifications is to clarify that if there 

is a current state of disaster or 

emergency that is not contributing to a 

disruption in health care services, then 

MA organizations would not be required 

to follow the requirements at 

§ 422.100(m)(1)(i) through (iv). During a 

state of disaster or emergency, MA 

organizations must continue to meet 

MA access and availability requirements 

consistent with the normal prevailing 

community pattern of health care 

delivery in the areas where the network 

is being offered. During a state of 

disaster or emergency, disruptions 

caused by the disaster or emergency 

may prevent contracted providers from 

providing services to enrollees. If 

enough contracted providers are 

unavailable to enrollees, then the MA 

plan would not have enough contracted 

providers consistent with the normal 

prevailing community pattern of health 

care delivery in the service area. Per the 

proposed definition, this would indicate 

that there is a disruption in access to 

health care in the service area, and MA 

organizations would be required to 

follow the special requirements at 

§ 422.100(m)(1). This definition is not 

intended to be limited to physical 

barriers to access (such as electrical 

outages or transportation difficulties 

caused by hurricanes or wildfires) but to 

be broad enough to encompass any 

interruption or interference caused by a 

disaster or emergency such as a lack of 

available hospital beds or quarantine 

restrictions. Therefore, under our 

proposal, when a disaster or emergency 

interrupts that level of access to and 

availability of services, MA 

organizations must ensure access by 

covering basic and supplemental 

benefits furnished at non-contracted 

facilities; waiving, in full, requirements 

for gatekeeper referrals where 

applicable; providing in-network costsharing even if the enrollee uses out-ofnetwork providers; and making changes 

that benefit the enrollee effective 

immediately without the 30-day 

notification requirement at 

§ 422.111(d)(3). Limits in other 

regulations, such as §§ 422.204(b)(3) and 

422.220 through 422.224, on which 

healthcare providers may furnish 

benefits remain in place and are not 

eliminated by § 422.100(m). 

In the definition, we refer to the 

normal prevailing community pattern of 

health care delivery in the service area 

as it usually is when a state of disaster 

or emergency does not exist, not the 

prevailing community pattern of health 

care delivery in the service area during 

the state of disaster or emergency. 

During a state of disaster or emergency, 

it is possible that access to health care 

will be disrupted affecting more than 

MA enrollees, including access to care 

for enrollees in commercial plans and 

Original Medicare. To provide an 

extreme example, an MA organization 

could indicate that its MA plans are 

meeting the prevailing community 

pattern of health care delivery when all 

of the primary care providers in the 

service area are closed due to a state of 

disaster, and the MA plans are therefore 

meeting the standard because everyone 

in the service area, no matter the type 

of insurance they have, cannot access 

primary care providers. As explained 

above, this would not be acceptable, as 

CMS is measuring the prevailing 

community pattern of health care by 

reference to the pre-disaster period. 

Under the proposed regulation, MA 

organizations would be required to 

ensure access for their enrollees by 

complying with the special 

requirements listed at § 422.100(m)(1)(i) 

through (iv). While we consider the 

standard to be the normal prevailing 

community pattern of health care 

delivery, we understand this standard 

broadly in the context of disasters and 

emergencies. Some examples that would 

constitute a disruption in access to 

health care include physical barriers to 

accessing health care such as road 

disruptions or electrical outages, as well 

as other barriers to accessing health care 

such as provider offices being closed 

due to quarantine requirements from the 

Centers for Disease Control and 

Prevention (CDC) or state or local health 

departments, or hospitals beds being 

unavailable as occurred during the 

COVID–19 pandemic. This list is not 

intended to be exhaustive as many 

unforeseen circumstances may arise 

during states of disaster or emergencies 

that may cause enrollees to have trouble 

accessing services through normal 

channels or force them to move to safer 

locations that are outside of their plan’s 

service areas. A disruption in access to 

health care could include disruptions in 

access to Medicare Part A or Part B 

services or to supplemental benefits 

offered by the plan, or any combination 

of those. Our proposal is intended to be 

broad and to focus on actual access to 

and availability of services for enrollees 

in a service area affected by a disaster 

or emergency. Whether the MA plan 

network continues to meet evaluation 

standards specified in § 422.116 is not 

the only relevant consideration. For 

example, regarding a hospital with beds 

or other equipment unavailable to treat 

additional patients (as has occurred 

during COVID–19 pandemic), the 

hospital remains part of the MA 

organization’s network, and therefore 

the network may be consistent with 

CMS’s network adequacy standards for 

MA plans, but enrollees would not be 

able to access the hospital and may need 

to go to out-of-network providers to 

access their covered benefits. Similarly, 

physical barriers that enrollees may 

experience during a disaster or 

emergency (road closures, flooding, etc.) 

may affect enrollees unevenly, 

preventing some enrollees from 

accessing in-network providers. The 

provider may be part of the MA 

organization’s network and therefore the 

network may meet the time and distance 

evaluation standards in § 422.116 and 

appear to be capable of furnishing 

services consistent with the prevailing 

community pattern of health care, but 

some enrollees may experience 

difficulty accessing that provider to 

obtain needed health services. Further, 

if an enrollee had to leave their home to 

move to a different location due to a 

disaster or emergency, the MA 

organization may still have a network 

that meets the prevailing community 

pattern of health care in the service area 

of the enrollee’s home, but the enrollee 

may not be able to access health care in 

their different location without being 

able to access out-of-network care. We 

requested comments from stakeholders 

on our proposed definition to determine 

whether there are circumstances CMS is 


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75https://governor.hawaii.gov/wp-content/ 

uploads/2016/02/160212_EmergencyProclamation_

Dengue.pdf. 

76https://www.govinfo.gov/content/pkg/FR-2017- 

10-06/pdf/2017-21649.pdf. 

77https://www.cms.gov/About-CMS/AgencyInformation/Emergency/Downloads/Puerto-Ricoand-US-Virgin-Islands-PHE-Determination.pdf. 

not considering or additional standards 

that we should be using to identify 

when a disruption of access to health 

care is occurring. 

We proposed to add a disruption of 

access to health care as a condition that 

must be met before the special 

requirements in § 422.100(m)(1) apply 

in order to ensure that this regulation is 

not overly broad and is appropriately 

tailored to address our concerns that 

MA enrollees have adequate access to 

medically necessary care and are not 

unduly restricted to the MA plan’s 

network of providers. As an illustrative 

example of a situation where a 

disruption of access to health care was 

not present even though a state of 

emergency was in effect, the Governor 

of Hawaii issued a state of emergency 75

to fight the Zika virus in February of 

2016. This state of emergency did not 

require all MA organizations operating 

in Hawaii to comply with the 

requirements at § 422.100(m)(1) because 

all provider offices were operating as 

usual, contracted providers continued 

in their ability to provide needed 

services, and enrollees did not face 

barriers in accessing needed services. 

The Opioid PHE, which began in 2017, 

is another example where there is a 

declared PHE by the Secretary that has 

been ongoing, but it does not necessarily 

constitute a disruption of access to 

health care. However, in 2017, 

Hurricane Maria in Puerto Rico led to 

substantial issues with access to covered 

services for MA enrollees. In connection 

with the Hurricane Maria, there was a 

Presidential declaration of a major 

disaster under the Stafford Act on 

September 20, 2017 76 and a Public 

Health Emergency declaration by the 

Secretary as of September 17, 2017.77

Under our proposal, MA organizations 

would be required to meet the special 

requirements at § 422.100(m)(1) for the 

duration of similar disasters and 

emergencies where access to covered 

benefits is disrupted. 

We proposed that MA organizations 

would be initially responsible for 

evaluating whether there is a disruption 

of access to health care under 

§ 422.100(m). We believe MA 

organizations are best positioned to 

evaluate if a state of disaster or 

emergency is disrupting access to health 

care for enrollees in their service area. 

MA organizations would know the 

status of their in-network providers (for 

example, whether they are operational 

or not, how many beds are filled, etc.) 

and would be in communication with 

their providers as issues at the 

provider’s facilities or with an MA 

organization’s enrollees arise. MA 

organizations should be guided by the 

explanations here, including the 

examples, as well as their particular and 

detailed knowledge and understanding 

of their enrollees, service areas, and 

networks, to reasonably assess if there is 

a disruption in access to health care in 

the service area. CMS expects that MA 

organizations should be aware of these 

and other facts regarding access to 

health care in the service areas where 

they offer plans, and should be able to 

evaluate those facts and apply the 

standard in the regulation to know 

when they must comply with the 

special requirements at § 422.100(m). 

CMS will monitor access during 

disasters or emergencies to ensure MA 

organizations are applying the standard 

in § 422.100(m)(1) correctly and 

complying with this regulation to avoid 

any disruptions in access to care. As we 

monitor, we will evaluate whether and 

when the standard in § 422.100(m)(1) as 

proposed to be amended here is met. If 

CMS discovers that there are problems 

with access for enrollees, we will direct 

MA organizations in the affected area to 

comply with § 422.100(m). However, we 

reiterate that an MA organization should 

be able to apply the standard in the 

regulation to the relevant facts related to 

a potential disruption in access to care 

during a disaster or emergency and to 

know the regulatory standard with 

regard to disruption in access to care 

during a disaster or emergency and 

when compliance with the special 

requirements during a disaster or 

emergency at § 422.100(m) is required. 

MA organizations are required to meet 

the network adequacy requirements at 

§§ 422.112(a) and 422.116 at all times to 

ensure enrollees have sufficient access 

to covered benefits. MA organizations 

that fail to meet network adequacy 

requirements must ensure access to 

specialty care by permitting enrollees to 

see out-of-network specialists at the 

individual enrollee’s in-network costsharing level under § 422.112(a)(3). In 

addition, MA organizations may need to 

make alternate arrangements if the 

network of primary care providers is not 

sufficient to ensure access to medically 

necessary care under § 422.112(a)(2). 

This proposal would not change these 

existing and continuing regulatory 

requirements. 

Similar to what was experienced by 

MA enrollees during the COVID–19 

PHE, CMS expects that there will be 

situations where disruptions are 

intermittent and access to health care is 

disrupted for some period of time 

during a disaster or emergency, but not 

at other times. Under our proposed 

regulation, MA organizations would 

follow the special requirements 

imposed by § 422.100(m)(1) for 30 days 

after the disruption of access to health 

care ends while the disaster or 

emergency is ongoing and for 30 days 

after the end of the disaster or 

emergency if the disruption of access to 

health care, as defined in 

§ 422.100(m)(6), continues until the end 

of the disaster or emergency. MA 

organizations may also find that at a 

later time period, during the same 

declared disaster or emergency, there is 

another disruption of access to health 

care and therefore that the MA 

organization must again follow the 

special requirements imposed by 

§ 422.100(m)(1). We also recognize that 

there may be circumstances when a 

state of disaster or emergency is 

declared for an area containing multiple 

service areas (for example, the entire 

United States), but the disaster or 

emergency may unequally affect the 

various service areas contained in the 

larger area for which it is declared. It 

may be that some service areas 

experience a disruption of access to 

health care, but other service areas do 

not, or that the disruption in care ends 

for certain service areas but continues in 

others. Under our proposed regulation, 

in situations where a disruption of 

access to health care ends in a particular 

service area, but the state of disaster or 

emergency continues to be in effect for 

an area that includes that particular 

service area, the special requirements 

imposed by § 422.100(m)(1) would be in 

effect for the service areas in which 

there is a disruption of access to health 

care (until 30 days after the disruption 

of access to health care ends) and would 

not be in effect for services in which 

there has not been any disruption of 

access to health care. 

We also proposed two technical 

changes to our regulations at 

§ 422.100(m)(2) to correct some 

numbering issues that occurred in the 

2015 final rule. First, we proposed to 

move the text from the fourth-level 

paragraph at (m)(2)(ii)(A) to the thirdlevel paragraph at (m)(2)(ii), which 

currently does not have text associated 

with it. As amended, the regulation at 

§ 422.100(m)(2)(ii)(A) would state that 

the Secretary of Health and Human 

Services (hereinafter referred to as the 

Secretary) may declare a PHE under 

section 319 of the Public Health Service 


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Act. Second, we proposed to remove the 

fourth-level paragraph at (m)(2)(ii)(B) 

because this paragraph only provides 

information about the Secretary’s 

section 1135 waiver authority which is 

not an authority under which the 

Secretary may declare PHEs. In addition 

to these technical changes, we proposed 

several clarifying revisions to our 

language in § 422.100(m) to ensure that 

we are consistently referring to disasters 

and emergencies. Currently, the 

language sometimes refers only to 

disasters (as in the introductory text to 

paragraphs (m)(1) and (2)), but also 

refers to disasters and public health 

emergencies (as in the text to paragraphs 

(m)(3) and (4) and (m)(5)(i)). We 

therefore proposed to update the 

language throughout to reference 

disasters and emergencies with the aim 

of being consistent in referring to the 

various types of declarations listed at 

§ 422.100(m)(2). 

Lastly, we proposed revisions to 

clarify the basis for determining when 

MA organizations are no longer required 

to comply with the special requirements 

for a disaster or emergency. We 

proposed to modify the text at 

§ 422.100(m)(3) to clarify that it refers to 

the end of the special requirements for 

a state of disaster or emergency 

stipulated at § 422.100(m)(1), not to the 

end of the state of disaster or emergency 

itself. We also proposed to add a 30-day 

transition period to § 422.100(m)(3). Our 

current regulation at § 422.100(m)(3)(iii) 

provides a period of 30 days from the 

initial declaration for the special 

requirements imposed by 

§ 422.100(m)(1) to be in effect if the 

initial declaration of the disaster or 

emergency does not contain a specific 

end date or if the official or authority 

that declared the disaster or emergency 

does not separately identify a specific 

end date, and CMS has not indicated an 

end date to the disaster or emergency. 

This means that, under the current 

regulation, there is usually a 30-day 

minimum period during which MA 

plans are providing access to covered 

benefits with the additional beneficiary 

protections specified in paragraphs 

(m)(1)(i) through (iv), unless an explicit 

announcement of the end of the disaster 

or emergency has been declared sooner 

than the end of the 30 days. We believe 

that having a minimum period for these 

protections is important and 

appropriate. A transitional period from 

when an MA organization must comply 

with the access requirements in 

§ 422.100(m)(1) to when the MA 

organization must furnish services are 

required by normal coverage rules will 

protect enrollees who need time and 

assistance from the MA organization to 

find a contracted provider after having 

been treated by a non-contracted 

provider during the disaster or 

emergency. We intend for this period to 

serve as a protection for enrollees so 

they are not immediately responsible for 

the total cost of services received from 

a non-contracted provider that they 

have been seeing for a period of time 

due to the state of disaster or 

emergency. MA organizations may also 

find a transitional period helpful if they 

must contract with additional providers 

or otherwise make changes to their 

network to assist with their return to 

normal operations. We therefore 

proposed to revise the regulation text at 

§ 422.100(m)(3) to require a 30-day 

transition period after the points in time 

identified in the regulation for the end 

of the special requirements. 

Specifically, we proposed to revise 

paragraph (m)(3) to provide that the 

applicability of the special requirements 

for a disaster or emergency in 

paragraphs (m)(1)(i) through (iv) end 30 

days after the latest of the events 

specified in paragraph (m)(3)(i) or (ii) 

occur (that is, the latest end date in a 

case where there are multiple disasters/ 

emergencies) or end 30 days after the 

condition specified in paragraph 

(m)(3)(iii) occurs (that is, there is no 

longer a disruption of access to health 

care). 

In the 2015 final rule, we finalized 

three circumstances as determining the 

end of the special requirements for a 

disaster or PHE in the regulations at 

§ 422.100(m)(3). First, as currently 

provided in § 422.100(m)(3)(i), the 

source that declared the disaster or PHE 

declares an end to it. As explained in 

§ 422.100(m)(2), disasters or 

emergencies may be declared by the 

President of the United States under the 

Robert T. Stafford Disaster Relief and 

Emergency Assistance Act (Stafford Act) 

or the National Emergencies Act, by the 

Secretary who may declare a PHE under 

section 319 of the Public Health Service 

Act, or by Governors of States or 

Protectorates. We intend paragraph 

(m)(3)(i) to address circumstances when 

the initial declaration contains a 

specific end date or when the official or 

authority who declared the disaster or 

emergency separately identifies a 

specific end date. We proposed to revise 

§ 422.100(m)(3)(i) to address situations 

that may arise where there is more than 

one declaration of a disaster or 

emergency at the same time for the same 

service area(s). This proposed revision 

clarifies that MA organizations must 

follow the special requirements until 

the latest applicable end date when 

multiple declarations apply to the same 

geographic area by specifying that all 

sources that declared a disaster or 

emergency that include the service area 

have declared an end. For example, if a 

Governor of a State declares a state of 

disaster or emergency and the President 

also later declares a state of disaster, 

both the state and Federal disasters 

must be declared at an end to trigger 

§ 422.100(m)(3)(i). If the President’s 

disaster declaration ends after 20 days, 

but the Governor maintains the state of 

disaster for 30 days, then the special 

requirements imposed by 

§ 422.100(m)(1) would apply for MA 

plans in that area through the end of the 

emergency declared by the Governor, 

plus an additional 30 days for the 

transition period we proposed. 

Second, the regulation currently 

provides that CMS may declare an end 

to the state of disaster or PHE per 

§ 422.100(m)(3)(ii). Upon review, we 

intended for this regulation text to refer 

to the Secretary’s authority, which is 

consistent with the current practice of 

the Secretary to declare an end to PHEs. 

However, since the Secretary is already 

considered a source under 

§ 422.100(m)(3)(i), we believe that 

modifying this requirement to refer to 

the Secretary is unnecessary and 

therefore we proposed to remove this 

text. 

Third, our current regulation at 

§ 422.100(m)(3)(iii) addresses 

circumstances where a state of disaster 

or PHE is declared with no end date 

identified. Because § 422.100(m)(3) 

provides that the end of the emergency 

or state of disaster ends when ‘‘any’’ of 

the three listed, if the declaration 

disaster or emergency timeframe has not 

been identified by the authority or 

official who declared the disaster or 

emergency and CMS has not indicated 

an end date to the disaster or 

emergency, MA plans should resume 

normal operations 30 days from the 

initial declaration. However, this does 

not properly account for how 

declarations of disasters or emergencies 

may be renewed with continued 

disruptions to access to health care 

services for enrollees. Further, our 

experiences with declarations of 

disasters and emergencies have 

demonstrated that the 30-day timeframe 

for the special requirements in 

§ 422.100(m)(1)(i) through (iv) may not 

be enough time to address concerns 

about enrollees being able to access 

benefits during disasters or emergencies, 

especially in cases where a disaster or 

emergency declaration has been 

renewed. There are circumstances 

where a 30-day time period does not 

cover the full length of a declared 


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disaster or emergency and the current 

regulation is not well suited to ensure 

access for enrollees during the entire 

period of a disaster or emergency. For 

example, a PHE declared by the 

Secretary under section 319 of the 

Public Health Service Act is in effect for 

90 days unless the Secretary terminates 

it earlier, and the Secretary may renew 

the declaration at the end of the 90-day 

period. 

We proposed to revise 

§ 422.100(m)(3)(ii) to address when no 

end date is identified under 

§ 422.100(m)(3)(i); in such cases, the 

applicability of the special requirements 

ends 30 days after the expiration of the 

declared disaster or emergency and any 

deadline for renewing the state of 

disaster or emergency. This 

modification clarifies that when a state 

of disaster or emergency is declared 

without an end date, § 422.100(m)(1) 

will continue to apply for the entire 

duration of the declared disaster or 

emergency, as determined under the 

relevant authority under which it was 

declared, if a disruption of access to 

health care continues. Stafford Act 

declarations do not have a defined end 

date. When the President declares a 

national emergency under the National 

Emergencies Act, the declaration of a 

national emergency lasts for a year 

unless terminated earlier by the 

Presidential proclamation or a joint 

resolution of Congress. The President 

can renew the declaration for 

subsequent one-year periods. When the 

Secretary declares a PHE under section 

319 of the Public Health Service Act, it 

lasts for 90 days unless the Secretary 

terminates it earlier, and it can be 

renewed for 90-day periods. For 

example, if the Secretary declared a PHE 

under section 319 of the Public Health 

Service Act, then the end date of the 

PHE would be in 90 days, unless 

renewed. If the Secretary chose to 

declare an end before the 90-day period 

ended, then the public health 

emergency would end according to the 

declared end date. CMS does not have 

the expertise to know whether all state 

declarations of emergency have a 

defined end date. Therefore, we did not 

propose specific time periods but 

proposed to amend § 422.100(m)(3)(ii) 

to account for extensions or renewals of 

declarations of the type identified in 

paragraph (m)(2). 

Lastly, we proposed to add the 

disruption of access to health care as a 

limitation under revised 

§ 422.100(m)(3)(iii) to indicate that the 

special requirements associated with a 

state of disaster or emergency may end 

when the disruption of access to health 

care ends, even if one of the 

circumstances in § 422.100(m)(3)(i) or 

(ii) to end the state of disaster or 

emergency has not yet occurred. 

We intend to continue to issue subregulatory guidance as appropriate for 

MA organizations to explain how 

§ 422.100(m) works, both through the 

HPMS system and through the CMS 

Current Emergencies web page at 

https://www.cms.gov/About-CMS/ 

Agency-Information/Emergency/EPRO/ 

Current-Emergencies/CurrentEmergencies.-page. Further, we note 

that the Secretary may exercise the 

waiver authority under section 1135 of 

the Social Security Act during an 

emergency period (defined in section 

1135(g) of the Act), which exists when 

the President declares a disaster or 

emergency pursuant to the National 

Emergencies Act or the Stafford Act, 

and the Secretary declares a PHE 

pursuant to section 319 of the Public 

Health Service Act. Under the 

Secretary’s section 1135 waiver 

authority, CMS may authorize DME and 

A/B Medicare Administrative 

Contractors (MACs) to pay for Part Ccovered services furnished to MA 

enrollees and seek reimbursement from 

MA organizations for those health care 

services, retrospectively. Detailed 

guidance and requirements for MA 

organizations under the section 1135 

waiver, including timeframes associated 

with those requirements and 

responsibilities, would be posted on the 

Department of Health and Human 

Services website, (https:// 

www.hhs.gov/) and the CMS website 

(https://www.cms.hhs.gov/). MA 

organizations are expected to check 

these sites frequently during such 

disasters and emergencies. 

We proposed the following changes to 

our regulations at § 422.100(m): 

• Revise § 422.100(m)(1) to state that 

when a disaster or emergency is 

declared as described in § 422.100(m)(2) 

and there is disruption of access to 

health care as described in 

§ 422.100(m)(6), an MA organization 

offering an MA plan must, until one of 

the conditions described in 

§ 422.100(m)(3) of this section occurs, 

ensure access to benefits as described in 

§ 422.100(m)(1)(i) through (iv). 

• Revise § 422.100(m)(2) to refer to 

emergencies and disasters. 

• Move the current text of 

§ 422.100(m)(2)(ii)(A) to 

§ 422.100(m)(2)(ii). 

• Remove § 422.100(m)(2)(ii)(B). 

• Revise § 422.100(m)(3) to specify 

that it addresses the end of the 

applicability of the special requirements 

rather than the end of the disaster or 

emergency. 

• Revise § 422.100(m)(3) to add a 

transition period of 30 days after the 

earlier of the conditions described in 

§ 422.100(m)(3)(i) and (ii) occurs or after 

the condition described in 

§ 422.100(m)(3)(iii) occurs; during the 

transition, MA organizations must 

continue to comply with 

§ 422.100(m)(1). 

• Revise § 422.100(m)(3)(i) to clarify 

that MA organizations must follow the 

special requirements until all of the 

sources that declared a disaster or 

emergency in the service area declare it 

ended. 

• Revise § 422.100(m)(3)(ii) to state 

that no end date was identified in 

§ 422.100(m)(3)(i) of this section, and 

all applicable disasters or emergencies 

have ended, including through 

expiration of the declaration or any 

renewal of such declaration. 

• Revise § 422.100(m)(3)(iii) to state 

that the special requirements identified 

in § 422.100(m)(1) of this section may 

also end if the disruption in access to 

health care services ends. 

• Revise § 422.100(m)(4) to refer to 

disasters and emergencies. 

• Revise § 422.100(m)(5)(i) to refer to 

disasters and emergencies. 

• Add a new paragraph at 

§ 422.100(m)(6) to define ‘‘disruption of 

access to health care’’ as an interruption 

or interference throughout the service 

area such that enrollees do not have 

ability to access contracted providers or 

contracted providers do not have the 

ability to provide needed services, 

resulting in MA organizations failing to 

meet the normal prevailing patterns of 

community health care delivery in the 

service area under § 422.112(a). 

We thank commenters for helping 

inform Special Requirements during a 

Disaster or Emergency. We received 

approximately 35 comments on this 

proposal; we summarize them and our 

responses follow: 

Comment: Comments were very 

supportive of our proposal that there 

must also be a disruption of access to 

health care in addition to a declared 

disaster or emergency for special 

requirements during a disaster or 

emergency to apply. 

Response: CMS thanks comments for 

their feedback. 

Comment: Some commenters agreed 

that MA plans are in the best position 

to determine when there is a disruption 

in care and supported our proposal. 

Many of these commenters requested 

CMS release further guidance providing 

additional examples and objective 

criteria for MAOs to use in further 

determining ‘‘disruption of access to 

care.’’ 


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Response: We thank commenters for 

their feedback. We proposed that a 

‘‘disruption of access to health care’’ for 

the purpose of § 422.100(m) mean an 

interruption or interference in access to 

health care throughout the service area 

such that enrollees do not have the 

ability to access contracted providers or 

contracted providers do not have the 

ability to provide needed services 

causing MA organizations to fail to meet 

the prevailing patterns of community 

health care delivery in the service area 

under § 422.112(a). We are finalizing 

this definition with a slight change to 

provide that a disruption of access to 

health care occurs when the 

interruption or interference in access to 

health care occurs ‘‘in’’ the service area 

such that the standard we proposed is 

met. This revision is to be more 

consistent with our intent and 

discussion in the proposed rule that a 

disruption of access to health care may 

be targeted or specific to a limited area. 

Service areas are generally a county or 

larger and while many disruptions of 

access to health care may be countywide or cover multiple counties, not all 

emergencies or disasters will result in 

such scope. Specific disruptions, such 

as those involving physical access (such 

as road damage or flooding that block 

access to or damage a hospital or larger 

provider group serving many enrollees) 

or damage to electrical supply or 

utilities, may be more limited in scope. 

So long as interruption or interference 

in access to health care in the service 

area is such that enrollees do not have 

the ability to access contracted 

providers or contracted providers do not 

have the ability to provide needed 

services causing MA organizations to 

fail to meet the prevailing patterns of 

community health care delivery in the 

service area under § 422.112(a) during a 

declared emergency or disaster as 

described in § 422.100(m)(2), it does not 

matter if that interruption or 

interference is limited to a specific area. 

In addition, we are clarifying in the 

regulation text that the term ‘‘service 

area’’ has the meaning provided in 

§ 422.2. 

Under this final rule, MA 

organizations must interpret and apply 

this regulatory standard (for when the 

special coverage requirements in 

§ 422.100(m)(1) apply) by the 

explanations in the proposed rule and 

this final rule, including the examples, 

as well as their particular and detailed 

knowledge and understanding of their 

enrollees, service areas, and networks. 

Applications of § 422.100(m) are to be 

based on reasonable assessments 

whether and when there is a disruption 

in access to health care in the service 

area for enrollees in an MA plan. MA 

organizations must take into account 

available information regarding access 

to health care in the service areas where 

they offer MA plans and must 

reasonably evaluate those facts and 

apply the standard in the regulation to 

know when they must comply with the 

special requirements at § 422.100(m). 

CMS will similarly be guided by the 

same things when evaluating MA 

organization compliance with 

§ 422.100(m) and when issuing 

instructions if CMS has determined that 

a disruption of access to health care has 

occurred in an area where a declaration 

of disaster or emergency has been made 

as described in § 422.100(m)(2). 

As previously stated in this final rule, 

per § 422.112(a), MA plans must ensure 

that all covered services are available 

and accessible to enrollees under the 

plan. Additionally, we note CMS 

quantifies the prevailing patterns of care 

standard in network adequacy with the 

specific time and distance and 

minimum number of provider 

requirements at § 422.116. Per CMS 

regulations at § 422.112, MA plans are 

currently required to maintain and 

monitor a network of appropriate 

providers, supported by written 

arrangements, that is sufficient to 

provide adequate access to covered 

services to meet the needs of the 

population served. The delivery of 

services in particular geographic areas 

must be consistent with local 

community patterns of care. Simply put, 

MA plans must currently ensure that 

contracted providers are distributed so 

that no enrollee residing in the service 

area must travel an unreasonable 

distance to obtain covered services. 

Given that MA plans must already 

follow and monitor these existing 

requirements, we believe that MA 

organizations are in the best position to 

determine when and whether access to 

network providers has been 

compromised. We also encourage plans 

to look at how they ensure compliance 

with current access requirements when 

determining whether and when access 

to health care services has been 

disrupted. 

Finally, to provide greater clarity, we 

are changing the term ‘‘throughout the 

service area’’ to ‘‘in the service area’’ at 

in the regulation text at § 422.100(m)(6). 

If the service area is several counties or 

an entire state but the natural disaster is 

limited to one county, ‘‘throughout the 

service area’’ could be interpreted to 

signify that there has not been a 

disruption sufficient to trigger 

§ 422.100(m) if only one county is 

affected. That is not our intention. As 

discussed in the proposed rule, some 

examples that would constitute a 

disruption in access to health care 

include physical barriers to accessing 

health care such as road disruptions or 

electrical outages, as well as other 

barriers to accessing health care such as 

provider offices being closed due to 

quarantine requirements from the 

Centers for Disease Control and 

Prevention (CDC) or state or local health 

departments, or hospitals beds being 

unavailable as occurred during the 

COVID–19 pandemic. Any disruption of 

service within a given service area, 

whether it is multiple counties or one 

county, is sufficient to trigger the 

requirements at § 422.100(m). MA plans 

must follow 422.100(m) for all impacted 

enrollees. Additionally, we added a 

reference to the statutory definition of 

‘‘service area’’ to provide further clarity 

on what CMS means by service area. 

Specifically, we define ‘‘service area’’ as 

it is defined at 42 CFR 422.2: a 

geographic area that for local MA plans 

is a county or multiple county, and for 

MA regional plans is a region approved 

by CMS within which an MA-eligible 

individual may enroll in a particular 

MA plan offered by an MA organization. 

Comment: Some commenters 

expressed concern that allowing plans 

to determine whether there is a 

disruption in care may not sufficiently 

guarantee beneficiary protections. A few 

expressed concern that allowing each 

plan to make their own determination 

may lead to inconsistency (for example, 

different determinations by different 

plans) and confusion among enrollees. 

Others expressed concern that providers 

and MA plans in the same service area 

may disagree and asked CMS for 

clarification if these scenarios were to 

occur. Some commenters expressed 

concern that MA plans may have 

financial incentive to not apply or delay 

compliance with these special 

requirements. 

Response: We thank commenters for 

expressing their concern. We reiterate 

that MA plans must provide enrollees 

health care services through a 

contracted network of providers that is 

consistent with the prevailing 

community pattern of health care 

delivery in the network service area (42 

CFR 422.112(a)). Further, we note that 

that MA plans must meet current 

network adequacy requirements as 

defined under 42 CFR 422.116. Per 

§ 422.112(a)(1), CMS requires that 

organizations monitor their contracted 

networks throughout the respective 

contract year to ensure compliance with 

the current network adequacy criteria. 

Given that plans are already required to 

ensure adequate access, we believe that 


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plans are best equipped to determine 

whether these existing standards have 

been compromised in a given service 

area or not. 

Additionally, MA organizations must 

consider the extent to which services 

are accessible in the network (meaning, 

from network providers) and whether 

that access is consistent with normal 

community patterns of health care 

delivery and with access during periods 

when there is no declaration of disaster 

or emergency in effect. For example, if 

a plan has a sufficient network per CMS 

requirements, but enrollees are not able 

to access those contracted providers or 

those providers are unavailable or 

otherwise unable to furnish services to 

enrollees, this would be a disruption in 

access. As stated in the proposed rule, 

some examples of a disruption in access 

to health care include physical barriers 

to accessing health care providers, road 

disruptions or electrical outages, as well 

as other barriers to accessing health care 

such as provider offices being closed 

due to quarantine requirements from the 

Centers for Disease Control and 

Prevention (CDC) or state or local health 

departments, or hospitals beds being 

unavailable as occurred during the 

COVID–19 pandemic. A disruption of 

access has occurred if the existing 

network adequacy requirements and 

requirements for access to and 

availability of services cannot be met 

and/or enrollees cannot access the 

providers in this network. Given that 

plans are already required to monitor 

adequate access as discussed above, we 

believe MA plans are already in a 

position to determine if a disaster or 

emergency has compromised or 

disrupted normal patterns of access to, 

availability of, and delivery of covered 

services when those services are 

medically necessary. We encourage 

plans to evaluate whether an emergency 

or disaster has compromised their 

ability to meet these existing 

requirements when determining 

whether a disruption of access to health 

care as defined in § 422.100(m)(6) is 

occurring for purposes of meeting the 

special requirements in § 422.100(m). 

Comment: A commenter suggested 

CMS change the 30-day transition 

period to one full month for additional 

clarity and to better align with plans’ 

claims processing systems. Some 

suggested CMS extend the 30-day 

transition period, suggesting that 30 

days may not be sufficient for enrollees 

to find new or alternative care. A 

commenter suggested 60 days instead of 

30 days. 

Response: We thank commenters for 

their feedback. Under our current 

regulations there is no explicit 

transition period but the general 

minimum period of time when an MA 

organization must comply with the 

special requirements in § 422.100(m)(1) 

is 30 days, and we believe that 30 days 

is sufficient in establishing how long an 

MA plan must continue to provide 

access to services as described in 

§ 422.100(m)(1) after the end of an 

emergency or disaster period or end of 

a disruption of access to health care. 

However, we will consider revising this 

duration in future rulemaking if we 

determine that it is necessary. We note 

that MA organizations that find it more 

operationally feasible to maintain 

compliance with the special 

requirements in § 422.100(m)(1)(i) 

through (iv) for a full month or until the 

end of a month when that it is longer 

than the 30 days transition period are 

free to do so. As proposed and finalized, 

the 30-day transition period is the 

minimum requirement. 

Comment: A commenter asked CMS 

to clarify how to determine the end 

point from which to begin calculating 

the 30 days transitional period. 

Response: As stated in the proposed 

rule, MA plans are required to continue 

to apply special requirements for 30 

days (the 30-day transitional period) 

after the points in time identified in the 

regulation at § 422.100(m)(3) for the end 

of the special requirements. For 

example, if the only applicable 

declaration of a public health 

emergency expires without renewal on 

April 30, the 30-day transition period 

ends on May 30 of the same year. If an 

MA organization reasonably determines, 

consistent with the regulation as it is 

adopted and explained in this final rule, 

that a disruption of access to health care 

has ended on January 1, the 30-day 

transition period will end on January 

31. 

Comment: Many commenters 

supported CMS’s intention to continue 

to issue sub- regulatory guidance to 

further explain § 422.100(m) as 

appropriate and requested that CMS 

release guidance regarding events that 

might trigger special requirements and 

timeframes associated with those 

requirements. 

Response: We thank commenters for 

their comments and plan to release 

additional sub-regulatory guidance on 

this subject as appropriate and as 

needed in the future. 

Comments: We received some 

comments asking CMS to ensure 

transparency to providers and 

beneficiaries when these special 

requirements are put into place. 

Response: We thank commenters for 

their concern. We remind MA plans that 

in addition to annual disclosure 

requirements at § 422.111, plans must 

follow emergency and disaster 

disclosure requirements at 

§ 422.100(m)(5), which include 

indicating the terms and conditions of 

payment during the public health 

emergency or disaster for noncontracted providers furnishing benefits 

to plan enrollees residing in the state-ofdisaster area, annually notifying 

enrollees of information on the coverage 

requirements related to declarations of 

emergencies and disasters and 

providing this information on plan 

websites. Additionally, per CMS 

regulations at §§ 422.111 and 

422.202(b), MA plans must establish 

policies and procedures to educate and 

fully inform contracted health care 

provider and, as appropriate, to 

enrollees concerning plan utilization 

policies, which should include any 

necessary information related to 

emergencies and disasters. We reiterate 

that we believe that MA organizations 

are generally in the best position to 

determine when and whether access to 

network providers in a service area has 

been compromised, so they will be 

expected to initiate compliance with 

§ 422.100(m) as necessary and 

appropriate. We believe that the disaster 

disclosure requirements at 

§ 422.100(m)(5) and general provider 

disclosure requirements at § 422.202(b) 

provide adequate transparency. 

Comment: A commenter expressed 

concern that the special requirements 

will increase plan costs, noting that out 

of network coverage for an extended 

period is not included in plan rates. 

Another commenter requested OACT 

provide guidance on whether MA plans 

should include actuarial assumptions 

related to disaster and emergency events 

when developing prices for their 

contract year bids. 

Response: We thank commenters for 

their feedback. When pricing a bid, the 

actuary should refer to the Actuarial 

Standards of Practice (ASOP). For 

example, ASOP No. 5 Incurred Health 

and Disability Claims says that when 

estimating incurred claims, the actuary 

should consider items such as changes 

in price levels, unemployment levels, 

medical practice, managed care 

contracts, cost shifting, provider fee 

schedule changes, medical procedures, 

epidemics or catastrophic events, and 

elective claims processed in 

recessionary periods or prior to contract 

termination (section 3.2.2 ECONOMIC 

AND OTHER EXTERNAL 

INFLUENCES). 

Comment: A few commenters asked 

CMS to clarify whether special 

requirements should apply in other 

situations beyond national or state 


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MedicareAdvtgSpecRateStats/downloads/ 

oonpayments.pdf. 

emergencies, such as shortage of health 

care staff or other scenarios that may 

still impact normal patterns of 

community health care delivery. 

Response: We thank commenters for 

their feedback. Section 422.112 requires 

MA plans to provide continued 

availability of and access to covered 

benefits for enrollees, including making 

medically necessary benefits available 

and accessible 24 hours a day and 7 

days a week. Additionally, § 422.113 

provides that urgently needed services 

must be provided when an enrollee is 

temporarily absent from the plan’s 

service (or, if applicable, continuation) 

area and therefore cannot obtain the 

needed service from a network provider 

and/or when the enrollee is in the 

service or continuation area but the 

network is temporarily unavailable or 

inaccessible. CMS has issued guidance 

about these requirements in section 20.2 

of Chapter 4 of the Medical Managed 

Care Manual (MMCM). Further, per 

CMS regulations at § 422.112(a)(3), MA 

plans are required to arrange for 

specialty care outside of the plan 

provider network when network 

providers are unavailable or inadequate 

to meet an enrollee’s medical needs. 

Finally, MA plans are also currently 

required to meet network adequacy 

requirements at § 422.116(a)(2) all year, 

regardless if there is a declared state of 

emergency or not. Given these existing 

standards, we do not believe the special 

requirements discussed in this rule are 

necessary to apply outside of an 

emergency or disaster. 

Comment: A commenter asked for 

more information on who has the 

authority to declare a state of disaster/ 

emergency where these special 

requirements would apply. Another 

commenter asked CMS to remind state 

governors of their authority under 42 

CFR 422.100(m). Another commenter 

stated that CMS should consider the 

state’s role in determining when 

determinations the special requirements 

apply. 

Response: The relevant types of 

disasters and emergencies are discussed 

in the proposed rule and reflected in 

§ 422.100(m)(2) and include: (i) A 

Presidential declaration of a disaster or 

emergency under either the Stafford Act 

or the National Emergencies Act, (ii) a 

Secretarial declaration of a public health 

emergency under section 319 of the 

Public Health Service Act, and (iii) a 

declaration by the Governor of a State or 

Protectorate. To further clarify, the 

special requirements discussed here do 

not impose any requirements on state 

governors. Rather, MA organizations are 

responsible for being aware of events 

discussed here, including an emergency 

or disaster declared by a Governor, in a 

given service area and knowing the 

status of their in-network providers and 

to applying requirements accordingly. 

We encourage MA plans to liaison with 

local and state authorities as appropriate 

when making a determination. 

Comment: A commenter asked CMS 

to clarify whether waiving of 

‘‘gatekeeper’’ referrals described at 

§ 422.100(m)(1)(ii) includes the waiving 

of prior authorization (PA) in hospital 

discharges to other settings. Another 

commenter suggested CMS extend the 

requirements at § 422.100(m) to include 

waiving prior authorization for hospitals 

and post-care settings in general. 

Response: As discussed in Chapter 4 

of the MCM, the primary purpose of a 

gatekeeper is to ensure compliance with 

plan requirements for medically 

necessary referrals to in-network 

specialists. Under special requirements 

during an emergency or disaster, MA 

plans must cover Medicare Parts A and 

B services and supplemental Part C plan 

benefits furnished at non-contracted 

facilities. Thus, such referrals are not 

applicable and must be waived during 

a qualifying disaster or emergency as 

described in this provision. We do not 

believe that adding a requirement that 

MA organizations waive prior 

authorization for hospitals and post-care 

settings at § 422.100(m)(1) is within the 

scope of our proposal to clarify and 

revise the time frame during which 

§ 422.100(m)(1)(i) through (iv) apply. 

MA plans are permitted and encouraged 

to waive or relax plan prior 

authorization requirements at any time 

during disasters or emergencies in order 

to facilitate access to services and 

alleviate burden on enrollees, plans, and 

providers. 

Comment: A commenter asked CMS 

to release guidance to address the needs 

of individuals who are required to 

evacuate from a disaster area, 

particularly those whose homes are 

damaged or destroyed in the disaster. 

Another commenter asked CMS to 

consider the special needs of the ESRD 

population. 

Response: The emergency 

requirements at § 422.100(m) currently 

address coverage for people who have 

been evacuated or who had to move 

temporarily as a result of a disaster or 

emergency declaration by requiring 

plans to cover Parts A and B services 

and supplemental Part C benefits out-ofnetwork. Also, § 422.100(b)(1)(iv) 

requires coverage of renal dialysis 

services provided while the enrollee 

was temporarily outside the plan’s 

service area. Further, there is a Special 

Enrollment Period (SEP) for people who 

move out of the service area 

permanently. Thus, enrollees who 

cannot move back to the area of the 

disaster or emergency are permitted to 

change plans. 

Additionally, we remind commenters 

that § 422.112(b) requires MA plans to 

ensure continuity of care and 

integration of services for enrollees 

through arrangements with contracted 

providers. Requirements in 

§ 422.112(b)(1) through (6) detail 

specific methods by which MA 

organizations are to ensure an effective 

continuity and integration of health care 

services. This includes requiring MA 

plans to have policies and procedures 

that provide enrollees with an ongoing 

source of primary care and to have 

programs for coordination of plan 

services with community and social 

services. 

Comment: A commenter asked CMS 

to clarify the rate a non-contracted 

provider must be paid. 

Response: As discussed in section 

1852(a)(2) of the Act, CMS regulations at 

§ 422.100(b)(2), and the MA Payment 

Guide for Out of Network Payments,78

MA plans must pay non-contracted 

providers the amount that the provider 

would have received from Original 

Medicare amount for covered services 

(including balance billing permitted 

under Medicare Part A and Part B). The 

total payment must take into account 

cost-sharing and the MA plan payment 

to equal cost-sharing and Medicare 

payment in the Original Medicare 

program. 

Comment: A few commenters 

suggested CMS align criteria related to 

special emergency requirements with 

the conditions for the Star Rating 

Extreme and Uncontrollable 

Circumstances adjustment. 

Response: We thank commenters for 

their suggestion and will consider ways 

to align CMS policies if and when 

appropriate in the future. 

Comment: A few commenters asked 

CMS to consider staffing, drug, and 

supply shortage issues to identify when 

a disruption of access to health care is 

occurring and when making decisions 

on timeframes and standards. 

Response: We thank commenters for 

these suggestions and remind MA plans 

to also consider these conditions when 

making a determination whether a 

disruption of access to health care has 

occurred. The definition we proposed 

and are adopted in this final rule 

permits consideration of these 

conditions and factors when 

determining whether there is a 


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79As noted in the proposed rule at 87 FR 1893, 

CMS has also codified network access requirements 

and standards at §§ 422.112(a) and 422.114(a)(1). 

disruption in access. Therefore, we 

believe that further edits to the 

proposed regulation text § 422.100(m)(6) 

is unnecessary. 

After consideration of the comments 

received and for the reasons outlined in 

the proposed rule and our responses to 

comments, we are changing the term 

‘‘throughout the service area’’ to ‘‘in the 

service area’’ at in the regulation text at 

§ 422.100(m)(6). Also, to provide further 

clarity on what CMS means by service 

area, we added a reference to the 

statutory definition of ‘‘service area’’ in 

parenthesis at § 422.100(m)(6). Lastly, 

we edited some repetitive language at 

§ 422.100(m)(1). Specifically, we revised 

‘‘until one of the conditions described 

in paragraph (m)(3)’’ to ‘‘until the end 

date specified in paragraph (m)(3) of 

this section occurs’’, which is a nonsubstantive, clarifying edit only. We are 

finalizing all other changes proposed to 

§ 422.100(m) without modification. 

C. Amend MA Network Adequacy Rules 

by Requiring a Compliant Network at 

Application (§ 422.116) 

In the ‘‘Medicare Program; Contract 

Year 2021 Policy and Technical 

Changes to the Medicare Advantage 

Program, Medicare Prescription Drug 

Benefit Program, and Medicare Cost 

Plan Program’’ final rule, which 

appeared in the Federal Register on 

June 2, 2020 (85 FR 33796) (hereinafter 

referred to as the June 2020 final rule), 

CMS added new § 422.116, which sets 

forth standards and criteria for 

determining, whether an MA 

organization limits the providers from 

which its MA plan members may 

receive covered benefits, and satisfies 

the requirement under section 

1852(d)(1) of the Act that such benefits 

be made available and accessible in an 

MA plan’s service area with reasonable 

promptness.79 New § 422.116 codified, 

with some modifications, network 

adequacy criteria and access standards 

that CMS had previously outlined in 

sub-regulatory guidance. In addition, 

the regulation codified our then-existing 

policy, that CMS does not deny an 

application based on CMS’s evaluation 

of the applicant’s network for a new or 

expanding service area. Under our 

policy as set forth in the June 2020 final 

rule and § 422.116(a)(2), an applicant is 

required to attest that it has an adequate 

network for access and availability of 

applicable provider and facility types at 

the time of the application for a new or 

expanding service area. 

In the proposed rule (87 FR 1893 

through 1895), we proposed to require 

compliance with applicable network 

adequacy standards set forth in 

§ 422.116 as part of an application for a 

new or expanding service area. As 

indicated in the June 2020 final rule, we 

currently rely on our existing triennial 

network review process and timeline to 

evaluate compliance with network 

adequacy standards for organizations 

applying for a new or expanding service 

area and we removed network adequacy 

reviews from the application process 

beginning in 2018 for contract year 

2019. We explained in the proposed 

rule that while the process of reviewing 

provider networks as part of the 

triennial review has thus far been 

adequate and efficient operationally, we 

have also experienced unintended 

consequences, and therefore proposed 

to improve our oversight and 

effectiveness of network adequacy 

reviews for initial and services area 

expansion (SAE) applicants by requiring 

provider networks be reviewed by CMS 

when these MA applications are 

submitted to CMS for consideration. 

Currently, consistent with 

§ 422.116(a)(1)(i) and our application 

process, applicants must attest that they 

meet provider network standards, but 

do not have to demonstrate that they 

meet CMS network requirements before 

submitting a bid for the following 

contract year. CMS’s experience has 

shown that since adopting the 

attestation-only approach for the 2019 

contract year, organizations are 

requesting to remove a county (or 

multiple counties) from their service 

area (that is, service area reduction) after 

bids are submitted because the 

organization realizes that it does not 

have a sufficient network for the entire 

service area. For example, five 

organizations have requested to make 

changes to the service area of a total of 

10 plans after bid submission deadlines 

since 2019. 

Bid integrity is a priority for CMS. A 

request by an organization to make 

service area reductions related to 

provider networks after the bid 

submission deadline, calls into question 

the completeness and accuracy of the 

bid(s). The provider network is an 

important consideration in preparing 

the bid submission. Permitting the MA 

organization to make changes to the bid 

submission because of the inability to 

establish an adequate network, which is 

reviewed after the first Monday in June 

(the bid deadline), would subsequently 

allow the MA organization to introduce 

revised information into the bidding 

process. The introduction of this revised 

information after the first Monday in 

June implies that the initial bid 

submission was not complete, timely, or 

accurate. The proposed requirement that 

MA networks be submitted for review as 

part of the application mitigates this 

issue, as CMS’s review of these 

networks as part of the application is 

complete before bids are due. 

Furthermore, network adequacy 

reviews are a critical component for 

confirming that access to care is 

available for enrollees. Our network 

evaluations ensure that MA 

organizations have networks that are 

sufficient to provide enrollees with 

access to providers and facilities 

without placing undue burden on 

enrollees seeking covered services. We 

indicated that adding network reviews 

back to the application process will help 

ensure overall bid integrity, result in 

improved product offerings, and protect 

beneficiaries. 

After we adopted the current policy, 

failures detected during network 

reviews were not a basis for CMS to 

deny an application and CMS expected 

plans to cure deficiencies and meet 

network adequacy standards once 

coverage began on January 1 of the 

following year. In analyzing the network 

adequacy review determinations for the 

years since we removed network 

adequacy requirements from the 

application, we have observed a pattern 

across these network review outcomes: 

Organizations continue to have failures 

in their networks even after the contract 

is operational. For example, we found 

that 19 initial applicants who submitted 

provider and facility Health Service 

Delivery (HSD) tables since contract 

year 2019 continued to have 

deficiencies upon review of their 

networks once the MA plans were 

operational. We explained that by 

changing the process and reviewing the 

provider networks as part of the 

application, CMS will be able to better 

understand whether the failures are due 

to the timing of the reviews, which we 

hope the 10-percentage point credit 

(discussed later in this section of this 

final rule) will account for, or whether 

they are failures that the organization 

cannot cure. Establishing and 

maintaining adequate provider networks 

capable of providing medically 

necessary covered services to enrollees 

is fundamental to participation in the 

MA program. 

Our current process and 

§ 422.116(a)(1)(i) do not prohibit us, 

when evaluating an application, from 

considering information related to an 

organization’s previous failure to 

comply with an MA contract due to 

previous failures associated with access 

to services or network adequacy 


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2021.pdf. 

evaluations resulting in intermediate 

sanction or civil money penalty under 

to part 422, subpart O, with the 

exception of a sanction imposed under 

§ 422.752(d). This will continue to be 

applicable to our evaluation of initial or 

SAE applications. The changes we 

proposed, which require compliance 

with network adequacy standards 

during the application process, will 

help us assess which organizations are 

not capable of meeting CMS standards 

in a given service area. As a result, we 

proposed to broaden our ability to 

safeguard the MA program by 

permitting evaluations of network 

adequacy in connection with our review 

and approval of applications for new 

and expanding service areas. This 

ability will help us avoid approving 

organizations that could have issues 

providing access to care in these new or 

expanded service areas. 

We found that the current timing of 

the network adequacy reviews impacts 

applicants’ ability to make timely 

decisions regarding the service area in 

which they intend to provide coverage. 

The operational process for conducting 

network adequacy reviews is outlined in 

the ‘‘Medicare Advantage and Section 

1876 Cost Plan Network Adequacy 

Guidance’’.80 The guidance currently 

directs initial and SAE applicants to 

upload their HSD tables containing 

pending service areas into the Health 

Plan Management System (HPMS) 

Network Management Module (NMM) 

in mid-June for CMS review. 

Regulations under § 422.254(a)(1) 

require organizations to submit bids no 

later than the first Monday in June of 

each year and authorize CMS to impose 

sanctions or choose not to renew an 

existing contract if the bid is not 

complete, timely and accurate. CMS has 

issued guidance to remind MA 

organizations of this obligation that bids 

be complete and accurate at the time of 

submission, such as in the CY 2014 

through CY 2020 Final Call Letters 

(provided as attachments to the annual 

Rate Announcements 81) and the CY 

2022 MA Technical Instructions, 

released in an HPMS memo on May 12, 

2021. Providing organizations with 

network adequacy determinations ahead 

of the bid deadline (within the 

application timeline) will provide them 

the opportunity to make decisions 

regarding their intended service areas 

before submitting bids. This practice 

would also help mitigate operational 

issues CMS has experienced related to 

requests for service area changes after 

the deadline has passed, as these kinds 

of requests may affect the MA 

organization’s submissions on the bid 

pricing tool. For these reasons, we are 

finalizing our proposal to revise 

paragraph (a)(1)(ii) of § 422.116 to 

require an applicant for a new or 

expanding service area to demonstrate 

compliance with § 422.116 and to 

explicitly authorize CMS to deny an 

application on the basis of an evaluation 

of the applicant’s network for the new 

or expanding service area. 

We also proposed to amend § 422.116 

by adding a new paragraph (d)(7), which 

provide applicants with a temporary 10- 

percentage point credit towards the 

percentage of beneficiaries residing 

within published time and distance 

standards for all of the combinations of 

county designations and provider/ 

facility types specified in § 422.116(d), 

for the proposed contracted network for 

a new service area or a service area 

expansion (SAE). Current CMS 

procedures (see ‘‘The Part C—Medicare 

Advantage and 1876 Cost Plan 

Expansion and 1876 Cost Plan 

Expansion Application’’ 82) require 

completed applications to be submitted 

by mid-February. We understand that 

organizations may have difficulties 

meeting this timing for submission of a 

full provider network that the proposed 

change in § 422.116(a)(1)(i) would 

require. We previously separated the 

network adequacy reviews from the 

application process due to the potential 

challenge of applicants securing a full 

provider network almost a year in 

advance of the contract becoming 

operational. In order to provide 

flexibility to organizations as they build 

their provider networks, we proposed to 

allow the 10-percentage point credit 

towards the percentage of beneficiaries 

residing within published time and 

distance standards for the contracted 

network in the pending service area, at 

the time of application and for the 

duration of the application review. At 

the beginning of the applicable contract 

year (that is, January 1), the 10- 

percentage point credit would no longer 

apply, and plans would need to be in 

full compliance for the entire service 

area. This aspect of our proposal will 

balance the burden on applicants of 

having network contracts in place close 

to a year before the beginning of the 

coverage year with the need to ensure 

that the MA plans have adequate 

networks for furnishing covered benefits 

to their enrollees. 

Starting with the contract year 2024 

application cycle, initial and service 

area expansion applicants will be 

required to submit their proposed 

contracted networks during the 

application process. Applicants will 

upload their HSD tables to the NMM by 

the application deadline, and CMS will 

generally follow the current operational 

processes for network reviews, which 

include an opportunity to submit 

exception requests as outlined in 

§ 422.116(f). The disposition of the 

exception request would be 

communicated as part of the 

opportunity to remedy defects found in 

the application under § 422.502(c)(2). 

Applicants for SAEs who are also due 

for a triennial review would be required 

to submit their pending new service 

area during the application process, and 

their existing network service area(s) 

separately, during the triennial review 

in mid-June. 

We acknowledge and thank 

commenters for providing their 

perspectives regarding our proposals to 

amend our network adequacy policy. 

We received a number of comments 

related to these proposals, and have 

summarized them and included our 

responses. 

Comment: Numerous commenters 

expressed support for our proposal to 

require compliance with network 

adequacy standards as part of an 

application for a new or expanding 

service area. Commenters agreed that 

network adequacy is critical to 

enrollees’ access to care. Commenters 

noted that improving our oversight of 

provider networks would strengthen 

beneficiary protections and ensure 

timely access to providers without 

placing undue burden on enrollees. 

Other commenters also noted that our 

proposal would hold plans accountable 

for providing access to care, especially 

in underserved communities. 

Response: We thank the commenters 

for their support of our proposal. As 

previously noted, we believe that 

requiring MA organizations to 

demonstrate compliance with network 

adequacy standards during the 

application process for a new or 

expanding service area will improve our 

oversight and effectiveness of network 

adequacy reviews and our ability to 

safeguard the Medicare program. 

Comment: Some commenters 

expressed support for our proposal to 

require that applicants demonstrate 

compliance with network adequacy 

standards during the application 

process because they believed this 

would help ensure bid integrity, which 


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the commenters agreed should be a 

priority for CMS. 

Response: We thank the commenters 

for their comments regarding bid 

integrity. As indicated in our proposal, 

we believe that providing MA 

organizations with information 

regarding their ability to provide 

coverage in a proposed service area 

ahead of the bid deadline would 

mitigate issues with service area 

reduction requests and ensure overall 

bid integrity. 

Comment: A commenter suggested 

that requests to make service area 

reductions after the bid deadline are 

relatively rare based on the number of 

new and service area expansion 

applications that are submitted, thus our 

proposal would needlessly increase 

burden on the entire industry for few 

occurrences. 

Response: While there may be fewer 

instances of service area reduction 

requests relative to MA applications 

submitted, we believe that any such 

request has the potential to compromise 

the overall integrity of the bidding 

process. As we have previously 

indicated, ensuring overall bid integrity 

is a priority for CMS. In addition, we 

note that this provision helps improve 

our oversight of provider networks, 

which strengthens beneficiary 

protections. Therefore, we believe the 

added burden of requiring applicants to 

demonstrate compliance with network 

adequacy standards is justified, 

particularly in light of the flexibilities, 

discussed later in this section, that we 

are adopting for how applicants for new 

MA contracts or expanded service areas 

can demonstrate compliance with the 

network adequacy requirements. 

Comment: Many commenters did not 

support our proposal. Commenters 

expressed concerns over the proposed 

timing for the submission and review of 

initial and service area expansion 

applicants’ networks (during the time of 

application in mid-February of each 

year). The commenters believed this 

timing would be insufficient for MA 

organizations to build high-quality 

provider networks, and would 

negatively impact negotiations with 

provider groups, giving providers 

leverage to negotiate higher rates that 

could increase healthcare costs and 

reduce benefits. Commenters also 

suggested that our proposal would 

disproportionately impact smaller 

organizations working to expand to 

certain regional, rural, and medically 

underserved areas, thereby inhibiting 

competition among plans and ultimately 

limiting choice for beneficiaries; some 

of these commenters also expressed that 

the proposal would provide an unfair 

advantage to large health plans with an 

existing presence in these areas. Several 

commenters posited that our proposal 

would place a substantial administrative 

burden on MA organizations and on 

providers, and that establishing 

contracts with organizations takes a 

significant amount of time. Finally, a 

number of commenters asked CMS to 

consider allowing MA organizations to 

use Letters of Intent (LOIs) to contract 

with providers as a means to meet 

network adequacy standards, and in 

order to provide flexibility as they work 

to come into compliance for the 

coverage year. 

Response: We appreciate the 

commenters’ feedback regarding our 

proposal. As we noted in the proposed 

rule, we understand that requiring an 

MA organization to establish a full 

provider network almost a year in 

advance of the contract becoming 

operational will be difficult. We also 

indicated that we previously separated 

the network adequacy reviews from the 

application process due to the potential 

challenge of applicants securing a full 

provider network almost a year in 

advance of the contract becoming 

operational. While we believe 

evaluating provider networks at the time 

of application is important, we agree 

that some flexibility is appropriate to 

address this challenge for applicants. 

Therefore, based on the comments 

received, we are modifying the 

regulation to allow LOIs to be used in 

lieu of signed provider contracts, at the 

time of application and for the duration 

of the application review. The LOI must 

be signed by both the MA organization 

and the provider with which the MA 

organization intends to negotiate. 

Further, applicants must notify CMS of 

their use of LOIs to meet network 

standards and submit copies (upon 

request) of the LOIs in the form and 

manner directed by CMS. At the 

beginning of the contract year, the MA 

organization must be in full compliance 

with the section, including having 

signed provider and facility contracts in 

place of the LOIs. 

CMS would also require any MA 

organization that utilized LOIs for the 

application of a new or expanding 

service area to participate in the 

triennial review to evaluate compliance 

with network adequacy standards. This 

triennial review by CMS will occur 

during the first year a plan is 

operational in its new service area. 

Comment: Many commenters 

supported our proposal to allow a 10- 

percentage point credit at the time of an 

MA organization’s application and 

during the application review. Some of 

these commenters recommended that 

the credit no longer apply once the 

contract is operational. Some of the 

commenters expressed the view that the 

proposed 10-percentage point credit 

struck the right balance between 

showing sensitivity to the challenges for 

MA organizations in developing and 

submitting provider networks on a 

much earlier timeline as part of the 

application process and demonstrating 

awareness of the need for CMS to 

monitor the adequacy of MA 

organizations’ provider networks. 

A number of commenters noted that 

the 10-percentage point credit would 

not be sufficient to make an impact on 

meeting network standards, especially 

in rural and other areas with limited 

providers. Some commenters suggested 

that we increase the 10-percentage point 

credit without specifying what 

percentage point they would prefer, 

whereas others suggested that we 

increase the credit to a 20-, 30-, or 

higher percentage point credit. A 

commenter noted that the credit 

undermines CMS’s effort to improve 

network adequacy. A commenter 

requested clarification on whether other 

credits would be affected by the 

proposed 10-percentage point credit for 

initial and service area expansion 

applicants. 

Response: We thank commenters for 

their support of this proposal and 

acknowledge the concerns that were 

raised by other commenters. As we 

indicated in our proposal, we 

understand that organizations may have 

difficulties meeting this timing for 

submission of a full provider network. 

Therefore, in order to provide flexibility 

to organizations as they build their 

provider networks, we proposed to 

allow the 10-percentage point credit 

towards the percentage of beneficiaries 

residing within published time and 

distance standards for the contracted 

network in the pending service area, at 

the time of application and for the 

duration of the application review. We 

believe a 10-percentage point credit, in 

conjunction with use of Letters of Intent 

(LOIs), as discussed above, will provide 

MA organizations with enough 

flexibility to meet network adequacy 

standards within the application 

timeframe. 

We also clarify that the 10-percentage 

point credit would be separate from and 

in addition to any other applicable 

credit established in § 422.116(d). 

Comment: A few commenters 

suggested that CMS allow MA 

organizations to apply for additional 

time to meet network adequacy 

standards for initial and service area 

expansion applicants. A few 

commenters suggested that CMS delay 


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implementation of this proposal until 

2025. 

Response: We believe that allowing 

the 10-percentage point credit towards 

the percentage of beneficiaries residing 

within published time and distance 

standards and allowing the use of LOIs 

in lieu of signed contracts, as discussed 

previously in this rule, for the 

contracted network in the pending 

service area, at the time of application 

and for the duration of the application 

review, provide sufficient flexibility for 

MA organizations. We also believe that 

establishing these changes for the 2024 

coverage year will allow us to improve 

our oversight and effectiveness of 

network adequacy reviews in a timely 

fashion. 

After careful consideration of the 

comments received from various 

stakeholders and for the reasons set 

forth in our responses and in the 

proposed rule, we are finalizing, with 

modifications, the following changes to 

§ 422.116: 

• Revise § 422.116(a)(1)(ii) to provide 

that beginning for contract year 2024, an 

applicant for a new or expanding 

service area must demonstrate 

compliance with this section as part of 

its application for a new or expanding 

service area and CMS may deny an 

application on the basis of an evaluation 

of the applicant’s network for the new 

or expanding service area. 

• Add a new paragraph at 

§ 422.116(d)(7), with the heading ‘‘New 

or expanding service area applicants.’’, 

to provide that beginning for contract 

year 2024, an applicant for a new or 

expanding service area receives a 10- 

percentage point credit towards the 

percentage of beneficiaries residing 

within published time and distance 

standards for the contracted network in 

the pending service area, at the time of 

application and for the duration of the 

application review. In addition, 

applicants may use an LOI, signed by 

both the MA organization and the 

provider or facility with which the MA 

organization has started or intends to 

negotiate, in lieu of a signed contract at 

the time of application and for the 

duration of the application review, to 

meet network standards. As part of the 

network adequacy review process, 

applicants must notify CMS of their use 

of LOIs to meet network standards, in 

lieu of a signed contract and submit 

copies upon request and in the form and 

manner directed by CMS. At the 

beginning of the applicable contract 

year, the credit and the use of the LOIs 

no longer apply, and if the application 

is approved, the MA organization must 

be in full compliance with this section, 

including having signed contracts with 

the provider or facility. 

D. Part C and Part D Quality Rating 

System 

This final rule finalizes a technical 

change at § 422.166(i)(12) proposed in 

the January 2022 proposed rule to 

enable CMS to calculate 2023 Star 

Ratings for three Healthcare 

Effectiveness Data and Information Set 

(HEDIS) measures that are based on the 

Health Outcomes Survey (HOS). It also 

finalizes provisions adopted in the 

March 31st COVID–19 IFC and the 

September 2nd COVID–19 IFC to enable 

us to calculate the 2021 and 2022 Star 

Ratings due to the COVID–19 pandemic. 

1. Background 

CMS develops and publicly posts a 5- 

star rating system for Medicare 

Advantage (MA) and Part D plans based 

on the requirement to disseminate 

comparative information, including 

information about quality, to 

beneficiaries under sections 1851(d) and 

1860D–1(c) of the Act and the collection 

of different types of quality data under 

section 1852(e) of the Act. The Star 

Rating system for MA and Part D plans 

is used to determine quality bonus 

payment (QBP) ratings for MA plans 

under section 1853(o) of the Act and the 

amount of beneficiary rebates under 

section 1854(b) of the Act. Cost plans 

under section 1876 of the Act are also 

included in the MA and Part D Star 

Rating system, as codified at 

§ 417.472(k). We use different data 

sources to measure quality and 

performance of contracts, such as CMS 

administrative data, surveys of 

enrollees, information provided directly 

from health and drug plans, and data 

collected by CMS contractors. Various 

regulations require plans to report on 

quality improvement and quality 

assurance and to provide data which 

help beneficiaries compare plans (for 

example, §§ 417.472(j) and (k), 

422.152(b), 423.153(c), and 423.156). 

The methodology for the Star Ratings 

system for the MA and Part D programs 

is codified at §§ 422.160 through 

422.166 and 423.180 through 423.186, 

respectively. 

The Star Ratings are generally based 

on measures of performance during a 

period that is 2 calendar years before the 

year for which the Star Ratings are 

issued; for example, 2023 Star Ratings 

will generally be based on performance 

during 2021. For some measures, such 

as the cross-sectional measures 

collected through the HOS, Star Ratings 

are based on performance up to 3 

calendar years prior to the Star Ratings 

year. For example, the HOS 

administered in 2021 asked about care 

received (for example, whether a 

healthcare provider advised the member 

to start, increase, or maintain their level 

of exercise or physical activity) in the 12 

months prior to the survey’s 

administration—that is a period of time 

covering parts of the 2020 and 2021 

calendar years—and the data will be 

used for the 2023 Star Ratings. 

In the March 31st COVID–19 IFC (85 

FR 19230), we adopted a series of 

changes to the 2021 and 2022 Star 

Ratings to address the disruption to data 

collection and impact on performance 

for the 2020 measurement period posed 

by the public health emergency (PHE) 

for COVID–19. The Star Ratings changes 

adopted in that rule addressed both the 

needs of health and drug plans and their 

providers to curtail certain data 

collections and adapt their current 

practices in light of the COVID–19 PHE 

and the need to care for the most 

vulnerable patients, such as the elderly 

and those with chronic health 

conditions. As explained in the March 

31st COVID–19 IFC, we expected to see 

changes in measure-level scores for the 

2020 measurement period due to 

COVID–19-related healthcare 

utilization, reduced or delayed nonCOVID–19 care due to advice to patients 

to delay routine and/or elective care, 

and changes in non-COVID–19 inpatient 

utilization. The March 31st COVID–19 

IFC made some adjustments to account 

for potential changes in measure-level 

scores so health and drug plans could 

have some degree of certainty that the 

Star Ratings would be adjusted and 

could continue their focus on patients 

who were most in need. (See 85 FR 

19269 through 19275 for a description 

of the various adjustments.) 

The March 31st COVID–19 IFC 

amended, as necessary, certain 

calculations for the 2021 and 2022 Part 

C and D Star Ratings to address the 

expected impacts of the COVID–19 PHE 

on data collection and performance in 

2020 that were immediately apparent. 

As the PHE for COVID–19 progressed in 

2020 with ultimately all areas across the 

country eligible for Star Ratings disaster 

adjustments for extreme and 

uncontrollable circumstances under the 

current regulations (§§ 422.166(i) and 

423.186(i)) for the 2022 Star Ratings, it 

became apparent that a modification to 

the existing disaster policy was required 

in order to calculate cut points for nonCAHPS measures for the 2022 Star 

Ratings. 

We adopted regulations for how Star 

Ratings would be calculated in the event 

of extreme and uncontrollable 

circumstances in the April 2019 final 

rule. Under §§ 422.166(i)(9)(i) and 


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83We use the start date of the incident period to 

determine which year of Star Ratings could be 

affected, regardless of whether the incident period 

lasts until another calendar year. 

(i)(10)(i) and 423.186(i)(7)(i) and (i)(8)(i), 

the numeric scores for contracts with 60 

percent or more of their enrollees living 

in Federal Emergency Management 

Agency (FEMA)-designated Individual 

Assistance areas at the time of the 

extreme and uncontrollable 

circumstance are excluded from: (1) The 

measure-level cut point calculations for 

non-CAHPS measures and (2) the 

performance summary and variance 

thresholds for the reward factor. The 60 

percent rule ensures that any impact of 

an unforeseen and uncontrollable 

circumstance on a particular contract (or 

group of contracts) in a specific 

geographic area does not affect the 

ratings for other contracts. As explained 

in the April 2019 final rule (84 FR 

15777), CAHPS measures use a relative 

distribution and significance testing, 

rather than clustering, to determine Star 

Ratings cut points; our testing indicated 

that when affected contracts were 

removed from the distribution of 

measure-level scores, the distribution of 

the remaining contracts looked very 

similar, suggesting that the affected 

contracts are randomly distributed 

among the rating levels. Additionally, 

the CAHPS methodology to assign cut 

points is less sensitive to extreme 

outliers that may result from the impact 

of a disaster on contract-level measure 

scores; thus, the 60 percent rule does 

not apply to the calculation of cut 

points for CAHPS measures. When only 

a small number of counties are 

designated by FEMA as Individual 

Assistance areas, application of the 60 

percent exclusions means that the 

performance of other contracts serving 

larger or other service areas is used to 

establish the necessary thresholds for 

Star Ratings for non-CAHPS measures 

and the reward factor. 

Up until the 2022 Star Ratings, 

disasters for which any Star Rating 

adjustments had been made were 

localized, and the 60 percent rule had 

removed scores from only a small 

fraction of contracts (that is, less than 5 

percent of contracts on average). The 

unprecedented impact of COVID–19 

created a new methodological issue 

where, without a revision to the existing 

disaster policy rules for calculating the 

measure-level cut points for the 2022 

Star Ratings, we would not have had 

enough contracts to reliably calculate 

the non-CAHPS measure-level cut 

points. Consequently, CMS would not 

have been able to assign Star Ratings for 

all non-CAHPS measures. Similarly, we 

would not have had enough contracts to 

reliably calculate the performance 

summary and variance thresholds for 

the Reward Factor. 

For most measures, the extreme and 

uncontrollable circumstance adjustment 

applies for disasters from 2 years prior 

to the Star Ratings year (that is, a 

disaster that begins 83 during the 2020 

measurement period results in a disaster 

adjustment for the 2022 Star Ratings). 

For Part C measures derived from the 

HOS, the disaster adjustment is delayed 

an additional year due to the timing of 

the survey and 1 year recall period. (See 

84 FR 15772 through 15773 for an 

example of the timing of disaster 

adjustments for measures from the 

HOS.) Although the CAHPS surveys and 

HEDIS data collection were not 

completed in 2020 (we did conduct the 

HOS in 2020 on a later schedule than 

usual), CAHPS surveys and HEDIS data 

collection completed in 2021 reflected 

performance by plans in 2020 during 

the PHE for COVID–19 and were used 

in the 2022 Star Ratings. 

In the September 2nd COVID–19 IFC 

(85 FR 54820), we revised the disaster 

policy rules for calculating the nonCAHPS measure-level cut points for the 

2022 Star Ratings so we would be able 

to calculate the 2022 Star Ratings for 

these measures (85 FR 54844–47) since 

all contracts qualified for the extreme 

and uncontrollable circumstance 

adjustments due to COVID–19. The 

change adopted by the September 2nd 

COVID–19 IFC at §§ 422.166(i)(11) and 

423.186(i)(9) removed application of the 

60 percent rule and avoided the 

exclusion of contracts with 60 percent 

or more of their enrollees living in 

FEMA-designated Individual Assistance 

areas from calculation of the nonCAHPS measure-level cut points for the 

2022 Star Ratings. The September 2nd 

COVID–19 IFC also modified the 

calculation of the performance summary 

and variance thresholds for the reward 

factor so that the threshold calculation 

would not exclude the numeric values 

for affected contracts with 60 percent or 

more of their enrollees in FEMAdesignated Individual Assistance areas 

at the time of the extreme and 

uncontrollable circumstance. These 

changes ensured that CMS was able to 

calculate measure-level cut points for 

those measures that qualified for the 

disaster adjustment for the 2022 Star 

Ratings; calculate measure-level 2022 

Star Ratings; apply the ‘‘higher of’’ 

policy for non-CAHPS measures as 

described at §§ 422.166(i)(3)(iv), 

(i)(4)(v), (i)(5), and (i)(6)(i) and (iv) and 

423.186(i)(3) and (i)(4)(i) and (iv); 

calculate the reward factor; and 

ultimately calculate 2022 overall and 

summary ratings for 2022 Star Ratings 

and 2023 QBPs. It was critical to adopt 

these changes to avoid an unworkable 

result from the current policy in these 

extraordinary circumstances and so that 

CMS could measure actual performance 

for the 2020 measurement period so 

plans had an opportunity to 

demonstrate how they were tailoring 

care in innovative ways to meet the 

needs of their enrollees during the PHE 

for COVID–19. Given the unprecedented 

impacts of the COVID–19 PHE, it was 

important to be able to calculate the 

2022 Star Ratings to help to continue to 

drive quality improvement for plans and 

providers. 

We proposed in the January 2022 

proposed rule a specific provision for 

2023 Star Ratings for HEDIS measures 

derived from the HOS data collection 

administered in 2021 covering the 2020/ 

2021 period. We address the comments 

we received on that proposal in section 

II.D.2. of this final rule. We also address 

the changes and comments we received 

in response to the March 31st COVID– 

19 IFC and the September 2nd COVID– 

19 IFC in sections II.D.3. and II.D.4., 

respectively, of this final rule. Per 

section 1871(a)(3)(C) of the Act, CMS 

responds to comments on an interim 

final rule regarding the Medicare 

program and finalizes the interim rules 

within 3 years of the issuance of the 

IFC. 

2. Provision Related to the HEDIS 

Measures Calculated From the HOS 

From the January 2022 Proposed Rule 

In response to the September 2nd 

COVID–19 IFC, some commenters 

requested clarification about the 

measures that come from the HOS and 

when the disaster policy would be 

applied in light of how HOS measures 

receive adjustment after an extreme and 

uncontrollable circumstance. A few 

commenters questioned, based on 

previous logic for disasters and HOS 

measures, whether we anticipated that 

the impacted HOS data collection 

period would not be until 2021 and the 

‘‘higher of’’ methodology would be 

applicable to reporting year 2023 for 

HOS measures. Another commenter 

noted that using the 2020 Star Ratings 

as an example, the contracts affected by 

2018 disasters received the ‘‘higher of’’ 

logic for most measures; however, the 

HOS and HEDIS–HOS measures used 

the ‘‘higher of’’ logic only for contracts 

affected by 2017 disasters. The 

commenter stated if this timing applies 

to 2020 disasters, the HOS and HEDIS– 

HOS measures will receive the higher of 

current or prior year measure-level Star 

Ratings in the 2023 Star Ratings. The 


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84The HEDIS measures derived from the HOS 

include Monitoring Physical Activity, Reducing the 

Risk of Falling, and Improving Bladder Control. 

commenters requested clarification 

since the September 2nd COVID–19 IFC 

adopted a regulatory change to the 60 

percent rule for only the 2022 Star 

Ratings. We proposed in the January 

2022 proposed rule to address the 

HEDIS measures derived from the HOS 

used in the 2023 Star Ratings. 

As described in the April 2019 final 

rule (CMS–4185–F) (84 FR 15772 

through 15773), for measures derived 

from the HOS, the disaster policy 

adjustment is for 3 years after the 

extreme and uncontrollable 

circumstance. Thus, we noted in the 

preamble to that rule that the 2023 Star 

Ratings would adjust measures derived 

from the HOS for 2020 extreme and 

uncontrollable circumstances (85 FR 

15772 through 15773). Based on the 

comments received and the timing of 

the HOS administration, we proposed to 

amend § 422.166(i) to specifically 

address the 2023 Star Ratings, for 

measures derived from the 2021 HOS 

only, by adding § 422.166(i)(12) to 

remove the 60 percent rule for affected 

contracts. This amendment would 

ensure that we are able to calculate the 

Star Ratings cut points for the three 

HEDIS measures 84 derived from the 

HOS and are able to include these 

measures in the determination of the 

performance summary and variance 

thresholds for the reward factor for the 

2023 Star Ratings. Without removing the 

60 percent rule for HEDIS measures 

derived from the HOS, we would not be 

able to calculate these measures for the 

2023 Star Ratings or include them in the 

2023 reward factor calculation. By 

removing the 60 percent rule, all 

affected contracts (that is, contracts 

affected by the 2020 COVID–19 

pandemic) with at least 25 percent of 

their enrollees in FEMA-designated 

Individual Assistance areas at the time 

of the disaster will receive the higher of 

the 2022 or 2023 Star Rating (and 

corresponding measure score) for each 

of the HEDIS measures collected 

through the HOS as described at 

§ 422.166(i)(3)(iv) for the 2023 Star 

Ratings. 

Below we summarize the comments 

we received and provide our responses. 

Comment: Most commenters 

expressed support for removing the 60 

percent rule for the 2023 Star Ratings for 

the three HEDIS measures (Monitoring 

Physical Activity, Reducing the Risk of 

Falling, and Improving Bladder Control) 

derived from the HOS due to the 

COVID–19 PHE. Commenters noted the 

detrimental effects of the COVID–19 

pandemic on beneficiaries and health 

care providers and appreciated that this 

proposed policy would ensure plans are 

not penalized on these three measures 

because of the effects of the pandemic. 

Response: We thank commenters for 

their support of this provision. This 

change to the calculation of ratings for 

these three HEDIS–HOS measures will 

permit CMS to calculate these measures 

for the 2023 Star Ratings and include 

them in the 2023 reward factor 

calculation. 

Comment: A few commenters 

requested that HEDIS measures derived 

from the HOS be removed entirely from 

the 2023 Star Ratings. They expressed 

concern that the proposed policy may 

be inadequate to account for the impacts 

of the COVID–19 PHE on these 

measures and that they would be 

penalized for factors outside of their 

control. 

Response: These three areas—bladder 

control, physical activity, and reducing 

falls risk—are important for 

beneficiaries’ health and well-being, 

even during a PHE. Removing the 60 

percent rule will allow most contracts to 

receive the higher of the 2022 or 2023 

Star Ratings (and corresponding 

measure score) for each of the HEDIS 

measures collected through the HOS, 

following the rules at § 422.166(i). This 

will minimize the impact of the PHE on 

these measures. It is CMS’s view that 

including these measures in Star Ratings 

will provide valuable information for 

people with Medicare on important 

areas of focus for avoiding serious 

health problems. As a reminder, as 

required at § 422.504(o), MA 

organizations must develop, maintain, 

and implement business continuity 

plans, including policies and 

procedures for disaster or emergency 

situations. Therefore, we do not believe 

it is appropriate to eliminate use of 

these measures entirely in the Star 

Ratings. 

After considering the comments we 

received, and for the reasons set forth in 

the proposed rule and in our responses, 

CMS is finalizing without modification 

the provision at § 422.166(i)(12) to 

codify special rules for the calculation 

of the 2023 Star Ratings for the three 

HEDIS measures that are collected 

through the HOS. 

3. Provisions in the March 31st COVID– 

19 IFC 

This final rule also responds to 

comments on and finalizes a series of 

changes to the 2021 and 2022 Star 

Ratings to accommodate the disruption 

to data collection posed by the COVID– 

19 pandemic (FR 85 19271–19275) that 

were established in the March 31st 

COVID–19 IFC. The following is a 

summary of the provisions and the 

public comments received on those 

changes to Part C and D Star Ratings 

policies included in the March 31st 

COVID–19 IFC. 

a. HEDIS, CAHPS, and HOS Data 

Collection and Submission for 2021 Star 

Ratings and 2022 Star Ratings 

The March 31st COVID–19 IFC 

eliminated the requirement to submit 

HEDIS and CAHPS data at 

§ 422.152(b)(6) for MA contracts and at 

§ 417.472(i) and (j) for cost plans, and to 

submit CAHPS data at § 423.182(c)(3) 

for Part D contracts. CMS suspended the 

collection and submission of HEDIS and 

CAHPS measures to allow health plans, 

providers, and physician offices to focus 

on caring for Medicare beneficiaries 

during the early stages of the PHE for 

COVID–19. These actions were adopted 

to minimize the risk of the spread of 

infection by eliminating travel and inperson work for the collection of HEDIS 

data and ensure the safety of CAHPS 

survey vendor staff by aligning with the 

CDC’s social distancing guidance. Both 

Part C and D plans could use any data 

already collected for their internal 

quality improvement efforts. 

CMS also delayed the administration 

of the HOS until late summer. To 

address the potential that CMS might 

not be able to complete HOS data 

collection in 2020 (for the 2022 Star 

Ratings), the March 31st COVID–19 IFC 

also adopted a provision at 

§ 422.166(j)(2)(i) to replace, if the HOS 

was not conducted in 2020, any 

measures calculated based on HOS data 

collections with earlier values from the 

2021 Star Ratings that were not affected 

by the public health threats posed by 

COVID–19. This specific provision was 

designed to address any gaps in the 

necessary HOS data if the HOS could 

not be administered in 2020. The Star 

Ratings measures from the HOS include 

the following: Improving or Maintaining 

Physical Health; Improving or 

Maintaining Mental Health; Reducing 

the Risk of Falling; Improving Bladder 

Control; and Monitoring Physical 

Activity. 

Comment: Some commenters 

commended CMS for curtailing HEDIS 

and CAHPS data collection so that plans 

and providers could focus on providing 

care and not put their employees at risk. 

Other commenters appreciated that by 

completely eliminating the submission 

requirements and removing the 

possibility of a competitive 

disadvantage as a result of ceasing data 

retrieval efforts, CMS enabled plans to 

better focus on patient care and the 

safety of plans’ employees. Commenters 


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85HPMS Memos for WK 1 August 2–6, 2021. 

CMS. 

expressed a general understanding of 

the sensitivity around data collection 

during this time and the need to focus 

plans and providers on caring for 

Medicare beneficiaries. 

Response: CMS appreciates the 

support and emphasis on plans’ focus 

on providing care to Medicare enrollees 

from the onset of the COVID–19 

pandemic. 

Comment: Some commenters argued 

that the HEDIS and CAHPS data 

collections were already well advanced 

before shutdowns occurred so there 

would be little risk to personnel 

involved in finishing data collection. 

These commenters stated that HEDIS 

data collection could be done 

electronically or through claims analysis 

and not through in-person contact, thus 

maintaining social distancing guidance. 

They also argued that CAHPS survey 

response rates do not increase much in 

the last few months of data collection. 

Response: The intent of these changes 

was to eliminate some of the data 

collection requirements given the public 

health and safety concerns with 

collecting the data and to enable plans 

to focus on the care and safety of their 

employees and Medicare beneficiaries. 

Given the extraordinary circumstances 

under which the healthcare system was 

operating, CMS wanted plans to have 

some degree of certainty related to Star 

Ratings program requirements and 

wanted to make sure plans would be 

able to focus on ensuring that Medicare 

beneficiaries received the care and 

treatment they needed. The issues 

facing the healthcare system, including 

significant differences across regions 

and demographic groups, created 

unique challenges for the 2021 and 2022 

Star Ratings calculations. Given these 

concerns, CMS believes that, had the 

2020 submission requirements for 

HEDIS and CAHPS data remained in 

force, we would not have had complete 

data for HEDIS and CAHPS across all 

contracts as needed in order to 

accurately calculate Star Rating measure 

cut points for the 2021 Star Ratings. 

Data collection was ongoing for HEDIS, 

including medical record review, so not 

all contracts were near completion. 

Data collection was curtailed for 

CAHPS after the first survey mailing so 

the data were not complete or 

representative of all enrollees. In 

general, for the MA and PDP CAHPS 

Survey, approximately 40 percent of 

responses come from the second mailing 

and telephone follow-up. Further, 

approximately 50 percent of responses 

from younger beneficiaries (those under 

age 55) and black beneficiaries, and 60 

percent of Spanish language beneficiary 

responses, come from the second 

mailing and telephone follow-up, which 

were not yet completed at the time the 

March 31st COVID–19 IFC was issued. 

Comment: Commenters were 

generally supportive of CMS’s decision 

to delay 2020 HOS data collection until 

late summer 2020, although some 

commenters wanted all 2020 HOS data 

collection to be halted. Other 

commenters recommended CMS move 

forward with the 2020 administration of 

HOS, with the stipulation that any data 

collected be used for internal plan 

purposes only and not used in the 2022 

Star Ratings. 

Response: We appreciate the support 

for delaying the 2020 HOS 

administration until late summer. The 

HOS data collection was successfully 

completed in the fall of 2020. Although 

the survey was successfully 

administered, two measures from the 

HOS, Improving or Maintaining 

Physical Health and Improving or 

Maintaining Mental Health, were moved 

to the display page for the 2022 and 

2023 Star Ratings due to data validity 

concerns as described in the HPMS 

memorandum ‘‘Medicare Health 

Outcomes Survey (HOS) Outcome 

Measures Moved to Display for 2022 

and 2023 Star Ratings,’’ released on 

August 5, 2021.85

Comment: A few commenters agreed 

with CMS’s plan to replace the 2022 

Star Ratings for HOS measures with the 

2021 Star Ratings if the HOS could not 

be administered, but some commenters 

argued plans should have the choice of 

receiving either the 2021 or 2022 Star 

Ratings and corresponding scores. 

Response: CMS did not have to 

replace the 2022 Star Ratings with the 

2021 Star Ratings for the measures from 

the HOS since the survey was 

administered in fall 2020. CMS could 

not select the higher measure-level star 

and corresponding numeric data for the 

measures from the HOS for the 2022 

Star Ratings since HOS measures did 

not qualify for the extreme and 

uncontrollable circumstances 

adjustment due to COVID–19 due to the 

timing and recall periods for the HOS. 

We are therefore not finalizing the 

provision at § 422.166(j)(2)(i) which 

authorized replacement of measures 

calculated based on HOS data 

collections for the 2022 Star Ratings 

with earlier values from the 2021 Star 

Ratings. Because the HOS was 

completed in 2020, the provision at 

§ 422.166(j)(2)(i) is moot and it is not 

necessary to finalize it permanently. 

Comment: Some commenters 

requested that the HOS measures be 

moved to the display page until at least 

2023 or 2024. Additionally, some 

commenters urged CMS to consider the 

impact of COVID–19 not only on the 

2020 and 2021 HOS data but also on the 

2022, 2023, and 2024 Star Ratings. 

Many commenters stated that even if 

current conditions improved enough to 

allow HOS to be fielded in 2020, 

comparisons of previous and future year 

scores, as well as comparisons across 

contracts, would not be valid during the 

COVID–19 pandemic. A few 

commenters pointed out that trends will 

likely vary by region or state based on 

the prevalence of COVID–19 and the 

presence or absence of state 

governments’ constraints on patient 

travel and provider operations. Some 

commenters argued that it would not be 

feasible for CMS to adjust HOS outcome 

measures to account for all COVIDassociated factors (for example, social 

isolation, loneliness, fear of death, 

national rhetoric regarding the value of 

elders, economic impacts, and 

decreased opportunity for physical 

activities) and pointed out that the 

negative impacts may last for years. 

Some commenters did not believe HOS 

data collected in 2020 would be 

indicative of overall plan quality, but 

would instead reflect the massive 

disruption to the healthcare system 

caused by the COVID–19 pandemic. To 

avoid unfairly penalizing plans for 

circumstances outside their control, 

most commenters recommended that 

CMS continue to collect HOS data in 

2020 but remove the measures from the 

Star Ratings for up to 3 years. In 

particular, commenters were concerned 

about the two HOS outcome measures, 

Improving or Maintaining Physical 

Health and Improving or Maintaining 

Mental Health. 

Response: Although the HOS data 

collection was completed as scheduled 

in fall 2020, CMS agrees that the 

COVID–19 PHE significantly impacted 

the validity of the two HOS outcome 

measures. CMS issued the HPMS 

memorandum ‘‘Medicare Health 

Outcomes Survey (HOS) Outcome 

Measures Moved to Display for 2022 

and 2023 Star Ratings,’’ on August 5, 

2021 announcing that the Improving or 

Maintaining Physical Health and 

Improving or Maintaining Mental 

Health measures would be moved to the 

display page on CMS.gov with a note 

that the comparisons were pre- and 

post-pandemic and that the measures 

would not be included in the 2022 and 

2023 Star Ratings because of validity 

concerns related to the COVID–19 PHE. 

These two measures were therefore not 

included in the 2022 Star Ratings, and 


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they will not be included in the 2023 

Star Ratings. 

After consideration of the public 

comments we received, we are 

finalizing without modification the 

provisions eliminating for 2020 the 

requirement to submit HEDIS and 

CAHPS data for MA contracts at 

§ 422.152(b)(6) and for cost plans at 

§ 417.472(i) and (j), and to submit 

CAHPS data for Part D contracts at 

§§ 423.156 and 423.182(c)(3). HOS data 

collection was completed as scheduled 

in fall 2020; thus, we are not finalizing 

the provision at § 422.166(j)(2) to 

replace any measures calculated based 

on HOS data collections for the 2022 

Star Ratings with earlier values from the 

2021 Star Ratings that were not affected 

by the public health threats posed by 

COVID–19. 

b. Adjustments to the 2021 Star Ratings 

Methodology Due To Lack of HEDIS and 

CAHPS Data 

The March 31st COVID–19 IFC 

replaced the 2021 Star Ratings measures 

calculated based on HEDIS and 

Medicare CAHPS data collections with 

earlier values from the 2020 Star Ratings 

(which were not affected by the public 

health threats posed by COVID–19) at 

§§ 422.166(j)(1) and 423.186(j)(1). 

Comment: Some commenters agreed 

with CMS that given the impact of the 

COVID–19 pandemic, CMS should use 

the 2020 Star Ratings scores and stars in 

place of 2021 Star Ratings scores and 

stars. Some commenters stated that such 

an approach would lessen the impact of 

any declines in performance that were 

driven by the PHE and outside of the 

control of Part C and D sponsors. 

Further, given that COVID–19 had 

differential geographic impacts 

throughout the country, commenters 

expressed that keeping all plans to the 

2020 ratings would keep scoring more 

stable. 

Other commenters recommended that 

CMS use the 2021 Star Ratings scores 

and stars. They stated that to not do so 

would not align with the goal of the 

program, which is to provide current 

unbiased and accurate information on 

the quality performance of a health or 

drug plan for consumers to make their 

best health care decisions. 

Some commenters also argued that to 

not use the 2021 Star Ratings would 

ignore the efforts plans had made during 

the previous year to significantly 

improve their HEDIS and CAHPS 

measure scores. Some commenters 

stated they disagreed with CMS’s 

statement that measure scores and stars 

do not fluctuate significantly year to 

year. They argued that not using 2021 

Star Ratings could negatively impact 

contracts demonstrating year-over-year 

improvement and ‘‘new’’ plans. 

Some commenters wanted the choice 

to use either their 2020 or 2021 Star 

Ratings. A few commenters suggested 

that if the 2021 HEDIS and CAHPS 

measures were not going to be used, 

these measures should be removed from 

the 2021 Star Ratings program or moved 

to the display page. 

Response: We believe that the 

provisions in the March 31st COVID–19 

IFC were necessary to ensure public 

health and safety during this 

unprecedented time. If we had required 

plans to collect HEDIS and CAHPS data, 

plans would have been forced to choose 

between protecting the safety of those 

collecting data, potentially diverting 

resources away from the urgent care 

needs of Medicare beneficiaries 

impacted by COVID–19, and collecting 

data needed by the Star Ratings 

program. 

For the 2021 Star Ratings, there was 

no reason not to use the most recent 

data available from all applicable 

sources. Unlike HEDIS and CAHPS, 

other data sources for the 2021 Star 

Ratings were not impacted by COVID– 

19 and could continue to be used to 

show recent plan performance. Given 

that not all data sources were impacted 

by COVID–19 for the 2021 Star Ratings, 

and CMS had the ability to calculate the 

2021 Star Ratings with the most recent 

data available for all measures, there 

was no reason to allow plans to choose 

if they wanted the 2020 Star Ratings or 

the 2021 Star Ratings. CMS did not 

consider moving both HEDIS and 

CAHPS data to the display page for the 

2021 Star Ratings, since that would have 

resulted in all contracts being rated on 

only 10 out of 32 Part C measures, 

which would not reflect the full range 

of care and services plans provide. 

After consideration of the public 

comments we received, we are 

finalizing without modification the 

provisions, as codified at 

§§ 422.166(j)(1) and 423.186(j)(1), to use 

the 2020 Star Ratings HEDIS and 

CAHPS data for the 2021 Star Ratings. 

c. Use of 2020 Star Ratings To Substitute 

for 2021 Star Ratings in the Event of 

Extraordinarily Compromised CMS 

Capabilities or Systemic Data Issues 

In the March 31st COVID–19 IFC, 

CMS established a process for the 

calculation of the 2021 Star Ratings in 

the event that the impact of the COVID– 

19 pandemic made it necessary for CMS 

to focus exclusively on the continued 

performance of essential agency 

functions, and the agency did not have 

the ability to calculate valid and 

accurate 2021 Star Ratings at 

§§ 422.164(i), 422.166(j)(1)(v), 

423.184(i), and 423.186(j)(1)(iv). 

CMS’s top priority at the beginning of 

the pandemic was to ensure public 

health and safety, including that of 

beneficiaries, health and drug plan staff, 

and providers, and to allow health and 

drug plans, providers, and physician 

offices to focus on the provision of care. 

Adopting this provision to address such 

extraordinary circumstances before they 

potentially could come to pass in 

connection with the COVID–19 

pandemic ensured that Medicare health 

and drug plans were aware of the steps 

CMS would take if we were unable to 

calculate the 2021 Star Ratings. 

Comment: Some commenters 

supported CMS’s proposal to establish 

modified methods of calculating or 

assigning 2021 Star Ratings if needed 

due to potential concerns over the 

impact of the COVID–19 pandemic on 

agency functions and the ability to 

calculate the Star Ratings. 

Response: CMS appreciates 

commenters’ understanding of our 

proposal to establish modified methods 

for calculating or assigning 2021 Star 

Ratings in the event that the impact of 

the COVID–19 pandemic made it 

necessary for CMS to focus exclusively 

on the continued performance of 

essential agency functions, or there were 

systematic measure-level data issues. 

We are not finalizing the proposed 

provisions at §§ 422.166(j)(1)(v) and 

423.186(j)(1)(iv) in this final rule, as 

CMS was able to calculate the 2021 Star 

Ratings. We are also not finalizing the 

special rules for 2021 Star Ratings at 

§§ 422.164(i) and 423.184(i), as CMS did 

not identify any data quality issues for 

non-HEDIS and non-CAHPS measures 

for the 2021 Star Ratings. 

d. Guardrails 

CMS modified §§ 422.166(a)(2)(i) and 

423.186(a)(2)(i) to delay the application 

of the guardrails for non-CAHPS 

measures until the 2023 Star Ratings are 

issued in October 2022. To increase the 

predictability of the cut points used for 

measure-level ratings, in the April 2019 

final rule (84 FR 15761), we adopted a 

rule that, starting with the 2022 Star 

Ratings, guardrails would be 

implemented for measures that have 

been in the program for more than 3 

years. As specified at §§ 422.166(a)(2)(i) 

and 423.186(a)(2)(i), the guardrails 

ensure that the measure thresholdspecific cut points for non-CAHPS 

measures do not increase or decrease 

more than 5 percentage points from 1 

year to the next. As noted in the April 

2019 final rule, the trade-off for the 

predictability provided by the bidirectional cap is the inability to fully 


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keep pace with changes in performance 

across the industry. While cut points 

that change less than the cap would be 

unbiased and keep pace with changes in 

the measure score trends, changes in the 

overall performance that are greater than 

the cap would not be reflected in the 

new cut points. We anticipated that 

most, if not all, contracts could have 

had performance changes on certain 

measures as they dealt with the 

demands of the COVID–19 pandemic 

that would result in the guardrails not 

keeping pace with changes in measure 

scores across the industry. Given the 

enormity of the COVID–19 pandemic, 

CMS believed it was important for plans 

to be able to focus on patients who were 

in the most need during the outbreak, 

and our guardrails, as currently 

constructed, could have had unintended 

incentives to the contrary. 

Comment: Many commenters agreed 

with our provision delaying the 

application of guardrails for non-CAHPS 

measures until the 2023 Star Ratings. 

These commenters appreciated that 

CMS recognized the significant changes 

in health care utilization that have 

occurred during the pandemic and that 

these changes in utilization might 

persist for some time. 

Response: CMS appreciates 

commenters’ support for this provision. 

After consideration of the public 

comments and for the reasons provided 

in the March 31st COVID–19 IFC and 

our responses to comments, CMS is 

finalizing without modification the 

provisions at §§ 422.166(a)(2)(i) and 

423.186(a)(2)(i) to delay the use of 

guardrails until the 2023 Star Ratings. 

e. Improvement Measures 

Another provision of the March 31st 

COVID–19 IFC expanded the existing 

hold harmless adjustment for the Part C 

improvement measures at 

§ 422.166(f)(1)(i) and (g)(3), and for the 

Part D improvement measures at 

§ 423.186(f)(1)(i) and (g)(3), to include 

all contracts for the 2022 Star Ratings, 

not just those with 4 or more stars for 

their highest rating. At the start of the 

COVID–19 pandemic, CMS anticipated 

that the pandemic could cause plan 

performance during the 2020 

measurement period to decline across 

the nation. Therefore, we believed it 

was appropriate to adopt a provision to 

minimize the impact of potential 

declines in the Part C and D 

improvement measures. Namely, for the 

2022 Star Ratings, if the inclusion of the 

Part C improvement measure reduced 

the Part C summary Star Ratings, it 

would be excluded from the calculation 

of the summary rating; if the inclusion 

of the Part D improvement measure 

reduced the Part D summary Star 

Rating, it would be excluded from the 

calculation of the summary rating; and 

if the inclusion of the Part C and Part 

D improvement measures reduced the 

overall Star Ratings, they would be 

excluded from the overall rating 

calculation. 

Comment: Many commenters 

supported the hold harmless provision 

for the Part C and D improvement 

measures to include all contracts for the 

2022 Star Ratings. Some commenters 

noted that the chaos and disruption 

brought about by COVID–19, which 

created unparalleled uncertainty and 

fear for members regarding health and 

health care, were likely to eclipse any 

quality improvement efforts 

implemented by MA plans during the 

performance year. 

Response: CMS thanks the 

commenters for their support of this 

provision. 

After consideration of the public 

comments and for the reasons outlined 

in the March 31st COVID–19 IFC, CMS 

is finalizing without modification the 

provisions at §§ 422.166(g)(3), 

423.186(g)(3), 422.166(f)(1)(i), and 

423.186(f)(1)(i), to apply the higher 

ratings after calculating the overall and 

summary ratings with and without the 

Part C and/or D improvement measures 

for all contracts only for the 2022 Star 

Ratings. 

f. QBP Calculations for New Contracts 

For the 2021 Star Ratings only, CMS 

modified the definition of a new MA 

plan to treat an MA plan as a new MA 

plan if it was offered by a parent 

organization that had not had another 

MA contract for the previous 4 years. 

New plans that started in 2019 and 

reported HEDIS and CAHPS data to 

CMS for the first time in 2020 for the 

2021 Star Ratings, because of our 

elimination of the HEDIS and CAHPS 

data submissions to CMS, would not 

have had enough measures to calculate 

the 2021 Star Ratings and, consequently, 

the 2022 QBP. A new contract with an 

effective date of January 1, 2019 would 

normally have been treated as new for 

QBP purposes for 2019, 2020, and 2021. 

The 2022 QBP rating was based on the 

2021 Star Ratings, which these new 

contracts did not have. 

Comment: Some commenters 

supported the modifications made to the 

definition of a new MA plan for 

purposes of 2022 QBPs based on 2021 

Star Ratings only. However, some 

commenters stated this modified 

definition of a new MA plan would 

penalize new plans, denying them the 

potential to receive 2022 QBPs. A 

commenter stated that with respect to 

placement on the Medicare Plan Finder, 

new plans would not have the option of 

earning top billing and placement if 

they are forced to remain unrated for 

2021. 

Response: Modifying the definition of 

a new MA plan as we did in the March 

31st COVID–19 IFC does not preclude a 

plan from receiving a QBP. In the March 

31st COVID–19 IFC, we modified the 

definition of a new plan such that, for 

purposes of 2022 QBPs based on 2021 

Star Ratings only, an MA plan is 

considered a new MA plan if it is 

offered by a parent organization that has 

not had another MA contract for the 

previous 4 years (rather than 3 years). 

New plans under parent organizations 

with other MA contracts would 

continue to get the enrollment-weighted 

average of the ratings of the other MA 

contracts under the parent organization, 

while new plans under parent 

organizations that did not have other 

MA contracts with ratings would 

continue to be treated as qualifying 

plans for the purposes of QBPs and 

would be eligible to receive a QBP 

percentage increase to the county rate of 

3.5 percentage points. 

In terms of placement on Medicare 

Plan Finder, we note that plans are 

currently sorted first by premium, not 

by Star Rating. 

After consideration of the public 

comments and for the reasons outlined 

in the March 31st COVID–19 IFC and 

our response to comments, CMS is 

finalizing the definition at § 422.252 

without modification, such that for only 

the 2022 QBP ratings that are based on 

2021 Star Ratings, a new MA plan is 

defined as one that is offered by a parent 

organization that has not had another 

MA contract for the previous 4 years. 

4. Provisions in the September 2nd 

COVID–19 IFC 

In addition to the provisions 

discussed in section II.D.3. of this final 

rule, the September 2nd COVID–19 IFC 

also adopted a modification to the 

application of the extreme and 

uncontrollable circumstances policy for 

calculation of the 2022 Star Ratings to 

address the effects of the COVID–19 

PHE (85 FR 54844–47). The September 

2nd COVID–19 IFC revised the current 

disaster policy, codified at §§ 422.166(i) 

and 423.186(i), for 2022 Star Ratings 

only by: (1) Removing the 60 percent 

exclusion rule for cut point calculations 

for non-CAHPS measures; and (2) 

removing the 60 percent exclusion rule 

for the determination of the 

performance summary and variance 

thresholds for the Reward Factor. As 

established by the IFC, new 

§ 422.166(i)(11) provides that CMS does 


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not apply the provisions of 

§ 422.166(i)(9) or (10) in calculating the 

2022 MA Star Ratings; and new 

§ 423.186(i)(9) provides that CMS does 

not apply the provisions of 

§ 423.186(i)(7) or (8) in calculating the 

2022 Part D Star Ratings. This change 

ensured that CMS could: (1) Calculate 

measure-level cut points for the 2022 

Star Ratings; (2) calculate measure-level 

Star Ratings for the 2022 Star Ratings; 

(3) apply the ‘‘higher of’’ policy for nonCAHPS measures, as described at 

§§ 422.166(i)(3)(iv) and (i)(4)(v) and 

423.186(i)(4)(i), for all contracts with 25 

percent or more of their enrollees living 

in FEMA-designated Individual 

Assistance areas which included all Part 

C and Part D contracts operational 

during the 2020 measurement period; 

and (4) ultimately calculate overall and 

summary ratings for 2022 Star Ratings 

and 2023 QBPs. 

The following is a summary of the 

public comments received on these Part 

C and Part D Star Ratings policies 

included in the September 2nd COVID– 

19 IFC. 

Comment: Most commenters 

supported dropping the 60 percent rule 

to be able to calculate 2022 non-CAHPS 

measure cut points and apply the 

existing adjustment for extreme and 

uncontrollable circumstances. They 

expressed support for modifying the 

disaster policy so that measure-level 

data for affected contracts with 60 

percent or more of their enrollees in 

FEMA-designated Individual Assistance 

areas during the 2020 performance and 

measurement period are not excluded 

from the measure-level cut point 

calculations for non-CAHPS measures 

and the performance summary and 

variance thresholds for the Reward 

Factor. Given the enormous impact the 

COVID–19 pandemic has had on the 

delivery of health care, commenters 

noted that allowing plans to receive the 

higher of their measure-level rating from 

2021 or 2022 Star Ratings would help 

ensure that plans are not penalized for 

declines in performance due to the 

pandemic. 

Response: We thank commenters for 

their support of these provisions. 

Comment: Some commenters 

requested clarification as to whether the 

adjustment for extreme and 

uncontrollable circumstances would 

apply to the CAHPS measures for the 

2022 Star Ratings. 

Response: Under §§ 422.166(i)(9) and 

423.186(i)(7), CMS excludes the 

numeric values for affected contracts 

with 60 percent or more of their 

enrollees in FEMA-designated 

Individual Assistance areas at the time 

of the extreme and uncontrollable 

circumstance from the clustering 

algorithms. This rule is limited to nonCAHPS measures since CAHPS 

measures do not use the clustering 

algorithm. Because the calculation of 

CAHPS cut points was not impacted by 

the 60 percent rule, it was not included 

in the IFC provisions. We did not 

propose or make any changes to the 

extreme and uncontrollable 

circumstance rules for the 2022 Star 

Ratings for CAHPS measures in 

§§ 422.166(i)(2) and 423.186(i)(2). 

Comment: Some commenters 

requested clarification about when the 

disaster policy would apply for the 

measures from the HOS. A few 

commenters questioned, based on how 

the disaster policy has previously 

applied for the HOS measures, whether 

CMS anticipated that the impacted HOS 

data collection period would not be 

until 2021 and the ‘‘higher of’’ 

methodology would be applicable to the 

2023 Star Ratings for HOS measures. 

Another commenter noted that for 

purposes of the 2020 Star Ratings, the 

contracts affected by 2018 disasters 

received the ‘‘higher of’’ logic for most 

measures; however, the HOS and 

HEDIS–HOS measures used the ‘‘higher 

of’’ logic only for contracts affected by 

2017 disasters. The commenter observed 

that if this timing applied to 2020 

disasters, the HOS and HEDIS–HOS 

measures would receive the higher of 

current or prior year measure-level Star 

Ratings in the 2023 Star Ratings. 

Response: We agree with these 

commenters that the HEDIS–HOS 

measures should receive the adjustment 

for extreme and uncontrollable 

circumstances for the 2023 Star Ratings. 

We proposed in the January 2022 

proposed rule a specific provision for 

2023 Star Ratings for HEDIS measures 

derived from the HOS data collection 

administered in 2021 covering the 2020/ 

2021 period. In section II.D.2. of this 

final rule, we finalize these changes for 

the 2023 Star Ratings for the HEDIS– 

HOS measures. 

Comment: A few commenters 

suggested that not all plans may be 

eligible for the extreme and 

uncontrollable circumstances policy. 

Response: All Part C and Part D 

contracts that were operational during 

2020 qualified for the relevant disaster 

adjustments for the 2022 Star Ratings. 

After consideration of the public 

comments and for the reasons outlined 

in the September 2nd COVID–19 IFC 

and our responses to comments, CMS is 

finalizing without modification the 

provisions at §§ 422.166(i)(11) and 

423.186(i)(9) to codify special rules for 

the calculation of the 2022 Star Ratings. 

E. Past Performance (§§ 422.502, 

422.504, 423.503, and 423.505) 

CMS has an obligation to ensure the 

organizations with whom it contracts 

are able to provide health care services 

to beneficiaries in a high-quality 

manner. CMS does not want 

organizations entering into or expanding 

in the MA and Prescription Drug 

programs that are poor performers. 

Currently, if an organization meets all of 

the requirements of CMS’ MA or 

Prescription Drug program application, 

CMS approves the application. 

However, the application requirements 

do not look at an organization’s prior 

performance in existing contracts. 

Therefore, if an organization fails to 

provide key services or administers the 

program poorly, their application for a 

new contract or a service area expansion 

would still be approved. Allowing poor 

performers into the MA and 

Prescription Drug programs puts 

beneficiaries at risk for inadequate 

health care services and prescription 

drugs. To avoid poor performers from 

entering or expanding, CMS first 

addressed this issue in the MA and Part 

D program regulations in 2005. CMS has 

established, at §§ 422.502(b) and 

423.503(b), that we may deny an 

application submitted by an 

organization seeking an MA or 

Prescription Drug program contract, 

including for a service area expansion, 

if that organization has failed to comply 

with the requirements of a previous MA 

or Prescription Drug contract. In the 

April 2011 final rule (75 FR 19684 

through 19686), we completed 

rulemaking that placed limits on the 

period of contract performance that 

CMS would review (that is, 14 months 

preceding the application deadline) and 

established that CMS would evaluate 

contract compliance through a 

methodology that would be issued 

periodically through sub-regulatory 

guidance. In the April 2018 final rule 

(83 FR 16638 through 16639), we 

reduced the review period to 12 months. 

In the January 2021 final rule (86 FR 

5864), we established that CMS would 

only have the authority to deny 

applications based on an organization’s 

past performance if an organization was 

subject to an intermediate sanction and/ 

or failed to maintain a fiscally sound 

operation during the performance 

review period. Up until the January 

2021 final rule (86 FR 5864) CMS issued 

a sub-regulatory methodology consisting 

of eleven areas of poor performance, 

including negative net worth and being 

under intermediate sanctions during the 

performance timeframe. The prior 

methodology assigned ‘‘performance 


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points’’ to organizations for each area 

the organization failed (for example, had 

a negative net worth resulted in a 

performance point). If the total number 

of performance points reached CMS’ 

threshold the organization’s application 

would be denied based on past 

performance. Historically, only a 

handful of applications have been 

denied based on prior past performance, 

with three denials since 2017. The low 

number of denials has not impacted 

access to MA plans nor do we believe 

expanding the bases for denials will 

impact access. In fact, the average 

number of plans that a beneficiary has 

access to has been increasing since 2015 

with approximately 99.7 percent of 

beneficiaries currently having access to 

an MA plan. In addition, 97.7 percent of 

eligible beneficiaries have access to ten 

or more plans in CY 2022. 

As stated in the January 2021 final 

rule, CMS’ overall policy with respect to 

past performance remains the same. We 

have an obligation to ensure MA 

organizations and Prescription Drug 

sponsors can fully manage their current 

contracts and books of business before 

expanding. CMS may deny applications 

based on past contract performance in 

those instances where the level of 

previous non-compliance is such that 

granting additional MA or Prescription 

Drug business to the organization would 

pose a high risk to the success and 

stability of the MA and Prescription 

Drug programs and their enrollees. 

The January 2021 final rule limited 

the bases for denial based on past 

performance to intermediate sanctions 

and failure to maintain fiscal soundness. 

In the proposed rule, CMS sought to 

expand the bases for application denial 

to include Star Ratings history, 

bankruptcy proceedings, and certain 

CMS compliance actions. CMS also 

proposed to codify the types of 

compliance notices which would be 

used as a factor in CMS’ review of an 

organization’s past performance. These 

notices are Notices of Non-Compliance 

(NONCs), Warning Letters (WLs), and 

Corrective Action Plans (CAPs). 

We are codifying the new bases for 

application denial based on past 

contract performance as paragraphs 

(b)(1)(i)(C)—Bankruptcy filing or under 

bankruptcy proceedings, (b)(1)(i)(D)— 

low Star Ratings, and (b)(1)(i)(E)— 

Compliance Actions. We are also 

codifying CMS’ compliance actions 

which are NONCs, WLs, and CAPs in 

§§ 422.504(m) and 423.505(n). We note 

that the basis for application denial 

based on past contract performance is 

not applicable for MA organizations 

establishing new D–SNP-only contracts 

under § 422.107(e) as described in 

section II.A.6.a. 

We proposed to correct a few 

technical issues identified since the 

final rule was published in January 2021 

and will be codifying those proposals. 

Specifically, we proposed to correct a 

drafting error in § 422.502(b)(1)(i)(A) 

that did not include enrollment 

sanctions based on medical loss ratios 

(MLRs) as a basis for an application 

denial. The technical correction revises 

§ 422.502(b)(1)(i)(A) to also provide for 

the denial of an application if the 

organization failed to meet MLR 

requirements and was prohibited from 

enrolling pursuant to § 422.2410(c). 

Secondly, we proposed to correct a 

minor technical error in 

§ 423.503(b)(1)(i)(A) to remove the word 

‘‘to’’ when referencing subpart O. 

Finally, we proposed to modify 

§§ 422.502(b)(1) and 423.503(b)(1) by 

deleting ‘‘. . . or fails to complete a 

corrective action plan during the 12 

months preceding the deadline 

established by CMS for the submission 

of contract qualification 

applications. . .’’ References to CAPs in 

§§ 422.502(b)(1) and 423.503(b)(1) were 

codified more than 15 years ago. Since 

the original provisions, CMS’ corrective 

action process has changed and is no 

longer a reason, by itself, to deny an 

application. 

As discussed, we proposed to include 

in §§ 422.502(b)(1)(i)(C) and 

423.503(b)(1)(i)(C), as a reason for 

application denial, organizations that 

have filed for bankruptcy or are 

currently in bankruptcy proceedings. 

Failure to maintain a fiscally sound 

operation results in enrollees being at 

risk of not being able to obtain needed 

medical resources if the organization 

cannot or will not pay its providers. 

Similar to being fiscally unsound, an 

organization that will potentially be 

declared bankrupt may result in 

beneficiaries not having access to 

needed services as providers may 

terminate contracts when the plan fails 

to pay for their services or items. Since 

bankruptcy may result in the closure of 

an organization’s operations, permitting 

an organization to expand while under 

bankruptcy proceedings is not in the 

best interest of the MA or Prescription 

Drug program. Based on this, we believe 

that any organization that has filed or is 

in bankruptcy proceedings should not 

be permitted to expand their current 

service area or enter into a new contract. 

We also sought to include, in 

§§ 422.502(b)(1)(i)(D) and 

423.503(b)(1)(i)(D), a recent history of 

low Star Ratings as a reason for 

application denial. We proposed that 

CMS would deny an application for a 

new contract or a service area expansion 

from any organization that received 2.5 

or fewer Stars. 

CMS’ Star Ratings are provided to 

beneficiaries to help them make 

informed health care choices. Moreover, 

MA organizations and Prescription Drug 

sponsors are required by 

§§ 422.504(b)(17) and 423.505(b)(26) to 

maintain summary Part C and/or Part D 

Star Ratings of at least 3 Stars. Contracts 

that have 2.5 or less Stars are considered 

to be ‘‘low performers.’’ Regulations at 

§§ 422.510(a)(4) and 423.509(a)(4) 

permit CMS to terminate a contract for 

having less than 3 Stars for 3 

consecutive years in a row for Part C 

summary ratings or for having less than 

3 Stars for 3 consecutive years in a row 

for Part D summary ratings. Such a 

termination carries with it an exclusion 

from future MA or Prescription Drug 

application approvals for 38 months 

under §§ 422.502(b)(3) and 

423.503(b)(3), a more significant 

consequence than the 1-year application 

denial we are discussing in this rule. We 

have decided, based on comments, that 

a 2-year history of low Star Ratings is a 

better indicator of poor performance. 

However, we are clarifying that the 

applicant’ that have 2.5 or less stars for 

their Part C Summary rating, their Part 

D Summary rating, or a combination of 

Part C and Part D Summary ratings for 

two years be subject to application and 

service area expansion denials. 

Finally, we proposed to codify our 

practice of issuing compliance notices 

in §§ 422.504(m) and 423.505(n). CMS 

also proposed, in §§ 422.502(b)(1)(i)(E) 

and 423.503(b)(1)(i)(E), to include the 

receipt of specific types of compliance 

notices as a reason to deny new 

applications or applications for service 

area expansions. 

Prior to the January 2021 final rule, 

CMS included compliance letters as a 

category in our sub-regulatory past 

performance methodology. This 

methodology included NONCs, WLs, 

Warning Letters with Business Plans, 

and CAPs. These notices are CMS’ 

formal way of recording an 

organization’s failure to comply with 

statutory and/or regulatory requirements 

as well as providing notice to the 

organization to correct their deficiencies 

or risk further compliance and 

enforcement actions. 

Of these three types of notices, 

requests for CAPs are the most serious 

of the notice types. CMS issues these 

notices pursuant to §§ 422.510(c) and 

423.509(c), which require CMS to afford 

non-compliant organizations the 

opportunity to develop and implement 

a corrective action plan prior to 

terminating an MA or Prescription Drug 


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contract. CMS may request CAPs for a 

one-time egregious error or an 

organization’s continued failure to 

correct previously identified 

deficiencies. The non-compliance 

resulting in a CAP request usually has 

beneficiary impact, such as failure to 

process appeals timely or marketing 

misrepresentation. In cases where CMS 

requests a CAP where there is no 

beneficiary impact, the majority are for 

continued non-compliance with 

requirements. 

WLs are an intermediate level of 

compliance action, between a NONC 

and a CAP. WLs, similar to CAPs, are 

issued for more egregious instances of 

non-compliance or continued noncompliance. However, the egregiousness 

or continued non-compliance, at the 

time of the notice, would not warrant a 

request for a CAP. Examples include 

continued failure to timely send 

Explanation of Benefits, multiple cost/ 

benefit errors on required beneficiary 

communication documents, and 

instances of unsolicited marketing. 

NONCs are the lowest form of a 

compliance action issued by CMS. 

These notices are issued for the least 

egregious failures. These failures are 

often a first-time offense, affect a small 

number/percentage of beneficiaries, or 

issues that have no beneficiary impact. 

Examples may include failure to submit 

and/or attest to agent/broker 

compensation data or failure to upload 

or correctly upload marketing materials. 

In determining the level of severity of 

a compliance action, CMS considers 

whether an organization self-reported 

the non-compliance. CMS considers 

items self-reported when CMS would 

not have otherwise known about the 

issue. In cases where we direct 

organizations to take a specific action, 

such as reviewing and reporting errors 

in Summary of Benefits (SB) and 

Evidence of Coverage (EOC) documents, 

CMS does not consider this selfreporting. 

As mentioned above, self-reporting 

can affect the level of compliance action 

issued. CMS reviews the organization’s 

non-compliance and whether the 

organization self-reported the issue or 

CMS found the issue through means 

such as, complaint reviews, notification 

by a State entity, or a review of 

requested data. Based on the issue 

involved, CMS determines the 

appropriate level of compliance that 

should be issued, such as a WL or a 

NONC. If the organization did selfreport, CMS will consider lowering the 

level of compliance (for example, 

issuing a NONC instead of a WL). 

However, CMS is not required to lower 

the level of compliance action if the 

issue was self-reported. This is 

especially the case with respect to 

NONCs, where the non-compliance is 

significant enough to warrant a NONC 

even if self-reported. 

We proposed to assign points to each 

type of compliance action based on the 

type of notice and then apply a 

compliance action threshold to 

determine if the application should be 

denied. The following points would be 

assigned: CAP—6 points, WL—3 points, 

NONC—1 point. CMS will then total the 

points accrued for each contract, and 

those applicants that have any single 

contract with 13 or more compliance 

action points may have applications for 

new contracts or service area 

expansions denied on the basis of past 

performance. 

CMS determined the threshold, by 

reviewing compliance actions taken 

from 2017 through November 2021. In 

the review of this data no more than 

three organizations, out of over three 

hundred organizations, scored 13 or 

more compliance action points in any 

one year. When looking at a percentile, 

based on historical data, an organization 

would need be in the top 2 percent of 

plans based on compliance action 

points to accrue 13 compliance action 

points. 

For these reasons, we are finalizing 

the regulations as proposed, with 

clarifications regarding compliance 

actions and modifications to Star 

Ratings. Below we summarize the 

comments received and our responses. 

Comment: We received numerous 

comments supporting our provisions. 

Response: We appreciate the support 

for our proposals. 

Comment: A few of the commenters 

who supported our provisions requested 

CMS take stronger action against plans 

including reviewing plan governance, 

civil and criminal penalties, ensuring 

plans have enough liquid assets to cover 

liabilities to providers, and reviews of 

consumer complaints. 

Response: CMS appreciates the 

recommendations and will continue to 

review performance areas to determine 

if additional reasons for service area 

expansions and application denials 

should be added to future regulations. 

Comment: A few commenters 

suggested that the overall methodology 

was too harsh and that it would 

penalize too many plans. A commenter 

suggested that we limit denials to one 

contract per Parent organization and do 

not deny applications of contracts that 

have less than 10 percent of the Parent 

organization’s total enrollment. 

Response: CMS appreciates the 

suggestion but does not believe it is in 

the best interest of the program to limit 

denials to one contract per Parent 

organization or those contracts with less 

than 10 percent of the Parent 

organization’s enrollment. The purpose 

of past performance is to limit the 

expansion of all poor performing 

applicants, not just one poor performing 

contract or only those contracts with 

significant enrollment. The goal of past 

performance assessments would be 

undermined should a Parent 

organization be allowed to choose 

which contracts are subject to the past 

performance evaluation and which are 

not. The purpose of our past 

performance evaluation is to ensure that 

all applicants, regardless of enrollment 

numbers, are sufficiently qualified to 

expand into a new service area or enter 

into a new contract. 

Comment: A commenter suggested 

CMS go back to the past performance 

methodology prior to the January 2021 

final rule, specifically using the outlier 

percentage threshold for compliance 

letters and requiring poor performance 

in more than one category. 

Response: CMS appreciates the 

comment. However, we believe the 

current and proposed methodology 

sufficiently identifies poor performers. 

The previous methodology, using an 80 

percent and 90 percent outlier resulted 

in ‘‘poor performers’’ in the compliance 

category regardless of the number of 

compliance actions received. A contract 

with few compliance actions could be 

considered an outlier based on other 

contracts having one or two fewer 

compliance actions. The prior 

methodology also failed to identify poor 

performers if many contracts received a 

significant number of compliance 

actions. We believe the threshold 

number appropriately identifies all 

contracts that are poor performers in the 

compliance action category. We also do 

not agree that an applicant should be 

required to have poor performance in 

more than one category. We believe 

failing to meet CMS’ requirements for 

any of our categories is sufficient to 

determine that the applicant is not 

qualified to enter into new contracts or 

expand existing service areas based on 

their past performance. Therefore, we 

will continue to deny applications when 

the applicant fails to achieve sufficient 

performance in any one category. 

Comment: We received a few 

comments requesting clarification or 

asking that CMS’ Program Audit 

Corrective Action Plans be excluded 

from the compliance category. 

Response: CMS is clarifying that CAPs 

resulting from CMS’ Program Audits 

were not included in the compliance 

action category of our proposal or this 

final rule. 


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86Part C and D Performance Data CMS. 

Comment: We received comments 

regarding the inclusion of Star Ratings 

as one of the bases for application 

denials. A few commenters asked if the 

Star Ratings used for past performance 

were the overall Star Ratings or the 

summary Star Ratings for Part C and 

Part D. A few commenters requested 

that CMS use the overall Star Ratings 

and a few commenters requested that 

CMS average the parent organization’s 

Star Ratings instead of using the 

contract-level Star Ratings. 

Response: CMS notes that Star Ratings 

are calculated at the contract level and 

not the parent organization level. In 

addition, we note that CMS contracts 

with a legal entity, not a parent 

organization. Therefore, averaging all 

Star Ratings for all contracts under a 

parent organization would be 

inconsistent with how CMS contracts 

with organizations. As for using the 

overall Star Rating instead of the Part C 

or Part D Summary rating, CMS notes 

that our existing termination authority 

at §§ 422.504(a)(17) and 423.505(b)(26) 

is based on low ratings for either the 

Part C or Part D summary rating. Using 

the overall Star Rating for past 

performance would be inconsistent with 

the application of Star Ratings for 

termination. To ensure clarity, we have 

modified the regulatory text to clarify 

that CMS will use the Part C or Part D 

summary Star rating for past 

performance purposes. 

Comment: Commenters had various 

concerns regarding Star Ratings in the 

past performance methodology. A few 

commenters opposed including Star 

Ratings in the methodology. 

Commenters expressed concern that 

public health emergencies, such as 

COVID–19, had a negative effect on Star 

Ratings. A few commenters believe the 

inclusion of Star Ratings would 

disincentivize high performing plans 

from acquiring low performing plans 

and decrease plan options. Other 

commenters stated that CMS already has 

the authority to terminate contracts after 

three years of low ratings and that 

should be sufficient. A few commenters 

suggested that CMS use two years, 

instead of one year, of Star Ratings in 

the past performance methodology. 

Response: CMS appreciates the 

commenters’ concerns regarding the 

inclusion of Star Ratings in the past 

performance methodology. Based on the 

comments received, we are finalizing 

our proposal with a modification to 

require that a contract have two 

consecutive years of Part C Summary, 

Part D Summary, or a combination of 

Part C and Part D Summary ratings of 

2.5 or below to receive a denial of new 

applications or service area expansions. 

CMS will use the two most recent Star 

Ratings period—that is, those that fall in 

the 12-month lookback period as 

specified in 42 CFR 422.502(b)(1) and 

423.503(b)(1). More specifically, if an 

organization received a Part C summary 

rating of 2.5 or below for both of the 

most recent Star Rating periods, CMS 

will deny a new application or a service 

area expansion. The same holds true if 

an organization received a Part D 

summary rating of 2.5 or below for both 

of the most recent Star Rating periods. 

If an organization received a Part C 

summary rating of 2.5 or below for one 

of the Star Rating periods during the 

most recent lookback period and 

received a Part D summary of 2.5 or 

below for the other Star Rating period 

during the most recent lookback period, 

CMS will also deny new applications or 

service areas expansions. For example, 

for a 2024 application submitted in 

February 2023, the lookback period will 

be March 1, 2022 through February 28, 

2023, which includes the 2022 and 2023 

Star Ratings periods. If the applicant 

received a summary Star Rating of 2.5 

or below for Part C or Part D for the 

2022 Star Rating period AND for the 

2023 Star Rating period, then the 

application will be denied. If the 

organization received a Part C/or Part D 

summary Star Rating of 2.5 or below 

only for the 2022 Star Rating period or 

only for the 2023 Star Rating period, 

then the application will not be denied. 

With respect to commenters’ concern 

that emergencies, such as the COVID–19 

pandemic, negatively affect Star Ratings, 

we note that CMS addresses 

emergencies, such as COVID–19, in the 

calculation of Star Ratings using an 

adjustment for extreme and 

uncontrollable circumstances policy 

codified at §§ 422.166(i) and 423.186(i) 

to mitigate the impact of the disaster on 

Star Ratings. CMS adopted a number of 

changes to address expected changes in 

plan performance due to the COVID–19 

public health emergency (PHE) on Star 

Ratings in the March 31stCOVID–19 IFC 

(85 FR 19230) and September 2nd 

COVID–19 IFC (85 FR 54820). Although 

we expected a decline in measure scores 

across Star Ratings measures for the 

2020 measurement year, we did not see 

a decline across all measures and saw 

an increase in scores for a number of 

measures (see the Fact Sheet—2022 Part 

C and D Star Ratings86). Based on CMS’s 

authority to account for extreme and 

uncontrollable circumstances, such as 

the COVID–19, we do not believe the 

methodology needs to be modified 

based on issues related to disasters. 

Finally, in response to the 

commenters who believe that plan 

choices will decrease as a result of our 

proposed inclusion of low Star Ratings 

as a basis for application denial, we 

believe the commenters do not fully 

understand the proposed methodology. 

The purpose of the methodology is to 

prohibit expansions of contracts, not to 

terminate or decrease the service area of 

contracts. Based on this, beneficiaries 

will still be able to enroll or stay 

enrolled in an existing contract, even 

though the contract has low Star 

Ratings. However, the legal entity will 

not be able to expand into new service 

areas or add new contracts. 

Comment: A few commenters were 

unsure if the methodology was at the 

Parent organization level, the legal 

entity level, or the contract level. 

Response: CMS’ contract and past 

performance methodology is calculated 

at the legal entity level. CMS contracts 

with a legal entity that covers one or 

more contracts. If any one of the 

contracts under the legal entity meets 

any one of the reasons for denial, all 

new applications and service area 

expansions under that legal entity will 

be denied. 

Comment: A few commenters 

suggested CMS provide MA 

organizations with an appeal process for 

compliance actions. 

Response: CMS appreciates the need 

to ensure that compliance actions taken 

against MA organizations are accurate 

and appropriate. However, we do not 

believe an appeal process is necessary. 

The majority of our compliance actions 

are data driven, with formal thresholds 

that define whether an organization 

receives a compliance action and what 

level of action is issued. CMS also has 

an organized process which all potential 

compliance actions must go through, 

resulting in greater consistency in the 

issuance of compliance actions. In 

addition, when requested by an 

organization, CMS reviews information 

provided by the organization and rereviews the compliance action to 

determine if the action was appropriate. 

CMS has a long-standing history of 

discussing compliance actions with 

organizations and retracting or 

modifying compliance actions when 

necessary. Based on our existing process 

we do not feel a formal appeals process 

is necessary for compliance actions. 

CMS notes that a formal appeal process 

is available for applicants whose 

application has been denied for past 

performance reasons specified in this 

rule. 

Comment: A few commenters were 

unsure if the compliance action 

threshold was at the contract level or if 


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all contract points for the legal entity 

were added together. 

Response: The compliance action 

point threshold of 13 is at the contract 

level. We have modified the regulatory 

text to ensure clarity regarding the point 

threshold. CMS will review all of the 

compliance actions and total the points 

for each contract. If any particular 

contract under a legal entity has 13 or 

more compliance action points new 

applications and service area 

expansions for that legal entity will be 

denied. 

Comment: A few commenters were 

concerned that one small contract could 

affect the entire organization. 

Response: CMS acknowledges that 

one poor performing contract could 

prohibit an applicant from service area 

expansions of other contracts or prohibit 

the applicant from entering into a new 

contract. As previously stated, if an 

organization has a poor performing 

contract it is in the best interest of the 

program for that organization to focus 

on improving the performance of the 

poor performing contract, no matter 

how small or how few enrollees are in 

the contract, instead of expanding their 

footprint. CMS believes all contracts 

under a legal entity should meet our 

requirements before that legal entity is 

permitted to expand into new service 

areas or add new contracts. 

Comment: A commenter stated that 

CMS should only consider the financial 

health of the acquiring organization and 

not of the financial health of the 

organization being acquired. 

Response: Organizations that acquire 

a poor performing organization are 

provided a 24-month grace period 

preceding the subsequent application 

deadline, after which the performance 

of the acquired organization will be 

factored into the acquiring 

organization’s performance. Based on 

this, if a fiscally sound organization 

acquires an organization that fails to 

meet CMS’ net worth requirements, the 

acquiring organization will not be 

denied the opportunity to expand into 

new service areas or add new contracts, 

if the entity was acquired within the 24- 

month period prior to the application 

deadline. However, the acquired 

organization will still be denied. Given 

the acquired organization has significant 

fiscal soundness issues, the acquiring 

organization should be putting all 

necessary resources into the acquired 

organization’s fiscal soundness issues, 

rather than trying to expand or enter 

into new contracts under that legal 

entity. 

Based on the comments received, we 

are finalizing as proposed with a few 

modifications. The first modification is 

to use 2 years of Star Ratings for Part C 

Summary, Part D Summary, or a 

combination of Part C and Part D 

Summary ratings. The second 

modification is to clarify that CMS is 

using the Part C Summary and Part D 

Summary Star ratings. The final 

modification is to clarify that the 13 

compliance action points are allotted on 

a per contract basis. 

F. Marketing and Communications 

Requirements on MA and Part D Plans 

To Assist Their Enrollees (§§ 422.2260 

and 423.2260, 422.2267, and 423.2267) 

As discussed in the proposed rule, 

sections 1851(h) and (j) of the Act 

provide a structural framework for how 

MA organizations may market to 

beneficiaries and direct CMS to adopt 

standards related to the review of 

marketing materials and limitations on 

marketing activities. Section 1860D– 

1(b)(1)(B)(vi) of the Act directs that the 

Secretary use rules similar to and 

coordinated with the MA rules at 

section 1851(h) of the Act for approval 

of marketing material and application 

forms for Part D plan sponsors. Section 

1860D–4(l) of the Act applies certain 

prohibitions under section 1851(h) of 

the Act to Part D sponsors in the same 

manner as such provisions apply to MA 

organizations. In addition, sections 

1852(c) and 1860D–4(a) of the Act 

provide that MA organizations and Part 

D sponsors must disclose specific types 

of information to each enrollee. Based 

on these authorities, CMS has 

promulgated regulations related to 

marketing and mandatory disclosures by 

MA organizations and Part D sponsors 

in 42 CFR part 422, subparts C (at 

§ 422.111) and V; as well as 42 CFR part 

423, subparts C (at § 423.128) and V, as 

directed in the statutory authority 

granted to the agency. Additionally, as 

we noted in the proposed rule, under 42 

CFR 417.428, most marketing 

requirements in subpart V of part 422 

also apply to section 1876 cost plans. 

Finally, CMS has authority to adopt 

additional contract terms for cost plans 

(section 1876(i)(3)(D of the Act)), MA 

plans (section 1857(e)(1)) of the Act), 

and Part D plans (section 1860D– 

12(b)(3)(D) of the Act) where such terms 

are not inconsistent with the Medicare 

statute and that we determine are 

necessary and appropriate. 

As we did in the proposed rule, 

because the changes that CMS is 

finalizing in this section are, unless 

otherwise noted, applicable to MA 

organizations, Part D plan sponsors, and 

section 1876 cost plans, we collectively 

refer to these entities in this section as 

‘‘plans.’’ 

In the January 2021 final rule, entitled 

‘‘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’’ (86 FR 5864), we 

codified much of the communications 

and marketing guidance previously 

found in the Medicare Communications 

and Marketing Guidelines (MCMG). In 

this final rule, we are codifying 

additional guidance and standards from 

the MCMG that was not part of the 

January 2021 final rule related to 

member ID card standards, the limited 

access to preferred cost-sharing 

pharmacies disclaimer, plan website 

instructions on how to appoint a 

representative, and the website posting 

of enrollment instructions and forms. In 

addition, we are codifying several new 

communications and marketing 

requirements aimed at further 

safeguarding Medicare beneficiaries, 

including reinstating the requirement 

that plans include a multi-language 

insert with specified required materials. 

Finally, we are codifying requirements 

to address concerns associated with 

third-party marketing activities. 

1. Required Materials and Content 

Under § 422.111(i), MA plans must 

issue and reissue (as appropriate) 

member identification cards that 

enrollees may use to access covered 

services under the plan. Likewise, under 

1860D–4(b)(2)(A) of the Act and 

§ 423.120(c)(1), a Part D plan sponsor 

must issue a card or other type of 

technology that its enrollees may use to 

access negotiated prices for covered Part 

D drugs. In the proposed rule, we 

proposed to codify CMS’s current 

guidance for additional ID card 

standards, which has historically been 

issued in the MCMG. 

Comment: Most comments that we 

received on this proposal were 

supportive. Commenters indicated that 

including ID cards as required materials 

will ensure consistency for beneficiaries 

regardless of the plan in which they 

enroll. 

Response: We acknowledge and 

appreciate the support for this provision 

as well as the awareness of the vital 

nature of the provision. 

Comment: We received a comment 

that pursuant to the existing standards 

for required materials and context, the 

ID card would, as a required material, be 

subject to the 12-point font requirement 

whereas CMS guidance has previously 

excluded ID cards from that 

requirement. Such comment requested 


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that we continue to exclude the ID card 

from the 12-point font requirement to 

which required materials are subject. 

Response: We thank the commenter 

and acknowledge that it would be 

impractical to require a 12-point font on 

an ID card. Furthermore, we 

acknowledge that we have previously 

(in the MCMG) excluded the ID card 

from the 12-point font requirement. In 

addition, we note that CMS has 

followed the guidance of the Workgroup 

for Electronic Data Interchange (WEDI) 

in crafting our required formatting for 

communications materials. However, as 

WEDI does not stipulate any 

requirements for font size, we will not 

extend our font size requirement to ID 

cards. 

We are codifying the guidance for ID 

card requirements under 

§§ 422.2267(e)(30) and 423.2267(e)(32) 

as proposed, except that in response to 

the aforementioned comment we are 

including an additional clarifying at 

§§ 422.2267(e)(30)(vii) and 

423.2267(e)(32)(vii) to exclude the ID 

cards from the 12-point font size 

requirement under §§ 422.2267(a)(1) 

and 423.2267(a)(1). In addition, we have 

renumbered the remaining required 

content beginning with the Federal 

Contracting statement, previously at 

§§ 422.2267(e)(30) and 423.2267(e)(32). 

In the January 2021 final rule, when 

codifying several other required 

disclaimers previously provided in the 

MCMG, Appendix 2, at §§ 422.2267(e) 

and 423.2267(e), CMS inadvertently left 

out the disclaimer for Part D sponsors 

with limited access to preferred costsharing pharmacies. In the January 2022 

proposed rule, we discussed the 

importance of this disclaimer and the 

impact of its omission on Medicare 

beneficiaries enrolled in Part D plans 

that only provide access to preferred 

cost-sharing through a limited number 

of pharmacies. 

Comment: The comments we received 

on this proposal were supportive. 

Response: We acknowledge and 

appreciate the support for this proposal. 

For the reasons set forth in the 

proposed rule and in response to the 

supportive comments we received, we 

are codifying this disclaimer 

requirement at § 423.2267(e)(40), as 

proposed. 

2. Website Requirements 

The regulations at §§ 422.111(h)(2) 

and 423.128(d)(2) require plans to have 

an internet website and include 

requirements regarding posted content. 

In the January 2021 final rule, we 

codified additional requirements for 

plan websites at §§ 422.2265 and 

423.2265 based on section 70.1.3 

(Required Content) of the MCMG. In 

doing so, we inadvertently failed to 

include the requirement that plans post 

instructions about how to appoint a 

representative and include a link to a 

downloadable version of the CMS 

Appointment of Representative Form 

(Control Number 0938–0950)), as well 

as enrollment instructions and forms. 

Comment: We received comments 

supporting this proposal. 

Response: We acknowledge and 

appreciate the support for this 

provision. 

Comment: A commenter noted that 

CMS did not include the Notice of 

Dismissal of Appeal in part 423. 

Additionally, CMS has not included the 

Notice of Dismissal of Coverage Request 

in either part 422 or 423. The comment 

requested that CMS codify both of these 

notices as indicated. 

Response: This comment is outside 

the scope of the current rule. However, 

CMS appreciates the observation and 

will consider this suggestion in future 

rulemaking. We note that the appeal 

regulations in subparts M of parts 422 

and 423 (for example §§ 422.568(h) and 

423.568(j)) address the content 

requirements for notices of dismissal. 

In this final rule, after consideration 

of the comments received in response to 

this proposal and for the reasons 

described in the proposed rule, we are 

codifying these two requirements as 

proposed under §§ 422.2265(b)(13), 

423.2265(b)(14), 422.2265(b)(14), and 

423.2265(b)(15), respectively. 

3. Multi-Language Insert 

In the proposed rule, we explained 

the history of the multi-language insert 

(MLI) (a standardized document that 

informs the reader that interpreter 

services are available in the 15 most 

common non-English languages in the 

United States), CMS’s previous 

requirement in the Medicare Marketing 

Guidelines (MMG) that plans include 

the MLI with certain materials, and why 

CMS eventually removed from this 

requirement for MA plans, Part D 

sponsors, and 1876 cost plans because 

it was duplicative of certain notice and 

tagline requirements implemented by 

the Office for Civil Rights (OCR) in 

2016. Specifically, on May 18, 2016, the 

OCR published a final rule (81 FR 

31375; hereinafter referenced to as the 

section 1557 final rule) implementing 

section 1557 of the Patient Protection 

and Affordable Care Act (ACA) (Pub. L. 

111–148). Section 1557 of the ACA 

provides that an individual shall not be 

excluded from participation in, be 

denied the benefits of, or be subjected 

to discrimination on the grounds 

prohibited under Title VI of the Civil 

Rights Act of 1964, 42 U.S.C. 2000d et 

seq. (race, color, national origin), Title 

IX of the Education Amendments of 

1972, 20 U.S.C. 1681 et seq. (sex 

(including pregnancy, sexual 

orientation, and gender identity)), the 

Age Discrimination Act of 1975, 42 

U.S.C. 6101 et seq. (age), or section 504 

of the Rehabilitation Act of 1973, 29 

U.S.C. 794 (disability), under any health 

program or activity, any part of which 

is receiving Federal financial assistance; 

any health program or activity 

administered by the Department; or any 

program or activity administered by any 

entity established under Title I of the 

Act. Part of OCR’s 2016 final rule (81 FR 

27778) included the requirement that all 

covered entities include taglines with 

all ‘‘significant communications’’. The 

sample tagline provided by the 

Department consisted of a sentence 

stating ‘‘ATTENTION: If you speak 

[insert language], language assistance 

services, free of charge, are available to 

you. Call 1–xxx–xxx–xxxx (TTY: 1– 

xxx–xxx–xxxx).’’ in the top 15 

languages spoken in a state or states. 

Because of the inherent duplication 

with the MLI, CMS issued an HPMS 

email on August 25, 2016 removing the 

MLI. On June 14, 2019, OCR published 

a proposed rule that, among other 

actions, proposed to repeal the 

requirement that notices and taglines be 

provided with all significant 

communications (84 FR 27846). Finally, 

on June 19, 2020, OCR published a final 

rule that finalized the repeal of the 

notice and tagline requirements while 

requiring that a covered entity take 

reasonable steps to ensure meaningful 

access to its programs or activities by 

LEP individuals (85 FR 37160, 37210, 

37245). 

In a proposed rule titled ‘‘Medicare 

and Medicaid Programs; Contract Year 

2021 and 2022 Policy and Technical 

Changes to the Medicare Advantage 

Program, Medicare Prescription Drug 

Benefit Program, Medicaid Program, 

Medicare Cost Plan Program, and 

Programs of All-Inclusive Care for the 

Elderly,’’ which appeared in the Federal 

Register on February 18, 2020 (85 FR 

9002) (hereinafter referred to as the 

February 2020 proposed rule), CMS 

proposed an availability of non-English 

translations disclaimer. The disclaimer 

consisted of the statement 

‘‘ATTENTION: If you speak [insert 

language], language assistance services, 

free of charge, are available to you. Call 

1–XXX–XXX–XXXX (TTY: 1–XXX– 

XXX–XXXX).’’ We proposed that the 

disclaimer be required in all nonEnglish languages that met the five 

percent threshold for language 


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translation under §§ 422.2267(a)(2) and 

423.2267(a)(2). In addition, when 

applicable, we proposed the disclaimer 

be added to all required materials under 

§§ 422.2267(e) and 423.2267(e). 

However, we did not finalize the 

proposed disclaimer in January 2021 

final rule (86 FR 5995). In doing so, we 

stated that CMS believed future 

rulemaking regarding non-English 

disclaimers, if appropriate, was best 

addressed by OCR, as those 

requirements would be HHS-wide 

instead of limited to CMS. We also 

stated that CMS believed deferring to 

OCR’s oversight and management of any 

requirements related to non-English 

disclaimers was in the best interest of 

the Medicare program. 

It is important to note that none of 

CMS’s actions impacting the various 

notifications of interpreter services 

changed the requirement that plans 

must provide these services under 

applicable law. Plans have long been 

required to provide interpreters when 

necessary to ensure meaningful access 

to limited English proficient 

individuals, consistent with existing 

civil rights laws. In fact, in the January 

2021 final rule, CMS codified call center 

requirements under §§ 422.111(h)(1)(iii) 

and 423.128(d)(1)(iii) that require 

interpreter services be provided to nonEnglish speaking and limited English 

proficient (LEP) individuals at no cost. 

In the months following the 

publication of the January 2021 final 

rule, we have gained additional insight 

regarding the void created by the lack of 

any notification requirement associated 

with the availability of interpreter 

services for Medicare beneficiaries. The 

U.S. Census Bureau’s 2019 American 

Community Survey (ACS) 1-year 

estimates show that 12.2 percent of 

individuals sixty-five and older speak a 

language other than English in the home 

(https://data.census.gov/cedsci/ 

table?q=language

&tid=ACSST1Y2019.S1603). CMS 

considers the materials required under 

§§ 422.2267(e) and 423.2267(e) to be 

vital to the beneficiary decision making 

process. Providing a notification for 

beneficiaries with limited English 

proficiency that translator services are 

available provides a clear path for this 

portion of the population to properly 

understand and access their benefits. 

We have also reviewed complaints in 

the Complaint Tracking Module (CTM) 

under the term ‘‘language’’ and found 

several reporting beneficiary confusion 

based on a language barrier. In 

retrospect, we believe that solely relying 

on the requirements delineated in OCR’s 

2020 final rule for covered entities to 

convey the availability of interpreter 

services is insufficient for the MA, cost 

plan, and Part D programs, and is not in 

the best interest of Medicare 

beneficiaries who are evaluating 

whether to receive Medicare benefits 

through these plans, as well as those 

already enrolled. Ultimately, we believe 

it is counterproductive to have 

regulatory requirements for interpreter 

services without an accompanying 

requirement to inform beneficiaries that 

the service is available. 

In the January 2022 proposed rule, we 

therefore proposed the requirement to 

use the MLI under §§ 422.2267(e)(31) 

and 423.2267(e)(33). Similar to the 

previously required version, the MLI 

must state ‘‘We have free interpreter 

services to answer any questions you 

may have about our health or drug plan. 

To get an interpreter, just call us at [1- 

xxx-xxx-xxxx]. Someone who speaks 

[language] can help you. This is a free 

service.’’ in the 15 most common nonEnglish languages in the United States. 

In addition, we proposed the 

requirement that plans also include the 

required statement in any language that 

meets the five percent threshold for a 

plan’s service area, as currently required 

under §§ 422.2267(a)(2) and 

423.2267(a)(2) for translation of required 

materials, when not currently on the 

standardized MLI. We also proposed the 

requirement that the MLI be included 

with all required materials listed in 

§§ 422.2267(e) and 423.2267(e). Finally, 

in the January 2022 proposed rule, we 

explained that if OCR were in the future 

to finalize broader or more robust 

requirements associated with interpreter 

services than what CMS requires and 

plans adopted those broader or more 

robust OCR requirements, CMS would 

consider plans compliant with these 

MLI requirements. 

Comment: Most commenters 

supported this proposal. Many of these 

commenters pointed out that 

individuals who do not speak English 

are often unaware of their rights. The 

commenters asserted that having the 

MLI included with required documents 

was the best way to reach these 

individuals. 

Response: We acknowledge and 

appreciate the support. As stated above, 

we have reviewed CTM cases and found 

reported beneficiary confusion 

stemming from not fully understanding 

materials based on a language barrier. 

While MA organizations, Part D 

sponsors, and cost plans are required to 

provide translator services, the 

requirement cannot be effective if those 

organizations do not also inform 

beneficiaries that those services are 

available. As we consider certain 

required documents to be vital to a 

beneficiary’s understanding of the MA, 

Part D, and cost plan programs, we agree 

that the requirement to include the MLI 

with those required documents is the 

best way to reach the target audience. 

Comment: Many commenters 

suggested different ways to implement 

this provision including requiring the 

MLI to be sent with only specific 

required documents (such as the 

Summary of Benefits, the Evidence of 

Coverage, and the Annual Notice of 

Change), requiring the MLI as a 

disclaimer on certain required 

documents, limiting delivery of the MLI 

to once annually, placing the MLI on the 

plan’s website, and sending the MLI as 

a small flyer with required documents. 

Response: We appreciate the 

suggested alternate methods. However, 

we believe that requiring the MLI as a 

separate full-page document that is 

included or provided with all required 

documents is the best way for the MLI 

to reach the target audience. CMS 

required plans to provide the MLI under 

similar circumstances for several years 

before replacing it with the language 

assistance notice and tagline 

requirements adopted in OCR’s 2016 

final rule. OCR implemented the same 

dissemination method in its section 

1557 final rule from July 18, 2016. 

Between the MLI and OCR’s analogous 

language assistance notice and tagline 

requirements, CMS has used this 

method for over 10 years with positive 

feedback and few complaints. To 

reiterate, we are again requiring plan 

delivery of the MLI to address the lack 

of any notification requirement 

associated with the availability of 

interpreter services for Medicare 

beneficiaries that exists since OCR 

repealed the notice and tagline 

requirements in its June 19, 2020 final 

rule. 

Comment: We received a comment on 

the MLI indicating a fear that 

beneficiaries will not read it as they 

receive a prohibitive volume of paper 

materials. 

Response: For enrollees whose 

primary language is not English, we are 

confident, based on historical consumer 

testing, that they will notice a one-page 

document, prominently displayed with 

required documents, directing them 

how to access support in their chosen 

language. 

After careful consideration of all the 

comments received, and for the reasons 

set forth in the January 2022 proposed 

rule and in our responses to the 

comments, we are finalizing this 

provision under §§ 422.2267(e)(31) and 

423.2267(e)(33) as proposed. 


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4. Third-Party Marketing Organizations 

In the proposed rule, we discussed 

our concerns regarding third-party 

marketing organizations (TPMOs) as 

well as the reasons for those concerns. 

We also explained that, while we 

acknowledge that TPMOs can serve a 

role in helping a beneficiary find a plan 

that best meets the beneficiary’s needs, 

additional regulatory oversight is 

required to protect Medicare 

beneficiaries from confusing and 

potentially misleading activities in this 

space and to ensure that Medicare 

health and drug plans are appropriately 

overseeing and maintaining 

responsibility for the entities that 

conduct marketing and, potentially, 

enrollment activities on the plans’ 

behalf. To this end, CMS proposed 

several updates to various sections of 

parts 422 and 423, subpart V. 

First, we proposed to define TPMOs 

in §§ 422.2260 and 423.2260 as being 

organizations that are compensated to 

perform lead generation, marketing, 

sales, and enrollment related functions 

as a part of the chain of enrollment, that 

is the steps taken by a beneficiary from 

becoming aware of a Medicare plan or 

plans to making an enrollment decision. 

In addition, the proposed definition of 

TPMOs specifies that TPMOs may be 

first tier, downstream or related entity 

(FDRs), as defined under §§ 422.504(i) 

and 423.505(i), but TPMOs may also be 

other businesses which provide services 

to customers including an MA or Part D 

plan or an MA or Part D plan’s FDRs. 

CMS specifically solicited comments 

from stakeholders regarding the 

proposed TPMO definition and whether 

it is sufficiently broad to capture the 

scope of the types of entities that may 

be in a position of marketing Medicare 

health and drug plans. Comments 

revealed that many of the commenters 

thought the definition was too broad. 

Those commenters indicated that they 

felt the definition would apply to 

entities to whom it shouldn’t apply or 

would be a burden to compliant 

organizations instead of applying 

compliance actions to deter bad actors. 

There was comment that the definition 

was too narrow, and that there would be 

bad actors who were not captured by the 

definition. We decided, for the reasons 

discussed in our below response to 

these comments, that the definition, 

with clarifying edits described in this 

final rule, is sufficient for now but may 

choose to revisit it in future rule-making 

if the evolving industry landscape 

indicates that reevaluation is necessary. 

Second, we proposed to codify, in 

§§ 422.2267(e)(41) and 423.2267(e)(41), 

the requirement that TPMOs use a 

standardized disclaimer that states ‘‘We 

do not offer every plan available in your 

area. Any information we provide is 

limited to those plans we do offer in 

your area. Please contact Medicare.gov 

or 1–800–MEDICARE to get information 

on all of your options.’’ As part of this 

proposal, MA organizations and Part D 

sponsors would need to ensure that any 

TPMO with which they do business, 

either directly or indirectly, utilizes this 

disclaimer where appropriate. MA 

organizations and Part D sponsors 

would also need to ensure TPMO’s 

adherence with these requirements 

through contractual arrangements, 

review of materials or other appropriate 

oversight methods available to the MA 

organization or Part D sponsor such as 

complaint reviews or audits. CMS 

would not require the disclaimer for 

those TPMOs who truly offer every 

option in a given service area. TPMOs 

would be required to prominently 

display the disclaimer on their website 

and marketing materials, including all 

print materials and television 

advertising that meet the definition of 

marketing. We also would require that 

the disclaimer be provided verbally, 

electronically, or in writing, depending 

on how the TPMO is interacting with 

the beneficiary. In cases where the 

TPMO is providing information through 

telephonic means, the TPMO would be 

required to provide this disclaimer 

within the first minute of the call. We 

believe the proposed disclaimer would 

help to reduce the type of beneficiary 

confusion CMS observed when we 

listened to TPMO-based sales calls. 

Third, we proposed to codify new 

TPMO oversight responsibilities in 

§§ 422.2274 and 423.2274, covering 

agent, broker, and other third-party 

requirements. These requirements 

would fall under §§ 422.2274(g) and 

423.2274(g), with the heading ‘‘TPMO 

oversight,’’ and would work (when 

applicable) in conjunction with the 

previously existing FDR requirements in 

§§ 422.504(i) and 423.505(i). As a part of 

their oversight responsibilities, plans 

that do business with a TPMO, either 

directly or indirectly through an FDR, 

would be responsible for ensuring that 

the TPMO adheres to any requirements 

that apply to the plan. An MA or Part 

D plan cannot purchase the services of 

a TPMO, and thereby evade 

responsibilities for compliance with 

Medicare marketing and communication 

requirements. This proposed new 

requirement that those instances where 

the TPMO does not contract either 

directly with the MA organization or the 

Part D sponsor or indirectly with a 

plan’s FDR, but where the plan or its 

FDR purchases leads or otherwise 

receives leads directly or indirectly from 

a TPMO. It is the responsibility of the 

MA organization or Part D sponsor to 

have knowledge of how and from where 

it (or its FDR) obtains leads or 

enrollments. We also proposed to 

require plans (and their FDRs), in their 

contracts, written arrangements, or 

agreements with TPMOs, to require 

TPMOs to disclose to the plan any 

subcontracted relationships used for 

marketing, lead generation, and 

enrollment; require sales calls with 

beneficiaries to be recorded in their 

entirety; and have TPMOs report to 

plans any staff disciplinary actions 

associated with Medicare beneficiary 

interaction on a monthly basis. As 

discussed in the proposed rule, MA 

organizations and Part D sponsors may 

not utilize TPMOs as means of evading 

their own compliance responsibilities, 

and thus these oversight requirements 

are intended to require plans to ensure 

that TPMOs adhere to any requirements 

that apply to the plans themselves. 

Based on this, we are finalizing changes 

to the proposed oversight requirements 

at §§ 422.2274(g)(2)(iii) and 

423.2274(g)(2)(iii) to require that 

violations by TPMOs of requirements 

that apply to the MA organization or 

Part D sponsor be reported to MA 

organizations and Part D sponsors, in 

addition to disciplinary actions. These 

reporting requirements would ensure 

that plans are made aware of all TPMOassociated activities that are part of or 

related to the chain of enrollment. 

Fourth, we proposed to codify a 

requirement to provide beneficiaries 

with certain notifications associated 

with TPMO lead generating activities. In 

the proposed rule, we discussed how 

beneficiaries are receiving outreach 

from sales agents and brokers based on 

previous contact and how this outreach 

in response to the previous contact was 

not prohibited as unsolicited. We 

explained the potential for bad actors to 

abuse this situation, and how 

beneficiaries were concerned about how 

the sales agent or broker had obtained 

the beneficiary’s contact information. As 

part of the proposed rule, plans would 

be required to ensure that TPMOs 

conducting lead generating activities 

inform the beneficiary that his or her 

information will be provided to a 

licensed agent for future contact, or that 

the beneficiary is being transferred to a 

licensed agent who can enroll him or 

her into a new plan. This requirement 

would help to eliminate beneficiary 

confusion by making the role of lead 

generating TPMOs more transparent. 

Overall, we believe the proposed 

requirements associated with TPMOs 


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will result in greater plan oversight of 

TPMOs, and in turn, will result in a 

more positive beneficiary experience as 

it relates to learning about plan choices 

to best meet their health care needs. We 

also believe the new requirements will 

complement and strengthen existing 

requirements. The finalized disclaimers 

and notifications will ensure that 

beneficiaries are more informed. 

Moreover, the more robust reporting 

requirements and oversight we now 

require will create a better mechanism 

for plans to be made aware when 

beneficiary-related issues arise. 

Comment: We received many 

comments supporting these proposals. 

Most of the supporting comments 

indicated the ‘‘severe’’ impact of bad 

actors in the TPMO industry on the 

Medicare beneficiary population and 

the MA and Part D markets. These 

comments also commended CMS for 

being accountable and taking action to 

curtail ‘‘predatory’’ activities of these 

entities. 

Response: We acknowledge and 

appreciate the support of these 

proposals. 

Comment: We received a few 

comments indicating that these 

proposed changes are not sufficient as a 

whole to protect Medicare beneficiaries 

from the actions of TPMOs. These 

commenters often suggested that CMS 

develop mechanisms, best practices, or 

rules to further curtail the activities of 

TPMOs. Other commenters suggested 

CMS create a reporting mechanism 

specifically for instances where 

beneficiaries have had detrimental 

experiences with TPMOs. 

Response: We appreciate that the 

impact of TPMOs on Medicare 

beneficiaries bears further observation 

and analysis. As proposed, we believe 

that these requirements should reduce 

the incidence of confusing and 

misleading marketing activities leading 

to, for example, improper enrollments, 

by making beneficiaries more wellinformed. CMS has a mechanism, 

through 1–800 Medicare, for reporting 

detrimental experiences with TPMOs. 

We review those complaints in our 

Complaint Tracking Module (CTM). 

CMS also engages in robust surveillance 

of agents associated with TPMOs, 

monitoring their sales and enrollment of 

beneficiaries. Overall, we have laid the 

groundwork from which we can develop 

additional rules addressing potentially 

confusing and misleading activities in 

this space, while acknowledging the 

conscientious performers who act 

within scope to educate and inform 

beneficiaries of their healthcare options. 

While we recognize that our authority to 

enforce compliance on TPMOs is 

limited to MA organizations, cost plans, 

and Part D sponsors, there is room to 

develop additional parameters around 

TPMOs as we gain a greater awareness 

of their impact on the Medicare 

insurance landscape. We will consider 

the suggestions made by these 

commenters as we contemplate future 

rulemaking. 

Comment: We received a comment on 

this provision indicating that a 

supporting provision further delineating 

the difference between educational and 

marketing events is necessary. 

Response: We appreciate this 

comment. It is, however, outside the 

scope of this rule. We will consider this 

suggestion for future policymaking in 

§§ 422.2264(c) and 423.2264(c) as those 

sections provide an explanation of the 

difference between educational events 

and marketing events. 

Comment: We received comments on 

this provision providing suggestions as 

to language of the disclaimer the rule 

requires. Some commenters suggested 

TPMOs be allowed to modify the 

disclaimer language to suit individual 

situations where the operational 

systems of the TPMO make use of the 

disclaimer problematic. Some 

commenters suggested that TPMOs be 

allowed to modify the disclaimer 

language when reaching out to 

individuals with whom they have a 

business relationship. Some 

commenters suggested that CMS modify 

the disclaimer language so that entities 

cannot incorrectly say that beneficiaries 

will receive their full Medicare benefits 

upon enrollment in an MA plan. Some 

commenters suggested that the language 

in the disclaimer be more direct, that 

the disclaimer should make it clear that 

not all plans and benefits are available 

in all service areas. Some commenters 

stated that CMS should require stronger 

disclaimer language including 

consideration of provider network and 

availability of current prescription 

drugs. Other commenters suggested that 

the disclaimer contain language 

referring beneficiaries to other 

educational tools including 

Medicare.gov, State Health Insurance 

Programs (SHIPs), and other educational 

resources. 

Response: We respectfully disagree. 

CMS carefully considered the content 

and length of this disclaimer, and 

believes all of it contains vital 

beneficiary information. The potential 

burden imposed by reading or listening 

to this disclaimer is necessary to ensure 

that plans, and TPMOs engaged in 

marketing activities on their behalf, are 

not providing information that could 

mislead beneficiaries into joining plans 

contrary to their intention for reaching 

out, or do not best meet their needs. For 

example, the TPMO disclaimer makes it 

clear that the TPMO does not offer all 

available plans, and that beneficiaries 

must call 1–800 Medicare or visit 

Medicare.gov for that information. CMS 

believes it provides the most pertinent 

information without including more 

content than a beneficiary can 

reasonably absorb and understand, 

especially during the limited duration of 

a television or radio advertisement. 

Requiring disclaimer language such as 

provider networks availability of current 

prescription drugs, or language referring 

beneficiaries to other educational 

resources, while good information, 

could cause the beneficiary to miss the 

most pertinent information directly 

related to the sales and enrollment 

activities of TPMOs. Furthermore, 

requiring a standardized notice ensures 

that all beneficiaries receive the same 

message, and assists CMS by allowing 

easier and more robust oversight of that 

message. The commenters had 

suggested modifications that either 

narrowed the scope of the disclaimer 

beyond what we had intended, or 

altered the disclaimer such that it no 

longer matched our intentions. While 

we received no specific examples of 

what operational limitations make 

compliance challenging, we will review 

specific requests and will consider 

allowing modifications accordingly. We 

do not believe that having an existing 

relationship with a beneficiary reduces 

the need for him or her to receive the 

exact information in this disclaimer. 

Regarding commenters who are 

concerned about the disclaimer not 

conveying that enrollees will not receive 

full benefits upon enrollment, please 

note that the requirements to not 

provide inaccurate or misleading 

information that currently apply to 

MAOs and Part D sponsors 

(§§ 422.2262(a)(1)(i), 423.2262(a)(1)(i)) 

also apply to TPMOs under the 

proposed TPMO oversight requirements. 

What we proposed and are finalizing 

does match what we intended in both 

definition and scope. 

Comment: We received several 

comments on the definition of TPMOs, 

including comments requesting 

additional clarity about what types of 

entities would be included within this 

definition. Some commenters indicated 

that the definition of TPMOs was too 

broad such that the provisions would 

apply unfairly to different actors in the 

Medicare Advantage and Part D plan 

sales landscape including call center 

employees and advocates Additionally, 

some commenters believed the 

proposed definition of TPMOs was too 


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narrow. Specifically, some commenters 

suggested that agents and brokers 

should be included in the definition of 

TPMOs. Other commenters suggested 

that agents and brokers should not be 

included in the definition of TPMOs. 

Some commenters suggested we limit 

the definition of TPMO to those entities 

with whom plans have a direct 

relationship. Some commenters 

suggested we limit the definition of 

TPMO to those entities who are able to 

offer all plans in a service area. Some 

commenters suggested we limit the 

definition of TPMO to those entities 

who are able to offer only a specific plan 

within a service area. Some commenters 

suggested that the definition of TPMO 

be limited to only those entities who are 

contractually obligated to provide 

services to a plan. 

Response: We believe that the 

definition is clear that TPMOs include 

all third-party marketers who work on 

behalf or provide services to plans. The 

definition is intentionally broad to 

ensure MA and Part D plans properly 

oversee and are accountable for any 

entity who profits in any manner from 

the enrollment of a beneficiary into an 

MA or Part D plan. As defined in 

§§ 422.2260 and 423.2260, this rule 

would apply to organizations, as well as 

agents and brokers, that are 

compensated to perform lead 

generation, marketing, sales, and 

enrollment related functions as a part of 

the chain of enrollment. TPMOs may be 

a first tier, downstream or related entity 

(FDRs), as defined under §§ 422.2 and 

423.4, but may also be entities that are 

not FDRs but provide services to 

customers including an MA 

organization or Part D sponsor or an MA 

organization’s or Part D sponsor’s FDR. 

We have carefully considered the 

wording of this provision as to the type 

of entities it encompasses. As described 

in the proposed rule, our intent is to 

cover entities that are conducting 

marketing and/or enrollment activities 

that result in a beneficiary’s enrollment 

in a Medicare plan, and the definition 

of TPMO is deliberately broad to 

accomplish that. With respect to the 

comments regarding the inclusion of 

individual agents and brokers in the 

definition of TPMO, we note that the 

proposed definition of TPMO included 

FDRs, which CMS has historically 

interpreted to mean individual agents 

and brokers, as well as organizational 

entities (72 FR 68704). However, 

because our intention to include 

individuals including independent 

agents and brokers was not sufficiently 

clear, we are finalizing the definition of 

TPMO at §§ 422.2260 and 423.2260 with 

an update to clarify that the definition 

includes such individuals as well as 

organizations. In addition, we note that 

definition of TPMOs in the proposed 

rule included incorrect citations when 

referencing the regulatory definitions of 

first tier, downstream, or related 

entities. These incorrect citations at 

§§ 422.504(i) and 423.505(i) have been 

corrected in this final rule to correctly 

refer to §§ 422.2 and 423.4. We will 

explore the definition in future 

rulemaking if we feel that the landscape 

of the industry evolves such that the 

definition we are finalizing requires 

reevaluation. 

After careful consideration of all the 

comments received, and for the reasons 

set forth in the January 2022 proposed 

rule and in our responses to the 

comments, we are finalizing the 

proposed changes to amend part 422 

subpart V and part 423 subpart V with 

the following modifications. We are 

updating the TPMO oversight 

requirements at §§ 422.2274(g)(2)(iii) 

and 423.2274(g)(2)(iii) to make clear that 

violations by TPMOs of requirements 

that apply to the MA organization or 

Part D sponsor must be reported to MA 

organizations and Part D sponsors, in 

addition to disciplinary actions. We are 

updating the definition of TPMOs at 

§§ 422.2260 and 423.2260 to include 

individuals such as independent agents 

and brokers. We are making a technical 

correction to the definition of TPMO at 

§§ 422.2260 and 423.2260 to include 

correct citations to the definitions of 

FDRs at §§ 422.2 and 423.4. Finally, we 

are adding a technical correction that 

clarifies that ID cards as required 

documents are exempt from the 

requirement to have all text in 12-point 

font. We are finalizing all the other 

provisions in this section as proposed. 

To reiterate and summarize, the new 

and revised regulatory sections and 

their content are as follows: 

• Sections 422.2260 and 423.2260 are 

revised to add a definition for ThirdParty Marketing Organization (TPMO). 

• Sections 422.2265(b)(13), 

423.2265(b)(14), 422.2265(b)(14), and 

423.2265(b)(15) are revised to add 

instructions on how to appoint a 

representative and to add enrollment 

instructions and forms. 

• Sections 422.2267(e)(30) and 

423.2267(e)(32) are revised to add the 

Member ID card and requirements for 

the card as a model document. 

• Sections 422.2267(e)(31) and 

423.2267(e)(33) are revised to add the 

Multi-Language Insert. 

• Sections 422.2267(e)(41) and 

423.2267(e)(41) are revised to add the 

Third-Party Marketing disclaimer. 

• Section 423.2267(e)(40) is revised to 

add the Limited Access to Preferred 

Cost-Sharing disclaimer. 

• Sections 422.2274 and 423.2274 are 

revised to apply MA and Part D 

oversight to TPMOs. 

G. Regulatory Changes to Medicare 

Medical Loss Ratio Reporting 

Requirements and Release of Part C 

Medical Loss Ratio Data (§§ 422.2460, 

422.2490, and 423.2460) 

1. Background 

Section 1103 of Title I, Subpart B of 

the Health Care and Education 

Reconciliation Act (Pub. L. 111–152) 

amended section 1857(e) of the Act to 

add a medical loss ratio (MLR) 

requirement to Medicare Part C (MA 

program). An 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. 

Because section 1860D–12(b)(3)(D) of 

the Act adopts by reference the 

requirements of section 1857(e) of the 

Act, these MLR requirements also apply 

to the Medicare Part D program. In the 

May 23, 2013 Federal Register, we 

published a final rule titled ‘‘Medicare 

Program; Medical Loss Ratio 

Requirements for the Medicare 

Advantage and the Medicare 

Prescription Drug Benefit Programs’’ (78 

FR 31284) (hereinafter referred to as the 

May 2013 Medicare MLR final rule), we 

codified the MLR requirements for MA 

organizations and Part D prescription 

drug plan sponsors (Part D sponsors) 

(including organizations offering cost 

plans that offer the Part D benefit) in the 

regulations at 42 CFR part 422, subpart 

X, and part 423, subpart X. 

Generally, the MLR for an MA or Part 

D contract reflects the ratio of costs 

(numerator) to revenues (denominator) 

for all enrollees under the contract. For 

an MA contract, the MLR reflects the 

percentage of revenue received under 

the contract spent on incurred claims 

for all enrollees, prescription drug costs 

for enrollees in MA plans under the 

contract offering the Part D benefit, 

quality initiatives that meet the 

requirements at § 422.2430, and 

amounts used to reduce Part B 

premiums. The MLR for a Part D 

contract reflects the percentage of 

revenue received under the contract 

spent on incurred claims for all 

enrollees for Part D prescription drugs, 

and on quality initiatives that meet the 

requirements at § 423.2430. The 

percentage of revenue that is used for 

other items such as administration, 

marketing, and profit is excluded from 

the numerator of the MLR (see 


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87The April 2018 final rule (83 FR 16715) 

estimated that the change in the MLR reporting 

requirements that CMS finalized for CYs 2018 and 

subsequent contract years would result in annual 

savings of $1,446,417 per year ($490,000 to the 

government and $904,884 to MA organizations and 

Part D sponsors). 

§§ 422.2401 and 423.2401; 

422.2420(b)(4) and 423.2420(b)(4); 

422.2430(b) and 423.2430(b)). 

For contracts for 2014 and later, MA 

organizations and Part D sponsors are 

required to report their MLRs and are 

subject to financial and other sanctions 

for failure to meet the statutory 

requirement that they have an MLR of 

at least 85 percent (see §§ 422.2410 and 

423.2410). The statute imposes several 

levels of sanctions for failure to meet the 

85 percent minimum MLR requirement, 

including remittance of funds, a 

prohibition on enrolling new members, 

and ultimately, contract termination. 

The minimum MLR requirement creates 

incentives for MA organizations and 

Part D sponsors to reduce administrative 

costs, such as marketing costs, profits, 

and other uses of the revenue received 

by plan sponsors, and helps to ensure 

that taxpayers and enrolled beneficiaries 

receive value from Medicare health and 

drug plans. 

Section 1001(5) of the Patient 

Protection and Affordable Care Act 

(Pub. L. 111–148), as amended by 

section 10101(f) of the Health Care and 

Education Reconciliation Act (Pub. L. 

111–152), also established a new MLR 

requirement under section 2718 of the 

Public Health Service Act that applies to 

issuers of employer group and 

individual market private insurance. We 

will refer to the MLR requirements that 

apply to issuers of private insurance as 

the ‘‘commercial MLR rules.’’ 

Regulations implementing the 

commercial MLR rules are published at 

45 CFR part 158. 

We proposed modifications to the 

MLR reporting requirements in the 

Medicare Part C and Part D programs 

and to the regulation that governs the 

release of Part C MLR data. 

2. Reinstate Detailed MLR Reporting 

Requirements (§§ 422.2460 and 

423.2460) 

Each year, MA organizations and Part 

D sponsors submit to CMS data 

necessary for the Secretary to determine 

whether each MA or Part D contract has 

satisfied the minimum MLR 

requirement under sections 1857(e)(4) 

and 1860D–12(b)(3)(D) of the Act. In the 

May 2013 Medicare MLR final rule (78 

FR 31284) that established the Medicare 

MLR regulations, CMS codified at 

§§ 422.2460 and 423.2460 that, for each 

contract year, each MA organization and 

Part D sponsor must submit an MLR 

Report to CMS that included the data 

needed by the MA organization or Part 

D sponsor to calculate and verify the 

MLR and remittance amount, if any, for 

each contract such as the amount of 

incurred claims, expenditures on 

quality improving activities, non-claims 

costs, taxes, licensing and regulatory 

fees, total revenue, and any remittance 

owed to CMS under § 422.2410 or 

§ 423.2410. 

To facilitate the submission of MLR 

data, CMS developed a standardized 

MLR Report template that MA 

organizations and Part D sponsors were 

required to populate with their data and 

upload to the Health Plan Management 

System (HPMS), starting with contract 

year (CY) 2014 MLR reporting, which 

occurred in December 2015. Based on 

the data entered by the MA organization 

or Part D sponsor for each component of 

the MLR numerator and denominator, 

the MLR reporting software would 

calculate an unadjusted MLR for each 

contract. The MLR reporting software 

would also calculate and apply the 

credibility adjustment provided for in 

§§ 422.2440 and 423.2440, based on the 

number of member months entered into 

the MLR Report, in order to calculate 

the contract’s adjusted MLR and 

remittance amount (if any). In addition 

to the numerical fields used to calculate 

the MLR and remittance amount, the 

MLR Report template included narrative 

fields in which MA organizations and 

Part D sponsors provided detailed 

descriptions of the methods used to 

allocate expenses, including how each 

specific expense met the criteria for the 

expense category to which it was 

assigned. 

The proposed rule discussed how 

CMS originally modeled the Medicare 

MLR reporting format on the tools used 

to report commercial MLR data, in 

keeping with our general policy of 

attempting to align the Medicare MLR 

requirements with the commercial MLR 

requirements to limit the burden on 

organizations that participate in both 

markets, and to make commercial and 

Medicare MLRs as comparable as 

possible for comparison and evaluation 

purposes. The proposed rule also 

explained how, as part of an initiative 

to reduce the regulatory burden on 

private industry, we later amended the 

reporting requirements by scaling back 

the amount of MLR data that MA 

organizations and Part D sponsors 

submit to CMS on an annual basis, 

starting with CY 2018. Under current 

§§ 422.2460 and 423.2460, for CY 2018 

and subsequent contract years, MA 

organizations and Part D sponsors are 

only required to report each contract’s 

MLR and the amount of any remittance 

owed to CMS; they are no longer 

required to submit the underlying data 

needed to calculate and verify reported 

MLR and remittance amount, if any. In 

the final rule titled ‘‘Medicare Program; 

Contract Year 2019 Policy and 

Technical Changes to the Medicare 

Advantage, Medicare Cost Plan, 

Medicare Fee-for-Service, the Medicare 

Prescription Drug Benefit Programs, and 

the PACE Program’’ (83 FR 16440, 

16675), which appeared in the April 16, 

2018 Federal Register (hereinafter 

referred to as the April 2018 final rule) 

and finalized the current MLR reporting 

requirements, we expressed our belief 

that we would still be able to effectively 

oversee MA organizations’ and Part D 

sponsors’ compliance with the MLR 

requirements by relying solely on 

audits, as authorized under §§ 422.2480 

and 423.2480. 

As discussed in greater detail in the 

proposed rule at 87 FR 1903 through 

1904, in light of subsequent experience 

overseeing the administration of the 

Medicare MLR program while the 

simplified MLR reporting requirements 

have been in effect, and after further 

consideration of the potential impacts 

on beneficiaries and costs to the 

government and taxpayers when CMS 

has limited access to detailed MLR data, 

we have reconsidered the changes to the 

MLR reporting requirements that were 

finalized in the April 2018 final rule. 

We have come to recognize the 

limitations of our current approach to 

MLR compliance oversight, in which we 

do not collect the information needed to 

verify that a contract’s MLR has been 

calculated accurately, except in the 

small number of cases that we can 

feasibly audit each year. As noted in the 

proposed rule at 87 FR 1905, we believe 

we would need to greatly expand the 

number of audits we conduct if we were 

to rely on them as our sole means of 

validating the accuracy of MLR 

reporting, and we anticipate that the 

increased cost to the government and 

the aggregate burden across all of the 

additional MA organizations and Part D 

sponsors selected for audits would 

negate the savings that the April 2018 

final rule estimated would result from 

the changes to the MLR reporting 

requirements.87 For these reasons, we 

proposed to reinstate the detailed MLR 

reporting requirements that were in 

effect for CYs 2014 through 2017. In 

addition, we proposed to collect 

additional data on certain categories of 

expenditures, and to make conforming 

changes to our data collection tools, 

which is discussed in section II.G.3. 

later in this final rule. 


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Comment: Many commenters agreed 

with our proposed reinstatement of the 

MLR reporting requirements and believe 

reinstating these requirements will 

provide transparency to beneficiaries 

and the public. 

Response: We appreciate the support. 

Comment: Some commenters 

expressed opposition to the proposed 

reinstatement of the Medical Loss Ratio 

reporting requirement that was 

previously in effect for contract years 

2014–2017. These commenters state that 

this proposal will add administrative 

burden. Several commenters expressed 

concern that more detailed MLR 

reporting for supplemental benefits will 

add burden and administrative costs for 

MA organizations and Part D sponsors. 

Commenters suggested that CMS require 

a single consolidated report for 

supplemental benefits costs rather than 

a separate report for each benefit. A 

majority of these commenters suggested 

that CMS maintain the current 

simplified MLR reporting requirements 

that have been in effect since 2018. 

Response: We appreciate the 

feedback. We proposed to reinstate the 

collection of detailed MLR reporting 

requirements that were in effect for CYs 

2014 through 2017 to improve 

transparency and oversight concerning 

the use of Medicare Trust Fund dollars. 

This requires reporting of the 

underlying data used to calculate and 

verify the MLR and any remittance 

amount, such as incurred claims, total 

revenue, expenditures on quality 

improving activities, non-claims costs, 

taxes, and regulatory fees. We address 

the collection of more detailed data 

about categories of supplemental 

benefits in section II.G.3. of this final 

rule. 

In light of subsequent experience 

overseeing the administration of the 

Medicare MLR program while the 

simplified MLR reporting requirements 

have been in effect, and after further 

consideration of the potential impacts 

on beneficiaries and costs the 

government and taxpayers when CMS 

has limited access to detailed MLR data, 

we have reconsidered the changes to the 

MLR reporting requirements that were 

finalized in the April 2018 final rule. 

We have come to recognize the 

limitations of our current approach to 

MLR compliance oversight, in which we 

do not collect the information needed to 

verify that a contract’s MLR has been 

calculated accurately, except in the 

small number of cases that we can 

feasibly audit each year. 

In developing the MLR reporting 

format, CMS modeled the data 

collection on tools used to report 

commercial MLR data. This was in 

keeping with a general policy of 

modeling the data collection on tools 

used to report commercial MLR data, 

with modifications for Medicarespecific needs in order to limit the 

burden on organizations that participate 

in both markets, and to make 

commercial and Medicare MLRs as 

comparable as possible for comparison 

and evaluation purposes. 

Additionally, given the minimal data 

we currently receive from MA 

organizations and Part D sponsors, we 

believe that we would need to greatly 

expand the number of audits we 

conduct if we were to rely on them as 

our sole means of validating the 

accuracy of MLR reporting. We would 

need to conduct comparatively resource 

heavy audits in order to identify 

potentially costly errors in the 

calculation of the MLR and remittance 

amount, including errors that would 

have been flagged systematically during 

the desk review process. We believe that 

the increased cost to the government 

and the aggregate burden across all of 

the additional MA organizations and 

Part D sponsors selected for audits 

($13.8 million per year) would negate 

the savings that the April 2018 final rule 

estimated would result from the changes 

to the MLR reporting requirements ($1.5 

million per year). Additional 

information on the projected cost and 

burden estimates of auditing MLR 

reports can be found in the Regulatory 

Impact Analysis (RIA) pages. 

Given that MA organizations and Part 

D sponsors are already tracking 

expenses by line of business and 

contract in order to comply with our 

current regulations and account for 

supplemental benefit expenditures for 

both internal accounting and bid 

development purposes, we estimate that 

the additional start-up and ongoing 

costs and time burden for submitting 

detailed data will be moderate. We 

estimate that MA organizations and Part 

D sponsors will incur minimal one-time 

start-up costs associated with 

developing processes for capturing the 

necessary data and will incur ongoing 

annual costs relating to data collection, 

populating the MLR reporting form, 

conducting an internal review, 

submitting the MLR reports to the 

Secretary, and conducting internal 

audits. Please see additional discussion 

of these costs in the Collection of 

Information Requirements section of 

this rule. 

We are finalizing this provision 

without modification. 

3. Changes to Medicare MLR Reporting 

Regulations, Data Collection Instrument, 

and Regulations Authorizing Release of 

Part C MLR Data (§§ 422.2460, 422.2490, 

and 423.2460) 

As noted throughout this section of 

this final rule, we proposed to amend 

our regulations to reinstate the MLR 

reporting requirements that were in 

effect for CYs 2014 through 2017, with 

some modifications. Under our 

proposed amendments, paragraph (a) of 

§ 422.2460 would state that, except as 

provided in paragraph (b), for each 

contract year, each MA organization 

must submit to CMS, in a timeframe and 

manner that we specify, a report that 

includes the data needed to calculate 

and verify the MLR and remittance 

amount, if any, for each contract, 

including the amount of incurred claims 

for Medicare-covered benefits, 

supplemental benefits, and prescription 

drugs; expenditures on quality 

improving activities; non-claims costs; 

taxes; licensing and regulatory fees; total 

revenue; and any remittance owed to 

CMS under § 422.2410. 

We proposed similar amendments to 

paragraph (a) of § 423.2460, except 

§ 423.2460(a) as proposed would refer to 

‘‘incurred claims for covered drugs,’’ 

would omit any mention of ‘‘covered 

services (both Medicare-covered 

benefits and supplemental benefits),’’ 

and would refer to the remittance owed 

to CMS under § 423.2410. In addition, 

we proposed to revise paragraph (b) of 

both §§ 422.2460 and 423.2460 to 

specify that the limited MLR data 

collection requirements under that 

paragraph only apply to MLR reporting 

for CYs 2018 through 2022. 

The proposed rule noted that, in 

connection with our proposal to 

reinstate the detailed MLR reporting 

requirements, starting with MLR 

reporting for CY 2023, we intend to 

require MA organizations and Part D 

sponsors to submit their MLR data to 

CMS using the MLR Reporting Tool that 

was used to report MLR data for CYs 

2014 through 2017, with certain 

changes. The proposed rule, at 87 FR 

1907, discussed the three types of 

changes that we intend to make to the 

MLR Reporting Tool: 

• First, we will revise the MLR 

Reporting Tool’s formulas to incorporate 

changes to the MLR calculation that 

have been finalized since CMS stopped 

developing the MLR Reporting Tool 

after CY 2017 MLR Reports were 

submitted. For example, we will add 

categories for fraud reduction expenses 

and medication therapy management 

programs in the section for Activities 

that Improve Healthcare Quality, 


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consistent with changes in the April 

2018 final rule that redefined these 

categories of expenditures as quality 

improvement activities (83 FR 16670 

through 16673). Similarly, we will 

design the MLR Reporting Tool to 

automatically calculate and insert the 

medical savings account (MSA) 

deductible factor, added to § 422.2440 

in a June 2020 final rule (85 FR 33908). 

• Second, we will separate out certain 

items that are currently consolidated 

into or otherwise accounted for in 

existing lines of the MLR Reporting 

Tool. For example, we will separate out 

low-income cost-sharing subsidy 

amounts, which were previously 

subtracted from the MLR numerator and 

excluded from the denominator, into an 

information-only line in the MLR 

Reporting Tool’s numerator section. 

• Third, we will separate out the 

single line in the MLR Report for claims 

incurred during the contract year 

covered by the MLR Report into 

separate lines for benefits covered by 

Medicare Parts A and B, certain 

additional supplemental benefits (that 

is, benefits not covered by Part A, B, or 

D and meeting the criteria in 

§ 422.100(c)(2), but excluding 

supplemental benefits that extend or 

reduce the cost-sharing for items and 

services covered under Parts A and B), 

and Part D prescription drug benefits. 

The proposed rule noted our intention 

to require MA organizations to report all 

expenditures for Medicare-covered 

benefits, including extended A/B 

coverage (by which we mean, for 

example, coverage of additional days 

during an inpatient stay) and costsharing reductions (by which we mean 

the value of the difference between the 

cost-sharing under Medicare FFS and 

the plan’s cost-sharing), on the same 

line of the MLR Reporting Tool, based 

on our assumption that it would be 

exceedingly difficult for MA 

organizations to separately identify and 

track spending on extended coverage of 

original Medicare benefits and costsharing reductions. We solicited 

comment on whether this is a 

reasonable assumption and whether the 

MLR Reporting Tool should instead 

mirror how MA bids are submitted 

under § 422.254(b). 

The proposed rule discussed our 

intention to have MA organizations 

report expenditures for additional 

supplemental benefits (supplemental 

benefits meeting the criteria in 

§ 422.100(c)(2) but excluding 

supplemental benefits that extend or 

reduce the cost-sharing for items and 

services covered under Parts A and B) 

on multiple lines of the MLR Reporting 

Tool, which will represent different 

types or categories of supplemental 

benefits. We explained that requiring 

MA organizations to account for their 

supplemental benefit expenditures by 

benefit type or benefit category will 

provide more transparency into how the 

MLR is being calculated, and it will 

assist CMS in verifying the accuracy of 

the MLR calculation, particularly with 

respect to expenditures related to 

categories of supplemental benefits that 

MA organizations must already 

separately report to CMS for purposes of 

bid development. The proposed rule 

also stated that the public release of 

information on supplemental benefit 

spending by benefit type or category 

may be helpful to beneficiaries who 

wish to make their enrollment decisions 

based on a comparison of the relative 

value of the supplemental benefits 

actually provided by different MA 

organizations. We did not propose to 

require separate reporting of Part D 

supplemental benefit expenditures (that 

is, they would continue to be reported 

combined with other Part D 

expenditures). 

The proposed rule explained that we 

intend to expand the MLR reporting 

requirements beyond what was required 

under the detailed MLR reporting 

requirements that were in effect for CYs 

2014 through 2017, to include 

expenditures related to supplemental 

benefits. As part of reinstating more 

detailed MLR reporting, the proposed 

rule described collecting data on claims 

incurred for certain supplemental 

benefits (that is, benefits not covered by 

Part A, B, or D and meeting the criteria 

in § 422.100(c)(2), but excluding 

supplemental benefits that extend or 

reduce the cost-sharing for items and 

services covered under Parts A and B). 

Based on these considerations, we 

intend to expand the MLR reporting 

requirements beyond what was required 

under the detailed MLR reporting 

requirements that were in effect for CYs 

2014 through 2017, to include 

expenditures related to the following 

categories of supplemental benefits: 

• Dental 

• Vision 

• Hearing 

• Transportation 

• Fitness Benefit 

• Worldwide Coverage/Visitor Travel 

• Over the Counter (OTC) Items 

• Remote Access Technologies 

• Meals 

• Routine Foot Care 

• Out-of-network Services 

• Acupuncture Treatments 

• Chiropractic Care 

• Personal Emergency Response System 

(PRS) 

• Health Education 

• Smoking and Tobacco Cessation 

Counseling 

• All Other Primarily Health Related 

Supplemental Benefits 

• Non-Primarily Health Related Items 

and Services that are Special 

Supplemental Benefits for the 

Chronically Ill (SSBCI) (as defined in 

§ 422.102(f)) 

In the proposed rule at 87 FR 1907 

through 1908, we discussed the factors 

that we took into consideration in 

compiling the list of supplemental 

benefit types and categories in the 

proposed rule. We solicited comment on 

whether the list of supplemental benefit 

types and categories would be 

appropriate breakouts for separating out 

supplemental benefit expenditures in 

the MLR Reporting Tool. We noted that 

we were interested in feedback that 

addressed whether we should increase 

or decrease the number of types or 

categories of supplemental benefits, as 

well as suggestions for alternative 

categories or for consolidating the 

previously listed benefit types or 

categories into larger categories. 

We received some comments 

requesting that requesting that CMS 

either collapse or expand the proposed 

supplemental benefit categories. As 

discussed in our response to these 

comments, we believe it is more 

appropriate for CMS to retain flexibility 

to modify the scope of data fields and 

the specific list of supplemental benefit 

categories required to be reported on the 

MLR Reporting Template. Maintaining 

this flexibility will allow CMS to collect 

data that is sufficiently detailed to 

enable us to understand benefit 

expenditures and verify and increase 

accountability for the accuracy of MLR 

calculation. We are finalizing the 

amendments to §§ 422.2460(a) and 

423.2460(a) to provide us with the 

flexibility to modify the scope of data 

fields and categories required for 

supplemental benefit expenditures. The 

intent of this rule is not to create a more 

detailed but static MLR report; rather 

this rule is intended to enable reporting 

requirements that support the program 

needs, such as supporting MLR 

calculation, verifying data reporting 

accuracy, gaining insight into 

supplemental benefit policies, and 

providing transparency into program 

expenditure allocation. 

In considering the scope of data fields 

and list of supplemental benefit 

categories for reporting we will take into 

account the following four factors, 

which were previously included in the 

proposed rule in setting forth our 

rationale for the list of supplemental 


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benefit categories. First, data elements 

and categories should enable a thorough 

reporting of data elements in categories 

that support MLR calculation, reduce 

errors in reporting, and increase our 

ability to verify data reporting accuracy. 

Second, data elements and categories for 

supplemental benefits should be 

selected to provide transparency into 

how MA program payments are 

allocated and may focus on specific 

benefits, such as the non-primarily 

health related supplemental benefits 

offered to the SSBCI population, for the 

purposes of providing CMS with 

information on the impact of a specific 

benefit change. Third, we will take into 

consideration the percentage of MA 

plans that offer each type of 

supplemental benefit in the most recent 

year for which data on plan benefit 

packages is available (that is, looking at 

CY 2022 for developing the CY 2023 

Reporting Tool), so that the lines we add 

to the MLR Reporting Tool are more 

likely to allow for comparison of MA 

organizations’ expenditures on types of 

supplemental benefits that are widely 

offered. In addition, in deciding 

whether to require separate reporting of 

the expenditures for a particular 

supplemental benefit type, we 

considered the percentage of contracts 

that currently offer that supplemental 

benefit under just one plan, as we 

believe expenditures associated with 

benefits offered under only one plan 

under a contract would constitute planlevel data, which CMS proposed to 

exclude from public release of MLR data 

consistent with the exclusions for MLR 

data reported at the plan level and 

information submitted for contracts 

consisting of a single plan (see 

§ 422.2490(b)(2)). Fourth in establishing 

the scope of data fields and categories 

for supplemental benefits, we 

acknowledge the trade-offs between the 

additional information gained from 

changing requirements and the 

additional burden placed on MA 

organizations and Part D sponsors 

brought about by changing 

requirements. We will take the balance 

between the increased value of 

additional information and the 

increased reporting burden into account 

in developing requirements on the 

scope of data fields and specific list of 

supplemental benefit categories. 

Modifications to the MLR data 

requirements for supplemental benefits 

expenditures will be set forth in a 

revision to the MLR Paperwork 

Reduction Act package (CMS–10476, 

OMB 0938–1232) and made available to 

the public for review and comment 

under the standard PRA process which 

includes the publication of 60- and 30- 

day Federal Register notices and the 

posting of the collection of information 

documents on our PRA website. 

The list of supplemental benefits 

included in the proposed rule should be 

viewed as an example of categories of 

supplemental benefits CMS is interested 

in collecting and is based on the 

standards described above. We will set 

forth data reporting requirements in a 

revised package as required by the PRA. 

This package will be published in the 

Federal Register and be available for 

public comment. 

In addition, the proposed rule 

discussed how we intend to use our 

authority under §§ 422.2490 and 

423.2490 to release to the public the 

Part C and Part D MLR data we 

proposed to collect, including the 

additional data we proposed to collect 

on supplemental benefit expenditures, 

to the same extent that we released the 

information we formerly collected 

under the MLR reporting requirements 

in effect for CYs 2014 through 2017. The 

proposed rule noted that, consistent 

with §§ 422.2490(c) and 423.2490(c), the 

release of the MLR data we proposed to 

collect for a contract year would occur 

no sooner than 18 months after the end 

of the applicable contract year, and 

would be subject to the exclusions in 

§§ 422.2490(b) and 423.2490(b). We 

proposed to amend § 422.2490(b)(2) by 

adding new paragraph (b)(2)(ii), which 

will exclude from release data on 

amounts that are reported as 

expenditures for a specific type of 

supplemental benefit, where the entire 

amount that is reported represents costs 

incurred by the only plan under the 

contract that offers that benefit. For 

example, if only one plan under a 

contract offers Dental X-rays as a 

supplemental benefit, and expenditures 

for that benefit are the only amounts 

reported on that line of the MLR 

Reporting Tool, we will exclude the 

entire amount reported on that line from 

our public data release. However, if only 

one plan under a contract covers Dental 

X-rays, and another plan under that 

same contract is the only plan under the 

contract that covers Extractions, 

expenditures for both benefits will be 

reported in the Dental line in the MLR 

Reporting Tool, and that combined 

amount (assuming both plans had 

expenditures in the Dental category) 

will not be excluded from our public 

data release. As stated in the proposed 

rule, we believe data regarding 

supplemental benefit expenditures is 

only sensitive to the extent that the data 

reveals plan-level expenditures for a 

specific benefit offered under a single 

plan, and that these concerns do not 

exist when expenditures for multiple 

types of supplemental benefits or from 

multiple plans are included in the same 

line of the MLR Reporting Tool. 

We solicited comment on this 

proposed exclusion, including any 

suggestions for how we would 

implement this exclusion (for example, 

by adding check boxes next to the 

applicable lines in the MLR Reporting 

Tool, where users would add a check 

mark if their expenditures for the 

supplemental benefit type or category in 

the line by the checkbox represented 

expenditures for a single plan and single 

benefit type), and whether additional 

exclusions should be added to our MLR 

data release regulations. We also 

solicited comment on whether there is 

additional sensitivity around 

expenditures for supplemental benefits 

generally or for any types of 

supplemental benefits in particular, 

such that public release of data 

concerning those expenditures would be 

harmful. 

Comment: A number of commenters 

supported CMS’ efforts to provide 

additional transparency as part of the 

proposal to reinstate the detailed MLR 

reporting previously in effect for 

contract years 2014–2017. They 

believed more detailed reporting will 

demonstrate the value of services being 

offered to beneficiaries, as included in 

plan bids, and provide transparency 

around how rebate dollars are being put 

to use by plans. 

Response: We appreciate the support. 

Comment: Some commenters were 

opposed to the public release of MLR 

data related to amounts paid for 

incurred expenditures for supplemental 

benefits. These commenters do not 

believe information on expenditures on 

supplemental services will help 

beneficiaries effectively distinguish the 

value offered by different plans. 

Response: In the final rule titled 

‘‘Medicare Program; Revisions to 

Payment Policies Under the Physician 

Fee Schedule and Other Revisions to 

Part B for CY 2017; Medicare Advantage 

Bid Pricing Data Release; Medicare 

Advantage and Part D Medical Loss 

Ratio Data Release; Medicare Advantage 

Provider Network Requirements; 

Expansion of Medicare Diabetes 

Prevention Program Model; Medicare 

Shared Savings Program Requirements,’’ 

which appeared in the Federal Register 

on November 15, 2016 (81 FR 80170) 

(hereinafter referred to as the CY 2017 

PFS final rule), we adopted §§ 422.2490 

and 423.2490 to authorize the release of 

MLR reports along with a regulation 

authorizing release of MA bid data. In 

that rule, we explained the rationale for 

releasing MA and Part D MLR reports, 


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which included increasing transparency 

and access to Federal data sets, 

alignment with the public release of 

MLR data of commercial issuer, 

facilitating the public evaluation of the 

evaluation of the MA and Part D 

programs by providing insight into the 

efficiency of health insurers’ operations, 

providing beneficiaries with 

information that can be used to assess 

the relative value of Medicare health 

and drug plans, and enhancing the 

competitive nature of the MA and Part 

D programs. We further stated that the 

release of this data would promote 

accountability in the MA and Part D 

programs, by making MLR information 

publicly available for use by 

beneficiaries who are making 

enrollment choices and by allowing the 

public to see whether and how 

privately-operated MA and Part D plans 

administer Medicare—and 

supplemental—benefits in an effective 

and efficient manner. The January 2022 

proposed rule acknowledged that this 

existing regulation for disclosure of 

MLR reports would include disclosure 

of the more detailed reports we 

intended to require beginning with CY 

2023. We discussed in that prior 

rulemaking how we believe that 

protecting against disclosures of 

individual beneficiary information and 

information at the plan level would be 

sufficient to protect against disclosure of 

proprietary or confidential commercial 

information. Disclosure of the 

additional details about MA 

supplemental benefits is consistent with 

the rationale and purpose of §§ 422.2490 

and 423.2490. Public access to 

information on supplemental benefit 

spending by benefit type or category 

may be a valuable tool for consumers (to 

make their enrollment decisions based 

on a comparison of the relative value of 

the supplemental benefits actually 

provided by different MA organization), 

researchers (to potentially use this data 

to provide insight on trends in 

supplemental benefit coverage in the 

MA programs or to better understand 

how managed care in Medicare differs 

from managed care for non-Medicare 

populations), and the public (to have 

information at an aggregate level about 

expenditures and benefits in the 

Medicare program). 

In the proposed rule titled ‘‘Medicare 

Program; Revisions to Payment Policies 

Under the Physician Fee Schedule and 

Other Revisions to Part B for CY 2017; 

Medicare Advantage Pricing Data 

Release; Medicare Advantage and Part D 

Medical Loss Ratio Data Release; 

Medicare Advantage Provider Network 

Requirements; Expansion of Medicare 

Diabetes Prevention Program Model’’ 

(81 FR 46162), which appeared in the 

Federal Register on July 15, 2016 

(hereinafter referred to as the CY 2017 

PFS proposed rule) we enumerated the 

benefits CMS associated with the release 

of Part C and Part D MLR data to the 

public. In that proposed rule, we stated 

that the release of Part C and Part D 

MLR data could lead to research into 

how managed care in the Medicare 

population differs from and is similar to 

managed care in other populations 

(such as the individual and group 

markets) where MLR data is also 

released publicly, and could inform 

future administration of these programs 

(81 FR 46396). We further stated that the 

release of this data would promote 

accountability in the MA and Part D 

programs, by making MLR information 

publicly available for use by 

beneficiaries who are making 

enrollment choices and by allowing the 

public to see whether and how 

privately-operated MA and Part D plans 

administer Medicare—and 

supplemental—benefits in an effective 

and efficient manner (81 FR 46397). 

Notably, in the CY 2017 PFS final rule, 

in response to comments that requested 

that CMS release only the MLR 

percentage for a contract, CMS expressly 

rejected that approach because releasing 

only the minimum amount of MLR data 

for MA and Part D contracts would not 

align with CMS’ release of the detailed 

MLR data submitted by commercial 

plans (see 81 FR 80439). However, when 

we amended §§ 422.2460 and 423.2460 

to scale back the MLR reporting 

requirements starting with CY 2018 

MLR reporting, we did not indicate that 

we had subsequently concluded that 

MLR data would not provide this value 

to the public, nor did we acknowledge 

that a direct consequence of CMS 

ending the detailed MLR reporting 

requirements, was that our release of 

Medicare MLR data would no longer 

align with the release of commercial 

MLR data, as we would only be 

releasing the MLR percentage and 

remittance amount (if any) for MA and 

Part D contracts, starting with MLR data 

submitted for CY 2018. 

We believe it is appropriate that we 

reaffirm our position that the public 

release of Part C and Part D MLR data 

provides value to the public both by 

increasing market transparency and 

improving beneficiary choice. We 

believe that the value in CMS releasing 

to the public detailed MLR data in 

accordance with §§ 422.2490 and 

423.2490, and of alignment with the 

disclosure of commercial MLR data, 

provides further support for our 

proposal to require MA organizations 

and Part D sponsors to submit such 

detailed data to us on an annual basis, 

starting with MLR reporting for CY 

2023. Further, while not every 

beneficiary will use the MLR data as 

part of making enrollment decisions, we 

believe providing access to more 

detailed information about expenditures 

on supplemental benefits, as reported in 

the MLR Reporting Tool, will provide a 

means for beneficiaries to determine the 

value provided by MA plans. 

Overall, we believe that the release of 

incurred expenditures for supplemental 

benefits is consistent with the rationale 

explained in the release of MLR 

reporting in the 2016 final rule. We do 

not believe it is necessary or appropriate 

to create exceptions from this existing 

regulation to exclude disclosure of the 

data that will be released for incurred 

expenditures for supplemental benefits, 

especially when that data will be 

provided at an aggregate level without 

risk of disclosing specific plan-level 

costs that might be used to put a 

particular MA plan at a competitive 

disadvantage. 

Comment: A commenter cited that 

reverting to the requirement to submit 

more detailed expenditure data on the 

MLR and the newly added requirement 

to submit expenditure data on 

supplemental benefits, in particular, is 

duplicative of data in the bid pricing 

tool (BPT). 

Response: In our view, the data 

collected during the bid process and the 

detailed data collected through the MLR 

report are not fully comparable. The 

data collected on the BPT is at the plan 

benefit package (PBP) level while MLR 

data is reported at the contract level. 

MA organizations and Part D sponsors 

submit bids at the plan level and 

typically use historical spending and 

utilization as the basis to for their bid 

projections for the applicable year. For 

example, MAOs this June will use 2021 

spending and utilization as the basis for 

trending forwarding their bids to the 

2023 plan year. If a plan is new or the 

MA organization or Part D sponsor 

expects a significant change in the 

plan’s 2023 enrollment or risk profile, 

the MA organization or Part D sponsor 

can use historical 2021 experience from 

another plan or group of plans that the 

MA organization or Part D sponsor 

expects to have had a similar 

enrollment/risk profile. For this reason, 

there is not always a one-to-one 

relationship between the historical plan 

experience used for bidding for a 

specific plan and the plan’s 

expenditures in the payment year. For 

MLR reporting, MAOs submit historical 

information for a specific contract and 


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specific contract year, not at the PBP 

level, so the detailed MLR data is not 

duplicative of the bid data. In addition, 

we intend to structure the MLR 

reporting so that data on supplemental 

benefits in the detailed MLR report are 

more granular than the broad 

supplemental benefit categories used in 

the BPT. The more detailed categories of 

reporting for supplemental benefits will 

provide increased transparency 

regarding the expenditures on 

supplemental benefits and enable us to 

assess the impact of specific policies, 

such as the provision of non-primarily 

health related supplemental services to 

the SSBCI population. Moreover, 

because the time lag between 

submission and release of public use 

files for the MLR data is significantly 

shorter than the time lag between 

submission and release of public use 

files of bid data, users have access to 

more recent data with the MLR. 

The MLR data is typically released for 

more recent contract years than the BPT 

data. Under § 422.272(b), MA bid 

pricing data is released for a contract 

year that is at least 5 years prior to the 

upcoming calendar year. In comparison, 

according to § 422.2490, MLR data 

cannot be released earlier than 18 

months after the end of the applicable 

contract year. CMS anticipates that for 

future years, MLR data will be released 

for more recent years than MA bid 

pricing data due to these timing 

requirements. 

Comment: Commenters stated that the 

release of expenditure information on 

supplemental benefits could risk 

revealing proprietary cost information 

and may threaten current MA market 

competition since supplemental benefits 

vary between plans, which helps drive 

competition. Commenters note that 

given the flexibility around the types of 

supplemental benefits MAOs may offer 

and the variety of benefit and payment 

structures used to offer these benefits, 

the cost information provided is not 

‘‘apples to apples’’ across contracts and 

is not useful for comparison by 

beneficiaries. As an example, a 

commenter noted that if only two or 

three plans in a given area offered a 

particular benefit category and that 

information were made publicly 

available, each plan could readily assess 

the other’s costs and could result in core 

business strategy and other highly 

proprietary cost information being 

revealed. 

Response: Currently, 

§§ 422.2490(b)(2) and 423.2490(b)(2) 

prohibit release of information that is 

reported in the MLR reports at the plan 

level. Our proposal, which we are 

finalizing, amends that provision to also 

protect amounts that are reported as 

expenditures for a specific type of 

supplemental benefit where the entire 

reported amount represents costs 

incurred by the only plan under the 

contract that offers that benefit. The data 

will be aggregated at the contract level, 

rather than at the PBP level, which we 

believe will prevent releases of 

proprietary cost information. 

Additionally, line items in the detailed 

MLR reporting will include aggregation 

at the provider type or service level (for 

example, different types of dental 

benefits would be reported together as a 

single line item) in the general 

supplemental benefit categories. Many 

MA and Part D contracts cover large or 

multiple geographic regions or areas and 

are made up by several plans, avoiding 

the risk of releasing plan-specific data. 

As commenters note, the flexibility 

commenters describe around the types 

of supplemental benefits MAOs may 

offer and the variety of benefit and 

payment structures used to offer 

supplemental benefits limits the 

comparability of the data across 

contracts and therefore, mitigates the 

risk of revealing proprietary cost 

information through the release of the 

supplemental benefit expenditures data. 

Moreover, as noted in the proposed rule, 

in deciding whether to require separate 

reporting of the expenditures for a 

particular supplemental benefit type, we 

considered the percentage of contracts 

that currently offer that supplemental 

benefit under just one plan, as we 

believe expenditures associated with 

benefits offered under only one plan 

under a contract would constitute planlevel data. In creating a list of potential 

categories of supplemental benefits for 

the more detailed MLR reporting, we 

did not include supplemental benefit 

types or categories offered by less than 

10 percent of all MA plans in 2021, with 

the exception of SSBCI that are not 

primarily health related, in order to 

protect individual plan information. 

Because of the potential variation in 

coverage of different items and services, 

such as the non-primarily health related 

services provided to the SSBCI 

population, which can range from 

indoor air quality equipment to 

transportation to services supporting 

self-direction depending on the needs of 

an individual enrollee whose overall 

function or health is reasonably 

expected to be improved by the item or 

service, we do not believe that the 

aggregate data available in the MLR 

reports about expenditures in this 

category could reveal confidential 

business strategies or cost information 

of an MA organization. We will also 

review the expenditure information on 

supplemental benefits to gain a better 

understanding of the data and analyze 

the number of contracts that include a 

given supplemental service and take 

this into consideration in creating files 

for public use. 

Additionally, according to 

§§ 422.2490(b)(1) and 423.2490(b)(1), 

narrative descriptions that MA 

organizations submit to support the 

information reported to CMS pursuant 

to the reporting requirements at 

§ 422.2460, such as descriptions of 

expense allocation methods, are 

excluded from MLR data released to the 

public. 

Finally, consistent with 

§§ 422.2490(c) and 423.2490(c), the 

release of the MLR data we propose to 

collect for a contract year will occur no 

sooner than 18 months after the end of 

the applicable contract year, and will be 

subject to the exclusions in 

§§ 422.2490(b) and 423.2490(b). For 

example, CMS does not release the 

narrative for the specifics around 

spending for any aspect of the MLR, 

including supplemental benefits per 

§§ 422.2490(b)(1) and 423.2490(b)(1). 

Finally, we believe the time lag between 

submission of data for a given contract 

year and public release of the data 

mitigates the potential threat to MA 

market competition on the basis of 

supplemental benefits. 

Comment: Several commenters cited 

the challenges of reporting more 

detailed information on supplemental 

benefits, and requested CMS delay 

implementation. 

Response: We do not believe that 

there are sufficient challenges for MA 

organizations with regard to reporting 

the more detailed MLR information to 

delay implementation beyond the MLR 

report due for CY 2023. Requiring MA 

organizations to account for their 

supplemental benefit expenditures by 

benefit type or benefit category will 

provide more transparency into how the 

MLR is being calculated, and it will 

assist CMS in verifying the accuracy of 

the MLR calculation, particularly with 

respect to expenditures related to 

categories of supplemental benefits that 

MA organizations must already 

separately report to CMS for purposes of 

bid development. In order to ensure 

accurate MLR reporting, for bid 

development purposes, and for internal 

accounting and planning purposes, MA 

plans presumably already collect 

detailed information on supplemental 

benefit expenditures. Given that plans 

will submit the detailed MLR reports at 

end of 2024 for contract year 2023, we 

believe plans will have adequate time to 

prepare for reporting additional 


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requirements in the MLR; therefore, a 

delay in implementation is not 

warranted. 

Comment: A few commenters raised 

concerns regarding quality improving 

activities (QIA) and requested that CMS 

ensure that QIA expenses represent 

actual value provided for consumers’ 

premium dollars and that plans do not 

abuse the removal of the ‘‘fraud 

reduction expenses’’ cap. 

Response: We appreciate the 

commenters concerns and remind 

commenters that the regulations at 

§§ 422.2430(a)(3) and 423.2430(a)(3) 

require QIA to be grounded in evidencebased practice that can be objectively 

measured. Under the current MLR 

reporting requirements, CMS is unable 

to determine the extent to which QIA 

expenses are actually spent on quality 

improving activities. The more detailed 

reporting reinstates requirements that 

plans submit narratives that explain 

their QIA methodology (for example, 

there is a line on reporting dedicated to 

spending on fraud reduction 

specifically). We believe these 

reinstated measures will prevent plans 

from misusing the removal of the fraud 

reduction cap. 

Comment: A few commenters 

supporting CMS’ efforts to reinstate the 

detailed MLR reporting urged CMS to 

clarify how health plans should capture 

and report such information and 

believed that the claims-based reporting 

framework may not be appropriate for 

all supplemental benefits. Commenters 

stated that using a per member per 

month (PMPM) reporting system would 

better illustrate what financial support a 

plan is providing for such benefits. 

Response: We appreciate the 

feedback. A per member per month 

(PMPM) reporting of expenditures is not 

consistent with the general calculation 

of the medical loss ratio or the method 

of reporting expenditure information. 

For the purposes of the MLR, MA 

organizations and Part D sponsors 

submit data on incurred claims for each 

contract, regardless of the type of 

payment arrangement with providers. 

The medical loss ratio is calculated by 

dividing total expenditures (as defined 

by the MLR instructions and reported to 

CMS) by total revenues (as defined by 

the MLR instructions and reported to 

CMS) for a given contract for a given 

contract year. A per member per month 

(PMPM) reporting for selected service 

categories, such as supplemental 

services, as suggested by the 

commenter, would not be suitable for 

the purpose of the MLR report. We are 

finalizing the detailed MLR reporting, 

including flexibility for CMS to change 

the specific line items and supplemental 

benefit categories that are reported by 

MA organizations. 

Comment: A few commenters 

recommended expanding reporting for 

the ‘‘Non-Primarily Health Related 

Items that are Special Supplemental 

Benefits for the Chronically Ill (SSBCI)’’ 

category, and suggested adding subcategories such as food, transportation, 

and housing, which align with the 

broader areas of focus for CMS and 

health plans. 

Another commenter recommended 

that CMS consolidate the ‘‘Wellness’’ 

and ‘‘Fitness Benefit’’ categories, thus 

establishing a ‘‘Fitness and Wellness 

Benefit’’ category, which would 

incorporate the programs that use a 

more holistic approach to the health and 

wellbeing. 

A commenter requested CMS provide 

clarification on how the ‘‘Fitness 

Benefit’’ should be classified in the MLR 

reporting, given that currently ‘‘memory 

fitness’’ supplemental benefits are filed 

as a specific category under the ‘‘Fitness 

Benefit’’ category, as are physical fitness 

supplemental benefits and wearable 

device supplemental benefits. They 

proposed CMS require plans to break 

out their MLR data across the three 

categories of fitness benefit, to provide 

data that evaluate how these very 

distinct types of fitness benefit are being 

implemented. 

Response: We appreciate the feedback 

related to expanding and collapsing 

supplemental benefit categories and line 

items. As noted above, maintaining 

flexibility to modify the scope of data 

fields and categories for MA 

supplemental benefits will allow CMS 

to collect data that is sufficiently 

detailed to enable us to understand 

benefit expenditures, verify and 

increase accountability for the accuracy 

of MLR calculation and accommodate 

evolving policy and program needs. We 

describe four standards we will use to 

determine supplemental benefit data 

reporting requirements above. One of 

those standards is the percentage of MA 

plans that offer each type of 

supplemental benefit. 

With regard to the requests for more 

detailed reporting for the ‘‘Fitness’’ and 

‘‘Non-Primarily Health Related Items 

that are Special Supplemental Benefits 

for the Chronically Ill (SSBCI)’’ 

categories, as noted in the proposed 

rule, we proposed to limit separate 

reporting of expenditures for 

supplemental benefit types or categories 

if these services were offered by less 

than 10 percent of all MA plans in 2021. 

The exception was the category of 

services for the SSBCI population that 

are not primarily health related; we 

included this category in the proposed 

rule because we believe this information 

will help us assess the impact of our 

2021 rule change that allows all 

amounts paid for covered services to be 

included in the MLR numerator as 

incurred claims (prior to this rule 

change, only amounts paid ‘‘to 

providers’’—which is defined in § 422.2 

in terms of the provision of healthcare 

items and services—for covered services 

could be included in incurred claims, 

which would have excluded, for 

example, pest control). We will 

continue to take the concentration of 

each type of supplemental benefit 

category offered into consideration in 

proposing the list of supplemental 

benefit categories in the PRA package. 

Similarly, with regard to request to 

combine the ‘‘Wellness’’ and ‘‘Fitness’’ 

benefit categories, we will also consider 

the standard previously described 

related to the percentage of MA plans 

offering these specific categories of 

supplemental benefits. 

Generally, as noted previously in this 

section II.G.3. of the final rule, we will 

consider the other standards related to 

administrative burden, data 

transparency, and data accuracy in 

developing the proposed reporting 

requirements in the PRA package. 

CMS will propose the MLR data 

requirements in a PRA package that will 

be published in the Federal Register for 

public comment. The comment period 

is 60 days, during which plans and the 

public may comment on the MLR data 

reporting requirements. CMS will take 

these comments into consideration in 

developing final MLR data reporting 

requirements, which will be published 

in final PRA package. 

After consideration of the comments 

and for the reasons outlined in the 

proposed and final rules and our 

responses to comments, we are 

finalizing the proposed amendments to 

§§ 422.2460(a) and (b) and 423.2460(a) 

and (b) without modification. We do 

note for readers that the MLR report will 

be subject to PRA processes and 

encourage the submission of comments 

related to reporting requirements and 

the structure of MLR reporting once the 

PRA package is posted for public 

comment. 

In addition, we are finalizing the 

requirement for MA organizations to 

separately report expenditures for 

supplemental benefits (supplemental 

benefits meeting the criteria in 

§ 422.100(c)(2) but excluding 

supplemental benefits that extend or 

reduce the cost-sharing for items and 

services covered under Parts A and B) 

on multiple lines of the MLR Reporting 

Tool, which will represent different 

types or categories of supplemental 


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27832 Federal Register / Vol. 87, No. 89 / Monday, May 9, 2022 / Rules and Regulations 

benefits. Requiring MA organizations to 

account for their supplemental benefit 

expenditures by benefit type or benefit 

category will serve program purposes, 

such as providing more transparency 

into how the MLR is being calculated, 

and assisting CMS in verifying the 

accuracy of the MLR calculation, 

particularly with respect to 

expenditures related to categories of 

supplemental benefits that MA 

organizations must already separately 

report to CMS for purposes of bid 

development. We did not propose a 

separate reporting of Part D 

supplemental benefits expenditures and 

continue to believe that a separate 

reporting of Part D supplemental 

benefits expenditures is not needed at 

this time. We will set forth detailed 

reporting requirements through the PRA 

process as noted previously. 

4. Technical Change to MLR Reporting 

Regulations (§§ 422.2460 and 423.2460) 

In addition to our proposal to 

reinstate the detailed MLR reporting 

requirements that were in effect for CYs 

2014 through 2017, with some 

modifications, and to add new data 

fields to our MLR Reporting Tool as 

described in the previous section of this 

preamble, we proposed to make a 

clarifying amendment to our MLR 

reporting regulations. 

Currently, §§ 422.2460(d) and 

423.2460(d) state that the MLR is 

reported once, and is not reopened as a 

result of any payment reconciliation 

process. We proposed to amend this 

paragraph to note that it is subject to an 

exception in new paragraph (e), which 

as proposed will provide that, with 

respect to an MA organization (in the 

case of proposed § 422.2460(e)) or Part 

D sponsor (in the case of proposed 

§ 423.2460(e)) that has already 

submitted to CMS the MLR report or 

MLR data submission for a contract for 

a contract year, paragraph (d) does not 

prohibit resubmission of the MLR report 

or MLR data for the purpose of 

correcting the prior MLR report or data 

submission. Proposed paragraph (e) will 

also provide that such resubmission 

must be authorized or directed by CMS, 

and upon receipt and acceptance by 

CMS, will be regarded as the contract’s 

MLR report or data submission for the 

contract year for purposes of part 422, 

subpart X, and part 423, subpart X. 

As explained in more detail in the 

proposed rule at 87 FR 1908 through 

1909, we characterized this as a 

clarifying amendment because we 

believe it is clear from the discussion in 

the May 2013 Medicare MLR final rule 

that the provision stating that the MLR 

will be reported once, and will not be 

reopened as a result of any payment 

reconciliation process, was intended to 

codify the policy decision that the MLR 

for a contract year is based on the 

contract year revenue figure available at 

the time of reporting, and is not subject 

to change if the contract year revenues 

increase or decrease through 

adjustments that take place in a future 

year. The proposed rule at 87 FR 1909 

discussed this requirement at 

§§ 422.2460(d) and 423.2460(d) in the 

context of other provisions in our MLR 

regulations. We believe this discussion 

provides additional support for our 

position that we did not intend to 

prohibit ourselves from collecting or 

considering additional or corrected MLR 

data submitted to address deficiencies 

or inaccuracies in the original annual 

MLR submission required under 

§§ 422.2460 and 423.2460. Specifically, 

if, based on the data available at the 

time of the original MLR submission, or 

on the data that should have been 

available at the time of the original MLR 

submission, the MAO or Part D sponsor 

submits an MLR report or data 

submission that contains errors or 

omissions, the MA organization or Part 

D sponsor must notify CMS of the 

incorrect report submission. CMS will 

review and may require a resubmission. 

The proposed rule also noted at 87 FR 

1909 that a prohibition on any and all 

corrections or resubmissions would be 

contrary to our longstanding practice, 

which dates back to when CMS first 

began collecting Part C and Part D MLR 

data (for CY 2014) in December 2015, of 

allowing MA organizations and Part D 

sponsors to resubmit their MLR Data 

Forms for a contract year in order to 

correct errors and omissions in the 

original MLR filing without treating that 

resubmission as a reporting of the MLR 

for purposes of §§ 422.2460(d) and 

423.2460(d). 

Comment: A commenter requested 

additional clarification on CMS’ 

technical changes and proposal for 

submitting corrections on MLR data. 

The commenter requested CMS clarify 

what changes and payment 

reconciliations would result in requiring 

an organization to resubmit MLR 

information and the types of MLR 

changes that CMS expects plans to 

report. Further, the commenter 

requested clarification on any proposed 

timeline or timing limitations for 

making changes and how that may 

correspond with potential audits. The 

commenter requested further 

clarification on the materiality 

thresholds that would trigger the need 

for a refiling, and examples of what 

criteria would necessitate a refiling to 

improve plan compliance. Another 

commenter expressed concern that 

requiring MLR corrections as a result of 

ongoing adjustments, such as direct and 

indirect remuneration (DIR) adjustments 

that can be made for years after the 

initial DIR submission, could require 

refiling of MLR information for several 

years. This commenter also asked about 

the process by which an MA 

organization or Part D sponsor would 

resubmit an MLR report. 

Response: The general concept 

underlying the resubmission of an MLR 

report remains unchanged from our 

original intent in the May 2013 

Medicare MLR final rule. In the 

proposed rule, we stated that with 

respect to an MA organization (in the 

case of proposed § 422.2460(e)) or Part 

D sponsor (in the case of proposed 

§ 423.2460(e)) that has already 

submitted to CMS the MLR report or 

MLR data submission for a contract for 

a contract year, paragraph (d) does not 

prohibit resubmission of the MLR report 

or MLR data for the purpose of 

correcting the prior MLR report or data 

submission. We also stated in the 

proposed rule that our remarks in the 

2013 Medicare MLR proposed and final 

rules made it clear that we never 

intended to prohibit ourselves from 

collecting, or taking into account, 

additional or corrected MLR data that is 

submitted to address deficiencies or 

inaccuracies in the annual MLR 

submission required under §§ 422.2460 

and 423.2460. We believe that the 

remittances owed based on a failure to 

meet the MLR standard should be based 

on the revenue and expenditure figures 

at the time of the report, and should not 

be subject to change if this revenue or 

expenditure figure is decreased or 

increased in a future year. If the revenue 

or expenditure figures increase or 

decrease as the result of an omission or 

other error committed by the MA 

organization or Part D sponsor, then the 

entity must notify CMS and may be 

required to resubmit the MLR report. 

We understand the commenter’s 

concerns regarding ongoing regularly 

occurring processes that affect 

payments, such as the reopenings of 

Part D payment reconciliation; however, 

this requirement for notifying CMS of 

errors in the MLR report does not 

extend to such adjustments that occur 

after the MLR report is submitted and 

finalized. Furthermore, payment 

reconciliations applicable for a contract 

year that occur after the contract year 

MLR report is submitted and finalized 

would not trigger the resubmission of 

that MLR report. Based on our prior 

experience, we do not anticipate that 

the identification and reporting to CMS 


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Federal Register / Vol. 87, No. 89 / Monday, May 9, 2022 / Rules and Regulations 27833 

88CMS collects DIR data under collection 

approved under OMB control number 0938–0964 

(CMS–10174) (‘‘Collection of Prescription Drug 

Event Data from Contracted Part D Providers for 

Payment’’). CMS does not release publicly the DIR 

data that we collect. The one exception was a 

highly summarized release of certain 2014 DIR data 

related to manufacturer rebates: https://

www.cms.gov/Research-Statistics-Data-andSystems/Statistics-Trends-and-Reports/ 

Information-on-Prescription-Drugs/PartD_Rebates. 

89Sponsors report all DIR to CMS annually by 

category at the plan level. DIR categories include: 

Manufacturer rebates, administrative fees above fair 

market value, price concessions for administrative 

services, legal settlements affecting Part D drug 

costs, pharmacy price concessions, drug costs 

related risk-sharing settlements, etc. 

of issues in an MLR report will be 

commonplace. If we see that 

organizations are re-stating or correcting 

MLR submissions that are related to 

MLR reports that were submitted a 

number of years ago, then we will 

revisit this issue. We decline to set a 

materiality threshold at this time and as 

we state previously, CMS will review on 

a case-by-case basis instances in which 

an MLR report may need to be 

resubmitted. If CMS decides that an 

MLR report should be resubmitted, we 

will provide entities with instructions 

on how to resubmit at that time. 

We assume the commenter who asked 

about audits is referring to our standard 

desk review of the MLR reports 

described at § 422.2460. The 

resubmission of MLR reports described 

herein is separate from reporting issues 

detected through the standard desk 

reviews of MLR reports. If an error is 

detected during a desk review, the MLR 

report is not considered final until it has 

been corrected and resubmitted and 

passes the desk review. 

Comment: A commenter requested 

that CMS confirm whether resubmission 

of an MLR report and/or data may be 

initiated by CMS only or if resubmission 

may be initiated by a MA organization 

or Part D sponsor. 

Response: CMS confirms that MLR 

resubmissions may be initiated by a MA 

organization, Part D sponsor, or CMS. 

The regulations we are finalizing at 

§§ 422.2460(e) and 423.2460(e) specify 

that CMS can either require or allow an 

MLR resubmission. We note that upon 

notification by an MA organization or 

Part D sponsor of an error in reporting, 

CMS will work with the reporting entity 

to gather additional information as 

necessary and determine whether a 

resubmission of the MLR report is 

required. 

Comment: A commenter stated that if 

a plan were at or around the 85 percent 

threshold when it filed its report, it 

would be disincentivized from 

identifying and collecting any erroneous 

payments after the data submission 

deadline for fear of subsequently 

revising its claims estimates, falling 

below 85 percent, having to refile, and 

potentially receiving an enrollment 

penalty. 

Response: It is incumbent upon the 

MA organization or Part D sponsor to 

submit data that is complete, accurate, 

and truthful. 

MA organizations and Part D sponsors 

that inaccurately report revenues or 

expenditures in an MLR filing, taking 

into account payment policy that was in 

effect during the contract year and 

payment amounts that the plan received 

for that contract year prior to the 

submission of the MLR report, may be 

required, as determined by CMS, to 

resubmit the MLR data for the given 

contract year. For example, if MA 

organizations and Part D sponsors 

identify errors (such as double counting, 

math errors, or misclassification of a 

type of revenue or expenditure that is 

discovered after submission of an MLR 

report), the organization should contact 

CMS and may be required to refile as 

determined by CMS. Additionally, if an 

MA organization or Part D sponsor 

develops estimates of revenues or 

expenditures in preparing the MLR 

report that are inconsistent with 

payment policy or MLR guidance in 

place at the time of submission of the 

report, the MA organization or Part D 

sponsor must notify CMS. 

After consideration of the comments 

and for the reasons outlined in the 

proposed rule and our responses to 

comments, we are finalizing 

amendments at §§ 422.2460(d) and (e) 

and 423.2460(d) and (e), as proposed. 

H. Pharmacy Price Concessions in the 

Negotiated Price (§ 423.100) 

1. Introduction 

Under Medicare Part D, Medicare 

makes partially capitated payments to 

private insurers, also known as Part D 

sponsors, for covering prescription drug 

benefits for Medicare beneficiaries. 

Often, the Part D sponsor or its 

pharmacy benefit manager (PBM) 

receives compensation after the point of 

sale that serves to lower the final 

amount paid by the sponsor to the 

pharmacy for the drug. Under Medicare 

Part D, this post-point-of-sale 

compensation is called Direct and 

Indirect Remuneration (DIR) and is 

factored into CMS’s calculation of final 

Medicare payments to Part D plans. DIR 

includes rebates from manufacturers, 

administrative fees above fair market 

value, price concessions for 

administrative services, legal 

settlements affecting Part D drug costs, 

pharmacy price concessions, drug costs 

related to risk-sharing settlements, or 

other price concessions or similar 

benefits offered to some or all 

purchasers from any source (including 

manufacturers, pharmacies, enrollees, or 

any other person) that would serve to 

decrease the costs incurred under the 

Part D plan (see § 423.308). 

Total DIR reported by Part D sponsors 

has been growing significantly in recent 

years. The data Part D sponsors submit 

to CMS as part of the annual reporting 

of DIR88 show that pharmacy price 

concessions (generally referring to all 

forms of discounts, direct or indirect 

subsidies, or rebates that a pharmacy 

pays to a Part D sponsor to reduce the 

costs incurred by Part D sponsors), net 

of all pharmacy incentive payments, 

have grown faster than any other 

category of DIR 89 received by sponsors 

and their contracted PBMs. This means 

that pharmacy price concessions now 

account for a larger share than ever 

before of reported DIR and a larger share 

of total gross drug costs in the Part D 

program. In 2020, pharmacy price 

concessions accounted for about 4.8 

percent of total Part D gross drug costs 

($9.5 billion), up from 0.01 percent ($8.9 

million) in 2010. As shown in Table 2, 

the growth in pharmacy price 

concessions from 2010 to 2020 has been 

a continuous upward trend with the 

exception of 2011. 


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27834 Federal Register / Vol. 87, No. 89 / Monday, May 9, 2022 / Rules and Regulations 

The data show that pharmacy price 

concessions, net of all pharmacy 

incentive payments, grew more than 

107,400 percent between 2010 and 

2020. The data also show that much of 

this growth occurred after 2012, when 

the use by Part D sponsors of 

performance-based payment 

arrangements with pharmacies became 

increasingly prevalent. Part D sponsors 

and their contracted PBMs have been 

increasingly successful in recent years 

in negotiating price concessions from 

network pharmacies. Such price 

concessions are negotiated between 

pharmacies and sponsors or their PBMs, 

independent of CMS, and are often tied 

to the pharmacy’s performance on 

various measures defined by the 

sponsor or its PBM. Performance-based 

pharmacy price concessions, net of all 

pharmacy incentive payments, 

increased, on average, nearly 170 

percent per year between 2012 and 2020 

and now comprise the second largest 

category of DIR received by sponsors 

and PBMs, behind only manufacturer 

rebates. 

The negotiated price is the primary 

basis by which the Part D benefit is 

adjudicated, as it is used to determine 

plan, beneficiary, manufacturer (in the 

coverage gap), and government cost 

obligations during the course of the 

payment year, subject to final 

reconciliation following the end of the 

coverage year. Under the current 

definition of ‘‘negotiated prices’’ at 

§ 423.100, negotiated prices must 

include all price concessions from 

network pharmacies except those that 

cannot reasonably be determined at the 

point of sale. However, because 

performance adjustments typically 

occur after the point of sale, they are not 

included in the price of a drug at the 

point of sale. 

As discussed in the proposed rule, 

based on stakeholder feedback and 

sponsor-reported DIR data, we 

understand that the share of 

pharmacies’ reimbursement that is 

contingent upon their performance 

under such arrangements has grown 

steadily each year. When pharmacy 

price concessions received by Part D 

sponsors are not reflected in lower drug 

prices at the point of sale and are 

instead used to reduce plan liability, 

beneficiaries generally see lower 

premiums, but they do not benefit 

through a reduction in the amount they 

must pay in cost-sharing. Thus, 

beneficiaries who utilize drugs end up 

paying a larger share of the actual cost 

of a drug. Moreover, when the point-ofsale price of a drug that a Part D sponsor 

reports on a prescription drug event 

(PDE) record as the negotiated price 

does not include such discounts, the 

negotiated price of each individual 

prescription is rendered less transparent 

and less representative of the actual cost 

of the drug for the sponsor. 

President Biden’s Executive Order 

(E.O.) 14036, ‘‘Promoting Competition 

in the American Economy’’ (86 FR 

36987), section 5 (‘‘Further Agency 

Responsibilities’’), called for agencies to 

consider how regulations could be used 

to improve and promote competition 

throughout the prescription drug 

industry. Because variation in the 

treatment of pharmacy price 

concessions by Part D sponsors may 

have a negative effect on the 

competitive balance under the Medicare 

Part D program, and given the 

programmatic impacts laid out above 

and the charge from the E.O., CMS 

proposed changes that would 

standardize how Part D sponsors apply 

pharmacy price concessions to 

negotiated prices at the point of sale. 

As discussed in the proposed rule, at 

the time the Part D program was 

established, we believed, as discussed 

in the January 2005 final rule (70 FR 

4244), that market competition would 

encourage Part D sponsors to pass 

through to beneficiaries at the point of 

sale a high percentage of the price 

concessions they received. However, in 

recent years, less than 2 percent of 

sponsors have passed through any price 

concessions to beneficiaries at the point 

of sale. We now understand that 

sponsors may face market incentives not 

to apply price concessions at the point 

of sale because of the advantages that 

accrue to sponsors in terms of lower 

premiums (also an advantage for 

beneficiaries). Pharmacy price 

concessions reduce plan costs, and 

having the concessions not be applied at 

the point of sale reduces plan costs and 

plan premiums at the expense of the 

beneficiary having lower cost-sharing at 

the point of sale, thus shifting some of 

the net costs to the beneficiary via 

higher cost-sharing. We believe that Part 

D sponsors are incentivized to have 

lower premiums versus lower costsharing because anecdotal evidence 

suggests beneficiaries focus more on 

premiums instead of cost-sharing when 

choosing plans. 

For this reason, as part of a November 

2017 proposed rule titled ‘‘Medicare 

Program; Contract Year 2019 Policy and 

Technical Changes to the Medicare 

Advantage, Medicare Cost Plan, 

Medicare Fee-for-Service, the Medicare 

Prescription Drug Benefit Programs, and 

the PACE Program’’ (82 FR 56419 

through 56428), which appeared in the 

Federal Register on November 28, 2017, 

we published a ‘‘Request for 

Information Regarding the Application 

of Manufacturer Rebates and Pharmacy 

Price Concessions to Drug Prices at the 

Point of Sale.’’ In the Request for 

Information, we solicited comment on 

whether CMS should require that the 

negotiated price at the point of sale for 

a covered Part D drug must include all 

price concessions that the Part D 


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TABLE 2: PHARMACY PRICE CONCESSIONS BY YEAR (2010-2020) 

Contract Year Total Pharmacv Price Concessions % Chane:e 

2010 $8,869,347 -

2011 $8,582,354 -3.2% 

2012 $68,086,163 693.3% 

2013 $228,573,206 235.7% 

2014 $538,421,239 135.6% 

2015 $1,719,179,214 219.3% 

2016 $2,125,460,000 23.6% 

2017 $4,001,741,355 88.3% 

2018 $6,339,517,817 58.4% 

2019 $8,130,024,785 28.2% 

2020 $9,535,197,775 17.3% 

Source: Summary Direct and Indirect Remuneration Report Data, 2010-2020. 
Federal Register / Vol. 87, No. 89 / Monday, May 9, 2022 / Rules and Regulations 27835 

90From 2018 to 2020, pharmacy price 

concessions increased by 50.4 percent while all 

other DIR increased by 23.5 percent. 

sponsor could potentially collect from a 

network pharmacy for any individual 

claim for that drug. Of the many 

comments received, the majority were 

from pharmacies, pharmacy 

associations, and beneficiary advocacy 

groups that supported the adoption of 

such a requirement claiming that it 

would: (1) Lower beneficiary out-ofpocket drug costs (especially critical for 

beneficiaries who utilize high cost 

drugs); (2) stabilize the operating 

environment for pharmacies (by creating 

greater transparency and allegedly 

making the minimum reimbursement on 

a per-claim level more predictable); and 

(3) standardize the way in which plan 

sponsors and their PBMs treat pharmacy 

price concessions. Some commenters— 

mostly Part D sponsors and PBMs— 

were against such a policy, claiming 

that it would limit their ability to 

incentivize quality improvement from 

pharmacies. In the proposed rule titled 

‘‘Modernizing Part D and Medicare 

Advantage To Lower Drug Prices and 

Reduce Out-of-Pocket Expenses’’ (83 FR 

62174 through 62180), which appeared 

in the Federal Register on November 30, 

2018 (hereinafter referred to as the 

November 2018 proposed rule), we 

solicited comment on a potential policy 

approach under which all pharmacy 

price concessions received by a plan 

sponsor for a covered Part D drug, 

including contingent price concessions 

paid after the point of sale, would be 

included in the negotiated price (83 FR 

62177). Specifically, we considered 

adopting a new definition for the term 

‘‘negotiated price’’ at § 423.100, which 

would mean the lowest amount a 

pharmacy could receive as 

reimbursement for a covered Part D drug 

under its contract with the Part D plan 

sponsor or the sponsor’s intermediary. 

In the final rule titled ‘‘Modernizing 

Part D and Medicare Advantage to 

Lower Drug Prices and Reduce Out-ofPocket Expenses,’’ which appeared in 

the Federal Register on May 23, 2019 

(84 FR 23867), we noted that we 

received over 4,000 comments on this 

potential policy approach, indicated 

that we would continue studying the 

issue, and left the existing definition of 

‘‘negotiated prices’’ in place. 

To address concerns about the lack of 

transparency in the performance 

measures used to evaluate pharmacy 

performance, in the February 2020 

proposed rule, we proposed to amend 

the regulatory language at § 423.514(a) 

to establish a requirement for Part D 

sponsors to disclose to CMS the 

pharmacy performance measures they 

use to evaluate pharmacy performance, 

as established in their network 

pharmacy agreements. We explained in 

the proposed rule that, once collected, 

we would publish the list of pharmacy 

performance measures in order to 

increase public transparency. In the 

final rule titled ‘‘Medicare and Medicaid 

Programs; Contract Year 2022 Policy 

and Technical Changes to the Medicare 

Advantage Program, Medicare 

Prescription Drug Benefit Program, 

Medicaid Program, Medicare Cost Plan 

Program, and Programs of All-Inclusive 

Care for the Elderly,’’ which appeared in 

the Federal Register on January 19, 

2021 (86 FR 5684), we finalized the 

proposed amendment to § 423.514(a), 

such that, starting January 1, 2022, Part 

D sponsors are required to disclose their 

pharmacy performance measures to 

CMS. 

After considering the comments 

received on the November 2018 and 

January 2022 proposed rules, and in 

light of recent data indicating that 

pharmacy price concessions have 

continued to grow at a faster rate than 

any other category of DIR,90 applicable 

beginning with contract year 2024, we 

are finalizing the policy proposed in the 

January 2022 proposed rule to amend 

§ 423.100 to define the term ‘‘negotiated 

price’’ to ensure that the prices available 

to Part D enrollees at the point of sale 

are inclusive of all possible pharmacy 

price concessions. Effective January 1, 

2024, we will delete the current 

definition of ‘‘negotiated prices’’ (in the 

plural) and we will add a definition of 

‘‘negotiated price’’ (in the singular), 

applicable January 1, 2024, to make 

clear that a negotiated price can be set 

for each covered Part D drug. We believe 

this approach accommodates the 

different approaches to applying price 

concessions under sponsor and PBM 

payment arrangements with pharmacies, 

which may provide for price 

concessions to be applied uniformly as 

a percentage adjustment to the price for 

all Part D drugs dispensed by a 

pharmacy or have price concessions 

differ on a drug-by-drug basis. In 

addition, defining ‘‘negotiated price’’ in 

the singular is consistent with the 

regulations for the coverage gap 

discount program, which define the 

term ‘‘negotiated price’’ at § 423.2305, 

and it is compatible with our existing 

regulations, which at times refer to the 

‘‘negotiated price’’ for a specific drug 

rather than ‘‘negotiated prices’’ for 

multiple drugs. Second, we will define 

‘‘negotiated price’’ as the lowest 

possible reimbursement a network 

pharmacy will receive, in total, for a 

particular drug, taking into account 

pharmacy price concessions. For the 

reasons described below, we are 

finalizing these proposals. 

2. Background 

Section 1860D–2(d)(1) of the Act 

requires that a Part D sponsor provide 

beneficiaries with access to negotiated 

prices for covered Part D drugs. Under 

the definition of ‘‘negotiated prices’’ at 

§ 423.100, the negotiated price is the 

price paid to the network pharmacy or 

other network dispensing provider for a 

covered Part D drug dispensed to a plan 

enrollee that is reported to CMS at the 

point of sale by the Part D sponsor. This 

point-of-sale price is used to calculate 

beneficiary cost-sharing. More broadly, 

the negotiated price is the primary basis 

by which the Part D benefit is 

adjudicated, as it is used to determine 

plan, beneficiary, manufacturer (in the 

coverage gap), and government liability 

during the course of the payment year, 

subject to final reconciliation following 

the end of the coverage year. 

Under current law, Part D sponsors 

can, for the most part, choose whether 

to reflect in the negotiated price the 

various price concessions they or their 

intermediaries receive from all sources, 

not just pharmacies. Specifically, 

section 1860D–2(d)(1)(B) of the Act 

requires that negotiated prices ‘‘shall 

take into account negotiated price 

concessions, such as discounts, direct or 

indirect subsidies, rebates, and direct or 

indirect remunerations, for covered part 

D drugs . . .’’ Part D sponsors are 

allowed, but generally not required, to 

apply rebates and other price 

concessions at the point of sale to lower 

the price upon which beneficiary costsharing is calculated. Under the existing 

definition of negotiated prices at 

§ 423.100, however, negotiated prices 

must include all price concessions from 

network pharmacies that can reasonably 

be determined at the point of sale. 

To date, very few price concessions 

have been included in the negotiated 

price at the point of sale. All pharmacy 

and other price concessions that are not 

included in the negotiated price must be 

reported to CMS as DIR at the end of the 

coverage year using the form required 

by CMS for reporting Summary and 

Detailed DIR (OMB control number 

0938–0964). These data on price 

concessions are used in our calculation 

of final plan payments, which, under 

section 1860D–2(d)(1)(B) of the Act, are 

required to be based on costs actually 

incurred by Part D sponsors, net of all 

applicable DIR. Reinsurance payments 

under section 1860D–15(b) of the Act, 

and risk sharing payments and 

adjustments under section 1860D– 


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27836 Federal Register / Vol. 87, No. 89 / Monday, May 9, 2022 / Rules and Regulations 

15(e)(2) of the Act are also required to 

be based on costs actually incurred by 

Part D sponsors. In addition, pursuant to 

section 1860D–2(d)(2) of the Act, Part D 

sponsors are required to disclose the 

aggregate negotiated price concessions 

made available to the sponsor by a 

manufacturer which are passed through 

in the form of lower subsidies, lower 

monthly beneficiary prescription drug 

premiums, and lower prices through 

pharmacies and other dispensers. 

When price concessions are applied 

to reduce the negotiated price at the 

point of sale, some of the concession 

amount is apportioned to reduce 

beneficiary cost-sharing. In contrast, 

when price concessions are applied 

after the point of sale, as DIR, the 

majority of the concession amount 

accrues to the plan, and the remainder 

accrues to the government. For further 

discussion on this matter, please see the 

CMS Fact Sheet from January 19, 2017 

‘‘Medicare Part D Direct and Indirect 

Remuneration,’’ found on the CMS 

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

newsroom/fact-sheets/medicare-part-ddirect-and-indirect-remuneration-dir. 

The January 2022 proposed rule 

explained in detail how pharmacy price 

concessions applied as DIR can: (1) 

Lower plan premiums and increase plan 

revenues; (2) result in cost-shifting to 

certain beneficiaries (in the form of 

higher cost-sharing) and the government 

(through higher reinsurance and lowincome cost-sharing subsidies); and (3) 

obscure the true costs of prescription 

drugs for consumers and the 

government. 

3. Changes to the Definition of 

Negotiated Price (§ 423.100) 

As discussed in the proposed rule, in 

the May 2014 final rule (79 FR 29844), 

we amended the definition of 

‘‘negotiated prices’’ at § 423.100 to 

require Part D sponsors to include in the 

negotiated price at the point of sale all 

pharmacy price concessions and 

incentive payments to pharmacies— 

with an exception, intended to be 

narrow, that allowed the exclusion of 

contingent pharmacy payment 

adjustments that cannot reasonably be 

determined at the point of sale (the 

reasonably determined exception). At 

that time, we did not anticipate the 

growth of performance—based 

pharmacy payment arrangements that 

we have observed in subsequent years. 

The proposed rule discussed how, 

based on feedback from stakeholders as 

well as information submitted by plan 

sponsors in their annual DIR reports, we 

have come to understand that the 

reasonably determined exception has 

been applied more broadly than we had 

initially envisioned, due to the shift by 

Part D sponsors and their PBMs towards 

contingent pharmacy payment 

arrangements. In short, because 

performance-based pharmacy payment 

adjustments are contingent upon 

performance over a period of time that 

extends beyond the point of sale, the 

stakeholders asserted that by definition, 

the amount of these adjustments cannot 

‘‘reasonably be determined’’ at the point 

of sale as they cannot be known in full 

at the point of sale. As a result, the 

reasonably determined exception 

prevents the current policy from having 

the intended effect on price 

transparency, consistency (by reducing 

differential reporting of pharmacy 

payment adjustments by sponsors), and 

beneficiary costs. 

Given the predominance of plan 

sponsors’ use of performance-contingent 

pharmacy payment arrangements, we do 

not believe that the existing requirement 

that pharmacy price concessions be 

included in the negotiated price can be 

implemented in a manner that achieves 

the goals previously discussed: 

Meaningful price transparency, 

consistent application of all pharmacy 

payment concessions by all Part D 

sponsors, and preventing cost-shifting to 

beneficiaries and taxpayers. Therefore, 

to establish a requirement that 

accomplishes these goals while better 

reflecting current pharmacy payment 

arrangements, we proposed to delete the 

existing definition of the term 

‘‘negotiated prices’’ at § 423.100 and add 

a definition of the term ‘‘negotiated 

price’’ at § 423.100 to mean the lowest 

amount a pharmacy could receive as 

reimbursement for a covered Part D drug 

under its contract with the Part D 

sponsor or the sponsor’s intermediary 

(that is, the amount the pharmacy 

would receive net of the maximum 

possible reduction that could result 

from any contingent pharmacy payment 

arrangement). Specifically, as noted 

previously, we proposed to delete the 

current definition of ‘‘negotiated prices’’ 

(in the plural) and to add a new 

definition of ‘‘negotiated price’’ (in the 

singular) in order to make clear that a 

negotiated price can be set for each 

covered Part D drug, and the amount of 

pharmacy price concessions may differ 

on a drug-by-drug basis. Our proposed 

definition of negotiated price would 

specify that the negotiated price for a 

covered Part D drug must include all 

pharmacy price concessions and any 

dispensing fees, and exclude additional 

contingent amounts (such as incentive 

fees) if these amounts increase prices. 

Under our proposal, we would not 

change Part D sponsors’ ability to pass 

through other, non-pharmacy price 

concessions and other direct or indirect 

remuneration amounts (for example, 

legal settlement amounts and risksharing adjustments) to enrollees at the 

point of sale. These proposed provisions 

are discussed in the following sections. 

a. All Pharmacy Price Concessions 

In the proposed rule, we proposed to 

adopt a new definition of ‘‘negotiated 

price’’ at § 423.100 that would include 

all pharmacy price concessions received 

by the plan sponsor for a covered Part 

D drug. The proposed definition would 

omit the reasonably determined 

exception, meaning that all price 

concessions from network pharmacies, 

negotiated by Part D sponsors and their 

contracted PBMs, would have to be 

reflected in the negotiated price that is 

made available at the point of sale and 

reported to CMS on a PDE record, even 

when such price concessions are 

contingent upon performance by the 

pharmacy. 

Section 1860D–2(d)(1)(B) of the Act 

requires that negotiated prices ‘‘shall 

take into account negotiated price 

concessions, such as discounts, direct or 

indirect subsidies, rebates, and direct or 

indirect remunerations, for covered part 

D drugs . . .’’ We have previously 

interpreted this language to mean that 

some, but not all, price concessions 

must be applied to the negotiated price 

(see, for example, 70 FR 4244 and 74 FR 

1511). Although we continue to believe 

that the prior interpretation of ‘‘take into 

account’’ was permissible, we believe 

that our initial interpretation may have 

been overly definitive with respect to 

the intended meaning of ‘‘take into 

account.’’ We believe that a proper 

reading of the statute supports requiring 

that all pharmacy price concessions be 

applied at the point of sale. As 

proposed, requiring that all pharmacy 

price concessions be applied at the 

point of sale would ensure that 

negotiated prices ‘‘take into account’’ at 

least some price concessions and, 

therefore, would be consistent with and 

permitted by the plain language of 

section 1860D–2(d)(1)(B) of the Act. 

The proposed rule noted that the 

regulatory change we proposed would 

change the reporting requirements for 

Part D sponsors, but it does not affect 

what sponsors may arrange in their 

contracts with network pharmacies 

regarding payment adjustments after the 

point of sale. Contracts between 

sponsors or their PBMs and pharmacies 

can continue to provide for 

performance-based payment 

adjustments. The requirement that 

pharmacy price concessions be passed 

through to the point-of-sale price only 


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directly impacts the price that is used to 

determine beneficiary cost-sharing and 

the information that is populated and 

reported on the PDE record, but it does 

not dictate the amount that is ultimately 

paid to the pharmacy or the timing of 

payments and adjustments. 

Comment: Most of the comments we 

received supported the adoption of a 

requirement that pharmacy price 

concessions be applied to the negotiated 

price at the point of sale. Many of the 

commenters who supported the 

proposal agreed that Part D sponsors or 

the sponsor’s intermediaries apply the 

‘‘reasonably determined’’ exception in 

the current definition of ‘‘negotiated 

prices’’ to nearly all performance-based 

pharmacy payment adjustments and 

that the exclusion of these adjustments 

from the negotiated price has resulted in 

cost-shifting to beneficiaries and the 

government. A majority of the 

commenters agreed with our assessment 

that the requirement to include all 

pharmacy price concessions in the 

negotiated price at the point of sale 

would lead to lower overall beneficiary 

spending for prescription drugs, even 

after accounting for possible increases 

in beneficiary premiums. 

Many commenters explained that they 

supported the proposal because they 

believed it would increase price 

transparency for beneficiaries, the 

government, and other stakeholders. 

Several commenters agreed with our 

observation in the proposed rule that 

there is currently wide variation in 

reporting of DIR to CMS, with some, 

albeit few, plan sponsors including 

certain pharmacy price concessions in 

negotiated price, while others continue 

to report them as DIR. Some 

commenters suggested that this 

inconsistency in reporting makes it 

difficult for beneficiaries to accurately 

compare plans with respect to the true 

costs of their medications. These 

commenters suggested that requiring all 

pharmacy price concessions to be 

accounted for in negotiated price would 

enhance the quality of information 

available to beneficiaries and provide 

them with a better understanding of 

how they will progress through the 

phases of the Part D benefit based on 

their current medications. Several 

commenters believed that increased 

price transparency would also create a 

more level playing field among plans by 

providing more consistency in how Part 

D sponsors report these price 

concessions. Many commenters 

suggested that pharmacies would also 

benefit from the increased price 

transparency because it would provide 

information necessary for more accurate 

budgeting and improved ability to 

evaluate proposed PBM contracts. 

Response: We thank these 

commenters for their support and agree 

that changing the definition of 

‘‘negotiated price’’ will provide greater 

transparency and lower out-of-pocket 

costs for beneficiaries. 

Comment: Some commenters stated 

that the policy would harm competition 

among pharmacies, leading to higher 

program costs. These commenters 

explained that under a revised 

definition of ‘‘negotiated price,’’ 

sponsors would no longer be able to 

apply pharmacy price concessions as 

DIR to reduce plan premiums. Several 

commenters stated that plan sponsors 

have demonstrated that the use of 

preferred networks has put a downward 

pressure on net prices and noted that 

pharmacies aggressively compete for 

preferred status in low premium plans. 

Knowing that beneficiaries prefer these 

plans, pharmacies (and, in particular, 

large retail-based pharmacies) are 

willing to offer substantial concessions 

to ensure that they have access to a large 

and fast-growing membership base. 

These commenters suggested that 

beneficiaries are not as sensitive to—or 

aware of—point-of-sale negotiated 

prices in comparison to premiums, and 

if sponsors are no longer able to reduce 

premiums by applying pharmacy price 

concessions as DIR, the result will be 

less effective competition between 

pharmacies for network placement. 

These commenters concluded that the 

use of post-point-of-sale pharmacy price 

concessions can give sponsors further 

leverage with pharmacies to negotiate 

prices, which decreases costs for the 

entire program. 

A few commenters were concerned 

that including pharmacy price 

concessions in the negotiated price 

would give pharmacies the power to 

impact future discount levels and 

pharmacies’ increased negotiating 

power would dramatically impact costs 

for patients, taxpayers, and plans. A few 

commenters suggested that pharmacies 

would not agree to economically 

equivalent discounts and would use the 

‘‘any willing provider’’ provisions to 

mandate that they must be allowed to 

participate in the network even at less 

of a discount. 

Response: The comments contending 

that sponsors’ inability to apply 

pharmacy price concessions as DIR to 

reduce premiums will lead to less 

effective competition among pharmacies 

for network placement assume that postpoint-of-sale recoupments are a more 

effective incentive than post-point-ofsale bonus payments. Commenters did 

not cite evidence to support this 

assumption; therefore, we believe 

pharmacies would continue to have 

incentives to compete for placement in 

networks. In addition, the aggressive 

competition among pharmacies for 

placement in low premium plan 

networks would be a continuing 

incentive for plan sponsors to keep 

premiums as low as possible regardless 

of the change in how the negotiated 

price is reported to CMS. To the extent 

that this policy results in increased 

transparency and information symmetry 

it would encourage market competition 

and improve competition among 

pharmacies. 

As noted above, several commenters 

stated that plan sponsors have 

demonstrated that the use of preferred 

networks has put a downward pressure 

on net prices, and we see no reason why 

this would change under the new 

policy. In spite of the statutory 

requirement at section 1860D–4(b)(1)(A) 

of the Act that Part D sponsors permit 

the network participation of any 

pharmacy willing to accept their 

standard terms and conditions, Part D 

sponsors and pharmacies remain free to 

negotiate terms of preferred network 

participation. The commenters provided 

no evidence to support the assertion 

that post-point-of-sale incentive 

payments (if used) would provide any 

less effective an incentive for 

pharmacies to continue to compete for 

preferred network status. We believe the 

policy would improve transparency and 

not necessarily affect any party’s 

leverage. 

Comment: We received some 

comments that opposed the adoption of 

a requirement that all pharmacy price 

concessions be included in the 

negotiated price at the point of sale 

because it would lead to higher 

premiums and increased government 

costs. Several commenters stated that 

the financial and budgetary impact of 

revising the definition of negotiated 

price to include all pharmacy price 

concessions does not address the 

Administration’s objectives to reduce 

overall drug prices. A few commenters 

noted that the CMS impact analysis 

estimates that drug manufacturers 

would have a financial gain due to less 

liability during the coverage gap. These 

commenters stated that this is 

particularly concerning as it financially 

rewards the very industry responsible 

for high drug prices. A few commenters 

posited that any savings from the policy 

would not be distributed evenly among 

beneficiaries. The commenters noted 

that although a subset of beneficiaries 

would pay less for discounted drugs, 

other beneficiaries would only 

experience higher premiums. The 


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91 Keisler-Starkey, K.B., & Bunch, L.N. (2021). 

Health Insurance Coverage in the United States: 

2020. United States Census Bureau. 

92 Kyle, M.A., Blendon, R.J., Benson, J.M., 

Abrams, M.K., & Schneider, E.C. (2019). Financial 

hardships of Medicare beneficiaries with serious 

illness. Health Affairs, 38(11), 1801–1806. 

93Cong, M., Chaisson, J., Cantrell, D., Mohundro, 

B.L., Carby, M., Ford, M., . . . & Nigam, S.C. (2021). 

Association of co-pay elimination with medication 

adherence and total cost. The American Journal of 

Managed Care, 27(6), 249–254. https://doi.org/ 

10.37765/ajmc.2021.88664. 

commenters also pointed out that some 

of the cost would be shifted to the 

Federal Government and would 

ultimately be borne by taxpayers. A few 

commenters were concerned this rule 

would disproportionately increase the 

financial burden for vulnerable 

beneficiaries with limited resources that 

are especially cost-conscious. They 

stated that premium increases due to the 

rule may potentially hinder progress in 

health equity for vulnerable populations 

and asked CMS to consider the potential 

to detract from the Agency’s overall goal 

of improving health equity and access. 

Response: While reducing overall 

prices is one of the Administration’s 

objectives, the new definition of 

‘‘negotiated price’’ set forth in this rule 

was not intended to meet that objective. 

The new definition will lead to savings 

for some beneficiaries by lowering the 

prices they pay for prescription drugs at 

the point of sale. As explained in the 

proposed rule, when pharmacy price 

concessions and other price concessions 

are not reflected in the negotiated price 

(that is, are applied instead as DIR at the 

end of the coverage year), beneficiary 

cost-sharing increases. For many Part D 

beneficiaries who utilize drugs and thus 

incur cost-sharing expenses, this means, 

on average, higher overall out-of-pocket 

costs, even after accounting for the 

premium savings tied to higher DIR. A 

principal purpose of any health 

insurance is to help reduce the financial 

burden borne by enrollees who need to 

utilize covered benefits.91 We believe it 

is appropriate that savings from price 

concessions go toward defraying the 

out-of-pocket costs of the beneficiaries 

who purchase prescription drugs. 

We disagree that this rule would 

increase the financial burden for 

vulnerable beneficiaries, hinder 

progress in health equity for vulnerable 

populations, or detract from the 

Agency’s overall goal of improving 

health equity and access. In fact, the 

lower cost-sharing for prescription 

drugs will help beneficiaries with 

serious health conditions, who bear a 

disproportionate burden of health care 

costs. These beneficiaries have reported 

difficulties paying for prescription drugs 

as a common problem.92 As stated 

earlier in the preamble, the application 

of all pharmacy price concessions to the 

negotiated price will lower cost-sharing 

for beneficiaries with the most serious 

health conditions. In addition, lower 

beneficiary cost-sharing can lead to 

increased medication adherence, which 

could result in a potential decrease in 

overall medical costs.93 Finally, this 

policy does not change how much LISeligible beneficiaries pay in cost-sharing 

or premiums, and therefore the lowincome subsidy will continue to protect 

the most vulnerable populations. 

Comment: A few commenters stated 

that, although including all pharmacy 

price concessions in the price at the 

point of sale could lead to lower costsharing for beneficiaries, it does not 

solve the complexities of drug pricing. 

For example, these commenters noted 

that the policy would not help 

beneficiaries who take expensive drugs 

with no post-point-of-sale rebates or 

discounts. 

Response: We appreciate the 

comment. Although we believe adopting 

this new definition of ‘‘negotiated 

price’’ is an important first step toward 

improving the affordability of drugs for 

the majority of beneficiaries who do not 

receive the low-income subsidy (LIS), 

and improving price transparency, we 

acknowledge that this change does not, 

nor is it intended to, address the full 

range of complexities of drug pricing, 

and may not directly reduce out-ofpocket costs for all beneficiaries. 

However, as discussed in further detail 

in section IV of this final rule, we 

project that the new definition of 

‘‘negotiated price’’ (modified to be 

applied across all phases of the Part D 

benefit, including the coverage gap 

phase (see comments, response and 

discussion below)) will save 

beneficiaries $26.5 billion between 2024 

and 2032. 

Comment: Some commenters opposed 

the policy on the ground that the new 

definition of ‘‘negotiated price’’ would 

violate the statutory definition of 

negotiated price at section 1860D– 

2(d)(1)(B) of the Act. Some commenters 

suggested that CMS would be exceeding 

its delegated authority if it finalized a 

requirement that all pharmacy price 

concessions be included in the point-ofsale price. Commenters also stated that 

Congress’s intent was to provide Part D 

sponsors with the flexibility in 

administering the Part D prescription 

drug benefit as a private market model 

and that the pharmacy price concession 

rule breaks with this fundamental trust 

in private markets instilled in the 

statute by Congress. In addition, some 

commenters noted that CMS has on 

multiple previous occasions recognized 

that the term ‘‘negotiated price,’’ as 

defined by Congress, grants Part D plans 

discretion in how they treat pharmacy 

price concessions and, as a result of this 

flexibility, Part D plans have been 

drivers of innovation in benefit design. 

Some commenters contended that CMS 

cannot now purport to interpret the 

statute in a way that eliminates postpoint-of-sale pharmacy price 

concessions, given that the agency 

previously found that the plain language 

of the statute permitted such price 

concessions. Further, commenters stated 

that an agency may not reverse a 

longstanding and reasoned policy 

without an adequate and thoughtful 

explanation for such a decision. Because 

the rule is unaligned with the intent of 

Congress, commenters argued, a 

reviewing court may find such policy 

changes to be substantively invalid 

because they would not be based on a 

permissible construction of the statute. 

A few commenters writing in support 

of revising the definition stated that the 

statutory definition of negotiated price 

gives CMS the authority to require Part 

D plan sponsors to include all price 

concessions in the negotiated price. 

These commenters explained that 

section 1860D–2(d)(1)(B) of the Act 

specifies that the negotiated price 

‘‘shall’’ take into account negotiated 

price concessions, such as discounts, 

direct or indirect subsidies, rebates, and 

direct or indirect remunerations, for 

covered part D drugs, and include any 

dispensing fees for such drugs. These 

commenters stated that the statute’s use 

of the word ‘‘shall’’ means that the 

negotiated price is required to reflect 

these price concessions. These 

commenters reasoned that, because the 

statute does not specify what percentage 

of these price concessions must be used 

to lower negotiated prices and thus 

passed through to patients at the point 

of sale or otherwise provide details 

about implementing the pass-through 

requirement, CMS has the authority to 

fill in those details. These commenters 

noted that plan sponsors and PBMs 

have exploited the ability to exclude 

price concessions that ‘‘cannot 

reasonably be determined at the point of 

sale’’ under the current definition of 

negotiated price. These commenters 

stated that plan sponsors and PBMs 

have applied this exception broadly and 

not passed the vast majority of 

pharmacy price concessions through to 

the point of sale, and that by doing so, 

plan sponsors and PBMs are violating 

CMS’s intent in allowing this exception 

(see 2014 final rule titled ‘‘Contract Year 

2015 Policy and Technical Changes to 


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the Medicare Advantage and the 

Medicare Prescription Drug Benefit 

Programs’’ (79 FR 29878), which 

appeared in the Federal Register on 

May 23, 2014). 

Response: As we stated in the 

proposed rule, section 1860D–2(d)(1)(B) 

of the Act requires that negotiated prices 

‘‘shall take into account negotiated price 

concessions, such as discounts, direct or 

indirect subsidies, rebates, and direct or 

indirect remunerations, for covered part 

D drugs . . . .’’ The statutory language 

does not prescribe the extent to which 

the negotiated prices shall take into 

account negotiated price concessions, 

and therefore, provides CMS with the 

authority to decide whether plan 

sponsors should be required to include 

all price concessions in the negotiated 

price. We have previously interpreted 

this language to mean that some, but not 

all, price concessions must be applied to 

the negotiated price (see, for example, 

70 FR 4244 and 74 FR 1511). Although 

we continue to believe that the prior 

interpretation of ‘‘take into account’’ 

was permissible, we believe that our 

initial interpretation may have been 

overly definitive with respect to the 

intended meaning of ‘‘take into 

account.’’ Requiring that all pharmacy 

price concessions be applied at the 

point-of-sale would ensure that 

negotiated prices ‘‘take into account’’ at 

least some price concessions and, 

therefore, would be consistent with and 

permitted by the plain language of 

section 1860D–2(d)(1)(B) of the Act. In 

this way, the negotiated price is 

required to ‘‘take into account’’ these 

price concessions. This policy we are 

finalizing is thus consistent with the 

statutory definition of negotiated price. 

In addition, the policy we are adopting 

is consistent with CMS’s delegated 

authority to interpret the statute and 

administer the Medicare program. 

Moreover, the statutory definition of 

negotiated price should be viewed in 

the broader context of administration of 

the Part D program and support better 

functioning of the Part D benefit overall. 

The policy we are adopting does so by 

addressing market incentives for plans 

to keep premiums low, by reducing 

point-of-sale costs for beneficiaries and 

by bringing the balance of cost-sharing 

among the government, plans, and 

beneficiaries into better alignment. We 

disagree with commenters who contend 

that CMS cannot change its 

interpretation of the statute. As noted 

above, the statutory language at section 

1860D–2(d)(1)(B) of the Act does not 

prescribe the extent to which the 

negotiated prices shall take into account 

negotiated price concessions, and 

therefore, provides CMS with the 

authority to decide whether plan 

sponsors should be required to include 

all pharmacy price concessions in the 

negotiated price. We believe that it is a 

permissible interpretation of the statute 

to require that all pharmacy price 

concessions be applied at the point of 

sale. The policy decision to treat 

pharmacy price concessions in this way 

is supported by evidence indicating that 

very few pharmacy price concessions 

are being passed on to beneficiaries in 

the form of lower cost-sharing at the 

point of sale and the significant growth 

in such concessions. As noted by some 

commenters, CMS originally believed 

that Part D plans would apply price 

concessions to the negotiated price due 

to pharmacy and beneficiary market 

competition; however, this has not been 

occurring as expected. As discussed in 

the proposed rule preamble, the sponsor 

reported data and stakeholder 

comments (83 FR 62174 through 62180) 

indicate that most price concessions are 

being applied after the point-of-sale. We 

reconsidered our interpretation of 

section 1860D–2(d)(1)(B) given that the 

initial interpretation does not 

accomplish the goals of meaningful 

price transparency, consistent 

application of pharmacy payment 

concessions, and preventing cost 

shifting to beneficiaries and taxpayers. 

We also disagree with commenters who 

claim that CMS is reversing its 

longstanding policy without an 

adequate explanation. CMS has 

carefully and thoroughly considered 

this issue over several years. Indeed, 

since 2014, CMS has addressed this 

topic multiple times, including 

soliciting comment through a formal 

process three times and holding 

numerous listening sessions. 

We disagree with commenters who 

contend that the policy we are adopting 

in this rule is inconsistent with trust in 

private markets or would hinder 

innovation in benefit design. As noted 

in the proposed rule, this policy 

changes the reporting requirements for 

Part D sponsors; it does not govern 

payment arrangements or eliminate 

post-point-of-sale price concessions, but 

rather only requires that all pharmacy 

price concessions be included in the 

negotiated price. Therefore, Part D 

sponsors remain free to negotiate 

innovative arrangements with network 

pharmacies. In addition, to the extent 

our policy increases transparency and 

information symmetry, as noted 

previously, it would improve 

competition in private markets. 

Regarding comments about 

Congressional intent for Part D sponsor 

flexibility, we do not believe this policy 

fundamentally changes Part D sponsor 

flexibility in administering the Part D 

benefit. Sponsors continue to exercise 

extensive flexibility over plan design 

and payment. 

CMS appreciates commenters support 

for the revision of the regulatory 

definition and statutory interpretation. 

As discussed in the preamble and 

mentioned by commenters that support 

revising the definition, this policy 

requiring that all pharmacy price 

concessions be applied to the negotiated 

price would ensure that negotiated 

prices ‘‘take into account’’ at least some 

price concessions and would be passed 

on to beneficiaries in the form of lower 

cost-sharing at the point of sale. 

Comment: A few commenters stated 

that a requirement that the negotiated 

price reflect the lowest possible 

reimbursement to the pharmacy at the 

point of sale would violate the statutory 

prohibition under section 1860D–11(i) 

of the Act on CMS ‘‘institut[ing] a price 

structure for the reimbursement of 

covered part D drugs.’’ Commenters 

stated that requiring pharmacy price 

concessions to be passed through at the 

point of sale would effectively create a 

price structure for pharmacy payment 

whereby sponsors would have to 

negotiate only on the lowest possible 

price/rates with each and every 

pharmacy with which they contract. 

Commenters argued that this ‘‘single 

variable negotiating system’’ would 

result in standard rates across all 

pharmacy lines of business. 

Response: CMS did not propose, and 

is not adopting, a price structure for the 

reimbursement of covered Part D drugs; 

rather, the requirement that the 

negotiated price reflect the lowest 

possible reimbursement the pharmacy 

will receive for a particular drug 

regulates only the reporting of data on 

the PDE record. The examples provided 

in this rule under section 3c. Lowest 

Possible Reimbursement Example 

clearly illustrate how the requirement 

that the negotiated price reflect the 

lowest possible reimbursement would 

be reflected on the PDE, under different 

payment arrangements. The policy we 

are adopting in this final rule has no 

bearing on how a pharmacy’s payment 

is calculated or what price structure 

sponsors use. Sponsors still have the 

option of negotiating with pharmacies 

on factors related to the payment rate 

ultimately received by the pharmacy, 

which may be higher than the 

negotiated price. While sponsors must 

comply with the prompt payment 

requirements at § 423.530, they continue 

to have discretion over the timeframes 


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for settling payment incentives and 

penalties. 

Comment: Most commenters, 

including beneficiary advocates and 

beneficiaries, applauded CMS’ effort to 

provide cost-sharing relief to 

beneficiaries. 

Some commenters stated that, if 

finalized, the requirement that all 

pharmacy price concessions be included 

in the negotiated price would increase 

beneficiary confusion and frustration 

over health care costs. These 

commenters suggested that beneficiaries 

do not have an awareness of the impact 

of pharmacy price concessions on their 

overall pharmacy drug and premium 

costs, and beneficiaries will not 

understand that their increased 

premium costs will be due to Part D 

sponsors no longer reporting pharmacy 

price concessions as DIR. 

Response: We thank commenters for 

their support of the application of all 

pharmacy price concessions to the 

negotiated price, which will lower 

beneficiary cost-sharing. Moreover, 

establishing consistency in how 

sponsors report pharmacy price 

concessions will allow for more 

meaningful price comparisons (for both 

premium and cost-sharing) and more 

well-informed choices by consumers. 

While beneficiaries may not 

immediately understand the factors 

underlying premiums increases and 

cost-sharing decreases, they will be 

better positioned to compare plans, 

because the standardized reporting of 

negotiated price required by this rule 

will create a more consistent basis for 

comparing plans based on premiums 

and cost-sharing. 

Comment: Several commenters who 

opposed adopting a new definition of 

‘‘negotiated price’’ stated that a 

requirement that all pharmacy price 

concessions be passed through at the 

point of sale, as opposed to being 

reported as DIR, would violate the 

statutory ‘‘non-interference clause,’’ at 

section 1860D–11(i) of the Act, which 

specifies that ‘‘the Secretary . . . may 

not interfere with the negotiations 

between drug manufacturers and 

pharmacies and PDP sponsors.’’ A few 

commenters charged that the new 

definition would be designed to directly 

affect the contracting processes between 

plans and pharmacies by mandating 

changes to point-of-sale prices. Several 

commenters indicated that the policy 

would take away Part D sponsors’ and 

PBMs’ ability to negotiate downside 

incentives with pharmacies tied to 

performance or quality targets, and that 

it would impair their ability to negotiate 

rates with pharmacies. A few 

commenters suggested that the new 

definition would limit the tools 

available to Part D sponsors to establish 

varied and innovative incentive 

arrangements with contracted 

pharmacies intended to achieve 

important goals, such as increasing 

generic dispensing rates, and to focus on 

priorities, such as reducing the use of 

high-risk medications and improving 

medication adherence. Several 

commenters asserted that pharmacy 

price concessions are used to develop a 

preferred pharmacy network while also 

keeping Part D premiums low and 

expressed concern that adopting the 

new definition of ‘‘negotiated price’’ 

would limit the ability of plan sponsors 

to negotiate effective, high-value 

contracts with pharmacies, resulting in 

an increase in both beneficiary 

premiums and government spending, as 

well as a decrease in preferred 

pharmacy networks. 

A commenter noted that this policy 

would adversely affect the reductions in 

cost-sharing for beneficiaries that have 

been realized under the Part D Senior 

Savings Model. The commenter stated 

that Part D plans that participate in this 

Center for Medicare & Medicaid 

Innovation (CMMI) model are relying on 

their preferred pharmacy networks to 

stock and dispense specific products. 

The commenter noted that additional 

contract terms help plans achieve goals 

under models and that pharmacy 

interactions can increase adherence to 

prescribed medications and foster 

therapeutic substitution that can save 

beneficiaries and plans money in the 

long run. The commenter stated this 

policy will put the benefits achieved 

through this model at risk by interfering 

with the relationships that have been 

formed between PBMs and pharmacies. 

Some commenters stated that the new 

definition of ‘‘negotiated price’’ would 

not violate the ‘‘non-interference 

clause.’’ Several commenters asserted 

that CMS would not be inserting itself 

into negotiations between plan 

sponsors, PBMs, and pharmacies by 

defining the negotiated price and 

altering the manner in which to account 

for pharmacy price concessions. Rather, 

some commenters stated, CMS is 

authorized to promulgate regulations in 

accordance with the Medicare statute’s 

any willing provider and prompt 

payment requirements, and such 

regulations would not run afoul of 

Medicare’s non-interference clause. 

Commenters also noted that CMS 

retains authority to promulgate such 

regulations in the interest of protecting 

market competition, which is consistent 

with the plain meaning of the text of the 

non-interference clause. Some 

commenters noted that plan sponsors 

and their PBMs and pharmacies are still 

free to negotiate any reimbursement, 

concessions, or pay structure they like. 

Response: We agree with commenters 

that this rule does not violate the noninterference clause. This rule does not 

implicate or impose requirements on 

plan-pharmacy interactions, such as 

contracting, negotiations, payments 

rates, incentive arrangements, quality 

goals or targets, performance-based 

payments or performance-based 

contracting. Sponsors and pharmacies 

remain free to negotiate any such 

arrangements they wish—this rule 

requires only that the negotiated price 

reflect the price that the parties have 

negotiated as the lowest possible 

reimbursement that the pharmacy could 

receive for a particular drug, inclusive 

of all pharmacy price concessions. As 

noted above, the requirement that the 

negotiated price reflect the lowest 

possible reimbursement that a pharmacy 

receives for a drug is directly related to 

the reporting of data on the PDE record 

and determination of beneficiary costsharing and to promoting price 

transparency to the beneficiary. The 

connection that commenters make 

between this policy and adverse effects 

on the Part D Senior Savings model and 

Part D sponsors and pharmacy 

relationships is unclear. To the extent 

that our policy has an effect on the 

calculation of cost-sharing under the 

model, we would anticipate that the 

model could be adapted, to 

accommodate new requirements and 

policies. As we have stated previously, 

this policy does not impose 

requirements on contracts between 

sponsors or their PBMs and pharmacies; 

therefore, we do not see how this policy 

affects performance-based payment 

adjustments that exist in the Senior 

Savings Model. We agree that pharmacy 

interactions can increase adherence to 

prescribed medications and foster 

therapeutic substitution that can save 

beneficiaries and plans money in the 

long run. 

Comment: A commenter noted that 

beneficiary costs are based on a 

combination of premiums and costsharing, both of which are already fully 

disclosed to the beneficiary through 

plan materials and other tools like 

Medicare Plan Finder (MPF). This 

commenter stated that beneficiaries use 

tools like MPF to choose plans based on 

factors including cost-sharing, 

premiums, formulary coverage, 

pharmacy network, Star Ratings, and 

integration or non-integration with MA 

plans. This commenter maintained that 

tools like MPF already allow for a real, 

meaningful, and actionable comparison 

of plan prices and efficiencies and 


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therefore, promoting transparency 

through this policy is unnecessary. 

Commenters believed that the 

pharmacy price concession rule will 

undo the effectiveness of MPF and 

create less transparency by causing 

confusion with the introduction of the 

new definition of negotiated price. 

Commenters were also concerned that if 

CMS allows plans the flexibility to 

determine how much of the pharmacy 

price concessions to pass through at the 

point of service (POS) for applicable 

drugs in the coverage gap (while using 

the negotiated price determined using 

the lowest possible reimbursement to 

the pharmacy in the non-coverage gap 

phases), then MPF will need to be 

updated to account for the differences, 

which could add to beneficiary 

confusion. 

Commenters recommend that CMS 

use the MPF tool to examine which 

factors most impact beneficiaries when 

making a plan choice before CMS makes 

drastic changes to the program through 

the pharmacy price concession rule. 

They suggested that CMS use 

underlying MPF data to perform 

analysis to determine how important 

premiums are in the total calculus of 

plan choice as compared to overall outof-pocket (OOP) costs. 

Commenters also stated that the 

proposal would require development of 

processes to ensure accurate 

information is posted on MPF and that 

there would be considerable challenges 

with loading accurate pharmacy 

network data into MPF in a timely 

fashion, as there is likely to be increased 

network volatility as contracts are 

renegotiated. 

Response: We agree with commenters 

that MPF is a valuable tool that 

beneficiaries use to make informed 

decisions. We note that the cost-sharing 

and premium data for Part D reflected 

in the MPF is and will continue to give 

beneficiaries an accurate assessment of 

their expected costs for a given plan. 

This policy does not affect the accuracy 

of the data in MPF as the new definition 

of negotiated price does not change how 

the out-of-pocket costs are displayed to 

the beneficiary. As discussed elsewhere 

in this rule, CMS is finalizing a policy 

to require that pharmacy price 

concessions be applied to the negotiated 

price across all phases of the Part D 

benefit, including the coverage gap 

phase. Therefore, MPF will not need to 

account for the difference in how 

pharmacy price concessions are applied 

in the gap verses non-coverage gap 

phases. Thus, we do not see how 

commenters’ claims that the new 

definition will cause confusion due the 

new definition of negotiated price are 

substantiated. 

In addition, CMS’s MPF tool utilizes 

drug prices net of rebates and other 

price concessions that are applied at the 

point of sale, so MPF’s current design 

already supports the collection and 

display of drug prices as contemplated 

under this rule. Therefore, CMS does 

not anticipate implementing changes to 

the MPF tool or the methodology 

currently in place. Plans should refer 

back to the Part D drug pricing 

submission guidance published 

annually by CMS. This guidance 

provides technical instructions on how 

to submit drug prices that account for 

rebates and other price concessions that 

are applied at the point of sale. The 

applicability date of January 1, 2024, for 

the new definition of negotiated price 

provides time for sponsors to prepare 

data for submission to MPF. 

We understand that beneficiaries 

consider many factors in selecting a 

plan and that the relative importance of 

premium costs as opposed to out-ofpocket costs can vary depending upon 

a beneficiary’s particular circumstances. 

Moreover, even for beneficiaries who 

prioritize premium costs over other 

factors, this rule will result in premiums 

that better reflect the relative efficiency 

of plan designs for prescription drug 

coverage, and therefore, this policy will 

contribute to more informed choices by 

beneficiaries. 

Comment: A few commenters 

expressed concern that the impact of the 

rule would likely be more profound on 

prescription drug plans (PDPs) than 

Medicare Advantage prescription drug 

(MA–PDs) plans, as many PDPs would 

be unable to avoid a significant increase 

in premiums, and could potentially be 

priced out of the market. Commenters 

explained that PDPs lack the additional 

financial cushion available to MA 

organizations (MAOs) as a result of their 

offering an integrated benefit. Also, 

PDPs lack the financial incentives of 

Star Ratings bonus payments for which 

MAOs are eligible. Commenters were 

concerned that as beneficiaries lose 

access to PDPs, many would be forced 

to enroll in MA–PDs, and be driven 

from original Medicare, which may be a 

source of comfort and stability to many, 

especially older beneficiaries, into 

managed care plans. 

Response: CMS appreciates the 

comments and concerns about potential 

differential impacts on PDPs versus 

MA–PDs. One outcome of this rule is 

that beneficiary cost-sharing may be 

reduced, regardless of the plan type in 

which they are enrolled. The statement 

that beneficiaries may be driven from 

original Medicare to Medicare 

Advantage assumes that Part D benefits 

are the sole factor behind individuals’ 

decisions in choosing between original 

Medicare and Medicare Advantage. We 

note that many factors, such as 

geographic location, Medicare 

Advantage plan options, and 

preferences related to provider choices, 

are also important considerations for 

many beneficiaries in choosing between 

original Medicare and Medicare 

Advantage. We also note that 

beneficiaries selecting original Medicare 

(for other reasons) will be comparing 

PDP premiums against one another and 

not comparing PDP premiums against 

MA–PD premiums. Medicare Advantage 

plans that use Part C rebates to offset 

Part D premium increases may need to 

forgo offering other benefits that would 

have been provided with those funds. 

Comment: Some commenters stated 

that it would be extremely challenging, 

if not impossible, to implement changes 

to bid assumptions, renegotiate 

pharmacy contracts, and make the 

necessary revisions to pharmacy 

adjudication systems prior to January 1, 

2023, and recommended that the 

implementation of the rule be 

postponed until 2024 or later. 

Commenters noted that if the rule is 

applicable for contract year 2023, there 

could be disruptions in member benefits 

because of the contracting and systems 

changes that would have to happen in 

time for the Fall 2022 Open Enrollment. 

As a result of the compressed timeline, 

they are concerned that focus will be 

taken away from member benefits. 

A commenter noted that Part D plan 

sponsors would need to renegotiate 

their contracts with PBMs. This 

commenter stated that not only would it 

be necessary to renegotiate fee 

arrangements, but also, given the rule, 

Part D plan sponsors may want to 

discuss new business strategies and 

underwriting scenarios with their PBMs. 

The commenter explained that this is a 

lengthy, resource-intensive process that 

precedes pharmacy contracting because 

it is the plan that sets the target for 

pharmacy contracts that the PBM 

negotiates. This commenter stated that 

CMS’ proposed timeline would cause 

the Part D sponsor/PBM negotiations to 

occur at the same time as PBMs are 

trying to renegotiate pharmacy 

contracts. 

Commenters also explained that 

changes to pharmacy contracts would 

not be mere technical changes, but 

would include how, when, and the 

amount pharmacies would receive in 

reimbursement. Commenters stated that 

most pharmacies are likely to see a 

significant reduction in reimbursement, 

which could result in some pharmacies 


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refusing to participate in the Part D 

network at the new reimbursement rate. 

Commenters explained that issues with 

participation could impact preferred 

pharmacy arrangements and network 

access, which could result in additional 

time needed for additional contracting 

to ensure that pharmacy network access 

requirements are satisfied. 

However, other commenters indicated 

that plans/PBMs customarily impose 

new terms without any consultation or 

negotiation. Some commenters stated 

that most fees charged to pharmacies are 

placed in the provider manual, which is 

included by reference into the contract 

terms. A commenter stated that all or 

substantially all PBMs have contractual 

terms in place with pharmacies to 

enable payment term modifications for 

any change in DIR, such as requiring 

immediate renegotiation of rates or 

setting a fixed reimbursement rate in the 

event of policy change. This commenter 

believed that any additional delay in 

providing this rule would improperly 

place Part D plan sponsor and PBM 

profits above beneficiary well-being and 

believe CMS’ current proposed timeline 

is appropriate. 

Response: We find commenters’ 

concerns regarding the ability to 

effectuate contract negotiations and 

make potential systems changes in time 

for 2023 implementation to be 

compelling. To give all parties sufficient 

time to implement this policy, including 

making the systems changes that will be 

needed to ensure that cost-sharing is 

correctly adjudicated for beneficiaries at 

the point of sale, we are modifying our 

proposal and finalizing an applicability 

date of January 1, 2024. This will give 

the Part D sponsors over a year to 

contract and prepare bids for the 2024 

contract year. In addition, based upon 

our experience implementing changes 

in the Part D program that require Part 

D sponsor and PBM system changes, we 

believe that this additional time is 

sufficient to operationalize the new 

definition of negotiated price. We are 

making corresponding changes to the 

regulation at 42 CFR 423.100 to retain 

the current regulatory definition of 

‘‘negotiated prices’’ for 2023 and adopt 

the new regulatory definition of 

‘‘negotiated price’’ for 2024 and 

thereafter. 

Comment: A significant volume of 

letters were submitted as the result of a 

letter writing campaign and encouraged 

CMS to move forward as swiftly as 

possible in adopting the new definition 

of negotiated price. 

Response: We thank the commenters 

for their feedback. While we appreciate 

the need to pass meaningful out of 

pocket cost savings to and increase drug 

price transparency for beneficiaries as 

soon as possible, concerns related to 

contracting and operational timelines 

that could disrupt successful 

implementation are sufficiently 

compelling to warrant making this 

policy applicable beginning on January 

1, 2024. 

After consideration of comments 

received, CMS is finalizing the new 

definition of negotiated price at 

§ 423.100 effective January 1, 2024. 

Under this definition, the negotiated 

price must be the lowest possible 

reimbursement a network entity will 

receive, in total, for a particular drug 

and include all pharmacy price 

concessions. To implement this policy, 

we will also remove the existing 

definition of negotiated prices at 

§ 423.100, effective January 1, 2024. 

b. Lowest Possible Reimbursement 

To effectively capture all pharmacy 

price concessions at the point-of-sale 

consistently across sponsors, we 

proposed to require that the negotiated 

price reflect the lowest possible 

reimbursement that a network pharmacy 

could receive from a particular Part D 

sponsor for a covered Part D drug. 

Under this approach, the price reported 

at the point of sale would need to 

include all price concessions that could 

potentially flow from network 

pharmacies, as well as any dispensing 

fees, but exclude any additional 

contingent amounts that could flow to 

network pharmacies and thus increase 

prices over the lowest possible 

reimbursement level, such as incentive 

fees. That is, if a performance-based 

payment arrangement exists between a 

sponsor and a network pharmacy, the 

point-of-sale price of a drug reported to 

CMS would need to equal the final 

reimbursement that the network 

pharmacy would receive for that drug 

under the arrangement if the pharmacy’s 

performance score were the lowest 

possible. If a pharmacy is ultimately 

paid an amount above the lowest 

possible reimbursement (such as in 

situations where a pharmacy’s 

performance under a performance-based 

arrangement triggers a bonus payment 

or a smaller penalty than that assessed 

for the lowest level of performance), the 

difference between the negotiated price 

reported to CMS on the PDE record and 

the final payment to the pharmacy 

would need to be reported as negative 

DIR as part of the annual report on DIR 

following the end of the year. For an 

illustration of how negotiated prices 

would be reported under such an 

approach, see the lowest cost 

reimbursement example provided later 

in this rule. 

By requiring that sponsors assume the 

lowest possible pharmacy performance 

when reporting the negotiated price, we 

would be prescribing a standardized 

way for Part D sponsors to treat the 

unknown (final pharmacy performance) 

at the point of sale under a performancebased payment arrangement, which 

many Part D sponsors and PBMs have 

identified as the most substantial 

operational barrier to including such 

concessions at the point of sale. The 

proposed rule discussed our bases for 

believing that requiring that the 

negotiated price reflect the lowest 

possible reimbursement a network 

pharmacy could receive for a Part D 

drug is the best approach to achieve our 

goals, as noted previously, of (1) 

consistency (standardized reporting of 

negotiated prices and DIR); (2) 

preventing cost-shifting to beneficiaries; 

and (3) price transparency for 

beneficiaries, the government, and other 

stakeholders. 

Consistent with this approach, we 

proposed that all contingent incentive 

payments (that is, an amount that is 

paid to the pharmacy instead of a price 

concession from the pharmacy) be 

excluded from the negotiated price. As 

explained in the proposed rule, 

including the amount of any contingent 

incentive payments to pharmacies in the 

negotiated price would make drug 

prices appear higher at a ‘‘high 

performing’’ pharmacy, which receives 

an incentive payment, than at a ‘‘poor 

performing’’ pharmacy, which is 

assessed a penalty, and would also 

reduce price transparency. This pricing 

differential could create a perverse 

incentive for beneficiaries to choose a 

‘‘lower performing’’ pharmacy for the 

advantage of a lower price. 

Additionally, Part D sponsors and their 

intermediaries previously asserted in 

public comments on the 2017 and 2018 

rules that network pharmacies lose 

motivation to improve performance 

when all performance-based 

adjustments are required to be reported 

up-front. Revising the negotiated price 

definition as proposed would mitigate 

this concern by allowing sponsors and 

their intermediaries to continue to 

motivate network pharmacies to 

improve their performance with the 

promise of future incentive payments 

that would increase pharmacy 

reimbursement from the level of the 

lowest possible reimbursement per 

claim. Further, we emphasized that the 

proposed changes would not require 

pharmacies to be paid in a certain way; 

rather we would be requiring 

standardized reporting to CMS of drug 

prices at the point of sale. 


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c. Lowest Possible Reimbursement 

Example 

To illustrate how Part D sponsors and 

their intermediaries would report costs 

under our proposal, we provided the 

following example. Suppose that under 

a performance-based payment 

arrangement between a Part D sponsor 

and its network pharmacy, the sponsor 

will implement one of three scenarios: 

(1) Recoup 5 percent of its total Part Drelated payments to the pharmacy at the 

end of the contract year for the 

pharmacy’s failure to meet performance 

standards; (2) recoup no payments for 

average performance; or (3) provide a 

bonus equal to 1 percent of total 

payments to the pharmacy for high 

performance. For a drug that the 

sponsor has agreed to pay the pharmacy 

$100 at the point-of-sale, the pharmacy’s 

final reimbursement under this 

arrangement would be: (1) $95 for poor 

performance; (2) $100 for average 

performance; or (3) $101 for high 

performance. Under the current 

definition of negotiated prices, the 

reported negotiated price is likely to be 

$100, given the reasonably determined 

exception for contingent pharmacy 

payment adjustments. However, under 

the proposed definition, for all three 

performance scenarios, the negotiated 

price reported to CMS on the PDE 

record at the point of sale for this drug 

would be $95, or the lowest 

reimbursement possible under the 

arrangement. Thus, if a plan enrollee 

were required to pay 25 percent 

coinsurance for this drug, then the 

enrollee’s costs under all scenarios 

would be 25 percent of $95, or $23.75, 

which is less than the $25 the enrollee 

would pay today (when the negotiated 

price is likely to be reported as $100). 

Finally, any difference between the 

reported negotiated price and the 

pharmacy’s final reimbursement for this 

drug would be reported as DIR at the 

end of the coverage year. Under this 

requirement, the sponsor would report 

$0 as DIR under the poor performance 

scenario ($95 minus $95), ¥$5 as DIR 

under the average performance scenario 

($95 minus $100), and ¥$6 as DIR 

under the high-performance scenario 

($95 minus $101), for every covered 

claim for this drug purchased at this 

pharmacy. 

Comment: Many commenters 

encouraged CMS to address the 

proposed rule’s potential impact on 

pharmacy cash flow during the first 

quarter of 2023 assuming the rule is 

implemented in January 2023. Many 

commenters expressed concern that a 

pharmacy’s payments for CY 2022 DIR 

fees to Part D sponsors and/or their 

PBMs will be due concurrently with the 

time pharmacies expect to receive lower 

reimbursements at the point of sale. 

Many of these commenters urged CMS 

to implement this proposal on January 

1, 2023; however, due to the potential 

impact of the retroactive fees and 

implementation of the rule, these 

commenters urged CMS to require 

sponsors and/or their PBMs to establish 

payment plans with pharmacies that 

need them during the transition period. 

Commenters noted that when Medicare 

Part D was established, hundreds of 

pharmacies closed because of cash flow 

issues, necessitating Congressional 

action to establish prompt pay rules. 

These commenters urged that CMS 

emphasize that prompt payment 

requirements will continue to be 

enforced. 

Response: CMS understands these 

concerns but does not have the 

authority to mandate payment plans 

between plans sponsors and 

pharmacies. We acknowledge the 

possibility that changes in cash flow 

may cause some already struggling 

pharmacies to decrease services or 

medication availability, and/or be 

unable to remain in business, which 

may impact pharmacy networks. Note 

that CMS will be particularly attuned to 

plan compliance with pharmacy access 

standards under § 423.120 to ensure that 

all Medicare Part D beneficiaries have 

convenient access to pharmacies and 

medications. Therefore, we encourage 

Part D sponsors to consider options, 

such as payment plans or alternate 

payment arrangements, to minimize 

impacts to vulnerable pharmacies and 

the patients they serve. We also note 

that the prompt payment requirements 

for Part D, as described in § 423.520, 

will continue to apply and that Part D 

sponsors must pay clean claims in 

accordance with the prompt pay 

regulation. As noted elsewhere, we are 

finalizing an applicability date of 

January 1, 2024, instead of January 1, 

2023. Nonetheless, we would expect 

these same concerns that commenters 

raised for January 1, 2023 to be similarly 

applicable to January 1, 2024. With this 

extra implementation time, we believe 

Part D sponsors and pharmacies will 

now have adequate time to implement 

payment plans or make other 

arrangements to address these cash flow 

concerns at the beginning of 2024. 

Comment: Many commenters wrote in 

support of a requirement that the 

negotiated price reflect the lowest 

possible reimbursement to the 

pharmacy because they believed this 

approach would make it possible for 

pharmacies to better predict the 

minimum reimbursement they could 

receive on a per-claim level. 

Response: We thank these 

commenters for their support of this 

policy. We agree that defining 

negotiated price to mean the lowest 

possible reimbursement received by the 

pharmacy will provide greater 

transparency and may improve 

predictability of per-claim revenue. 

Comment: Several commenters 

opposed the policy, suggesting that a 

requirement that the price paid to a 

pharmacy for a covered Part D drug be 

net of all possible downward 

adjustments would effectively eliminate 

the ability of Part D plans to employ 

performance-based negative pharmacy 

payment adjustments. A few 

commenters suggested that the 

elimination or restriction of 

performance-based pharmacy payment 

arrangements is out of line with current 

CMS initiatives to expand and 

incentivize value-based arrangements, 

such as the recently announced agenda 

to expand value-based care in Medicare 

by CY 2023. Commenters stated that 

restricting or eliminating payment 

arrangements that incentivize pharmacy 

performance is counterintuitive to these 

ongoing efforts to bring increased value 

to the Part D program as well as the rest 

of Medicare. A few commenters stated 

that this rule will make it harder to 

achieve the bold quality agenda set forth 

by CMS (cited in Health Affairs written 

by CMS officials). These commenters 

stated that pharmacy DIR is generated 

by two-sided, value-based contracts— 

similar to contracts entered into by 

health plans and other providers as the 

optimal path to transform health care 

delivery and payment. These 

commenters also noted that these 

pharmacy DIR contracts often focus on 

driving Stars performance and 

increasing generic dispensing to the 

benefit of the Medicare program and its 

beneficiaries. Some commenters stated 

that applying all pharmacy price 

concessions at the point of sale would 

negatively impact Star Ratings and 

performance-based models such as 

MIPS and APMs. Commenters argued 

that if sponsors adopt a ‘‘bonus only 

model’’ when paying pharmacies for 

performance, there will not be an 

adequate financial incentive for 

pharmacies to help plans improve 

pharmacy measures. A few commenters 

noted that performance on adherence 

measures has been trending up as has 

the generic dispensing rate and MTM 

completion. These commenters stated 

that this proposal would interfere with 

the DIR contracting that has yielded 

these impressive results. 


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A commenter noted that recent 

research has shown that pharmacy 

performance measures that address 

social determinants of health (SDOH) 

help promote equitable and high-quality 

care. The commenter stated that 

Medicare beneficiaries are best served 

when their providers are focused on 

addressing community-level SDOH 

barriers, and in pharmacy care, a 

number of programs are funded and 

incentivized through Part D plan price 

concessions that CMS would effectively 

eliminate. 

Response: We did not propose to 

eliminate or restrict the use of any 

performance-based pharmacy payment 

arrangements, and we do not agree that 

a policy of requiring the negotiated 

price to reflect the lowest possible 

reimbursement to the pharmacy for a 

Part D drug eliminates or restricts Part 

D sponsors’ ability to institute 

performance-based pharmacy payment 

arrangements. The new definition of 

negotiated price that we are adopting in 

this final rule does not mandate how 

sponsors contract with, incentivize, or 

pay pharmacies in their network. The 

new definition of negotiated price 

applies only to how the PDE data is 

populated and reported and thus the 

price of the drug on which beneficiary 

cost-sharing is determined. We also 

disagree with the implication that 

performance-based contingent incentive 

payments provide pharmacies with 

insufficient motivation to engage in 

activities that impact sponsors’ Star 

Ratings and other performance-based 

models. Rather, sponsors remain free to 

motivate pharmacies by offering 

performance-based payment 

arrangements to pharmacies. Applying 

all pharmacy price concessions to the 

negotiated price will provide 

pharmacies with more information on 

the reimbursement they will receive if 

they fail to meet performance metrics. 

While we are not specifying payment 

arrangements between plan sponsors 

and pharmacies, we encourage fair and 

equitable value-based arrangements, 

including those focused on social 

determinants of health (SDOH), that 

improve beneficiaries’ quality of care 

and reduce health care costs. 

Comment: Many commenters urged 

CMS to collect pharmacy performance 

measure information from Part D 

sponsors as finalized in the January 

2021 final rule (86 FR 5864) to assess 

concerns raised by pharmacies about 

performance measures. Several 

commenters noted that PBMs often 

apply one-size-fits-all metrics that are 

not relevant to a pharmacy’s population 

or specialty. Commenters explained that 

they are penalized for not having a large 

enough population for a credible sample 

that PBMs use to assess performance. A 

few commenters noted they were 

penalized for not meeting generic 

dispensing rates because the pharmacies 

are specialty pharmacies serving a 

population whose medical conditions 

do not have available generic drugs for 

treatment. A commenter recommended 

that plan sponsors not be able to apply 

the pharmacy price concessions to all 

pharmacies within a particular chain of 

pharmacies, such as local chains or 

supermarket pharmacies, based on the 

performance of the lowest performing 

pharmacy in the chain. This commenter 

stated that the ability of pharmacies to 

meet performance standards set forth by 

PBMs and plan sponsors is hindered by 

the fact that no consideration is given to 

inherent handicaps, such as socioeconomic disparities between pharmacy 

geographic locations or as noted above 

differences in dispensing practices 

between retail and specialty drugs. 

Many commenters noted that penalties 

from one measure and one medication 

are applied to all medications, setting 

thresholds pharmacies cannot meet. 

Response: We appreciate the 

comments regarding the nature of and 

differing application of pharmacy 

performance metrics to assess pharmacy 

performance; however, we did not 

propose to address pharmacy 

performance metrics in the proposed 

rule. We addressed reporting of 

pharmacy performance measures to 

CMS in the January 2021 final rule (86 

FR 5864). In the January 2021 final rule, 

we finalized a proposal to give CMS the 

authority to establish a Part D reporting 

requirement for Part D sponsors to 

disclose to CMS the pharmacy 

performance measures they use to 

evaluate pharmacy performance, as 

established in their network pharmacy 

agreements. This authority to establish a 

reporting requirement is effective 

January 2022; however, the actual data 

elements must be proposed through the 

Office of Management and Budget 

(OMB) Paperwork Reduction Act (PRA) 

process in a future package. We 

encourage the industry to continue to 

work together on developing a set of 

pharmacy performance measures 

through a consensus process and Part D 

sponsors to adopt such measures to 

ensure standardization, transparency 

and fairness. We are aware that the 

Pharmacy Quality Alliance (PQA), a 

measure developer, is working to build 

consensus on pharmacy-level measures 

across pharmacies, plans, PBMs, and 

other stakeholders. 

Comment: Some commenters stated 

that CMS did not articulate any rational 

basis for giving ‘‘preferable’’ treatment 

for pharmacy incentive payments over 

pharmacy price concessions. A few 

commenters asserted that giving special 

treatment to higher payments to 

pharmacies underscores the arbitrary 

and capricious nature of CMS’s effort to 

redefine negotiated price. A few 

commenters supported a requirement 

that all contingent incentive payments 

be excluded from the negotiated price. 

The commenters noted that this 

approach supports PBMs’ ability to 

measure and monitor pharmacy 

performance on Stars Ratings-related 

measures and incentivize pharmacies 

for their performance without negatively 

impacting the beneficiaries’ costsharing. 

Response: We disagree that the 

proposal gives preferential treatment or 

higher payments to pharmacies. The 

proposed rule does not impose 

requirements on the actual payments 

made to pharmacies. This rule sets forth 

requirements that standardize how and 

when pharmacy price concessions are 

reported to CMS. In the proposed rule, 

we described the information gathered 

through the Request for Information in 

the November 2017 proposed rule 

regarding pharmacy price concessions 

(payments from network pharmacies to 

sponsors or their intermediaries for 

‘‘poor performance’’) and incentive 

payments (payments made to 

pharmacies by plan sponsors or their 

intermediaries for ‘‘high performance’’). 

The primary concern with including 

incentive payments in the negotiated 

price is that including these types of 

payments in the negotiated price would 

make drug prices appear higher at a 

‘‘high performing’’ pharmacy, which 

receives an incentive payment, than at 

a ‘‘poor performing’’ pharmacy, which 

is assessed a penalty. This pricing 

differential could create a perverse 

incentive for beneficiaries to choose a 

‘‘lower performing’’ pharmacy for the 

advantage of a lower price. 

Additionally, Part D sponsors and their 

intermediaries previously asserted in 

public comments on the 2017 and 2018 

rules that network pharmacies lose 

motivation to improve performance 

when all performance-based 

adjustments are required to be reported 

up-front. Revising the negotiated price 

definition to include pharmacy price 

concessions and not incentive payments 

would mitigate this concern by allowing 

sponsors and their intermediaries to 

motivate network pharmacies to 

improve their performance with the 

promise of future incentive payments 

that would increase pharmacy 

reimbursement from the level of the 

lowest possible reimbursement per 


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claim. We thank the commenters for the 

support on excluding incentive 

payments from the negotiated price and 

agree that not including contingent 

incentive payments in the negotiated 

price best aligns beneficiary, plan, and 

pharmacy incentives. 

Comment: Many commenters 

requested that CMS establish safeguards 

to guarantee that pharmacies 

participating in Medicare Part D receive 

a reasonable rate of reimbursement. 

These commenters urged the 

administration to ensure that the 

negotiated price at a minimum cover the 

pharmacy’s costs of purchasing and 

dispensing covered items and providing 

covered services. A few commenters 

requested that CMS establish a flat 

dispensing fee or an alternative model 

such as a pharmacy reimbursement 

model based on a public drug pricing 

benchmark such as national average 

drug acquisition costs (NADAC) plus a 

fair dispensing fee in line with those in 

state Medicaid fee-for-service program. 

Response: Thank you for these 

suggestions. CMS will consider these 

suggestions for future rulemaking. 

Comment: Some commenters 

suggested that, as an alternative to 

requiring that all pharmacy price 

concessions be included in the 

negotiated price, CMS could achieve the 

policy goals of controlling and reducing 

drug prices and improving transparency 

by making changes to the treatment of 

pharmacy DIR in Part D sponsors’ bids. 

Some commenters recommended that 

plan sponsors be required to reflect 

some or all of the expected pharmacy 

DIR in cost-sharing amounts when they 

submit their Part D bids. A few 

commenters encouraged CMS to 

consider imposing a penalty for 

systematically underestimating DIR 

within plan bids. 

Some commenters offered alternatives 

to the implementation of the new 

definition of negotiated price. One 

suggestion was to offer Part D sponsors 

the flexibility to launch an additional 

new plan beyond what is currently 

allowable, for example, three PDP 

products per contract. This new plan 

could be structured to test CMS’ 

negotiated price proposal, while the 

other existing Part D plans remain using 

the current approach. A similar 

suggestion was for CMS to perform a 

case-control study to test the 

implementation of the new definition of 

negotiated price. A third suggestion was 

for CMS to require additional options 

for treatment of pharmacy price 

concessions. These options could for 

example, include no pharmacy price 

concession arrangements or explicitly 

limit the amount of pharmacy price 

concession payment arrangements 

relative to point-of-sale payments. 

Under this approach, pharmacies could 

choose one of the options and not be 

excluded from network participation. 

Commenters noted that these 

approaches would allow CMS to gather 

data before finalizing the requirements 

set forth in this rule. 

A few commenters recommended that 

CMS focus on creating pricing 

transparency through the widespread 

use of provider and beneficiary-level 

real-time benefit tools (RTBT). One of 

these commenters explained that 

prescriber RTBT allows for real-time 

decision-making to guide beneficiaries, 

advise them of their options with a 

focus on clinically needed drugs and the 

prices of those drugs. According to the 

commenter, although many plans use 

RTBT, the tools are proprietary and can 

lead to highly variant experiences. 

Congress has mandated broader 

adoption of RTBT by 2023 and 

mandated provider use of these tools. 

The commenter noted that National 

Council for Prescription Drug Programs 

(NCPDP) has developed a standard for a 

real-time prescription benefit request 

and response for use by providers and 

asked that CMS name the specific 

telecommunications standard for use by 

Part D program participants. This 

commenter believes that RTBT, rather 

than changing point-of-sale pricing, 

creates a way to get pricing information 

into the hands of beneficiaries, without 

the need for computers or smart phones, 

which promotes efficient and socially 

sensitive SDOH-focused care delivery. 

Response: We thank commenters for 

their suggestions regarding alternative 

approaches to implementing the new 

definition of negotiated price, but we 

decline to adopt these approaches. We 

do not believe that a policy that requires 

sponsors to include all pharmacy price 

concessions in the negotiated price and 

some of the alternatives suggested by 

commenters are mutually exclusive or 

that the availability of alternatives 

should prevent us from adopting the 

revised definition of ‘‘negotiated price.’’ 

With regard to use of the RTBT to 

promote price transparency, CMS is 

committed to the use of tools that 

promote efficient and socially sensitive 

social determinants of health focused 

care delivery. Regulations at 

§ 423.160(b)(7) require Part D plans to 

implement one or more electronic RTBT 

capable of integrating with at least one 

prescriber’s e-Prescribing (eRx) system 

or electronic health record (EHR). CMS 

will continue to evaluate available 

electronic standards for RTBT to 

determine if they are appropriate for the 

Part D program and propose updated 

standards, if appropriate. In the 

meantime, this rule will promote lower 

beneficiary cost-sharing, which also will 

help beneficiaries to overcome financial 

barriers to the medications they need. 

Comment: A few commenters 

recommended that if CMS instructs 

plans to bid with existing law and 

regulations in effect currently for the 

2023 bid deadline and then finalizes 

this policy as proposed, then CMS 

consider conducting the proposed 2019 

voluntary two-year demonstration that 

would consist of a modification to the 

Part D risk corridors in order to better 

manage a transition to new 

requirements. 

Response: Thank you for the 

suggestions. However, we decline to 

adopt them at this time, as we have 

changed the applicability of this rule to 

January 1, 2024, which, as noted 

previously, provides sufficient 

transition time. 

After considering the comments 

received, we are adopting a requirement 

as proposed that the negotiated price 

reflect the lowest possible 

reimbursement that the network entity 

will receive, in total, for a particular 

covered Part D drug, including all price 

concessions and any dispensing fees, 

but excluding additional contingent 

amounts that increase prices. 

d. Additional Considerations 

In order to implement the proposed 

change, we indicated we would leverage 

existing reporting mechanisms to 

confirm that sponsors are appropriately 

applying pharmacy price concessions at 

the point of sale. Specifically, we 

indicated we would likely use the 

estimated rebates at point-of-sale field 

on the PDE record to also collect the 

amount of point-of-sale pharmacy price 

concessions. We also indicated that we 

would likely use fields on the Summary 

and Detailed DIR Reports to collect final 

pharmacy price concession data at the 

plan and national drug code (NDC) 

levels. Differences between the amounts 

applied at the point of sale and amounts 

actually received, therefore, would 

become apparent when comparing the 

data collected through those means at 

the end of the coverage year. 

Comment: Several commenters 

questioned how data ensuring the 

lowest possible reimbursement will be 

transmitted to the pharmacy via the 

required HIPAA-standard transactions 

and how data will map to the PDE and 

to the pharmacy remittance. Both plan/ 

PBMs and pharmacies raised these 

questions, as all stakeholders are 

currently required to use the National 

Program for Prescription Drug Plans 

(NCPDP) Telecommunications standard 


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version D.0 (D.0) for claims 

adjudication, and the Health Care Claim 

Payment/Advice Transaction Set (X12 

835) to support the claims payment 

process. A few commenters stated that 

D.0 would need to be replaced by an 

updated standard, as the current 

standard cannot support another cost 

field to convey post-point-of-sale 

remuneration to downstream entities. A 

commenter posited that such capability 

would not be available until 2027 or 

beyond. 

Response: We disagree with 

commenters that there is no mechanism 

under the current NCPDP data format 

for Part D sponsors to provide 

information on a drug’s negotiated price 

to pharmacies. PCMS does not dictate or 

provide guidance regarding plans’ 

billing arrangements, and has identified 

the two following approaches that could 

accomplish the goal of transmitting a 

drug’s negotiated price data between 

plan sponsors and pharmacies using the 

data format available today. 

The following example reflects a 

payment arrangement where the 

pharmacy point-of-sale payment reflects 

the negotiated price. 

Example 1: Pharmacy is paid 

Negotiated Price of $90 at the Point of 

Sale. 

Pharmacy Point-of-Sale Transactions: 

• Ingredient Cost Paid + Dispense Fee 

Paid = $90 (this is the total amount 

that will be paid to the pharmacy by 

all parties) 

• Patient Pay (beneficiary cost share in 

deductible is 100%) = $90 

• Total Amount Paid (Plan paid) = $0 

Because the Negotiated Price of $90 is 

the lowest possible reimbursement there 

is no need for an informational field to 

indicate future deductions from the 

pharmacy. 

The second example reflects a 

payment arrangement in which a plan/ 

PBM pays the pharmacy more than the 

negotiated price at the point of sale. The 

Total Gross Payment (negotiated price 

plus post-POS pharmacy price 

concession) could be populated in the 

Total Amount Paid Field on the claim 

response, and the post-POS pharmacy 

could be included in an informational 

structured text field. Under this scenario 

the pharmacy could compute the 

negotiated price by reducing the Total 

Gross Payment by the amount noted in 

the informational field on the pharmacy 

claim response. The PBM would 

calculate the beneficiary cost share at 

the point of sale using the negotiated 

price and not the total gross payment. 

The following example reflects this 

payment arrangement where the price 

paid to the pharmacy at the point of sale 

does not reflect the negotiated price and 

so the amount that needs to be adjusted 

has to be separately conveyed in the 

informational field within D.0. The PBM 

computes beneficiary and plan costsharing based on the negotiated price; 

however, the pharmacy will have to 

subtract the amount reported by the 

PBM in the informational field to 

determine the negotiated price. 

Example 2: Pharmacy is paid $100 at 

the Point of Sale, Negotiated Price is 

$90. 

Pharmacy Point-of-Sale Transactions: 

• Ingredient Cost Paid + Dispense Fee 

Paid = $100 (this is the total amount 

that will be paid to the pharmacy by 

all parties) 

• Patient Pay (Beneficiary cost share in 

deductible is 100% of negotiated 

price) = $90 

• Total Amount Paid (plan paid) = $10 

(this plan paid amount is necessary to 

have pricing fields balance on a 

claim) 

• Additional Message 

Information¥(informational 

structured claim response indicates 

the amount that could be taken back 

post point of sale) = Negative $10 

Both of these arrangements can be 

reflected within the current standard, 

and indeed historically this is how 

coordination of benefits occurred prior 

to availability of specific pricing fields. 

Additionally, any amount paid by the 

pharmacy to the plan post-point-of-sale 

could be reported at the claim level 

(CLP) on the 835 and will be reported 

in the Estimated Rebate at the Point of 

Sale field 40 on the PDE as some plans 

are doing today. This would allow the 

information to be transparent from the 

point-of-sale transaction to the PDE. 

We agree with commenters who 

pointed out that the pharmacy price 

concessions cannot be conveyed to 

downstream supplemental payers 

unless price concession values are 

conveyed in a dedicated cost field, 

which is not available under D.0. 

Because these price concession amounts 

could only be conveyed in an 

informational field, the current NCPDP 

standard does not support providing 

this information to a supplemental 

payer on a COB claim. So, if the PBM 

uses the method illustrated in Example 

2, the pharmacy would be unable to 

provide transparency around any 

amounts that will be taken back post 

point of sale on the COB claim that will 

be sent to a supplemental payer. 

However, we are including Example 2 

for PBMs to use when implementing the 

new rule because it will still benefit 

those supplemental payers who provide 

coverage based on beneficiary costsharing, and will retain the status quo 

for supplemental payers who pay based 

on plan-paid amounts. 

Comment: A few commenters 

explained that Part D bidding and 

payment policies in the Advance Notice 

would be impacted by these provisions 

that are not mentioned in the AN. For 

example, the risk adjustment model for 

CY 2023 is proposed to be calibrated on 

2018 claims and encounter data, plus 

expenditure data from 2019 PDE records 

that do not reflect pharmacy DIR being 

applied at POS. Commenters noted that 

the risk adjustment is not the only issue 

impacted by pharmacy DIR at POS but 

also the underlying trends used to make 

the annual adjustments to Medicare Part 

D benefit parameters would also be 

impacted. 

Response: Given that we are finalizing 

an applicability date of January 1, 2024, 

the policy we are adopting will not 

affect Part D payment in 2023. We will 

consider commenters’ feedback as we 

prepare the Part D payment policies for 

the 2024 Advance Notice. 

Comment: A few commenters urged 

CMS’ Office of the Actuary to provide 

plan sponsors with bid guidance as soon 

as possible to ensure accuracy of the 

bids. Commenters noted that the 

pharmacy DIR impacts if the rule were 

final, were not referenced in the draft 

Bid Pricing Tool (BPT) or the Advance 

Notice. Commenters noted that Part D 

sponsors will have to choose whether to 

prepare their bids under current 

regulations where they assume that (a) 

the definition of negotiated price 

remains the same, or (b) the new 

definition of negotiated price is 

finalized. A few commenters indicated 

that if the industry is not aligned on 

assumptions, there will be significant 

disruption for beneficiaries due to the 

erratic bidding in the market. Also, 

commenters noted that the uncertainty 

of the proposed rule adds additional 

actuarial risk, which may result in plans 

adopting more conservative (that is, 

higher) plan pricing, in order to mitigate 

the impacts of the uncertainty during 

the bidding period. 

Response: As noted above, we are 

finalizing this rule with an applicability 

date of January 1, 2024. CMS will 

communicate bid guidance to support 

the bid development process with 

sufficient lead time for the 2024 bid 

cycle. 

Comment: A commenter noted that 

the Out-of-Pocket Cost (OOPC) Models 

are under development and targeted for 

release in April 2022, possibly prior to 

the publication of the final rule. The 

commenter was concerned as the values 

produced from these models are used in 

CMS’s bid review and while the 


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baselines were released on January 21, 

2022, the average price for each RxCUI 

in the model could be influenced by 

adoption of the proposal to require the 

negotiated price to include pharmacy 

price concessions. The commenter 

stated that CMS would have to decide 

whether adjustments for potential 

changes in the average price for each 

RxCUI in the model would be 

appropriate. The same commenter noted 

that in relation to pricing changes, the 

Health Plan Management System 

(HPMS) Formulary Submission and Part 

D Pricing File Submission (PDPFS) 

Modules are expected to be released on 

May 16, 2022, and that the formulary 

submission module may be directly 

impacted by this proposal, while plan 

sponsor and PBM formulary strategy 

most certainly will. The commenter 

noted that the Part D pricing file module 

would likely either have to be delayed 

or re-released to appropriately reflect 

this final rule. 

Response: Given the applicability date 

of January 1, 2024, changes to the OOPC 

model tool for 2023 are not needed. We 

will consider whether updates will be 

appropriate for the OOPC model for 

2024. 

Comment: A commenter requested 

that CMS ensure that Part D sponsors 

and their PBMs load revised drug 

pricing tables reflecting the lowest 

possible reimbursement into their 

claims processing systems that interface 

with contracted pharmacies. The 

commenter noted that this information 

goes hand-in-hand with a real-time 

prescription benefit model in providing 

at the point of prescribing and even at 

the point of dispensing an accurate 

accounting of the beneficiary’s out-ofpocket cost for their prescription. 

Response: We appreciate the 

suggestion. We will monitor the 

situation to determine whether it is 

necessary that we take any additional 

steps to ensure that Part D sponsors and 

their PBMs have made the appropriate 

changes to their claims processing 

systems. 

After consideration of the comments, 

we will finalize our proposal to use 

existing reporting mechanisms to 

confirm that sponsors are appropriately 

applying pharmacy price concessions to 

the negotiated price. 

e. Negotiated Prices of Applicable Drugs 

in the Coverage Gap 

The negotiated price of an applicable 

drug is also the basis by which 

manufacturer liability for discounts in 

the coverage gap is determined. Section 

1860D–14A(g)(6) of the Act provides 

that, for purposes of the coverage gap 

discount program, the term ‘‘negotiated 

price’’ has the meaning it was given in 

§ 423.100 as in effect as of the 

enactment of section 3301 of the Patient 

Protection and Affordable Care Act 

(Pub. L. 111–148) (PPACA), as amended 

by section 1101 of the Health Care and 

Education Reconciliation Act of 2010 

(Pub. L. 111–152), except that it 

excludes any dispensing fee for the 

applicable drug. Under that definition, 

which is codified in the coverage gap 

discount program regulations at 

§ 423.2305, the negotiated price is the 

amount the Part D sponsor (or its 

intermediary) and the network 

dispensing pharmacy (or other network 

dispensing provider) have negotiated as 

the amount such a network entity will 

receive, in total, for a covered Part D 

drug, reduced by those discounts, direct 

or indirect subsidies, rebates, other 

price concessions, and direct or indirect 

remuneration that the Part D sponsor 

has elected to pass through to Part D 

enrollees at the point of sale, and net of 

any dispensing fee or vaccine 

administration fee for the applicable 

drug. 

In the November 2018 proposed rule 

(83 FR 62179), we solicited comment on 

whether to require sponsors to include 

pharmacy price concessions in the 

negotiated price in the coverage gap. 

Under such an approach, the negotiated 

price of the applicable drug for purposes 

of determining manufacturer coverage 

gap discounts, would include all 

pharmacy price concessions as in all 

other phases of the Part D benefit under 

the proposed revision to the definition 

of negotiated price at § 423.100. Because 

the statutory definition of negotiated 

price for purposes of the coverage gap 

discount program references price 

concessions that the Part D sponsor has 

elected to pass through at the point-ofsale, we explained that we did not 

believe it would be appropriate to 

require sponsors to include all price 

concessions in the negotiated price for 

purposes of the coverage gap discount 

program. However, we indicated our 

belief that there would be authority 

under the statute to require sponsors to 

include all pharmacy price concessions 

in the negotiated price for purposes of 

the coverage gap discount program 

because such concessions necessarily 

affect the amount that the pharmacy 

receives in total for a particular 

applicable drug. We also noted that 

pharmacy price concessions account for 

only a share of all price concessions a 

sponsor might receive. Thus, even if a 

plan sponsor were required to include 

all pharmacy price concessions in the 

negotiated price of an applicable drug at 

the point of sale, the plan sponsor must 

still make an election as to how much 

of the overall price concessions 

(including non-pharmacy price 

concessions) it receives will be passed 

through at the point of sale. 

In the November 2018 proposed rule, 

we also sought comment on an 

alternative approach under which Part 

D sponsors would determine how much 

of pharmacy price concessions to pass 

through at the point-of-sale for 

applicable drugs in the coverage gap, 

and beneficiary, plan, and manufacturer 

liability would be calculated using this 

alternate definition of negotiated price. 

The majority of the comments on the 

November 2018 proposed rule that 

addressed the possible inclusion of 

pharmacy price concessions in the 

negotiated price of applicable drugs in 

the coverage gap expressed support for 

applying the same definition of 

negotiated price in all phases of the Part 

D benefit, as they believed maintaining 

the same definition for all phases of the 

benefit would provide more 

transparency and consistency at the 

point of sale, minimize beneficiary 

confusion, and avoid the operational 

challenges of having two different rules 

for applying pharmacy price 

concessions to applicable drugs in the 

coverage gap versus other phases of the 

Part D benefit. Some commenters 

disagreed with our assessment that CMS 

has the legal authority to require that all 

pharmacy price concessions be included 

in the negotiated price of applicable 

drugs in the coverage gap, as they felt 

this was at odds with the reference to 

‘‘price concessions that the Part D 

sponsor had elected to pass-through to 

Part D enrollees at the point-of-sale’’ in 

the regulatory definition of ‘‘negotiated 

price’’ at § 423.100 as in effect when the 

PPACA was enacted. Commenters noted 

that if CMS were to adopt the alternative 

approach under which sponsors would 

be required to include pharmacy price 

concessions in the negotiated price for 

applicable drugs in all phases of the Part 

D benefit other than the coverage gap, it 

would be necessary for CMS to issue 

very specific guidance explaining how 

to operationalize different definitions of 

‘‘negotiated price’’ for the coverage gap 

versus the non-coverage gap phases of 

the Part D benefit. 

In the proposed rule, we noted that 

we continue to believe that section 

1860D–14A(g)(6) of the Act would not 

preclude us from revising the definition 

of negotiated price at § 423.2305 to 

require Part D sponsors to apply all 

pharmacy price concessions for 

applicable drugs at the point of sale. 

However, we did not propose to adopt 

such a mandate and noted that allowing 

plans flexibility with respect to the 


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treatment of pharmacy price 

concessions for applicable drugs in the 

coverage gap would moderate increases 

to beneficiary premiums and 

government costs. 

In summary, under our proposed 

approach, for non-applicable drugs in 

the coverage gap, and during the noncoverage gap phases of the Part D 

benefit for applicable drugs, claims 

would be adjudicated using the 

negotiated price determined using the 

lowest possible reimbursement to the 

pharmacy. In contrast, for applicable 

drugs during the coverage gap, plans 

would have the flexibility to determine 

how much of the pharmacy price 

concessions to pass through at the point 

of sale, and beneficiary, plan, and 

manufacturer liability in the coverage 

gap would be calculated using this 

alternate negotiated price. 

Based on comments we received on 

the November 2018 proposed rule, we 

anticipate that if we were to adopt the 

proposed approach, we would need to 

provide technical or operational 

guidance to Part D sponsors regarding 

the calculation of the gap discount, PDE 

reporting, and straddle claim 

processing. We solicited comment on 

whether there are other topics CMS 

would need to address in new guidance 

if we finalized the proposed approach. 

We also requested that commenters with 

concerns about the feasibility of 

sponsors having two different rules for 

applying pharmacy price concessions to 

applicable drugs in the coverage gap 

versus other phases of the Part D benefit 

provide detailed explanations of their 

concerns, with specificity and 

examples. 

In addition, we solicited comment on 

whether, as an alternative to our 

proposed approach, we should require 

that Part D sponsors apply pharmacy 

price concessions to the negotiated price 

of applicable drugs in the coverage gap. 

As noted above, we believe that such a 

requirement would also be consistent 

with section 1860D–14A(g)(6) of the 

Act. 

Comment: The majority of 

commenters indicated that pharmacy 

price concessions should be included in 

the negotiated price for applicable drugs 

in the coverage gap. Commenters stated 

that applying pharmacy price 

concessions at the point of sale, 

regardless of the benefit phase, is the 

least confusing option for beneficiaries 

and provides consistency and 

transparency at the point of sale. Some 

noted that predictability in out-ofpocket costs is critically important for 

seniors and people with disabilities. 

Some commenters believed that 

applying the same rules regarding the 

reporting of pharmacy price concessions 

in the coverage gap would reduce 

beneficiary out-of-pocket costs and 

improve patient access and 

affordability. Several commenters stated 

that having two different sets of rules 

would be hard to explain to 

beneficiaries and create beneficiary 

confusion. A few commenters raised 

concerns about how two definitions 

could be effectively communicated in 

Medicare Plan Finder files, with greater 

potential for errors in the information 

and confusion among enrollees. 

Many commenters stated that it 

would be operationally challenging to 

have different rules for applying 

pharmacy price concessions in the 

coverage gap versus other phases of the 

Part D benefit. Commenters noted that it 

was unclear how Part D plans, PBMs, 

and pharmacies could operationalize 

two different rules for negotiated prices. 

Others noted that having two different 

approaches would increase 

administrative costs for pharmacies, 

plan sponsors, PBMs, and other 

stakeholders, and that claims systems 

would need to be reprogrammed. 

Commenters stated that if there were 

two different approaches, Part D 

sponsors would need specific guidance 

regarding the calculation of the gap 

discount, PDE reporting, and straddle 

claim processing. In addition, 

commenters were concerned that having 

different rules for the negotiated price 

would result in significant complexity 

during the bid process and CMS 

oversight. Some commenters noted the 

potential for confusion and errors and 

administrative costs associated with 

implementation. 

Response: We appreciate the 

thoughtful feedback on maintaining two 

separate rules for determining the 

negotiated price and the concerns about 

the potential for beneficiary confusion, 

added administrative burden and cost, 

and implementation challenges that 

would result from applying one 

approach to the negotiated price for 

applicable drugs in the coverage gap 

phase and another for non-applicable 

drugs in the gap, as well as for drugs in 

all other phases of the Part D benefit. 

As noted in the preamble of the 

proposed rule, in the November 2018 

proposed rule (83 FR 62179), we 

solicited comment on whether to 

require sponsors to include pharmacy 

price concessions in the negotiated 

price of applicable drugs in the coverage 

gap. Because the statutory definition of 

negotiated price for purposes of the 

coverage gap discount program 

references price concessions that the 

Part D sponsor has elected to pass 

through at the point-of-sale, we 

explained that we did not believe it 

would be appropriate to require 

sponsors to include all price 

concessions in the negotiated price for 

purposes of the coverage gap discount 

program. However, we indicated our 

belief that there would be authority 

under the statute to require sponsors to 

include all pharmacy price concessions 

in the negotiated price for purposes of 

the coverage gap discount program 

because such concessions necessarily 

affect the amount that the pharmacy 

receives in total for a particular 

applicable drug. We also noted that 

pharmacy price concessions account for 

only a share of all price concessions a 

sponsor might receive. Thus, even if a 

plan sponsor were required to include 

all pharmacy price concessions in the 

negotiated price of an applicable drug, 

the plan sponsor must still make an 

election as to how much of the overall 

price concessions (including nonpharmacy price concessions) it receives 

will be passed through to beneficiaries 

at the point-of-sale. 

Given our authority under the statute 

to require plans to include all pharmacy 

price concessions to the negotiated price 

for all phases of the Part D benefit and 

the beneficiary confusion, additional 

administrative burden and costs, and 

implementation challenges posed by 

maintaining two approaches for 

purposes of the two definitions of 

negotiated price, we are finalizing our 

proposal with modification to use the 

negotiated price determined using the 

lowest possible reimbursement to the 

pharmacy across all phases of the Part 

D benefit, including for applicable drugs 

in the coverage gap phase. Accordingly, 

we are revising the definition of 

negotiated price at § 423.2305 to clarify 

that the negotiated price must be 

inclusive of all pharmacy price 

concessions in the coverage gap phase 

of the Part D benefit but that sponsors 

continue to have the flexibility to elect 

which non-pharmacy price concessions 

are to be passed through at the point of 

sale. After consideration of the 

comments, we are finalizing our 

proposal with modification to use the 

negotiated price determined using the 

lowest possible reimbursement to the 

pharmacy across all phases of the Part 

D benefit, including the coverage gap 

phase. 

4. Pharmacy Administrative Service 

Fees 

As noted in the proposed rule, we are 

aware that some sponsors and their 

intermediaries believe certain fees 

charged to network pharmacies—such 

as ‘‘network access fees,’’ 

‘‘administrative fees,’’ ‘‘technical fees,’’ 


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and ‘‘service fees’’—represent valid 

administrative costs and, thus, do not 

believe such fees should be treated as 

price concessions. However, pharmacies 

and pharmacy organizations report that 

they do not receive anything of value for 

such administrative service fees other 

than the ability to participate in the Part 

D plan’s pharmacy network. 

Thus, we restate the conclusion we 

provided in the May 2014 final rule (79 

FR 29877): When pharmacy 

administrative service fees take the form 

of deductions from payments to 

pharmacies for Part D drugs dispensed 

to Part D beneficiaries, they clearly 

represent charges that offset the 

sponsor’s or its intermediary’s operating 

costs under Part D. We believe that if 

the sponsor or its intermediary 

contracting organization wishes to be 

compensated for these services and have 

those costs treated as administrative 

costs, such costs should be accounted 

for in the administrative costs of the 

Part D bid. If instead these costs are 

deducted from payments made to 

pharmacies for purchases of Part D 

drugs, such costs are price concessions 

and must be treated as such in Part D 

cost reporting. This is the case 

regardless of whether the deductions are 

calculated on a per-claim basis. 

The regulations governing the Part D 

program require that price concessions 

be fully disclosed. If not reported at all, 

these amounts would result in another 

form of so-called PBM spread in which 

inflated prices contain a portion of costs 

that should be treated as administrative 

costs. That is, even if these amounts did 

represent costs for services rendered by 

an intermediary organization for the 

sponsor, then these costs would be 

administrative service costs, not drug 

costs, and should be treated as such. 

Failure to report these costs as 

administrative costs in the bid would 

allow a sponsor to misrepresent the 

actual costs necessary to provide the 

benefit and thus to submit a lower bid 

than necessary to reflect its revenue 

requirements (as required at section 

1860D–11(e)(2)(C) of the Act and at 

§ 423.272(b)(1) of the regulations) 

relative to another sponsor that 

accurately reports administrative costs 

consistent with CMS instructions. 

Comment: Some commenters 

expressed support for the requirement 

that legitimate administrative service 

fees be recorded as administrative costs 

in the bid and not as a pharmacy price 

concession. The commenters explained 

these fees typically provide no 

additional value to the pharmacy or the 

beneficiary beyond the ability to 

participate in the Medicare Part D plan’s 

pharmacy network and instead mainly 

offset the sponsor’s or its intermediary’s 

costs of operating the Part D plan, which 

the commenters contended should not 

be the responsibility of a network 

pharmacy. A few commenters requested 

that CMS provide further clarification 

on the definition of pharmacy 

administrative service fees and what 

should be considered under such 

definition. 

Response: CMS appreciates the 

commenters’ support. As discussed in 

the May 2014 final rule (79 FR 29877), 

pharmacy price concessions 

characterized as ‘‘network access fees,’’ 

‘‘administrative fees,’’ ‘‘technical fees,’’ 

or ‘‘service fees’’ and are taken as 

deductions from payments to 

pharmacies for drugs dispensed, 

represent charges that offset sponsor or 

PBM operating costs. If a sponsor or its 

intermediary contracting organization 

wishes to be compensated for these 

services then such administrative costs 

should be accounted for as such in the 

Part D bid. However, when such fees 

take the form of deductions from 

payments to pharmacies for dispensed 

Part D drugs, such costs are price 

concessions and must be reflected in the 

negotiated price. This is the case 

regardless of whether the deductions are 

calculated on a per-claim basis. CMS 

declines at this time to further define 

what should be considered pharmacy 

administrative service fees, but we may 

consider providing further clarification 

in future rulemaking. 

Comment: A commenter requested 

that CMS clarify how it intends to 

ensure that administrative service fees 

are being properly recognized and 

reported. This commenter 

recommended that CMS utilize 

Medicare Part D Reporting 

Requirements to ensure fees charged to 

pharmacies are properly reported as 

either administrative costs or price 

concessions. Another commenter 

requested that CMS require a Part D 

sponsor (and its PBM) attest that any 

administrative service fees charged by 

the Part D sponsor (or its PBM) are 

utilized for administrative services and 

that such services are relevant and 

applicable to the pharmacy against 

which the fees are applied. 

Response: We appreciate the concerns 

raised by commenters and will consider 

what steps might be necessary in the 

future to ensure that administrative 

service fees are properly reported to 

CMS. 

Comment: A number of commenters 

expressed concerns that the Part D 

sponsors could use the classifications of 

price concessions and pharmacy 

administrative service fees to 

manipulate the Part D bidding and MLR 

processes in order to retain additional 

profit. A commenter was concerned that 

Part D sponsors had incentives to bid in 

ways that allowed the sponsors to retain 

pharmacy price concessions and not 

apply them to the negotiated price, 

diminishing the value available to 

enrollees at the point of sale. This 

commenter stated that plans overbid by 

underestimating DIR in order to retain 

additional profit during the plan’s 

reconciliation process. The commenter 

is concerned that the terms of the MLR 

requirements may permit Part D 

sponsors to inflate their actual 

expenditures, or ‘‘incurred claims,’’ by 

classifying their arbitrary charges to 

pharmacies as ‘‘administrative fees’’ or 

‘‘administrative service fees.’’ By doing 

so, a Part D sponsor inflates their 

reported incurred claims so that they 

can retain such fees while 

simultaneously reducing the sponsor’s 

probability of paying remittances under 

the MLR. This commenter noted that if 

such fees were instead reported as postpoint-of-sale price concessions, then 

they would increase the plan’s 

probability of paying a remittance under 

the MLR. This commenter stated that 

the MLR requirement was created to 

encourage plans to: (1) Provide value to 

beneficiaries, (2) be transparent and 

accountable for expenditures, and (3) 

reduce health care costs. 

A commenter rejected the notion that 

Part D plans have an incentive to 

deliberately underestimate DIR in Part D 

bids in order to increase plan profits. 

This commenter stated that there are 

multiple mechanisms in place to 

prevent abuse of the system. The 

commenter cited the bid review process, 

Part D risk corridors, and the MLR 

requirement as examples of 

programmatic features that limit Part D 

plan sponsors’ gaming of bids and 

profits. The commenter asserts that the 

Office of the Actuary would refuse to 

approve bids if a sponsor were 

‘‘consistently off’’ in projections. They 

contended that the current plan 

payment structure applies appropriate 

incentives and allows for appropriate 

oversight to ensure that private market 

innovation delivers competitive and 

meaningful choices to beneficiaries and 

financial savings to taxpayers. 

Response: While the bid review 

process, Part D risk corridors and the 

MLR requirement limit Part D plan 

sponsors’ ability to game bids and 

profits to an extent, we do not agree 

with the commenters’ implication that 

these are CMS. The commenters do not 

address the analysis of Part D plan 

payment and cost data we discussed in 

the proposed rule, which show that in 

recent years, DIR amounts that Part D 


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sponsors and their PBMs actually 

received have consistently exceeded 

bid-projected amounts, by an average of 

0.6 percent and as much as 3 percent as 

a share of gross drug costs from 2010 to 

2020. The commenter merely asserts 

that the Office of the Actuary would 

have refused to approve bids if a 

sponsor were ‘‘consistently off’’ in 

projections. They fail to elaborate under 

which conditions the Office of the 

Actuary would reject a bid from a Part 

D sponsor because the Part D sponsor 

has been historically off in their bids, 

but could provide an argument that 

their current bid is actuarially sound. 

We do not believe the MLR requirement 

nor the Part D risk corridors function to 

solve or disincentivize the trend of 

underbidding DIR. The MLR 

requirement mandates that sponsors 

remit funds if less than 85 percent of all 

revenues are spent on prescription 

drugs or quality improvement activities. 

When Part D sponsors share extra 

profits through the Part D risk corridor 

with the Federal Government due to the 

sponsor underestimating DIR, sponsors 

typically keep a significant majority of 

the extra profits. For example, when a 

Part D sponsor’s target amount or 

revenue exceeds their allowable risk 

corridor costs by 10%, the sponsor 

would retain 75% of the extra profits 

while the Federal Government would 

recoup 25%. Also, a Part D sponsor 

could underestimate DIR relative to its 

bid and receive additional profits up to 

the maximum amount permitted by the 

Part D risk corridors without necessarily 

failing to meet the 85 percent MLR 

requirement. 

CMS appreciates the commenter’s 

concerns that Part D sponsors could 

manipulate the treatment of payments 

from pharmacies in different Part D 

processes in order retain additional 

profits. However, we believe the 

requirements for both MLR and under 

this final rule are clear that a Part D 

sponsor could not treat a fee as an 

administrative cost for one purpose, but 

a drug cost for the other. While Part D 

sponsors have had an incentive to bid 

using an assumption that pharmacy 

price concessions would not be applied 

at the point of sale to achieve 

advantageous premiums, Part D 

sponsors must submit Part D bids that 

comply with the Part D statute, 

regulations, and rules applicable for the 

contract year as the basis for their 

actuarial assumptions, and in relation to 

the issuance of this final rule Part D 

sponsors will be required to reflect the 

new definition of negotiated price in all 

phases of the Part D benefit in their Part 

D bids. The definition of ‘‘price 

concession’’ and the requirements of the 

MLR would not allow Part D sponsors 

to inflate the ‘‘incurred claims’’ in their 

MLR by reclassifying amounts that are 

deducted from payments made to 

pharmacies for purchases of Part D 

drugs as administrative fees. ‘‘Incurred 

claims’’ in the MLR numerator include 

direct drug costs that are actually paid 

(§ 423.2420(b)(2)(i)) and excludes 

administrative fees (§ 423.2420(b)(4)). 

The definition of ‘‘price concession’’ 

mirrors ‘‘actually paid’’ as defined in 

§ 423.308. A ‘‘price concession’’ is 

defined as any form of discount, direct 

or indirect subsidy, or rebate received 

by the Part D sponsor or its intermediary 

contracting organization from any 

source that serves to decrease the costs 

incurred under the Part D plan by the 

Part D sponsor. Similarly, ‘‘actually 

paid’’ are costs that must be actually 

incurred by the Part D sponsor and must 

be net of DIR from a source that serves 

to decrease the costs incurred under the 

Part D plan by the Part D sponsor. 

Therefore, any amount that would be 

considered a price concession in the 

application of this rule would also be 

netted from the incurred claims amount 

in the MLR numerator, which is why we 

believe the requirements for both MLR 

and this final rule are clear that a Part 

D sponsor could not treat a fee as an 

administrative cost for one purpose, but 

a drug cost for the other. 

5. Defining Price Concession (§ 423.100) 

Section 1860D–2(d)(1)(B) of the Act 

stipulates that the negotiated price shall 

take into account negotiated price 

concessions, such as discounts, direct or 

indirect subsidies, rebates, and direct or 

indirect remunerations, for covered Part 

D drugs. Section 1860D–2(d)(2) of the 

Act further requires that Part D sponsors 

disclose to CMS the aggregate negotiated 

price concessions by manufacturers that 

are passed through in the form of lower 

subsidies, lower monthly beneficiary 

premiums, and lower prices through 

pharmacies and other dispensers. While 

‘‘price concession’’ is a term important 

to the adjudication of the Part D 

program, it has not yet been defined in 

the Part D statute or in Part D 

regulations and sub-regulatory 

guidance. Therefore, to avoid confusion 

among Part D sponsors and other 

stakeholders of the Part D program 

resulting from inconsistent terminology, 

we proposed to add a regulatory 

definition for the term ‘‘price 

concession’’ at § 423.100 that is 

consistent with how that term is used in 

subsections (d)(1)(B) and (d)(2) of 

section 1860D–2 of the Act. 

We proposed to define price 

concession to include any form of 

discount, direct or indirect subsidy, or 

rebate received by the Part D sponsor or 

its intermediary contracting 

organization from any source that serves 

to decrease the costs incurred under the 

Part D plan by the Part D sponsor. The 

proposed definition would note that 

price concessions include but are not 

limited to discounts, chargebacks, 

rebates, cash discounts, free goods 

contingent on a purchase agreement, 

coupons, free or reduced-price services, 

and goods in kind. 

The proposed rule noted that 

adopting the proposed definition of 

price concession would not affect the 

way in which price concessions must be 

accounted for by Part D sponsors in 

calculating costs under a Part D plan, 

and it would not require the 

renegotiation of any contractual 

arrangements between a sponsor and its 

contracted entities. Therefore, the 

proposed definition of price concession 

has no impact under the Federal 

requirements for Regulatory Impact 

Analyses. 

Comment: Many commenters 

expressed concern that PBMs will 

restructure pharmacy fees to sources 

other than claim-level fees to 

circumvent CMS’s intent in the proposal 

and provided recommendations on what 

CMS should include or consider. Some 

commenters wanted CMS to clarify that 

pharmacies would not be held 

accountable for ‘‘non-pharmacy’’ price 

concessions (for example, manufacturer 

rebates). 

Many commenters asked CMS to 

confirm that any fee related to or 

assessed because of a Part D 

prescription drug claim is considered a 

price concession. Commenters 

expressed that this should be true 

whether the fee represents an 

administrative fee, a transaction fee, or 

the value of a contingent amount, such 

as a performance-based penalty. Many 

commenters explained that the fees and 

price concessions that PBMs utilize in 

contracts and pharmacy manuals have 

different names, but were primarily 

deductions from their reimbursements. 

Commenters felt these deductions must 

be treated as a price concession and 

fully disclosed to them on individual 

adjudicated claim responses and 

remittance advices within the prompt 

pay rules of 14 calendar days. 

Response: We believe that the 

definition of ‘‘price concession’’ that we 

discussed in the proposed rule is broad 

enough to include all forms of 

discounts, direct or indirect subsidies, 

or rebates that serve to reduce the costs 

incurred under Part D plans by Part D 

sponsors, so that Part D sponsors and 

their intermediaries are limited in 


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circumventing CMS’ intent without 

fundamentally changing. When 

pharmacy administrative service fees 

take the form of deductions from 

payments to pharmacies, they represent 

charges that offset the sponsor’s or its 

intermediary’s operating costs under 

Part D. If the sponsor or its intermediary 

contracting organization wishes to be 

compensated for these services and have 

those costs treated as administrative 

costs, such costs should have been 

accounted for in the administrative 

costs of the Part D bid. However, if the 

sponsor or its intermediary deducts 

these same costs from payments to 

pharmacies, such costs are price 

concessions and must be reflected in the 

negotiated price. For pharmacy price 

concessions that are not at the claim 

level, Part D sponsors would have to 

determine a methodology to attribute 

such concessions to the claim level to 

remain in compliance with the 

definition of negotiated price. 

We are confirming that under the 

definition of negotiated price we are 

adopting in this final rule, the 

negotiated price must include pharmacy 

price concessions, and does not require 

inclusion of non-pharmacy price 

concessions, such as manufacturer 

rebates. To the extent a non-pharmacy 

price concession is applied to the 

negotiated price, it would reduce the 

negotiated price, but not reduce the 

amount that is the lowest possible 

reimbursement the pharmacy could 

receive as reimbursement for a covered 

Part D drug under the contract between 

the pharmacy and the Part D sponsor or 

the sponsor’s intermediary. 

Comment: Some commenters 

recommended changes to our proposed 

definition of ‘‘price concession.’’ These 

commenters recommended that the 

definition consider administrative 

service fees. A commenter 

recommended that in our proposed 

definition after the phrase ‘‘received by 

the Part D sponsor or its intermediary 

contracting organization’’ that we add 

‘‘for a particular claim at any time 

during the contract year.’’ This 

commenter also recommended that after 

the phrase ‘‘from any source’’ that we 

add ‘‘including a network dispensing 

pharmacy.’’ Finally, in the list of 

examples of price concessions, the 

commenter recommended that we 

include ‘‘fees or other charges to 

network dispensing pharmacy.’’ 

Another commenter recommended that 

we modify the definition of ‘‘price 

concession’’ by adding, after the phrase 

‘‘that serves to decrease the costs 

incurred under the Part D plan by the 

Part D sponsor,’’ ‘‘or its intermediary 

contracting organization under the Part 

D plan.’’ This commenter also 

recommends that the examples be 

expanded to include ‘‘any type of fee or 

other amount that a Part D sponsor or 

its intermediary contracting 

organization retains from payments 

made to such pharmacies or providers 

for their provision of Part D drugs or 

requires such pharmacies or providers 

to pay in connection with its provision 

of Part D drugs under a Part D network, 

including but not limited to transaction 

fees, network participation fees and 

administrative fees.’’ Commenters also 

requested that CMS define 

‘‘administrative service fees.’’ 

Response: For the reasons stated 

previously, we believe the definition we 

are adopting in this final rule is 

sufficient to identify price concessions. 

CMS will take commenters’ suggestions 

for changes to the definition of price 

concession, as well as for a new 

definition of ‘‘administrative service 

fees,’’ into consideration for future 

rulemaking. 

We are finalizing our proposal 

without modification to define ‘‘Price 

concession’’ to include any form of 

discount, direct or indirect subsidy, or 

rebate received by the Part D sponsor or 

its intermediary contracting 

organization from any source that serves 

to decrease the costs incurred under the 

Part D plan by the Part D sponsor at 

§ 423.100. 

III. Requests for Information 

A. Request for Information: Prior 

Authorization for Hospital Transfers to 

Post-Acute Care Settings During a 

Public Health Emergency 

We are committed to ensuring that 

hospitals, post-acute care facilities 

(including long-term care hospitals 

(LTCHs), inpatient rehabilitation 

facilities (IRFs), and skilled nursing 

facilities (SNFs)), physicians, and MA 

organizations have the tools necessary 

to provide access to appropriate care to 

patients without unnecessary delay 

during a public health emergency (PHE). 

Throughout 2020 during the 

Coronavirus Disease 2019 Public Health 

Emergency (COVID–19 PHE), we 

consistently issued guidance to address 

permissible flexibilities for MA 

organizations as part of an ongoing 

effort to help MA enrollees, and the 

health care systems that serve them, 

avoid delays and disruptions in care. 

We recognize that any delays or 

disruptions in care that might transpire 

within the MA program could have a 

ripple effect and also negatively impact 

the timely provision of appropriate care 

to patients covered under payer systems 

external to MA (for example, employersponsored insurance). Additionally, we 

recognize the positive impact that 

payers in general can have through the 

adoption of flexibilities that support 

hospitals’ ability to effectively manage 

resources when a hospital experiences a 

substantial uptick in hospitalizations. 

As a result of the guidance and 

clarification that we issued throughout 

2020, a large proportion of MA 

organizations opted to relax or 

completely waive their prior 

authorization requirements with respect 

to patient transfers between hospitals 

and post-acute care facilities during 

plan year 2020, consistent with our 

guidance encouraging flexibility to 

ensure access to care. However, as the 

PHE continued into 2021, many MA 

organizations reinstated prior 

authorization requirements, which some 

stakeholders reported contributed to 

capacity issues and delays in care 

within hospital acute care settings. For 

example, one stakeholder reported that 

only 5 percent of intensive care unit 

(ICU) beds were open in their state 

during the month of August 2021, and 

stated that the scarcity of available beds 

could be mitigated if more MA 

organizations reinstated waivers on 

prior authorization requirements for 

patient transfers. Another stakeholder 

reported that it was not uncommon for 

a hospital to wait up to 3 business days 

to receive a decision from an MA 

organization for a request for a patient 

transfer—a delay which prevented the 

hospital from moving patients to the 

next appropriate care setting in a timely 

manner and forced the unnecessary use 

of acute-care beds. The same 

stakeholder reported that a high rate of 

initial denials from MA organizations 

also contributed to delays in patient 

transfer. We acknowledge our 

responsibility to ensure that our 

programs’ policies do not hinder access 

to care, especially during a public 

health emergency. Therefore, in 

response to these reports and the uptick 

in COVID–19 hospitalizations across the 

country, we sought information from 

stakeholders in order to assess the 

impact of MA organizations’ use of prior 

authorization or other utilization 

management criteria during certain 

PHEs. Through this request for 

information (RFI), CMS sought 

additional information from all affected 

stakeholders, especially MA 

organizations, hospitals, post-acute care 

facilities, professional associations, 

states, and patient advocacy groups 

regarding the effects of both the 

relaxation of and reinstatement of prior 

authorizations on patient transfers 

during a PHE. 


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We noted that we remain mindful of 

the impact the MA program’s policies 

have on the health care system as a 

whole, and strongly encouraged MA 

organizations to continuously re-assess 

the need for flexibilities in their 

utilization management practices. We 

noted that with regard to prior 

authorization and other utilization 

management practices, we permit MA 

organizations the choice to uniformly 

waive or relax plan prior authorization 

requirements at any time in order to 

facilitate access to care, even in the 

absence of a disaster, declaration of a 

state of emergency, or PHE. Generally, 

MA organizations are required to ensure 

that enrollees are notified of changes in 

plan rules of this type in accordance 

with § 422.111(d); however, when the 

provisions under § 422.100(m)(1) go into 

effect during a disaster or emergency, as 

they did during the COVID–19 PHE, MA 

organizations are permitted to 

immediately implement plan changes 

that benefit enrollees, including a 

waiver of prior authorization 

requirements, without the 30-day 

notification requirement at 

§ 422.111(d)(3). 

We invited the public to submit 

comments for consideration as CMS 

assesses the impact of MA 

organizations’ prior authorization 

requirements for patient transfer on a 

hospital’s ability to effectively manage 

resources and provide appropriate and 

timely care during a PHE. We indicated 

that the primary objective of this RFI 

was for us to glean information from 

stakeholders about the effects of MA 

organizations’ prior authorization 

requirements for patient transfers on a 

hospital’s ability to furnish the 

appropriate care to patients in a timely 

manner in the context of a PHE. This 

was a general RFI related to prior 

authorizations on patient transfers 

during any PHE. While many 

commenters may have chosen to 

provide information in the context of 

the COVID–19 PHE, we welcomed and 

encouraged commenters to provide 

information in the context of any PHE. 

B. Request for Information: Building 

Behavioral Health Specialties Within 

MA Networks 

CMS is dedicated to ensuring that MA 

beneficiaries have access to provider 

networks sufficient to provide covered 

services in accordance with the 

standards described in section 

1852(d)(1) of the Act and in 

§§ 422.112(a) and 422.114(a)(1). 

Accordingly, CMS strengthened 

network adequacy rules for MA plans by 

codifying our network adequacy 

standards at § 422.116 in the June 2020 

final rule. 

Currently, we require MA 

organizations to submit data for 

behavioral health providers, specifically 

psychiatry (provider-specialty type) and 

inpatient psychiatric facility services 

(facility-specialty type), using the 

Health Service Delivery (HSD) tables. 

The HSD tables are submitted to CMS 

during an MA organization’s formal 

network review and are utilized to 

demonstrate compliance with network 

adequacy standards. The HSD tables 

must list every provider and facility 

with a fully executed contract in the MA 

organization’s network, and are 

uploaded to the Health Plan 

Management System (HPMS) for an 

automated review. MA plans must have 

sufficient providers within a certain 

time and distance of 85 or 90 percent of 

beneficiaries residing the plan’s service 

area, depending on the type of counties 

in the service area, under § 422.116. We 

also encouraged plans to provide more 

choices for enrollees to access care 

using telehealth for certain specialties, 

including psychiatry, through our 

policy under § 422.116(d)(5), while 

maintaining enrollees’ right to access in 

person care for these specialty types. To 

encourage and account for telehealth 

providers in contracted networks, 

§ 422.116(d)(5) provides MA plans a 10- 

percentage point credit towards the 

percentage of beneficiaries that reside 

within published time and distance 

standards when the plan’s network 

includes telehealth providers for certain 

specialties and the plan covers 

additional telehealth benefits, as 

defined in § 422.135. However, as noted 

in the proposed rule, even with the 

availability of the additional 10- 

percentage point credit for the use of 

telehealth providers, it is our 

understanding that MA organizations 

may experience difficulties meeting 

network adequacy standards with 

respect to behavioral health providers. 

In order to increase our understanding 

of issues related to MA enrollees’ access 

to behavioral health specialties, CMS 

sought input from industry stakeholders 

on the challenges MA organizations face 

when building an adequate network of 

behavioral health providers for MA 

plans. More specifically, we issued an 

RFI that solicited comment on issues 

including, but not limited to, the 

following: 

• Challenges related to a lack of 

behavioral health provider supply in 

certain geographic regions for 

beneficiaries, health plans, and other 

stakeholders; 

• Challenges related to accessing 

behavioral health providers for enrollees 

in MA plans, including wait times for 

appointments; 

• The extent to which a behavioral 

health network affects a beneficiary’s 

decision to enroll in an MA plan; 

• Challenges for behavioral health 

providers to establish contracts with 

MA plans; 

• Providers’ inability or 

unwillingness to contract with MA 

plans, including issues related to 

provider reimbursement; 

• Opportunities to expand services 

for the treatment of opioid addiction 

and substance use disorders; 

• The overall impact of potential 

CMS policy changes as it relates to 

network adequacy and behavioral health 

in MA plans, including in rural areas 

that may have provider shortages; and 

• Suggestions from industry 

stakeholders on how to address issues 

with building adequate behavioral 

health networks within MA plans. 

We acknowledge and appreciate all 

comments submitted in response to this 

RFI. While we will not be responding to 

those comments in this final rule, we 

will take the commenters’ suggestions, 

concerns, and other feedback into 

account as we consider future changes 

to our in policy in this area. 

C. Request for Comment on Data 

Notification Requirements for 

Coordination-Only D–SNPs 

(§ 422.107(d)) 

In the April 2019 final rule, we 

established an additional contracting 

requirement at § 422.107(d) for any D– 

SNP that is not a FIDE SNP or HIDE 

SNP. Under this new requirement for 

the contract that is required between the 

D–SNP and the State Medicaid agency 

effective January 1, 2021, the D–SNP is 

required to notify the State Medicaid 

agency, or individuals or entities 

designated by the State Medicaid 

agency, of hospital and skilled nursing 

facility (SNF) admissions for at least one 

group of high-risk full-benefit dual 

eligible individuals, as determined by 

the State Medicaid agency. 

These data notification requirements 

have only been in effect for a short time, 

all of which coincided with the COVID– 

19 public health emergency. Through 

the proposed rule we invited MA 

organizations, States, and other 

stakeholders to submit comments on 

their experience implementing the data 

notification requirements thus far and 

any suggested improvements for CMS 

consideration in future rulemaking. 

While we are not responding to 

specific comments submitted in 

response to this Hospital Transfers to 

Post-Acute Care Settings during a Public 

Health Emergency, Building Behavioral 


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Health Specialties within MA Networks, 

Data Notification Requirements for 

Coordination-Only D–SNPs request for 

information (RFI) in this final rule, we 

appreciate all of the comments and 

interest on these topics. We will 

continue to take all concerns, 

comments, and suggestions into account 

as we continue work to address and 

develop policies on these topics and 

may reach out to commenters for further 

discussion. 

IV. Collection of Information 

Requirements 

Under the Paperwork Reduction Act 

of 1995 (PRA) (44 U.S.C. 3501 et seq.) 

we are required to provide 60-day notice 

in the Federal Register and solicit 

public comment before a ‘‘collection of 

information’’ requirement is submitted 

to the Office of Management and Budget 

(OMB) for review and approval. For the 

purposes of the PRA and this section of 

the preamble, collection of information 

is defined under 5 CFR 1320.3(c) of the 

PRA’s implementing regulations. 

To fairly evaluate whether an 

information collection should be 

approved by OMB, section 3506(c)(2)(A) 

of the PRA requires that we solicit 

comment on the following issues: 

• The need for the information 

collection and its usefulness in carrying 

out the proper functions of our agency. 

• The accuracy of our estimate of the 

information collection burden. 

• The quality, utility, and clarity of 

the information to be collected. 

• Recommendations to minimize the 

information collection burden on the 

affected public, including automated 

collection techniques. 

In our January 12, 2022 (87 FR 1842) 

proposed rule, we solicited public 

comment on each of these issues for the 

following provisions that contain 

information collection requirements. As 

indicated below, we received public 

comments on the collection of 

information requirements related to the 

creation of a one-page multi-language 

insert; the comments and our responses 

are summarized below under the 

applicable Collection of Information 

subsection. Separately, on February 25, 

2022 (87 FR 10761), we published a 

correction that clarified we will submit 

information on the number of 

respondents and the time estimates to 

the public and OMB for the collection 

of information requirements related to 

limiting certain Medicare Advantage 

contracts to D–SNPs prior to the 2025 

plan year application. 

A. Wage Data 

To derive average costs, we are using 

data from the U.S. Bureau of Labor 

Statistics’ (BLS’s) National Occupational 

Employment and Wage Estimates for all 

salary estimates (https://www.bls.gov/ 

oes/current/oes_nat.htm), which, at the 

time of finalizing of this rule, provides 

May 2021 wages. In this regard, Table 3 

presents BLS’s mean hourly wage along 

with our estimated cost of fringe 

benefits and overhead (calculated at 100 

percent of salary), and our adjusted 

hourly wage. 

As indicated, we are adjusting our 

employee hourly wage estimates by a 

factor of 100 percent to account for 

fringe benefits and overhead costs that 

vary from employer to employer and 

because methods of estimating these 

costs vary widely from study to study. 

We believe that doubling the hourly 

wage to estimate total cost is a 

reasonably accurate estimation method. 

Revised Wage and Cost Estimates: 

While our proposed rule’s costs were 

based on BLS’s May 2020 wages, this 

final rule uses BLS’s May 2021 wages 

which are the most current as of the 

publication date of this rule. The wage 

changes are presented below in Table 4. 

Overall, the revised BLS wages 

increased our cost estimates by $74,274 

for first year (from $5,225,170 to 

$5,299,444) and a corresponding 

decrease of $43,579 for subsequent years 

(from $3,647,583 to $3,604,004). Note 

these numbers also reflect an 

adjustment to the numbers published in 

the January 2022 proposed rule (87 FR 

1934) since two provisions described in 

section IV.B.2 and section IV.B.3. had 

changes in their estimated number of 

respondents, and in response to 

comments one additional provision 

(section IV.B.7.) was added. Therefore, 

we recalculated the estimates from the 

proposed rule with these three changes 

resulting in $5,225,170 for first year and 

$3,647,583 for subsequent years 

representing the updated estimates with 

2020 wage estimates. We then 

recalculated again using the 2021 wage 

estimates resulting in the $5,299,444 for 

first year and the $3,604,004 for 

subsequent years numbers so that the 

difference would compare similar items. 

Please note that besides the wage 

changes there were (i) two changes in 

occupation codes, 13–1198 is now 13– 

1199 and 15–1250 is now 15–1252 and 

(ii) there was one change in 

occupational title, ‘‘Software and Web 

Developers’’ is now ‘‘Software 

developers.’’ 


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TABLE 3: NATIONAL OCCUPATIONAL EMPLOYMENT AND WAGE ESTIMATES 

Fringe 

Mean Benefits Adjusted 

Hourly and Hourly 

Occupation Wage Overhead Wage 

Occupation Title Code ($/hr) ($/hr) ($/hr) 

Business Operation Specialists, All Other 13-1199 38.10 38.10 76.20 

Compliance Officers 13-1041 36.45 36.45 72.90 

Computer and Information Systems Managers 11-3021 78.33 78.33 156.66 

Lawver 23-1011 71.17 71.17 142.34 

Software Developers 15-1252 58.17 58.17 116.34 
27854 Federal Register / Vol. 87, No. 89 / Monday, May 9, 2022 / Rules and Regulations 

B. Information Collection Requirements 

(ICRs) 

The following ICRs are listed in the 

order of appearance within section II. of 

this final rule. 

1. ICRs Regarding Enrollee Participation 

in Plan Governance (§ 422.107) (CMS– 

10799, 0938–1422) 

The requirement and burden for D– 

SNPs to create one or more enrollee 

advisory committees will be submitted 

to OMB for approval under control 

number 0938–TBD (CMS–10799). The 

requirement and burden for D–SNPs to 

update audit protocols to require 

documentation of the enrollee advisory 

committees will be submitted to OMB 

for approval under control number 

0938–1395 (CMS–10717). 

a. Creating One or More Enrollee 

Advisory Committees (CMS–10799, 

OMB 0938–1422) 

At § 422.107(f), we are requiring that 

any MA organization offering a D–SNP 

must establish one or more enrollee 

advisory committees at the State level or 

other service area level in the State to 

solicit direct input on enrollee 

experiences. We also require at 

§ 422.107(f) that the committee include 

at least a reasonably representative 

sample of the population enrolled in the 

dual eligible special needs plan, or 

plans, or other individuals representing 

those enrollees, and solicit input from 

these individuals or their 

representatives on, among other topics, 

ways to improve access to covered 

services, coordination of services, and 

health equity for underserved 

populations. 

The burden of establishing and 

maintaining an enrollee advisory 

committee is variable due to the 

flexibilities MA organizations would 

have to implement the requirements. 

We believe that D–SNPs should work 

with enrollees and their representatives 

to establish the most effective and 

efficient process for enrollee 

engagement; therefore, we chose not to 

establish the: (1) Frequency; (2) 

location; (3) format; (4) participant 

recruiting and training methods; (5) use 

and adoption of telecommunications 

technology; or (6) other parameters for 

operation of the required committee. In 

addition, the final rule requires one 

committee (for example, one committee 

at the State level to serve all of the MA 

organization’s D–SNPs in that State) but 

MA organizations may establish more 

than one committee). This rule also 

permits MA organizations to use 

existing committees which would meet 

the requirements of both §§ 422.107(f) 

and 438.110 (we expect this approach to 

be used by FIDE and HIDE SNPs). 

The only requirements in this rule for 

an MA organization offering one or 

more D–SNPs in a State is to establish 

and maintain one or more enrollee 

advisory committees that serve the D– 

SNPs offered by the MA organization 

and for that committee to solicit input 

on, among other topics, ways to improve 

access to covered services, coordination 

of services, and health equity for 

underserved populations. The enrollee 

advisory committee(s) must include at 

least a reasonably representative sample 

of the population enrolled in the D– 

SNP(s), or other individuals 

representing those enrollees. The 

enrollee advisory committee(s) may also 

advise managed care plans under title 

XIX of the Act offered by the same 

parent organization as the MA 

organization offering a D–SNP. 

To determine the burden for MA 

organizations to establish the enrollee 

advisory committees, we reviewed two 

estimates from similar committees. 

First, the May 2016 final rule (81 FR 

27778) estimated it will take 6 hours 

annually for a business operations 

specialist to establish and maintain the 

LTSS member advisory committee 

required by § 438.110 for Medicaid 

managed care plans that cover Medicaid 

LTSS. 

Second, in 2021 we conducted an 

informal survey of the three South 

Carolina MMPs under the capitated FAI 

demonstration that are required to 

conduct meetings quarterly and highly 

value their advisory committees. The 

MMPs surveyed estimated an annual 

average of 240 hours (or 60 hours per 

meeting) to recruit members and 

establish and maintain the committee. 

We expect these efforts to include 

outreach and communication to 

members, developing meeting agendas, 

scheduling participation of presenters, 

preparing meeting materials, identifying 

meeting location and technology, D– 

SNP staff attendance at the meeting, and 

disseminating enrollee feedback to D– 

SNP and MA organization staff. 

Due to the variety of flexibilities in 

creating the enrollee advisory 

committee, detailed previously in this 

section, we expect the average time and 

annual cost for an MA organization to 

establish and hold an enrollee advisory 

committee meeting(s) to be somewhere 

between 6 hours estimated for the 

requirement at § 438.110 and 240 hours 

as reported by MMPs. We believe this 

large difference in the time spent comes 

from two sources: (1) The committees 

created by MMPs must meet quarterly 

rather than annually and (2) MMPs find 

value in their committees and have 

invested more staff and resources to 

recruit enrollees, and prepare for and 

hold meetings; for example, MMPs often 

provide transportation to meetings, 

refreshments, and nominal incentives 

for participation, none of which is 

required by the capitated FAI 

demonstration or this rule. With this 

understanding that a wide variety of 

approaches would be used, we estimate 

that on average a business compliance 

officer will spend 40 hours at $76.20/hr 

to establish and hold enrollee advisory 

committee meetings. 

In the proposed rule, we noted that 

each MA organization offering one or 

more D–SNPs in a State will decide how 

to establish an enrollee advisory 


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TABLE 4: COMPARISON OF PROPOSED AND FINALIZED ADJUSTED HOURLY 

WAGES 

CMS-4192-P: CMS-4192-F: 

Occupation Title Occupation BLSMay BLS May2021 Difference 

Code 2020 ($/hr) 

($/hr) ($/hr) 

Business Operation Specialists, All Other 13-1198 81.06 76.20 -4.86 

Compliance Officers 13-1041 72.70 72.90 0.20 

Computer and Information Systems Managers 11-3021 155.52 156.66 1.14 

Lawyer 23-1011 143.18 142.34 -0.84 

Software and Web Developers 15-1250 105.72 116.34 10.62 
Federal Register / Vol. 87, No. 89 / Monday, May 9, 2022 / Rules and Regulations 27855 

94See https://www.cms.gov/Medicare/ 

Compliance-and-Audits/Part-C-and-Part-DCompliance-and-Audits/ProgramAudits. 

committee based on the MA 

organization’s approach to obtaining 

maximal input from enrollees leading to 

the highest quality enrollee experience. 

Because of the wide variability, we 

solicited stakeholder comments on our 

assumptions and burden estimates. We 

received no comments on this issue and 

therefore we are finalizing our estimates 

that an MA organization will spend 40 

hours at a cost of $3,048 (40 hr × $76.20/ 

hr for a business operation specialist) to 

establish an enrollee advisory 

committee. 

We believe all FIDE SNPs and HIDE 

SNPs that provide LTSS currently have 

an enrollee advisory committee since 

they have a Medicaid managed care 

plan that must comply with § 438.110. 

We are updating these estimates from 

the estimates used in the proposed rule 

based on the increase in D–SNP PBPs 

for contract year 2022. There were 596 

D–SNP PBPs in 2021 and 703 D–SNP 

PBPs in 2022. For 2022, we estimate 578 

D–SNPs do not have a corresponding 

Medicaid managed care plan that 

provides LTSS, with 125 D–SNP PBPs 

in MA contracts that provide LTSS. 

Additionally, 268 D–SNP PBPs are in 

the same State and under the same 

contract, which means only one enrollee 

advisory committee is necessary to meet 

the requirement. Therefore, we estimate 

MA organizations operating D–SNPs 

will need to establish 310 (703 D–SNP 

PBPs minus 125 PBPs in D–SNP 

contracts that provide LTSS minus 268 

PBPs under the same contract in the 

same State) new enrollee advisory 

committees. 

Thus, the aggregate minimum annual 

burden for MA organizations operating 

D–SNPs to meet the requirements of 

§ 422.107(f) is 12,400 hours (310 new 

committees × 40 hr per committee) at a 

cost of $944,880 (12,400 hr × $76.20/hr). 

As stated above, the requirement and 

burden will be submitted to OMB for 

approval under control number 0938– 

1422 (CMS–10799). 

b. Updates to Audit Protocols (CMS– 

10717, OMB 0938–1395) 

As noted in section II.A.3. of this rule, 

we anticipate updating the CMS SNP 

Care Coordination audit protocols 94 for 

MA organizations offering one or more 

D–SNPs to require documentation, such 

as a committee member list and meeting 

minutes, of the enrollee advisory 

committee meetings. In our currently 

approved collection of information 

request, we estimated that the audit 

protocol and data request will take 701 

hours per MA organization at an average 

hourly cost of $87.00/hr, totaling 

$60,987 per MA organization (701 hr × 

$87.00/hr). With regard to this final 

rule, we believe MA organizations 

offering D–SNPs will prepare and retain 

a committee member list and meeting 

minutes a of customary business 

practices that is exempt from the 

requirements of the PRA under 5 CFR 

1320.3(b)(2). Therefore, we do not 

believe reporting this documentation on 

the enrollee advisory committee will 

impact our currently approved 701-hour 

audit protocol time estimate. 

While we do not anticipate any 

changes to our active time estimates, we 

will revise the SNP Care Coordination 

audit protocol prior to the effective date 

of the rule to provide stakeholders with 

an opportunity to comment on the 

contents of our revised audit protocol. 

The CMS–10717 collection of 

information request will be made 

available to the public for review and 

comment under the standard PRA 

process, which includes the publication 

of 60- and 30-day Federal Register 

notices and the posting of the collection 

of information documents on our PRA 

website. 

c. Conclusion 

We did not receive any public 

comments on our proposed collection of 

information requirements, however, as 

noted and explained previously in this 

section, we have updated to our 

estimates based on: (1) The increase of 

D–SNP PBPs for contract year 2022; and 

(2) updated hourly wage estimates. 

2. ICRs Regarding Standardizing 

Housing, Food Insecurity, and 

Transportation Questions on Health 

Risk Assessments (§ 422.101) (CMS– 

10799, OMB 0938–1422) and (CMS– 

10717, OMB 0938–1395) 

The following HRA requirements will 

be submitted to OMB for approval prior 

to the CY 2024 applicability date. The 

changes to our SNP audit protocols will 

be submitted to OMB for approval under 

control number 0938–1395 (CMS– 

10717). 

a. Added HRA Questions 

As described in section II.A.4. of this 

final rule, we are requiring that SNPs 

include questions on housing stability, 

food security, and access to 

transportation as part of their HRAs, 

although, based on insight from public 

comments, we are not finalizing our 

proposal to require standardized 

questions as proposed in our January 

2022 proposed rule. Instead, we will 

require SNPs to include one or more 

questions from a list of screening 

instruments specified by CMS in subregulatory guidance on housing 

stability, food security, and access to 

transportation in their HRAs. SNPs will 

also have the option to use any Staterequired Medicaid screening 

instruments that include questions on 

these domains. We have updated our 

burden estimates accordingly, as 

described later in this section. As noted 

in section II.A.4. of this final rule, we 

will ensure compliance with the PRA as 

we strive to post the sub-regulatory 

guidance by the end of 2022. 

This provision will result in SNPs 

having a more complete picture of the 

risk factors that may inhibit enrollees 

from accessing care and achieving 

optimal health outcomes and 

independence. We do not believe that 

collecting this information will require 

any additional efforts from SNPs outside 

of customary updates to the HRA tools. 

Due to the current requirement at 

§ 422.101(f) that the HRA include an 

assessment of the individual’s physical, 

psychosocial, and functional needs, we 

believe, and public comments 

confirmed, that many SNPs are already 

including questions in their HRA tools 

related to housing stability, food 

security, and access to transportation, 

and many such questions are drawn 

from the types of validated and widelyused screening instruments that we will 

specify in sub-regulatory guidance. 

Therefore, many SNPs will not need to 

revise their HRA tools. If a SNP is not 

already asking these questions, we do 

not predict the addition of questions on 

these three topics would lengthen the 

time to administer a typical HRA. 

CMS does not currently collect 

specific data elements from HRAs for all 

SNP enrollees. CMS will not be 

collecting data elements from the HRA 

as part of this collection of information. 

We estimate a one-time burden for the 

parent organizations offering SNPs to 

update their HRA tools in their care 

management systems and adopt 

questions on housing stability, food 

security, and access to transportation, in 

cases where the SNPs are not already 

asking questions on the required topics. 

In our proposed estimate, we assumed 

that each parent organization offering 

one or more SNP would be impacted. 

Because we are not finalizing 

standardized questions but rather 

requiring SNPs to choose questions from 

a list of existing screening instruments 

that comments indicate are widely in 

use or a State-required Medicaid 

screening instruments, we assume that 

many SNPs are already asking questions 

that we will include on the list; 

therefore, we estimate about 35 percent 

of parent organizations with one or 


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27856 Federal Register / Vol. 87, No. 89 / Monday, May 9, 2022 / Rules and Regulations 

95See https://www.cms.gov/Medicare/ 

Compliance-and-Audits/Part-C-and-Part-DCompliance-and-Audits/ProgramAudits. 

more SNPs would update the care 

management system where an enrollee’s 

HRA responses are recorded. We 

estimate that it will take a software 

programmer 3 hours at $116.34/hr to 

update the care management system 

resulting in a cost of $349 (3 hr × 

$116.34/hr) per parent organization. We 

are updating the number of parent 

organizations making these updates 

based on the 2022 contract year 

numbers from 123 parent organizations 

with a SNP PBP in 2021 to 133 parent 

organizations with a SNP PBP in 2022. 

We therefore estimate 47 parent 

organizations (35 percent of 

organizations that update multiplied by 

133 parent organizations) will be 

making these updates. In aggregate, we 

estimate a one-time burden for updating 

the HRA tool of 141 hr (47 parent 

organizations × 3 hr) at a cost of $16,404 

(141 hr × $116.34/hr). 

b. Updates to Audit Protocols (CMS– 

10717, OMB 0938–1395) 

The change to the HRAs would also 

require an update to the CMS SNP Care 

Coordination audit protocols 95 that 

ensure the completed HRAs include the 

assessment of housing stability, food 

security, and access to transportation 

based on the list of screening 

instruments specified by CMS in subregulatory guidance. Currently, audit 

protocol and data request burden are 

estimated at 701 hours per MA 

organization at an average hourly cost of 

$87.00/hr, totaling $60,987 per MA 

organization. We do not believe the 

changes to SNP audit protocols would 

add more time to the 701-hour audit 

protocol estimate, as we are adding a 

confirmation that the SNP’s HRA 

includes the changes as part of the SNP 

Care Coordination audit protocols. 

While we do not anticipate any 

changes to our active time estimates, we 

will revise the audit protocol documents 

to provide stakeholders an opportunity 

to review and comment on the contents 

of the protocol documents. The revised 

collection of information request is not 

available at this time, but it will be 

made available to the public for review 

and comment under the standard PRA 

process, which includes the publication 

of 60- and 30-day Federal Register 

notices and the posting of the collection 

of information documents on our PRA 

website. 

c. Conclusion 

We did not receive any public 

comments on our proposed collection of 

information requirements regarding 

housing, food insecurity, and 

transportation questions on health risk 

assessment. As indicated above, (i) we 

have updated our burden estimates from 

123 affected parent organizations to 47 

parent organizations and (ii) updated 

our cost estimates by using BLS’ 2021 

wages; however, the estimated time per 

respondent remains the same. 

3. ICRs Related To Refining Definitions 

for Fully Integrated and Highly 

Integrated D–SNPs (§ 422.2) 

The following changes will be 

submitted to OMB for approval under 

control number 0938–1410 (CMS– 

10796). 

As described in section II.A.5. of this 

final rule, we are making several 

changes to the definitions of FIDE SNPs 

and HIDE SNPs at § 422.2 that we 

believe will ultimately help to 

differentiate various types of D–SNPs 

and clarify options for beneficiaries and 

stakeholders. Our changes to the FIDE 

SNP definition require these plans to: 

Have exclusively aligned enrollment; 

cover Medicare cost-sharing; and cover 

the Medicaid benefits of home health (as 

defined in § 440.70), medical supplies, 

equipment, and appliances (as 

described in § 440.70(b)(3)), and 

Medicaid behavioral health services 

through a capitated contract with the 

State Medicaid agency. We also require 

that each FIDE SNP’s and HIDE SNP’s 

capitated contract with the State 

Medicaid agency apply to the entire 

service area for the D–SNP for plan year 

2025 and subsequent years. We are also 

codifying existing policy outlined in 

sub-regulatory guidance to permit, 

subject to CMS approval, specific 

limited benefit carve-outs for FIDE SNPs 

and HIDE SNPs through the State 

Medicaid agency contract submission 

process. 

Due to the changes to the definition 

of FIDE SNP and HIDE SNP, a D–SNP 

may need to update its contract with the 

State Medicaid agency. The currently 

approved annual burden estimate for 

updating the State Medicaid agency 

contract is 30 hours per D–SNP as 

described in OMB control number 

0938–0753 (CMS–R–267). While the 

changes may result in a one-time change 

to the contract, we believe the changes 

to the contract language would be 

relatively minor (even though the 

changes are substantive in nature) and 

part of routine updates to contracts such 

as changes of dates. We also believe that 

the contract changes would be 

subsumed in the 30-hour burden 

estimate for updating the contract 

annually. Therefore, we do not estimate 

our changes to these definitions at 

§ 422.2 would impact our currently 

approved annual 30 hour contracting 

burden estimate for D–SNPs. 

The changes to the FIDE SNP and 

HIDE SNP definitions may change how 

D–SNPs attest when submitting their 

State Medicaid agency contract to CMS. 

The burden is currently estimated under 

OMB control number 0938–0935 (CMS– 

10237). We do not estimate D–SNPs 

would experience an increase in their 

per response time or effort to submit the 

State Medicaid agency contract to CMS. 

However, we will update the content 

of the collection of information to reflect 

the changes to § 422.2 by revising the 

5.11 D–SNP State Medicaid Agency 

Contract Matrix and 5.12 D–SNP State 

Medicaid Agency Contract Matrix 

documents connected to control number 

0938–0935 (CMS–10237) and move 

these documents to control number 

0938–1410 (CMS–10796). We believe 

including these forms in a separate 

OMB control number 0938–1410 (CMS– 

10796) exclusively for the D–SNP State 

Medicaid agency contracts is more 

operationally consistent with the 

collection of information required from 

MA organizations. The matrix 

documents will be removed from 0938– 

0935 after they are approved by OMB 

under 0938–1410. 

a. Service Area Overlap Between HIDE 

SNPs and Companion Medicaid Plans 

(CMS–R–262, OMB 0938–0763) 

In addition to the updates described 

in this section, changes to the FIDE SNP 

or HIDE SNP definition described in 

section II.A.5.f. of this final rule will 

require the service area of a FIDE SNP 

or HIDE SNP to overlap with companion 

Medicaid plans; therefore, the 15 HIDE 

SNPs that have service area gaps with 

their affiliated Medicaid MCOs would 

make a business decision regarding how 

to comply with the requirement in 

addition to updating the State Medicaid 

agency contract with the D–SNP. We 

believe that only one-third of the 15 

impacted D–SNPs, or 5 D–SNPs, would 

choose to remain a HIDE SNP. The 

remaining 10 D–SNPs would contract 

with the State as a non-HIDE D–SNP 

and not incur additional burden. 

A D–SNP that wishes to remain a 

HIDE SNP would submit a new D–SNP 

PBP for the service area that does not 

overlap with the D–SNP’s companion 

Medicaid plan during the annual bid 

submission process (OMB control 

number 0938–0763 (CMS–R–262)). 

Also, under the annual bid submission 

process, the existing HIDE SNP would 

reduce their MA service area to that 

which overlaps with the companion 

Medicaid plan. 


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The currently approved annual 

burden estimate for D–SNPs to update 

PBPs is 35.75 hours per MA contract as 

described in OMB control number 

0938–0763 (CMS–R–262). We do not 

estimate D–SNPs would experience an 

increase in their response time or effort 

to submit the bid to CMS. 

Alternatively, to remain a HIDE SNP, 

the MA organization can work with the 

State Medicaid agency to expand the 

service area of the companion Medicaid 

plan to align with the D–SNP service 

area. However, State Medicaid 

procurement time frames and 

contracting strategies may not provide 

the 15 D–SNPs an opportunity to 

expand the service area of the 

companion Medicaid plan in CY 2025. 

b. Conclusion 

We did not receive any public 

comments on our proposed collection of 

information requirements and are 

therefore finalizing them without 

modification. 

4. ICRs Related to Additional 

Opportunities for Integration Through 

State Medicaid Agency Contracts 

(§ 422.107) 

As described in section II.A.6. of this 

final rule, we are adding new paragraph 

(e) at § 422.107 to describe conditions 

through which States may require 

certain contract terms for D–SNPs and 

how CMS would facilitate compliance 

with those contract terms. Paragraph 

(e)(1) would allow States, through the 

State Medicaid agency contract with D– 

SNPs, to require that certain D–SNPs 

with exclusively aligned enrollment (a) 

establish MA contracts that only include 

one or more D–SNPs within a State, and 

(b) integrate materials and notices for 

enrollees. A more detailed discussion of 

these requirements and associated 

burden follows: 

a. State Medicaid Agency Contract 

Requirements 

The following changes will be 

submitted to OMB for review under 

control number 0938–1410 (CMS– 

10796). 

For States that opt to require the 

contract requirements at § 422.107(e), 

States and plans will need to modify the 

existing State Medicaid agency contract. 

These modifications will document the 

D–SNP’s responsibility to only enroll 

dually eligible individuals who receive 

coverage of Medicaid benefits from the 

D–SNP, integrate member materials, and 

request that CMS establish an MA 

contract limited to D–SNPs within the 

State. 

(1) State Burden (CMS–10796, OMB 

0938–1410) 

Section 1903(a)(7) of the Act requires 

the Federal Government to pay a match 

rate for administrative expenses. Since 

cost is split between the State Medicaid 

agency and the Federal Government, we 

split in half the total costs associated 

with administering the Medicaid 

program, half of which the States incur 

and half of which the Federal 

Government incurs. The Federal 

Government’s cost is presented in the 

RIA section of this rule (see section 

V.D.3.). 

For each State Medicaid agency, it 

will take a total of 24 hours at $142.34/ 

hr for State staff to update the State 

Medicaid agency’s contract with the D– 

SNPs in its market to address the 

changes in this final rule. This estimate 

includes the burden to negotiate with 

the D–SNPs on contract changes and 

engage with CMS to ensure contract 

changes meet the requirements that we 

are finalizing at § 422.107(e). 

Based on our experience, we expect 

that each State Medicaid agency will 

establish uniform contracting 

requirements for all D–SNPs operating 

in their market. We are uncertain of the 

exact number of States that would opt 

to require these proposed contract 

changes over the course of the first 3 

years (contract years 2025 to 2027). 

Based on our previous work with States 

as part of the capitated FAI 

demonstration and implementing the D– 

SNP integrations requirements 

established by the BBA of 2018, we 

estimate as few as five and as many as 

20 States may opt to make these changes 

in their contracts with D–SNPs and their 

administration of their programs. Based 

on the number of States currently 

collaborating with CMS on Medicare 

and Medicaid integration and the States 

likely to transition from MMP-based to 

D–SNP-based integrated care 

approaches, we believe there will be 12 

States that implement this rule. In our 

proposal, we projected that States 

would implement this one-time change 

during the first year (contract year 

2025). In section II.A.14. of this final 

rule, we discuss our intent to explore 

extension of the FAI model test in 

certain circumstances and consistent 

with our authority under section 1115A 

of the Act to convert MMPs to integrated 

D–SNPs. The discussion in section 

II.A.14. of this final rule makes us less 

certain of when States will incur the 

burden described in this collection of 

information; however, we do not expect 

the number of States impacted to 

change. Therefore, we are not updating 

our estimates based on the discussion in 

section II.A.14. of this final rule. 

Section 1903(a)(7) of the Act requires 

the Federal Government to pay half of 

the States’ administrative costs. In 

aggregate we estimate a one-time burden 

of 288 hours (12 States × 24 hr/State) at 

a cost of $20,497 (288 hr × $142.34/hr 

× 0.5). After this first-year one-time 

requirement is satisfied, and given the 

uncertainty involved in estimating State 

behavior, we are estimating zero burden 

in subsequent years. 

(2) MA Organization Burden (CMS– 

10796, OMB 0938–1410) 

For the initial year, we expect each 

affected D–SNP will take 8 hours at 

$142.34/hr for a lawyer to update the 

contract with the State Medicaid agency 

to reflect the revised and new 

provisions in this rule at § 422.107(e). 

Based on our assumptions of States 

likely to opt to require the contract 

changes, we estimate between 40 to 80 

MA organizations would be impacted. 

Since we are uncertain of which 

extreme to use, we use the average, 60 

MA organizations. We further expect the 

updates to be completed in the first year 

(contract year 2025). In aggregate we 

estimate a one-time burden of 480 hours 

(60 MA organizations × 8 hr) at a cost 

of $68,323 (480 hr × $142.34/hr). 

b. Limiting Certain Medicare Advantage 

Contracts to D–SNPs (CMS–10237, OMB 

0938–0935 and CMS–10137, OMB 

0938–0936) 

The following changes regarding 

additional Part C application 

respondents will be submitted to OMB 

for approval under control number 

0938–0935 (CMS–10237). The following 

changes regarding additional Part D 

application respondents will be 

submitted for OMB approval under 

control number 0938–0936 (CMS– 

10137). 

At § 422.107(e) we are codifying a 

pathway by which States can require 

and CMS would permit MA 

organizations—through the existing MA 

application process—to establish MA 

contracts that only include one or more 

D–SNPs with exclusively aligned 

enrollment within a State. This action 

will allow dually eligible individuals to 

ascertain the full quality performance of 

a D–SNP and better equip States to work 

with their D–SNPs to improve health 

equity. 

We note that creating a new D–SNPonly contract will have several 

downstream collection of information 

impacts for an MA organization that are 

captured under the two aforementioned 

control numbers, the most immediate of 

which is the MA organization would 


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96HPMS, Contract Management Reports 2020, 

SNP Type and Subtype Report, August 7, 2020. 

need to complete a new application for 

Parts C and D. 

We estimate that 60 D–SNPs will be 

impacted by our changes to § 422.107(e). 

Currently, 32 percent of D–SNPs are in 

D–SNP-only contracts; 96 therefore, we 

estimate that 19 of the 60 D–SNPs (60 

D–SNPs × 0.32) impacted would already 

have a D–SNP-only contract and not 

need to submit a new Part C and D 

application. The remaining 41 D–SNPs 

(60¥19 D–SNPs) would need to submit 

both a new Part C and a new Part D 

application. 

The burden per MA organization for 

an initial Part C application for a SNP 

is currently approved by OMB under 

control number 0938–0935 (CMS– 

10237) at 10 hours at $72.90/hr for a 

compliance officer to review 

instructions and complete the 

application (including submission) at a 

cost of $729 (10 hr × $72.90/hr). Under 

this final rule, we estimate 41 D–SNPs 

will need to submit a new Part C 

application; therefore, the currently 

approved total burden for one-time Part 

C applications will increase by 410 

hours (10 hr × 41 D–SNPs) at a cost of 

$29,889 (410 hr × $72.90/hr). 

The burden per MA organization for 

an initial Part D application for an MA– 

PD plan is currently approved by OMB 

under control number 0938–0936 

(CMS–10137) at 6.41 hours for a 

compliance officer to review 

instructions and complete the 

application (including submission) at a 

cost of $467 (6.41 hr × $72.90/hr). Under 

this final rule, we estimate 41 D–SNPs 

will need to submit a new Part D 

application; therefore, the currently 

approved total burden for one-time Part 

C applications will increase by 263 

hours (6.41 hr × 41 affected D–SNPs) at 

a cost of $19,173 (263 hr × 72.70/hr). 

While we anticipate changes to the 

number of respondents and our active 

time estimates for the Part C and Part D 

applications, we will revise control 

numbers 0938–0935 (CMS–10237) and 

0938–0936 (CMS–10137) for the 2025 

plan year application. Because States 

will likely consult with CMS, MA 

organizations, and other stakeholders on 

whether and how to pursue this step 

toward integration and because of the 

timing of MA applications, bids, and 

contract execution, we believe the 2025 

plan year application is the earliest date 

that the new policy in § 422.107(e) can 

be implemented by a State and MA 

organization. The CMS–10237 and 

CMS–10137 collection of information 

materials will be made available to the 

public for review/comment under the 

standard PRA process which includes 

the publication of 60- and 30-day 

Federal Register notices and the posting 

of the collection of information 

documents on our PRA website. 

We acknowledged in our proposal 

that there may be additional 

downstream collection of information 

impacts for new contracts related to Part 

C and D reporting and CMS monitoring 

at the contract level. For example, MA 

organizations would experience 

additional reporting to CMS, calculation 

of HEDIS measures, and administration 

of HOS and CAHPS surveys. We are 

uncertain of the extent of the additional 

burden incurred for reporting as a 

separate contract. We requested 

comments on these impacts for a new 

contract under an already existing MA 

organization and if they should be 

included in our estimates. We received 

no comments and are finalizing our 

estimates without including any 

additional collection of information 

impacts. 

c. Integrated Member Materials 

As described in section II.A.6.b. of 

this final rule, to provide a more 

coordinated beneficiary experience, at 

§ 422.107(e) we are codifying a pathway 

by which States and CMS will 

collaborate to establish model materials 

when a State chooses to require through 

its State Medicaid agency contract that 

certain D–SNPs use an integrated SB, 

Formulary, and combined Provider and 

Pharmacy Directory. Section 

422.107(e)(1) establishes factual 

circumstances that would commit CMS 

to certain actions under paragraphs 

(e)(2) and (3). 

We do not estimate any additional 

burden for States or plans to implement 

integrated member materials at 

§ 422.107(e) due to existing State efforts 

to work with Medicaid managed care 

plans to comply with information 

requirements at § 438.10 and to work 

with D–SNPs to populate Medicaid 

benefits for Medicare member materials. 

Since requirements imposed on the 

Federal Government are not subject to 

the PRA, we describe costs to the 

Federal Government’s burden to 

develop integrated member materials in 

section V.D.3.c. of this final rule. 

d. Conclusion 

We did not receive any public 

comments on our proposed collection of 

information requirements and are 

finalizing these estimates as is with 

updated mean hourly wages. 

5. ICRs Related to Definition of 

Applicable Integrated Plan Subject to 

Unified Appeals and Grievances 

Procedures (§ 422.561) (CMS–10796, 

OMB 0938–1410) 

The following changes will be 

submitted to OMB for approval under 

control number 0938–1410 (CMS– 

10796). 

In § 422.561, we are expanding the 

universe of D–SNPs with unified 

grievance and appeals processes by 

revising the definition of the term 

‘‘applicable integrated plan,’’ which 

establishes the scope of plans that are 

subject to the requirement to use those 

unified processes. Unified grievance 

and appeals processes were originally 

limited to FIDE SNPs and HIDE SNPs; 

however, after our implementation 

experience, we believe that there are 

models of integrated D–SNPs other than 

FIDE SNPs and HIDE SNPs that should 

be required to use, and are capable of 

using, the unified grievance and appeals 

processes. 

We anticipate that additional D–SNPs 

will be implementing the unified 

grievance and appeals procedures under 

§§ 422.629 through 422.634 and that the 

D–SNPs impacted by this rule are D– 

SNPs in California with exclusively 

aligned enrollment, including those 

plans receiving Cal MediConnect 

members at the end of the California 

capitated FAI demonstration. 

We estimate a one-time burden for 

each new applicable integrated plan to 

update its policies and procedures to 

reflect the new integrated organization 

determination and grievance procedures 

under § 422.629. We anticipate this task 

will take a business operation specialist 

8 hours at $76.20/hr. In aggregate, we 

estimate a one-time burden of 104 hours 

(8 hr × 13 D–SNPs) at a cost of $7,925 

(104 hr × $76.20/hr). 

While new D–SNPs will use the 

CMS–10716 denial notice under OMB 

control number 0938–1386 rather than 

the CMS–10003 MA denial notice under 

OMB control number 0938–0829, 

neither of the notices nor burden 

estimates would be revised as a result of 

this rule. As indicated previously, the 

rule’s changes will be submitted to OMB 

under control number 0938–1410 

(CMS–10796). 

The CMS–10716 denial notice 

required under § 422.631(d)(1) includes 

information about the determination, as 

well as information about the enrollee’s 

appeal rights for both Medicare and 

Medicaid covered benefits. Though 

integrating information on Medicare and 

Medicaid appeal rights will be a new 

requirement for the impacted D–SNPs, 

we note that the timeframe for sending 


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a notice and the content of the notice 

are largely the same as the current 

requirements in Medicaid (§ 438.404(b)) 

and MA (§ 422.572(e)); therefore, 

impacted D–SNPs are not incurring 

additional burden to send the 

notification. Setting out such burden 

would be duplicative. 

We did not receive any public 

comments on our proposed collection of 

information requirements and are 

therefore finalizing our estimates as is 

but with updated mean hourly wages. 

6. ICRs Related to Attainment of the 

Maximum Out-of-Pocket (MOOP) Limit 

(§§ 422.100 and 422.101) 

As described in section II.A.12. of this 

final rule, we are making a revision to 

which costs accumulate toward the 

MOOP limit, with the most significant 

impact being for dually eligible 

enrollees with cost-sharing protections 

under § 422.101 for MA regional plans 

and § 422.100(f)(4) and (5) for all other 

MA plans. As established in this final 

rule, all costs for Medicare Parts A and 

B services accrued under the plan 

benefit package, including cost-sharing 

paid by any applicable secondary or 

supplemental insurance (such as 

through Medicaid, employer(s), and 

commercial insurance) and any costsharing that remains unpaid (such as 

because of limits on Medicaid liability 

for Medicare cost-sharing under lesserof policy and the cost-sharing 

protections afforded certain dually 

eligible individuals), will count towards 

the MOOP limit. This will ensure that 

once an enrollee, including a dually 

eligible individual with cost-sharing 

protections, has accrued cost-sharing 

(deductibles, coinsurance, or copays) 

that reaches the MOOP limit, the MA 

plan will pay 100 percent of the cost of 

covered Medicare Part A and Part B 

services. MA plans are currently 

tracking all costs accrued as part of 

preparing to submit an accurate plan 

benefit package bid (OMB control 

number 0938–0763 (CMS–R–262)); 

therefore, this provision does not add 

additional requirements or burden. 

This final rule will update current 

guidance governing MA organization 

bid requirements, which are captured 

under our active OMB control number 

0938–0763 (CMS–R–262). We do not 

foresee any new or revised burden that 

would arise from the changes. The nonPRA related burden can be found in 

section V.D.4. of this final rule. 

We did not receive any public 

comments on regarding the collection of 

information requirements for this 

provision and are finalizing them 

without change. 

7. ICRs Related to Network Adequacy 

(§ 422.116(a)(i)(ii) and (d)(7)) 

The following changes will be 

submitted to OMB for approval under 

control number 0938–1346 (CMS– 

10636). 

In this rule we will require 

compliance with CMS’s network 

adequacy standards for initial and 

service area expansion (SAE) applicants 

as part of the MA application process. 

Therefore, we will require that initial 

and SAE provider networks be 

submitted and reviewed in February 

instead of June (with plans being 

reviewed for the triennial review). 

Consequently, the number of reviews 

and the amount of work is the same; 

rather, it is being re-distributed. 

Comment: We did not receive any 

public comments specific to our 

proposed collection of information 

requirements. However, based on 

comments we received on our proposal 

to review applicants’ provider networks 

during the time of application in midFebruary of each year, we will modify 

the final regulation to include a change 

in our collection of information. 

We received a number of comments 

that were not supportive of our proposal 

to require compliance with CMS’s 

network adequacy standards for initial 

and SAE applicants as part of the MA 

application process. Commenters 

expressed concerns over the proposed 

timing for submission and review of 

provider networks, which they said 

would not allow sufficient time for MA 

organizations to build high-quality 

networks. Further, commenters said that 

our proposal would negatively impact 

negotiations with provider groups, give 

providers leverage to negotiate higher 

rates that would increase healthcare 

costs and reduce benefits. Commenters 

also suggested that our proposal would 

disproportionately impact smaller 

organizations working to expand to 

certain regional, rural, and medically 

underserved areas, thereby inhibiting 

competition among plans and ultimately 

limiting choice for beneficiaries; some 

of these commenters also expressed the 

view that the proposal would provide 

an unfair advantage to large health plans 

with a presence in these areas. Several 

commenters posited that our proposal 

would place a substantial administrative 

burden on MA organizations and on 

providers, and that establishing 

contracts with organizations takes a 

significant amount of time. Finally, a 

number of commenters asked CMS to 

consider allowing applicants to use 

Letters of Intent (LOIs) to contract with 

providers as a means to meet network 

adequacy standards, which would 

provide flexibility as they work to come 

into compliance for the coverage year. 

Response: We appreciate the 

commenters’ feedback regarding our 

proposal. As we noted in the proposed 

rule, we understand that requiring an 

applicant to establish a full provider 

network almost a year in advance of the 

contract becoming operational will be 

difficult. We also indicated that we 

previously separated the network 

adequacy reviews from the application 

process due to the potential challenge of 

applicants securing a full provider 

network almost a year in advance of the 

contract becoming operational. 

Therefore, based on the comments 

received, we will modify the regulation 

to allow applicants to use LOIs in lieu 

of signed provider contracts, at the time 

of application and for the duration of 

the application review. The LOI must be 

signed by both the MA organization and 

the provider with which the MA 

organization intends to negotiate. 

Further, as part of the network adequacy 

review process, applicants must notify 

CMS of their use of LOIs to meet 

network standards in lieu of a signed 

contract and submit copies upon request 

and in the form and manner directed by 

CMS. At the beginning of the contract 

year, the MA organization must be in 

full compliance with the section, 

including having signed provider and 

facility contracts in place of the LOIs. 

We are not estimating the burden of 

updating systems to receive LOIs since 

this is done by CMS and its contractors 

and not subject to PRA requirements. 

We are not estimating the negotiations 

between plans and providers since these 

already occur, as would negotiations of 

LOIs. While there might be some 

increase in these negotiations, we do not 

have access to data on plan negotiations 

and believe that the assumption that the 

negotiations remain the same is valid. 

There is an increase in burden 

because we will require applicants to 

submit the providers with whom LOIs 

have been entered into when submitting 

their MA application using CMS 

systems; previously, the LOIs were 

internal documents to the plan. We 

must be prepared that all applicants 

who may be requesting an exception to 

the network adequacy standards may 

submit LOIs. While there might be 

additional or less we have no way of 

ascertaining this and believe this a 

reasonable assumption. 

As noted, applicants will use existing 

processes to submit the LOIs. Currently 

we have 468 MA applicants of which 

we expect about 45 percent to submit 

exceptions through CMS systems (CMS– 

10636, OMB 0938–1346). Thus, we 

assume 211 applicants (45 percent × 468 


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97https://www.cms.gov/research-statistics-dataand-systemsstatistics-trends-andreportsmcradvpartdenroldatamonthly/contractsummary-2021-09. 

applicants) would submit an exception 

request. MA applicants are already 

collecting LOIs, and already submitting 

zipped files through our application and 

network adequacy review process. The 

extra burden to the applicants from this 

provision would be in gathering 

documents for the zip file and 

indicating whether there are LOIs. We 

are estimating that the extra burden of 

gathering forms and indicating a check 

on an application will take 5 minutes 

(0.083 hr). Therefore, the total burden of 

this provision is 18 hours (211 

applicants × 0.083 hr) at a cost of $1,312 

(18 hr × $72.90/hr for a compliance 

officer.) 

8. ICRs Related to the Disclaimer for 

Preferred Pharmacy (§ 423.2267(e)(40)) 

The following disclaimer changes 

carry no burden. Section 

423.2267(e)(40) would require Part D 

sponsors to insert CMS standard 

disclaimer on materials that mention 

preferred pharmacies. The burden 

associated with this requirement is the 

time and effort to copy the disclaimer 

on plan documents during document 

creation. While these requirements are 

subject to the PRA, we believe the 

associated burden is exempt from the 

PRA in accordance with 5 CFR 

1320.3(c)(2). We believe that the time, 

effort, and financial resources to comply 

with the information collection 

requirements will be incurred by 

persons in the normal course of their 

activities and therefore considered to be 

usual and customary business practice. 

This disclaimer is currently described 

in CMS’s sub-regulatory guidance, the 

MCMG, and will be codified in this final 

rule. The disclaimer provides an 

important safeguard to Medicare 

beneficiaries enrolled in a Part D plan 

that only provide access to preferred 

cost-sharing through a limited number 

of pharmacies by alerting them that the 

preferred costs may not be available at 

the pharmacy they use, as well as 

providing information on how to access 

the list of pharmacies offering 

prescription drugs as a preferred cost in 

the beneficiary’s area. We did not 

receive any public comments on our 

proposed collection of information 

requirements and are finalizing them 

without change. 

9. ICRs Related to Member Identification 

Cards (§§ 422.2267(e)(30) and 

423.2267(e)(32)) 

Member Identification Cards burden 

is exempt from the requirements of the 

PRA since the issuance of Medicare 

Identification Cards is a normal and 

customary practice throughout the 

insurance industry. Health plans, 

whether commercial, through Medicare 

or Medicaid, or Original Fee-For-Service 

issue cards that inform providers of the 

enrollee’s insurance. 

This final rule is a codification of 

previously issued sub-regulatory 

guidance in the MCMG defining 

standards for member identification 

cards issued by MA plans and Part D 

plan sponsors. 

CMS created this sub-regulatory 

guidance to reduce Medicare beneficiary 

confusion through bringing consistency 

to member ID card requirements by 

applying standards so that ID cards from 

plan to plan contained the same 

information in the same locations. 

The member identification card 

standard provided in the previously 

issued sub-regulatory guidance was 

created using an industry standard for 

ID cards; these industry standards 

reflected best practices and 

consequently plans found the 

previously issued sub-regulatory 

guidance implementable with minimal 

burden. Because of the minimal burden, 

plans will have no incentive to avoid 

using them. Additionally, we have 

received no enrollee complaints on 

member cards since issuing the subregulatory guidance. 

Because of the reasons listed 

previously, we believe plans are 

following the standards described in 

this sub-regulatory guidance and 

therefore no further burden is imposed 

by codifying these standards in 

regulation. 

We did not receive any public 

comments on our proposed collection of 

information requirements and are 

finalizing them without change. 

10. ICRs Related to the Creation of a 

One-Page Multilanguage Insert 

(§§ 422.2267(e)(31) and 423.2267(e)(33)) 

(CMS–10802, OMB 0938–1421) 

The following changes will be 

submitted to OMB for approval under 

control number 0938–1421 (CMS– 

10802). 

The requirements finalized under 

§§ 422.2267(e)(31) and 423.2267(e)(33) 

will require that plans add in their 

postings or mailings of CMS required 

materials a one-page document written 

in the top 15 non-English languages in 

the U.S. informing enrollees that 

interpreter services are available at no 

cost. 

We previously required plans to 

provide this document to enrollees. 

However, based on section 1557 of the 

Affordable Care Act, the Office for Civil 

Rights (OCR) created their own version. 

Because of the inherent duplication 

between CMS’s MLI requirement and 

OCR’s requirement, CMS issued an 

HPMS email on August 25, 2016, that 

removed the MLI requirement. OCR 

later vacated their requirement, leaving 

a gap. Consequently, we proposed to 

require that MA plans and Part D plan 

sponsors provide the one-page 

document. 

Because the MLI will be standardized, 

plans will not be permitted to create 

their own version and will need to use 

the standardized template provided by 

CMS. In estimating the burden of this 1- 

page standardized document, we 

assume plans have retained their 

templates consistent with the record 

retention requirements at 

§ 422.504(e)(4). Consequently, there is 

no burden to create the template, as 

plans will either use their existing 

templates or the standardized template 

that CMS will provide to new plans 

based on the previously-created MLI 

without change. 

The cost of placing an extra page on 

the plan’s web page is incurred by plans 

as part of their normal course of 

fluctuating business activities and hence 

excluded from the PRA (5 CFR 

1320.3(b)(2)). 

For beneficiaries who request a paper 

copy, this final rule requires that plans 

mail it to those beneficiaries along with 

other CMS required materials 

(§§ 422.2267(e) and 423.2267(e)). We 

believe it is reasonable to assume that 

adding one page (at 0.1696 ounces) to a 

bulk mailing cost is de minimis and 

therefore does not create additional 

postage costs. 

Similar estimates have been made in 

previous final rules where we identified 

the major burden as paper and toner. 

We have checked the following 

assumptions of cost and beneficiary 

interest in receiving paper copies found 

in the April 2018 final rule (83 FR 

16695), and found them to still be 

reliable for the purpose of this rule. 

A 10-ream box (of 5,000 sheets) of 

paper costs approximately $50. Hence 

the cost per sheet is $50/5,000 sheets = 

$0.01 per page. 

Standard toner cartridges which last 

for about 10,000 pages also cost $50. 

Hence the cost per sheet is $50/10,000 

= $0.005 per page. 

Thus, the total paper and toner cost is 

$0.015 per page. 

As of September 2021, there are 52 

million beneficiaries enrolled in MA PD 

or stand-alone PDP plans.97

Of these 52 million beneficiaries we 

estimate that 40 percent or 20,800,000 

beneficiaries (52 million beneficiaries × 

0.40) will request paper copies. 


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It follows that the aggregate cost of 

providing one extra sheet of paper is 

$312,000 (20,800,000 enrollees × 

$0.015/page). 

There is no labor cost for providing 

one extra sheet of paper. 

We solicited stakeholder input on all 

assumptions including the estimate that 

40 percent of enrollees request paper 

copies and that the major costs are 

paper and toner. 

Comment: We received comments 

indicating generally that our estimate of 

the burden to plans was incorrect. A 

commenter indicated our estimate of the 

burden was incorrect without providing 

any specifics on the nature of the 

alleged error or its impact on the burden 

calculation. Another commenter 

indicated that our estimate of the 

burden was too low, but they did not 

indicate to what degree or in what way 

they felt we had miscalculated. 

Response: As the comments did not 

provide specific parameters as to how 

our burden estimate is inaccurate, we 

decline modification of estimates based 

on the comment. On review, we believe 

our assessment of the burden on plans 

is accurate. Regardless, we also believe 

the burden on plans is acceptable 

considering the vital nature of the MLI. 

Additionally, we expect that plans 

consider the burden acceptable as the 

MLI improves awareness of health 

issues; and as plans are committed to 

the health of their members, they 

support the MLI as is a bridge to 

education and awareness of health and 

health insurance issues. 

We did not receive any other 

comments on our proposed collection of 

information requirements and are 

finalizing them without change. 

11. ICRs Related to Third-Party 

Marketing Organizations (TPMOs) 

Agent (§§ 422.2260, 422.2267(e)(41), 

422.2274(g), 423.2260, 423.2267(e)(41), 

and 423.2274(g)) 

Sections 422.2260, 422.2267(e)(41), 

422.2274(g), 423.2260, 423.2267(e)(41), 

and 423.2275(g) will require MA 

organizations and Part D sponsors to 

insert a CMS standard disclaimer on 

materials created by Third Party 

Marketing Organizations. 

The burden associated with this 

requirement will be the time and effort 

to copy the disclaimer on marketing 

materials during document creation. 

The disclaimer is a standardized, 

required material. In this regard we 

believe that the disclaimer is not subject 

to the requirements of the PRA because 

it does not constitute a ‘‘collection of 

information.’’ Instead, the disclaimer is 

a ‘‘public disclosure’’ of information 

originally supplied by the Federal 

Government to the recipient (5 CFR 

1320.3(c)(2)). 

CMS did not receive any other 

comments on our proposed collection of 

information requirements and are 

finalizing them without change. 

CMS received no comments on the 

estimates for this proposal and therefore 

are finalizing this provision estimate 

without modification. 

12. ICRs Related to the Medicare 

Medical Loss Ratio (MLR) Reporting 

Requirements (§§ 422.2460 and 

423.2460) (CMS–10476, OMB 0938– 

1232) 

The following changes to the 

Medicare MLR reporting requirements 

will be submitted to OMB for approval 

under control number 0938–1232 

(CMS–10476). 

In section II.G.2. of this final rule, we 

note that under current §§ 422.2460 and 

423.2460, for each contract year, MA 

organizations and Part D sponsors must 

report to CMS only the MLR and the 

amount of any remittance owed to us for 

each contract with credible or partially 

credible experience. For each noncredible contract, MA organizations and 

Part D sponsors are required to report 

only that the contract is non-credible. In 

this rule, our amendments to 

§§ 422.2460 and 423.2460 would 

increase the MLR reporting burden by 

requiring that MA organizations and 

Part D sponsors report, for each contract 

year, the data needed to calculate and 

verify the MLR and remittance amount, 

if any, for each contract, such as the 

amount of incurred claims for Medicarecovered benefits, supplemental benefits, 

and prescription drugs; expenditures on 

quality improving activities; non-claims 

costs; taxes; licensing and regulatory 

fees; total revenue; and any remittance 

owed to CMS under § 422.2410 or 

§ 423.2410. 

In estimating impact, we initially 

focus on hourly burden. Once the 

hourly burden of this final rule is 

established, we calculate the per 

contract and aggregate hourly and dollar 

burden. The reason for this approach is 

that the estimates of hourly burden have 

undergone several changes; focusing on 

them first provides a clearer exposition. 

The following four regulatory sources, 

final rules and PRA packages, are used 

as a source for items estimated. These 

are presented here with brief outlines of 

their contributions which will be 

detailed below. (i) The information 

collection that was previously approved 

by OMB under 0938–1232 (CMS–10476) 

in connection with the requirements 

finalized in the May 2013 Medicare 

MLR final rule, CMS estimated that, on 

average, MA organizations and Part D 

sponsors will spend 47 hours per 

contract on Medicare MLR reporting, 

including: Collecting data, populating 

the MLR reporting forms, conducting 

internal review, submitting the reports 

to the Secretary, and conducting 

internal audits. (ii) This 47-hour figure 

was also used in the April 2018 final 

rule (83 FR 16701) to estimate the 

reduction in burden resulting from that 

rule’s revisions to the MLR reporting 

requirements that apply with respect to 

MLR reporting for contract year 2018 

and subsequent contract years. (iii) The 

June 2020 final rule (84 FR 33796 to 

33850), added a deductible-based 

adjustment to the MLR calculation for 

MA medical savings account (MSA) 

contracts. (iv) The current final rule, 

which introduces three changes: 

Automation of the MLR reporting for 

MA organizations including the MSA 

reporting requirement, reinstatement of 

detailed MLR reporting requirement 

used in 2014–2017, and addition of data 

fields related to expenditures on 

supplemental services. 

Five items must be estimated to 

perform the impact analysis. They are 

presented in Table 5. Table 5 indicates 

if these items have undergone change 

for this final rule. 

BILLING CODE 4120–01–P 


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27862 Federal Register / Vol. 87, No. 89 / Monday, May 9, 2022 / Rules and Regulations 

BILLING CODE 4120–01–C We next present more detailed 

discussion of some of these 

assumptions. 

Number of contracts: Our analysis of 

the estimated administrative burden 

related to the MLR reporting 


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TABLE 5: SUMMARY OF KEY ITEM ASSUMPTIONS USED IN 

CALCULATIONS 

Item Information June 2020 rule Final Rule 

Collection previously 

approved under 

0MB Control 

Number 0938-1232; 

April 2018 final rule 

Total assumed 47 hours; 36.75 hours 36.75055 hours 61.1 hours 

administrative burden 

related to MLR form 

used as a starting point 

and then apportioned 

into i) the burden for the 

completion of the form 

and ii) other 

administrative burden. 

See next three rows. 

Burden for completion (1) 11.5 hours for Discussed below. 

of MLR forms (There completing the 2014-2017 (2) 0.5 hour for Compared with the 2014-

are three forms: (1) the form. completing the 2018 2017 form, there is an 

2014-2017 form, (2) the form. increase of33.3 percent 

2018-current form, (3) (2) 0.5 hour for completing of fields for MA 

the form that will be the 2018 form. organizations; there is a 5 

used starting in 2023 percent increase for 

(under this final rule) sponsors of stand-alone 

Part D contracts. 

The 11.5 estimate 

presented in the April 

2018 rule and included in 

the June 2020 rule burden 

estimate was classified as 

an error in the proposed 

rule ( and this final rule) 

and has been corrected 

(for purposes of 

estimating the burden 

increase) to 10.75 hours. 

(3) 24.85 hours for 

completing the form that 

will be used starting in 

2023 (under this final 

rule) 

Other administrative This is a derived calculation. It equals total administrative burden minus burden for 

burden completion of forms 

Burden for MSA Not present Introduced in June 2020 Eliminated in proposed 

deductible factor fmal rule. The annual rule and this final rule 

calculation burden was estimated to 

be 0.00055/hr. 

Average number of 601 

contracts 
Federal Register / Vol. 87, No. 89 / Monday, May 9, 2022 / Rules and Regulations 27863 

requirements is based on the average 

number of MA and Part D contracts 

subject to the reporting requirements for 

each contract year. For contract years 

(CYs) 2014 to 2020, the average number 

of such contracts is 601. The total 

number of MA and Part D contracts is 

relatively stable year over year varying 

from 533 to 691 during CYs 2014–2020, 

such that we are applying the 601 

average in this rule’s burden estimates. 

Total hourly burden related to MLR: It 

is necessary to estimate the total effort 

(time) related to the Medicare MLR 

requirements that applied with respect 

to MLR reporting for contract years 2014 

through 2017. In the information 

collection request that was previously 

approved by OMB under 0938–1232 

(CMS–10476), CMS estimated the total 

time spent on MLR reporting to be 47 

hours. The April 2018 final rule 

subsequently divided this 47 hour 

estimate into two components: Time to 

complete the MLR form and time spent 

on other administrative tasks related to 

MLR reporting. 

Time to complete the MLR form: In 

the April 2018 final rule (83 FR 16701), 

we estimated that it would take an MA 

organization or Part D sponsor 11.5 

hours to complete the MLR reporting 

form that was used to collect MLR data 

for CYs 2014 through 2017. We 

explained that we developed this 

estimate by considering the amount of 

time it would take an MA organization 

or Part D sponsor to complete each of 

the following tasks: 

• Review the MLR report filing 

instructions and external materials 

referenced therein and to input all 

figures and plan-level data in 

accordance with the instructions. 

• Draft narrative descriptions of 

methodologies used to allocate 

expenses. 

• Perform an internal review of the 

MLR report form prior to submission. 

• Upload and submit the MLR report 

and attestation. 

• Correct or provide explanations for 

any suspected errors or omissions 

discovered by CMS or our contractor 

during initial review of the submitted 

MLR report. 

In 2018, we finalized a less detailed 

form which we estimated takes 0.5 

hours to complete. 

The calculations for hourly burden 

per contract that were included in the 

April 2018 final rule are summarized in 

Table 6. These calculations do not 

reflect the corrections to the April 2018 

rule that were taken into account in our 

burden estimate for the proposed rule. 

The following explanations apply to 

the rows in Table 6: 

Row (1): The 47-hour figure, as 

explained in the opening paragraphs of 

this ICR, is CMS’s estimate for the total 

amount of time MA organizations and 

Part D sponsors will spend per contract 

on Medicare MLR reporting when the 

MLR was reported using the MLR form 

for CYs 2014 through 2017, including: 

Collecting data, populating the MLR 

reporting form, conducting internal 

review, submitting the report to the 

Secretary, and conducting internal 

audits. 

Row (2): The 11.5-hour burden is the 

portion of the burden in Row (1) that the 

April 2018 final rule assumed was 

associated with completing the MLR 

form used for CYs 2014 through 2017. 

This burden is discussed in the 

paragraph immediately preceding Table 

6. 

Row (3): 35.5 hours, the 

administrative burden associated with 

the MLR requirements, excluding the 

April 2018 final rule’s estimate of the 

burden for completing and submitting 

the MLR form used for CYs 2014 

through 2017. This number represents 

the difference between total per contract 

burden, 47 hours, and the form burden 

per contract, 11.5 hours. 

Row (4): Estimated burden to 

complete the current MLR data form, 

which is vastly simplified and is 

estimated to take only a half-hour to 

complete. 

Row (5): The total burden per 

contract, as written in the April 2018 

final rule, and as adjusted for the 

current number of contracts is 36.00 

(35.5 hours non-form burden + 0.5 

hours current form burden). 

However, we cannot use Table 6 as a 

basis for comparing the burden of this 

final rule with the current burden. The 

reason we cannot use Table 6 is because 

the 11.5 hours (Row (2)) in Table 6 was 

corrected in the proposed rule. As 

indicated in Tables 5 and 6, the other 

Administrative burden is a calculated 

number equal to the difference between 

the total burden of 47 hours and the 


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TABLE 6: TIME PER CONTRACT USED IN APRIL 2018 FINAL RULE (HOURS) 

Row Item Estimate Notes 

ID 

(1) Total administrative burden (assuming use 47 Estimate used in former approved 

ofMLR form for CYs 2014-2017) (hr) Information Collection Request that 

included MLR form used for CY s 2014-

2017 

(2) Original estimate of burden for 11.5 Assumption in April 2018 final rule 

completing MLR form used for CY s about amount of time needed to complete 

2014-2017 (hr) MLR form used for CYs 2014-2017 

(3) Burden for administrative tasks other than 35.5 (3) = (1) - (2) 

completing MLR form (hr) 

(4) Estimate of burden for completing current 0.5 Assumption in April 2018 final rule 

MLR form (hr) 

(5) Total administrative burden for current 36 (5) = (3) + (4) 

MLR form (hr) 
27864 Federal Register / Vol. 87, No. 89 / Monday, May 9, 2022 / Rules and Regulations 

burden of filling out the form (Row (3)). 

Consequently, if Row (2) changes, then 

Row (3) must change also. We next 

discuss the revisions of the April 2018 

estimates just summarized in Table 6. 

In the proposed rule, we explained 

that after further consideration, we 

believe that the April 2018 final rule 

overstated the burden of completing the 

detailed MLR reporting form because it 

did not take into account the number of 

MA organizations and Part D sponsors 

that were actually required to provide 

explanations for suspected errors or 

omissions discovered by CMS or our 

contractor during initial review of the 

submitted MLR report. Unlike the first 

four tasks previously listed (the first 

four of the bullets immediately listed 

prior to Table 6), the need to correct or 

provide explanations for errors and 

omissions discovered by CMS or our 

contractor during desk reviews and 

estimated at 11.5 hours (Row (2)) was 

not applicable to all plans when our 

detailed MLR data reporting 

requirements were in effect. 

Based on the percentage of contracts 

per contract year (for years 2014 through 

2017) for which the annual MLR filing 

was flagged for potential errors during 

desk reviews, the number of MA 

organizations and Part D sponsors that 

were required to correct or explain 

suspected errors during desk reviews, 

and a review of the correspondence 

between such organizations or sponsors 

and CMS or our contractor, we 

estimated the last task previously listed 

(to correct or provide explanations for 

suspected errors or omissions flagged in 

desk reviews) would take an MA 

organization or Part D sponsor an 

average of 3 hours per affected contract, 

depending on the number and 

complexity of issues that required 

additional explanation, whether the MA 

organization or Part D sponsor had to 

recalculate any of the figures included 

in its original MLR submission, and 

whether the MA organization or Part D 

sponsor had to submit a corrected MLR 

Report to address any of the errors or 

omissions in its original submission. 

Table 7 presents a revision of Table 6 

with the primary change being replacing 

11.5 (Row (2) in Table 6) with 10.75 

(Row (7) in Table 7), with the other rows 

following by computation. Table 7 also 

differs from Table 6 is the addition of 

the per contract burden of calculation of 

the MSA deductible factor. This is 

explained in the narrative to Table 7. 

This refinement to our prior 11.5-hour 

time estimate does not affect our 

estimate that MA organizations and Part 

D sponsors spent 47 hours per contract 

under the MLR reporting requirements 

in effect for CYs 2014 through 2017 

(Row (1) in Table 6) which as we have 

noted was an aggregate number 

estimated by CMS in the information 

collection that was previously approved 

by OMB under control number 0938– 

1232 (CMS–10476). Instead, it causes 

the estimated time to complete the 

detailed MLR reporting form to decrease 

from 11.5 hours to 10.75 hours (Row (2) 

in Table 6 and Row (7) in Table 7), with 

the remaining administrative tasks, a 

derived calculation, now estimated as 

taking the other 36.25 hours (47 

hours¥10.75 hours) (Row (8) in Table 

7). 

We next explain row (10), calculation 

of the deductible factor. In the June 

2020 final rule, CMS estimated that it 

would take 5 minutes (1⁄12 hour) to 

calculate and verify the deductible 

factor for an MSA contract. At the time 

of the 2020 rule, there were 8 MSA 

contracts. As of 2021, there are only 4 

MSA contracts. However, the 

calculations presented in Table 7 are per 

contract, not aggregate. Thus, the hourly 

burden for calculation of the MSA 


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TABLE 7: TIME PER CONTRACT IN APRIL 2018 FINAL RULE REVISED (HOURS) 

Row 

ID Item Estimate Notes 

Total administrative burden 

(assuming use ofMLR form 

(6) for CYs 2014-2017) (hr) 47 (1) 

Revised estimate of burden for 

completing MLR form used Reduced from original 11.5 hr 

(7) for CYs 2014-2017 (hr) 10.75 estimate 

Burden for administrative 

tasks other than completing 

(8) MLR form (hr) 36.25 (8)=( 6)-(7) 

Estimate of burden for 

(9) completing current form (hr) 0.5 (4) 

Burden per contract of 

calculation of MSA deductible 

Burden for calculation of factor. This is explained in the 

(10) MSA deductible factor (hr) 0.00055 narrative below. 

Total administrative burden 

(11) for current MLR form (hr) 36.75055 (11)=(8)+(9)+(10) 
Federal Register / Vol. 87, No. 89 / Monday, May 9, 2022 / Rules and Regulations 27865 

deductible factor adjusted for the 

number of current contracts is 0.00055 

hours (1⁄12 hour per contract × 4 MSA 

contracts divided by 601 total 

contracts). We round to 5 decimal 

places because if we had rounded to two 

decimal places the burden would be 0 

(zero). 

This final rule finalizes three items 

affecting per contract hourly burden that 

were introduced in the proposed rule. 

These changes are summarized in Table 

9 which will be referred to throughout 

the following discussion of the three 

changes. First, as noted in section II.G.3. 

of this final rule, in connection with the 

changes to the reporting requirements 

CMS is adopting in this final rule, we 

expect to resume development of the 

MLR reporting software, and to update 

the data collection fields and built-in 

formulas so that the MLR reporting 

software calculates the MLR consistent 

with all amendments to the MLR 

regulations that CMS has finalized since 

contract year 2017. In making these 

updates, CMS is revising the 

programming of the MLR reporting 

software so that it automatically 

calculates and applies the appropriate 

deductible factor for MA MSA contracts, 

as determined under § 422.2440. 

Because MA organizations would no 

longer be responsible for calculating the 

deductible factor, the burden associated 

with performing that calculation will be 

eliminated. Thus Row (19) in Table 9 is 

0 contrasting with Row (10) in Table 7 

which had a positive amount. 

Second, as discussed in section II.G.2. 

of this final rule, CMS is finalizing our 

proposal to reinstate the detailed MLR 

reporting requirements in effect for CYs 

2014 through 2017. This changes the 0.5 

hour estimate in Rows (4) and (9) to 

10.75 hours (Row (18)). 

Third, we are finalizing our proposal 

to require a detailed MLR report that 

provides details on several categories of 

data and costs (for example, the amount 

of incurred claims for original Medicare 

covered benefits, supplemental benefits, 

and prescription drugs; total revenue; 

expenditures on quality improving 

activities; non-claims costs; taxes; 

licensing and regulatory fees; and any 

remittance owed to CMS) and also 

permits CMS to break down the general 

categories and require additional details 

or line items to be included in the 

report. As discussed in section II.G.3. of 

this final rule, to collect this 

information, we are adding additional 

fields to the MLR Report template in 

which MA organizations will enter their 

total expenditures for different types or 

categories of supplemental benefits. We 

are also adding narrative fields in which 

users will describe the methodologies 

used to allocate supplemental benefit 

expenditures. 

In total, we estimate that the addition 

of these fields, as well as an 

information-only field in which MA 

organizations and Part D sponsors will 

enter the low-income cost-sharing 

subsidy amount that they deducted 

when calculating the amount of 

prescription drug costs to include in the 

MLR report, will increase the number of 

fields that will require user input and 

validation by approximately one-third, 

or 33.3 percent. We believe this increase 

would cause a proportional increase in 

the amount of time needed both to 

complete and submit the MLR Report to 

CMS, and to perform the data collection 

activities that make up the remaining 

portion of the 47 hours per contract that 

we previously estimated MA 

organizations and Part D sponsors 

would spend on tasks related to the 

MLR reporting requirements. 

However, because the new 

supplemental benefits fields do not 

affect the MLR reporting burden for 

sponsors of standalone Part D contracts, 

we calculate the MLR reporting burden 

separately for MA contracts and 

standalone Part D contracts. Thus, we 

estimate the burden to stand-alone Part 

D contracts would only increase 5 

percent in contrast to the 33.3 percent 

increase for MA contracts and Part D 

sponsors estimated in the previous 

paragraph. This is summarized in Row 

(12) of Table 8. To aggregate this 

increase on a per-contract level, we take 

a weighted average of the 33 percent 

increase and the 5 percent increase. The 

weights correspond to the percentage of 

contracts that represent MA contracts 

(about 89 percent) and standalone Part 

D contracts (about 11 percent). This 

aggregate net increase per contract is 

29.92 percent (89% × 33% + 11% × 5%). 

The computations are presented in 

Table 8. It is simpler to use one 

aggregate figure (29.92 percent) for all 

contracts rather than estimate each 

contract type separately and then 

adding them together. This weighted 

average on Row (14) in Table 8 is used 

to estimate the increased burden 

finalized in this rule of filling out MLR 

forms as calculated in Row (21) in Table 

9. 

BILLING CODE 4120–01–P 


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Row 

ID 

(12) 

(13) 

(14) 

TABLE 8: CALCULATION OF (WEIGHTED) AVERAGE INCREASE IN TIME PER 

CONTRACT 

Product of 

Increase and 

Percent Increase Percent 

of for new (weight) of 

Contract Type contracts fields contract type Notes 

Rounded to 4 decimal places. 

Rounding to two decimal 

Stand-alone prescription drug places would make this 1, a 

contracts 11% 5% 0.55% misleading increase. 

Rounded to 4 decimal places 

MA (including MA-PD and for consistency with previous 

MSA) contracts 89% 33% 29.37% row. 

Aggregate burden increase 

per contract 29.92% (14 )=(12 )+(13) 
27866 Federal Register / Vol. 87, No. 89 / Monday, May 9, 2022 / Rules and Regulations 

BILLING CODE 4120–01–C 

Table 9 incorporates these three 

changes—removing the deductible 

factor calculation burden, reinstating 

the form used for MLR reporting for CYs 

2014 through 2017, and increasing the 

fields in the form—to arrive at a final 

increased hourly burden per contract, 

and then calculates dollar burden per 

contract as well as aggregate burden for 

all contracts. The following presents 

further information about the rows in 

Table 9 as compared to Table 7. 

• Rows (15)–(17) are identical to 

Rows (6)–(8). This provides the percontract administrative hours on nonform items connected with the MLR 

provisions before adding the formrelated burdens. 

• Row (18): The 0.5 hours in Row (9) 

is replaced by the 10.75 hours in Row 

(16) since this final rule requires 

returning to the detailed form used for 

MLR reporting for CYs 2014 through 

2017 whose cost is estimated in Row (7). 

• Row (19): Row (10), the time for 

calculation of the MSA deductible 

factor, is replaced with 0 hours, since 

the changes CMS is finalizing would 

entail having CMS-developed software 

automatically calculate and apply the 

deductible factor. 

• Row (20): The total hourly burden 

per contract, 47 hours, reflecting 

returning to the detailed form used for 

contract year 2014 through 2017 MLR 

reporting and removal of calculation of 

the MSA deductible factor (but not yet 

reflecting additional fields) is obtained 

by adding 10.75 (form burden) + 36.25 

(non-form burden), (Rows (17) and (18)). 

• Row (21): The total hourly burden 

per contract, 61.1 hours under the 


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TABLE 9: BURDEN (AGGREGATE and PER CONTRACT) 

Row 

ID Item Burden Notes 

(15) Total time (hr) per contract 47 (6) 

Revised (2018 rule) time (hr) per 

contract for then-current detailed 

(16) form 10.75 (7) 

Time (hr) per contract for non-form 

(17) items 36.25 (17)=(8) or (17)=(15)-(16) 

Per contract burden for return to Removal of current form; return 

detailed form used for CY s 2014- to form used for CYs 2014-2017 

(18) 2017 10.75 (see row (7)) 

Per contract burden for calculation of Software now automatically 

deductible factor for MSA contracts calculates the MSA deductible 

(19) (hr) 0 factor 

Per contract revised time (hr) for 

return to detailed form used for CY s 

2014-2017 and removal of 

(20) calculation of MSA deductible factor 47 (20)=(17)+(18) 

Per contract time (hr) for detailed 

(21) form with new fields, this rule 61.1 (21 )=(20)+(14)*(20) 

(22) Current per contract time (hr) 36.75055 (22) = (11) 

Average increase time 

(23) (hours/ contract) 24.34945 (23) = (21) - (22) 

(24) Wage/hr 156.66 Wage Table 

Per contract cost ($) for detailed 

(25) form, this rule, with new fields $3,815 (25)=(24)*(23) 

Number of current contracts affected Estimate explained in opening 

(26) by MLR provisions 601 paragraph of this ICR 

Aggregate increase in time (hr), all 

(27) contracts, with new fields, this rule 14,634 (27)=(26)*(23) 

Aggregate cost ($), all contracts, with 

(28) new fields, this rule $2,292,562 (28)=(27)*(24) 
Federal Register / Vol. 87, No. 89 / Monday, May 9, 2022 / Rules and Regulations 27867 

requirements we are adopting in this 

final rule, is obtained by increasing the 

47 hours (Row (20)) by 29.92 percent, 

which is the weighted effect of adding 

new fields (Row (14)) (61.1 = 47 + 29.92 

percent × 47). 

• Row (22): The current contract 

burden of 36.75055 hours is obtained 

from Row (11). The five decimal places 

assure that the effect of the provision on 

MSAs is not removed. 

• Row (23): The average increase in 

time under the requirements we are 

finalizing of 24.34945 is obtained by 

subtracting from the total burden under 

the regulation requirements we are 

finalizing of 61.1 hours on Row (21) the 

current-form burden of 36.75055 hours 

on Row (22). 

• Row (25): The increased contract 

cost ($) $3,815 on Row (25) is obtained 

by multiplying the average increase in 

time (hours) of 24.34945 on Row (23) by 

the wages ($156.66/hr) on Row (24). 

• Row (26): The total number of 

contracts is presented in Table 5 

• Row (27): The average increase in 

time (hours) across all contracts of 

14,634 is obtained by multiplying the 

601 contracts (Row (26)) by the per 

contract increase in time (hours) of 

24.34945 on Row (23). 

• Row (28): The aggregate increase in 

cost ($) across all contracts, $2,292,562 

is obtained by multiplying the increase 

in time (hours) of 14,634 on Row (27) 

by the wages per hour on Row (24). 

We estimate that MA organizations 

and Part D sponsors will incur minimal 

one-time start-up costs associated with 

developing processes for capturing the 

necessary data, as they should already 

have been allocating their expenses by 

line of business and contract in order to 

comply with our current regulations 

regarding the calculation of the MLR, 

and they should already have been 

tracking their supplemental benefit 

expenditures for purposes of bid 

development. We estimate that MA 

organizations and Part D sponsors will 

incur ongoing annual costs relating to 

data collection, populating the MLR 

reporting form, conducting an internal 

review, submitting the MLR reports to 

the Secretary, and conducting internal 

audits. 

Table 10 summarizes the relevant 

calculations as one combined line item. 

The average burden per contract as 

given on Row (25) of Table 8 is $3,815. 

We note that this is a weighted average. 

Stakeholders may be interested in a 

more careful analysis based on contract 

type. We do this for 3 types of contracts. 

MA MSA contracts have reduced 

burden since the new software 

automatically calculates the deductible 

factor and uses that to adjust the 

applicable credibility factor, relieving 

them of the need to perform this 

calculation and adjustment on their 

own. 

For each MA contract (including MA– 

PD and MA MSA contracts), we 

estimate, on average, 25.92 hours of 

additional burden at an additional cost 

of $4,061. Row (11) (which excludes the 

burden on Row (10) associated with 

calculating the MSA deductible factor) 

shows the current hour burden to be 

36.75 hours. (The removal of the 

0.00055 hours has negligible effect and 

is appropriate for the majority of 

contracts which are non-MSAs). Row 

(20) shows that the new burden without 

considering the additional fields is 47 

hours. Row (13) shows that this would 

result in 62.67 hours total burden (47 

hours × 1.33 due to increased fields). 

Comparing the 62.67 total burden under 

the MLR reporting requirement we are 

adopting in this final rule with the 36.75 

hours under the reporting requirements 

that have been in effect since contract 

year 2018 shows an increase time of 

25.92 hours (62.67¥36.75) at a cost of 

$4,061 (25.92 hours × $156,66/hr). 

For Part D contracts, we estimate 12.6 

additional hours of burden at an 

additional cost of $1,974. As in the 

preceding analysis for MA contracts, 

Row (11) (which excludes burden on 

Row (10) associated with calculating the 

MSA deductible factor) shows the 

current hour burden to be 36.75 hours. 

Row (20) shows that the new burden 

without taking into effect the new fields 

is 47 hours. Row (12) shows a 5 percent 

increase for new fields for Part D 

contracts, such that this would result in 

a total burden of 49.35 hours (47 hours 

+ 47 hours × 5 percent). Thus, there is 

an additional hour burden of 12.6 hours 

(49.35 hours¥36.75 hours) at an 

additional cost of $1,974 (12.6 hours × 

$156.66/hr) per contract. 

As indicated above, the total 

increased impact of finalizing the MLR 

provision is presented in Table 10. 

We did not receive any comments on 

our proposed collection of information 

requirements and are finalizing them 

without change. 

13. ICRs Related to Pharmacy Price 

Concessions in the Part D Negotiated 

Price (§§ 423.100 and 423.2305) (CMS– 

10174, OMB 0938–0982) 

The requirement and burden for Part 

D Sponsors to implement the proposals 

related to pharmacy price concessions 

that we are now finalizing, as discussed 

in section II.H. of this final rule will be 

submitted to OMB for approval under 

control number 0938–0982 (CMS– 

10174), as needed. Below we discuss in 

greater detail the burden associated with 

the requirements we are finalizing. 

Revisions to §§ 423.100 and 423.2305 

will require that Part D sponsors apply 

all pharmacy price concessions to the 

point of sale price in all phases of the 

Part D benefit. Under this rule, 

beneficiaries will see lower prices at the 

pharmacy point-of-sale and on Plan 

Finder beginning immediately in the 

year the policy will apply, 2024. We 

anticipate that the change will require 

that Part D sponsors make certain 

system changes related to the 

calculation of the amounts they report 

in one or two fields in the PDE data 

collection form. 

In the NPRM we only estimated the 

impact of annual costs for PDE Data 

transmission. Although we received no 


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TABLE 10: BURDEN ASSOCIATED WITH THE MLR PROVISIONS 

Responses Time per 

Total Hourly Number of Annual Total Cost Respondent Respondents per Response Time Labor Cost ($) Respondent (hours) (hours) ($/hr) 

Contracts subject to 

MLR reporting 

requirement 601 1 24.34945 14,634 $156.66 $2,292,562 
27868 Federal Register / Vol. 87, No. 89 / Monday, May 9, 2022 / Rules and Regulations 

external comments on our burden 

estimates, we made two changes from 

the NPRM. First, we anticipate that this 

provision will cause sponsors to incur 

both one-time costs for updating 

software, and annual costs for PDE Data 

transmission. Second, our estimates of 

PDE data transmission used an estimate 

of a $35.50/hr cost for electronic 

submission. This is incorrect and 

should be $17.75/hr. 

Update of Software: The systems for 

submitting PDE transmission are already 

in place as required by the regulations. 

A software update is required to deal 

with transmitting data at the time of 

sale. We believe it reasonable that this 

software update will be done at the 

parent organization level rather than the 

contract level. Based on internal CMS 

data, currently there are 298 parent 

organizations. The burden of update 

requires that 2 software developers will 

each spend 20 hours (2 and one half 

days) performing the necessary designs. 

Therefore, the aggregate burden across 

all parent organization is 11,920 hours 

(2 software developers × 20 hr a 

programmer × 298 parent organizations) 

at a total cost of $1,386,773 (11,920 hr 

× 116.34/hr). The burden per parent 

organization would be 40 hours (20 hr 

× 2 software developers) at a cost of 

$4,654 (40 hr × $116.34/hr). 

PDE Data Submission: The 

calculations discussed in the narrative 

are presented in Table 11. The number 

of prescription drug events (PDE) for 

2020 is 1.5 billion (Row C). The average 

number of Part D contracts for the past 

3 years (2019–2021) is 856 (Row B). To 

compute the average number of 

responses per respondent, that is, the 

number of PDEs per contract, we divide 

the average number of PDEs per year 

(Row C) by the average number of 

contracts (Row B). This computation 

leads to an average of 1,752,336.449 

PDEs/contract (Row D (1.5 billion 

divided by 856)). The extra decimal 

places listed in Row D and other rows 

are to assure consistency in two 

methods at arriving at the final burden. 

A similar computation shows that the 

average number of PDEs per Part D 

enrollee is 30.5047 (1.5 billion PDE 

(Row C) divided by 49,229,626 enrollees 

(as of November 2021) (Row A). 

Since our regulations require Part D 

sponsors to submit PDE data to CMS 

that can be linked at the individual level 

to Medicare Part A and Part B data in 

a form and manner similar to the 

process provided under § 422.310, the 

data transaction timeframes will be 

based on risk adjustment and 

prescription drug industry experiences. 

Moreover, our PDE data submission 

format only supports electronic formats. 

The drug industry’s estimated average 

processing time for electronic data 

submission is 1 hour for 500,000 records 

(Row F). The drug industry further 

estimates that on average it costs 

$17.75/hr (for 2020) to process PDEs 

(Row E). 

Using these numbers, we can compute 

individual contract and aggregate 

burden. 

It would take 3.5047 hours (Row G) 

on average for each respondent 

(contract) to process its 1,752,336.449 

PDEs at a rate of 500,000 per hour 

(1,752,336.449 PDEs per contract (Row 

D) divided by 500,000/hr (Row F). The 

aggregate hours to process all 1.5 billion 

claims is therefore 3,000 hours (Row H) 

(3.5047 hours/contract (Row G) × 856 

contracts (Row B)). 

The average cost per contract (Row I) 

is $62.2084 hours (3.5047 hours (Row G) 

× $17.75/hr (Row E)). The ongoing cost 

for all contracts (Row J) is therefore 

$53,250, which can be obtained either 

by multiplying total hours (3,000 (Row 

H)) by cost per hours(17.75/hr (Row E)) 

or by multiplying the cost per contract 

($62.2084 (Row I)) by the number of 

contracts (856 (Row B)). 

BILLING CODE 4120–01–P 


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Federal Register / Vol. 87, No. 89 / Monday, May 9, 2022 / Rules and Regulations 27869 

The aggregate burden for the 

provision is $1,440,023 in the first year 

($1,386,773 for software updates plus 

$53,250 for transmission costs) and 

$53,250 in subsequent years. 

C. Summary of Finalized Information 

Collection Requirements and Associated 

Burden Estimates 


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Row ID 

A 

B 

C 

D 

E 

F 

G 

H 

I 

J 

TABLE 11: ESTIMATED ADMINISTRATIVE COSTS RELATED TO 

SUBMISSION OF PRESCRIPTION DRUG EVENT (PDE) DATA 

Item Estimate Source/Derivation Description 

Number of Part D Enrollees 

Part D Enrollees 49,229,626 Internal CMS data as of November 2021 

Average Number of 

Number ofrespondents 856 Internal CMS data Contracts 2019-2021 

Total responses 1,500,000,000 Internal CMS data PDEs per year 

Average responses per 

respondent 1,752,336.449 (C) / (B) Average PDEs per contract 

Drug industry's 

estimated cost/hr 

of electronic Cost/hr of processing PDEs 

Cost per hour (Non labor) $17.75/hr processing electronically 

Drug industry's 

estimated average 

Electronic PDEs processing volume Number of Electronic PDEs 

processed per hour 500,000 per hour processed per hour 

Number of hours needed to 

Hours/respondent 3.5047 (D) I (F) process one contract's PDEs 

Total hours to process all 

Aggregate hours 3,000 (G) x (B) contracts 

Cost per contract to process 

Cost per respondent 62.2084 (G) X (E) PDEs 

Either (H) x (E) or 

Total cost all contracts 53,250 (I) x (B) Total cost for all contracts 

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TABLE 12. SUMMARY OF ANNUAL INFORMATION COLLECTION REQUIREMENTS AN

0MB 

Control No. 

Section in Title (CMS ID Number of 

42 oftbe CFR Item No.) Respondent Respondents 

422.107(±) Solicit committee 0938-1422 DSNPS 310 members (CMS-10799) 

422.101 Update HRA System 0938-1422 SNP Parent 47 (CMS-10799) Organizations 422.107(e) Update Contracts with 0938-1410 State 12 D-SNPs ( CMS-10796) 

422.107(e) Update Contracts 0938-0935 DSNPS 60 ( CMS-1023 7) 

422.107(e)(l) Part C Contracts with 0938-0935 DSNPS 41 onlvDSNPS ( CMS-1023 7) 

422.107(e)(l) Part D Contracts with 0938-0936 DSNPS 41 onlvDSNPS /CMS-10137) 

422.561 Update Contracts 0938-1410 DSNPS 13 ( CMS-10796) 

422.116(±) Update Network 0938-1346 MA Contracts 211 Adecrnacv (CMS-10636) 

422.2267(e)(31) 1 pager multi-language 0938-1421 MA Plans and Part D and 961 

423.2267(e)(33)) insert (CMS-10802) Sponsors 4 22.2460 and MLR 0938-1232 MAandPartD 601 423.2460 (CMS-10476) Contracts 

Part D Pharmacy Price 

423.100 and Concessions ( ongoing 0938-0982 Part D Sponsors 856 423.2305 costs of reporting (CMS-10174) Contracts 

PDEs) 

423.100 and Part D Pharmacy Price 0938-0982 Part D Sponsors Parent 

423.2305 Concessions ( one-time (CMS-10174) Organizations 298 system change costs) 

Totals 1,271 ••• 

NOTES: 

*This number is halved because the Federal Government covers half the cost. 

**Includes MA only, MA PD, and PDP plans. 

Time per Total Hou

Responses per Total Responde Time Labor 

Respondent Responses nt (hours) (hours) ($/h

1 310 40 12,400 

1 47 3 141 1

1 12 24 288 11 60 8 480 1

1 41 10 410 

1 41 6.41 263 1 13 8 104 

1 211 0.0833 18 

21,644 20,800,000 n/a a/a 

1 601 24.34945 14,634 1

1,752,336.449 1,500,000,000 3.5047 3000 

1 298 40 11,920 1

1,773,990 Varies Varies 43,658 V

*** To avoid double counting, the 1,271 is the sum of distinct parent organizations (298), distinct contracts (961) and distinct states (12) Note that the 961 contracts alrea

contracts such as D-SNPs. Similarly, the 298 parent organizations include specific types of parent organizations such as those for D-SNPs. 
Federal Register / Vol. 87, No. 89 / Monday, May 9, 2022 / Rules and Regulations 27871 

BILLING CODE 4120–01–C 

V. Regulatory Impact Analysis 

A. Statement of Need 

This final rule will revise the MA and 

Part D program regulations to improve 

transparency in, and oversight of, these 

programs and to revise regulations to 

improve the integration of Medicare and 

Medicaid programs for individuals 

enrolled in dual eligible special needs 

plans (D–SNPs). This final rule will also 

revise regulations related to MA and 

Part D plans, D–SNPs, other special 

needs plans, and cost contract plans. 

Additional revisions will implement 

changes related to requirements during 

disasters or public emergencies, past 

performance, MLR reporting, pharmacy 

price concessions, marketing and 

communications, Star Ratings, and 

network adequacy. 

Through provisions that apply to D– 

SNPs, we intend to improve beneficiary 

experiences by amplifying the voices of 

dually eligible individuals in health 

plan governance and operations by 

requiring an enrollee advisory 

committee and requiring assessment of 

certain social risk factors. Additionally, 

our final rule will improve partnership 

with States through better Federal-State 

collaboration on oversight and 

performance improvement activities and 

establishing new pathways for CMS and 

States to collaborate to integrate care for 

dually eligible individuals. 

The past performance proposals hold 

plans more accountable for their 

performance under MA and Part D and 

protect the best interest of the Medicare 

program by preventing those with poor 

past performance from entering new MA 

or Part D applications or service area 

expansions. The Star Ratings provisions 

allow CMS to calculate 2023 Star 

Ratings for three Healthcare 

Effectiveness Data and Information Set 

measures that are based on the Health 

Outcomes Survey; due to the COVID–19 

PHE in place nationwide during 2020, 

applying the 60 percent rule in the 

current regulations would result in 

removal of all contracts from threshold 

calculations and CMS would be unable 

to calculate ratings for these three 

measures. In sections II.D.3. and II.D.4. 

of this final rule, we are also responding 

to comments about and finalizing Star 

Ratings provisions from the March 31st 

COVID–19 IFC and the September 2nd 

COVID–19 IFC without modification: 

§§ 417.472(i) and (j), 422.152(b)(6), 

422.166(a)(2)(i), (f)(1)(i), (g)(3), (i)(11), 

and (j)(1)(i) through (iv), 422.252, 

423.182(c)(3), and 423.186(a)(2)(i), 

(f)(1)(i), (g)(3), (i)(9), and (j)(1)(i) through 

(iii). We are not finalizing the following 

provisions in the March 31st COVID–19 

IFC: §§ 422.164(i), 422.166(j)(1)(v) and 

(j)(2), 423.184(i), and 423.186(j)(1)(iv) 

and (j)(2). 

Due to a rule change that took effect 

with CY 2018 MLR reporting, MA 

organizations and Part D sponsors only 

submit to CMS the MLR percentage and 

amount of any remittance that must be 

repaid to CMS for failure to meet the 85 

percent minimum MLR requirement. 

CMS is finalizing our proposal to 

change our regulations to reinstate the 

former requirement for MA 

organizations and Part D sponsors to 

submit the underlying information 

needed to calculate, and verify the 

accuracy of, the MLR and remittance 

amount. We believe reinstating this 

detailed data submission requirement 

and the desk review process will allow 

us to detect errors in the MLR 

calculation which can result in 

significant losses to the Government. 

We are deleting the existing definition 

of ‘‘negotiated prices’’ at § 423.100 and 

adopting a new definition for the term 

‘‘negotiated price’’ at § 423.100, which 

we define as the lowest amount a 

pharmacy could receive as 

reimbursement for a covered Part D drug 

under its contract with the Part D plan 

sponsor or the sponsor’s intermediary 

(that is, the amount the pharmacy 

would receive net of the maximum 

negative adjustment that could result 

from any contingent pharmacy payment 

arrangement and before any additional 

contingent payment amounts, such as 

incentive fees). This provision will 

reduce out-of-pocket prescription drug 

costs, improve price transparency and 

market competition under the Part D 

program. As discussed in the proposed 

rule, based on stakeholder feedback and 

sponsor-reported DIR data, we 

understand that the share of 

pharmacies’ reimbursement that is 

contingent upon their performance 

under such arrangements has grown 

steadily each year. When pharmacy 

price concessions received by Part D 

sponsors are not reflected in lower drug 

prices at the point of sale and are 

instead used to reduce plan liability, 

beneficiaries generally see lower 

premiums, but they do not benefit 

through a reduction in the amount they 

must pay in cost-sharing. Thus, 

beneficiaries who utilize drugs end up 

paying a larger share of the actual cost 

of a drug. Moreover, when the point-ofsale price of a drug that a Part D sponsor 

reports on a prescription drug event 

(PDE) record as the negotiated price 

does not include such discounts, the 

negotiated price of each individual 

prescription is rendered less transparent 

and less representative of the actual cost 

of the drug for the sponsor. 

President Biden’s Executive Order 

(E.O.) 14036, ‘‘Promoting Competition 

in the American Economy’’ (86 FR 

36987), section 5 (‘‘Further Agency 

Responsibilities’’), called for agencies to 

consider how regulations could be used 

to improve and promote competition 

throughout the prescription drug 

industry. Because variation in the 

treatment of pharmacy price 

concessions by Part D sponsors may 

have a negative effect on the 

competitive balance under the Medicare 

Part D program, and given the 

programmatic impacts laid out above 

and the charge from the E.O., CMS 

proposed changes that would 

standardize how Part D sponsors apply 

pharmacy price concessions to 

negotiated prices at the point of sale. 

We are clarifying our regulations 

regarding the special requirements for 

disasters and emergencies at 

§ 422.100(m) to address stakeholder 

concerns about the end of a disaster or 

emergencies and to codify previous 

guidance. We also are finalizing the 

proposed updates to them to allow 

smoother transitions for enrollees who 

during a disaster or emergency may 

have been obtaining services from outof-network providers. 

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 a rule: (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 


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27872 Federal Register / Vol. 87, No. 89 / Monday, May 9, 2022 / Rules and Regulations 

98North American Industry Classification System 

(2017). Retrieved from: https://www.census.gov/ 

eos/www/naics/2017NAICS/2017_NAICS_

Manual.pdf. https://www.sba.gov/sites/default/ 

files/2019-08/ 

SBA%20Table%20of%20Size%20Standards_

Effective%20Aug%2019%2C%202019.pdf. 

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 (RIA) 

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). 

While the total annualized costs for this 

rule are estimated at $3.1 million a year, 

as indicated in Table 20, the net 

transfers from the Trust Fund to 

enrollees and manufacturers exceed 

$100 million annually. Therefore, based 

on our estimates, OMB’s Office of 

Information and Regulatory Affairs has 

determined this rulemaking is 

‘‘economically significant’’ as measured 

by the $100 million threshold, and 

hence also a major rule under Subtitle 

E of the Small Business Regulatory 

Enforcement Fairness Act of 1996 (also 

known as the Congressional Review 

Act). Accordingly, we have prepared a 

Regulatory Impact Analysis that to the 

best of our ability presents the costs and 

benefits of the rulemaking. 

Section 202 of the Unfunded 

Mandates Reform Act of 1995 also 

requires that agencies assess anticipated 

costs and benefits before issuing any 

rule whose mandates require spending 

in any 1 year of $100 million in 1995 

dollars, updated annually for inflation. 

In 2022, that threshold is approximately 

$165 million. This rule will not 

mandate on an unfunded basis any 

requirements for State, local, or tribal 

governments nor would it result in 

expenditures by the private sector 

meeting that threshold in any 1 year. 

Executive Order 13132 establishes 

certain requirements that an agency 

must meet when it promulgates a 

proposed rule (and subsequent final 

rule) that imposes substantial direct 

requirement costs on State and local 

governments, preempts State law, or 

otherwise has federalism implications. 

Under Executive Order 13132, this 

final rule will not significantly affect the 

States. It follows the intent and letter of 

the law and does not usurp State 

authority beyond what the Act requires. 

This rule describes the processes that 

must be undertaken by CMS, the States, 

and D–SNPs in order to implement and 

administer the requirements of the MA 

program. In accordance with the 

provisions of Executive Order 12866, 

this final rule was reviewed by OMB. 

If regulations impose administrative 

costs on reviewers, such as the time 

needed to read and interpret this final 

rule, then we should estimate the cost 

associated with regulatory review. As of 

November 2021, there are 962 

contracting organizations with CMS 

(which includes MA, MA–PD, and PDP 

contracts). Additionally, there are 55 

State Medicaid agencies and 300 

Medicaid MCOs. We also expect a 

variety of other organizations to review 

(for example, consumer advocacy 

groups, major PBMs). A reasonable 

maximal number is 1,500 total entities 

who will review this rule We note that 

other assumptions are possible. We 

assume each organization will designate 

two people to read the rule. 

Using the BLS wage information for 

medical and health service managers 

(code 11–9111), we estimate that the 

cost of reviewing this final rule is 

$114.24 per hour, which includes 100 

percent increase for fringe benefits and 

overhead costs (https://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 final 

rule. For each person that reviews this 

final rule, the estimated cost is therefore 

$900 (8 hours × $114.24). Therefore, we 

estimate that the maximum total cost of 

reviewing this entire final rule is $.7 

million ($900 × 1,500 entities × 2 

reviewers/entity). 

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 

organizations because a parent 

organization might have local reviewers 

assessing potential region-specific 

effects from this final rule. 

C. Regulatory Flexibility Act (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 final rule may have a 

significant economic impact on a 

substantial number of small entities, 

then the final 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.98 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. 

As can be seen from the Summary of 

Annual Information Collection 

Requirements and Burden table (Table 

12) in section IV.C. of this final rule, as 

well as Table 21 of this section, on 

average, the net cost to each plan to 

implement all provisions is significantly 

below $10,000 (the annualized cost over 

10 years of $3.6 million divided by the 

number of contracts, about 1,000, is 

significantly below $10,000). 

Additionally, not all provisions apply to 

all plans. We do not believe this to be 

excessive burden even to small entities. 

Nevertheless, a more complete analysis 

is provided immediately below 

supporting the position that burden is 

not excessive. 

Although States are also affected by 

these provisions, States are not 

classified as small entities and in any 

event the burden as just indicated is 

small. 

The relevant NAICS category is Direct 

Health and Medical Insurance Carriers, 

NAICS 524114, with a $41.5 million 

threshold for ‘‘small size,’’ with 75 

percent of insurers having under 500 


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Federal Register / Vol. 87, No. 89 / Monday, May 9, 2022 / Rules and Regulations 27873 

employees meeting the definition of 

small business. 

MA organizations and Medicaid 

managed care plans have their costs 

funded by the Federal Government or 

State and therefore there is no 

significant burden. We discuss the 

details of this in this section. This 

discussion will establish that there is no 

significant burden to a significant 

number of entities from this final rule 

for these provisions. 

1. Medicare Advantage 

Each year, MA plans submit a bid for 

furnishing Part A and B benefits and the 

entire bid amount is paid by the 

government to the plan if the plan’s bid 

is below an administratively set 

benchmark. If the plan’s bid exceeds 

that benchmark, the beneficiary pays the 

difference in the form of a basic 

premium (note that a small percentage 

of plans bid above the benchmark, 

whereby enrollees pay a basic premium, 

thus this percentage of plans is not 

‘‘significant’’ as defined by the RFA and 

as justified below). Payments to MA 

plans of the bid (or benchmark) amounts 

are risk adjusted and are higher for 

enrollees with risk scores above 1.0 and 

lower for enrollees with risk scores 

below 1.0. 

MA and MA–PD plans can also offer 

supplemental benefits, that is, benefits 

not covered under Original Medicare or 

under Part D. These supplemental 

benefits are paid for through enrollee 

premiums, extra Government payments, 

or a combination. Under the statutory 

payment formula, if the bid submitted 

by a Medicare Advantage plan for 

furnishing 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 

rebate must be used to provide 

supplemental benefits (that is, benefits 

not covered under Original Medicare or 

Part D) and/or lower beneficiary Part B 

or Part D premiums. Some examples of 

these supplemental benefits include 

vision, dental, hearing, fitness and 

worldwide coverage of emergency and 

urgently needed services. 

To the extent that the Government’s 

risk adjusted payments to plans for the 

bid plus 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 supplemental 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 of 

Medicare funds and beneficiary 

premiums. In addition, for enrolled lowincome beneficiaries Part D plans 

receive government funds to cover most 

of premium and cost-sharing amounts 

those beneficiaries would otherwise 

pay. 

Thus, the cost of providing services 

by these insurers 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 

final rule, are expected to include the 

costs of compliance in their bids, thus 

avoiding additional burden, since the 

cost of complying with any final rule is 

funded by payments from the 

government and, if applicable, enrollee 

premiums. 

For Direct Health and Medical 

Insurance Carriers, NAICS 524114, MA 

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 making risk adjusted 

payments to the plan of 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. 

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. Historically, 

only two percent of plans bid above the 

benchmark, and they contain roughly 

one percent of all plan enrollees. The 

CMS threshold for what constitutes a 

substantial number of small entities for 

purposes of the RFA is 3 to 5 percent. 

Since the number of plans bidding 

above the benchmark is two percent, 

this is not considered substantial for 

purposes of the RFA. 

The preceding analysis shows that 

meeting the direct cost of this final rule 

does not have a significant economic 

impact on a substantial number of small 

entities, as required by the RFA. 

There are certain indirect 

consequences of these provisions which 

also create impact. We have already 

explained that 98 percent of the plans 

bid below the benchmark. Thus, their 

estimated costs 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 costsharing 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.) It would follow 

that if the provisions of this final rule 

cause the MA bid to increase and if the 

benchmark remains unchanged or 

increases by less than the bid does, the 

result would be a reduced rebate and, 

possibly fewer supplemental benefits, or 

higher premiums for the health plans’ 

enrollees. However as noted above, 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 rule would otherwise cause bids to 

increase, plans will reduce their profit 

margins, rather than substantially 

change their benefit packages. 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 more 

generous supplemental benefits. Thus, it 

can be advantageous to the plan to 

temporarily reduce profit margins, 

rather than reduce supplemental 

benefits. 

2. Medicaid 

We include Medicaid in this section 

since it is relevant to the proposed 

change to the applicable integrated plan 

definition at § 422.561. At § 422.561, we 

are expanding the universe of D–SNPs 

that are required to have unified 

grievance and appeals processes by 

revising the definition of an applicable 

integrated plan. Section 50311(b) of the 

BBA of 2018 amended section 

1859(f)(8)(B) of the Act to direct 

establishment of procedures, to the 

extent feasible, unifying Medicare and 

Medicaid grievances and appeals. The 

April 2019 final rule introduced the 

concept of applicable integrated plans, 

which we defined as FIDE SNPs and 

HIDE SNPs whose Medicare and 

Medicaid enrollment is exclusively 

aligned (meaning State policy limits a 

D–SNP’s enrollment to those whose 

Medicare and Medicaid enrollment is 

aligned as defined in § 422.2) and the 

companion Medicaid MCOs for those 

D–SNPs, thereby making it feasible for 

these plans to implement unified 

grievance and appeals processes. We 

believe that unified grievance and 


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27874 Federal Register / Vol. 87, No. 89 / Monday, May 9, 2022 / Rules and Regulations 

99Resources for Integrated Care and Community 

Catalyst, ‘‘Member Engagement in Plan Governance 

Webinar Series’’, 2019. Retrieved from: https://

www.resourcesforintegratedcare.com/article/ 

member-engagement/. 

appeals procedures are feasible for the 

additional D–SNPs and MCOs included 

in the revisions to the definition. While 

we are not imposing new Medicaid 

requirements, the applicable integrated 

plan definition change would expand 

the universe of Medicaid managed plans 

subject to the unified appeals and 

grievances provisions codified in the 

April 2019 final rule. However, the 

burden imposed by this final rule on 

Medicaid managed care plans is the 

one-time requirement to update their 

grievance and appeals procedures, 

which as estimated in Table 12, is a onetime cost of $7,582. Consequently, we 

have determined that this final rule will 

not have a significant impact on 

Medicaid managed care plans. 

Therefore, the Secretary has certified 

that this final rule will not have a 

significant economic impact on a 

substantial number of small entities. 

Based on the above, we conclude that 

the requirements of the RFA have been 

met by this final rule. 

Comment: We received support, 

thanks, and encouragement from a large 

number of small business stakeholders 

including several organizations 

representing large numbers of small 

businesses. This support frequently 

echoed comments already made in the 

analysis: (i) The enormous expenses and 

rise of DIR, (ii) the lack of transparency 

resulting from pharmacy price 

concessions being collected a year or so 

after a small pharmacy had gained a 

profit and resulted in a net loss, (iii) the 

increased cost-sharing to enrollees, 

which can result in increased levels of 

medication non-compliance and lead to 

poorer health incomes. Commenters’ 

criticism consisted of: (1) Requests for 

CMS to regulate the PBMs; (2) requests 

for extending the pharmacy price 

concessions provisions to the coverage 

gap; (3) requests for a delay of the 

effective date pointing to the burden of 

updating software and preparing for the 

2023 bid; and (4) requests for further 

protections for small businesses and 

specialty pharmacies, which the 

commenters stated were very vulnerable 

and at risk for going out of business. 

Some commenters also noted that 

although this final rule is a step in the 

right direction, it does so on average and 

may not meet the needs of very small 

pharmacies not belonging to chains or 

pharmacies specializing in certain types 

of drugs. 

Response: We thank the stakeholders 

for their support. With respect to the 

criticisms received: (1) We did not 

propose to impose any requirements 

directly on PBMs in the proposed rule. 

(2) After consideration of the comments, 

however, we modified our proposal to 

require pharmacy price concessions be 

applied to the negotiated price in the 

coverage gap. (3) We agree with the 

comment that pharmacies, including 

small pharmacies, need time to prepare 

software updates and that Part D 

sponsors will need time to prepare their 

2023 bids. In response to comments 

here and as addressed previously, we 

are finalizing the proposal with a 2024 

applicability date. We are also 

sympathetic to specialty pharmacies. 

CMS does not collect data on pharmacy 

price concessions at the pharmacy level, 

and this information is not publicly 

available. In order to estimate, for 

example, the effects on specialty 

pharmacies in particular, we would 

need to speculate on the relative 

difference between price concessions to 

those pharmacies versus retail 

pharmacies. As we do not have any 

basis for developing this difference, it is 

not possible to meaningfully analyze 

impacts by type of pharmacy. 

We are therefore finalizing our 

analysis as presented above. 

3. Rural Hospitals 

Section 1102(b) of the 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. This rule however is directed to 

plans and enrollees. Providers including 

hospitals receive the contracted rate or 

at least the original Medicare rate 

depending on whether the providers are 

contracted or not. Consequently, the 

Secretary has certified that this final 

rule will not have a significant 

economic impact on a substantial 

number of small entities. 

D. Anticipated Effects 

1. Enrollee Participation in Plan 

Governance (§ 422.107) 

As described in section II.A.3. of this 

final rule, at § 422.107(f), we are 

finalizing our proposal that any MA 

organization offering a D–SNP must 

establish one or more enrollee advisory 

committees at the State level or other 

service area level in the State to solicit 

direct input on enrollee experiences. We 

are also finalizing at § 422.107(f) that the 

committee include a reasonably 

representative sample of individuals 

enrolled in the D–SNP(s) and solicit 

input on, among other topics, ways to 

improve access to covered services, 

coordination of services, and health 

equity for underserved populations. 

This final rule intends to ensure 

enrollees are engaged in defining, 

designing, participating in, and 

assessing their care systems. Section 

IV.B.1. of this final rule presents the 

collection of information burden for this 

provision. 

To support D–SNPs in establishing 

enrollee advisory committees that meet 

the objective of this final rule in 

achieving high-quality, comprehensive, 

and coordinated care for dually eligible 

individuals, CMS would provide 

technical assistance to D–SNPs to share 

engagement strategies and other best 

practices. CMS can leverage the body of 

technical assistance developed for 

MMPs. For example, the CMS contractor 

Resources for Integrated Care partnered 

with Community Catalyst, a non-profit 

advocacy organization, to offer a series 

of webinars and other written technical 

assistance to help enhance MMPs’ 

operationalization of these 

committees.99 CMS will be able to 

realize efficiencies by repurposing and 

building on these resources. Based on 

the existing technical assistance 

contracts held by CMS, we estimate an 

annual cost to the Federal Government 

of $15,000. 

We received no comments on this 

proposal and therefore are finalizing 

this analysis without modification. 

2. Refining Definitions for Fully 

Integrated and Highly Integrated D– 

SNPs (§ 422.2) 

We have presented a discussion of 

collection of information burden 

associated with this provision in section 

IV.B.3. of this final rule. In this section, 

we describe the impacts of our 

definition changes of: (1) Requiring 

exclusively aligned enrollment for FIDE 

SNPs; (2) capitation of Medicare costsharing; (3) clarifying the scope of 

services covered by a FIDE or HIDE; (4) 

Medicaid carve-outs; and (5) requiring 

service area overlap with the 

corresponding Medicaid plan. We 

anticipate all changes to the definition 

of FIDE SNP and HIDE SNP will result 

in additional time for CMS staff to 

review D–SNPs’ contracts with State 

Medicaid agencies. We estimate that a 

GS level 13, step 5 (GS–13–5), employee 

will take an additional 20 minutes per 

State to confirm the contract meets the 

updated definitions. For CY 2022, 21 

States have FIDE SNPs, HIDE SNPs, or 

both. Therefore, we estimate that the 


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100See the locality pay tables for 2021 at https:// 

www.opm.gov/policy-data-oversight/pay-leave/ 

salaries-wages/2021/general-schedule/. 

final rule would result in 7 hours (20 

minutes × 21 State contracts) of 

additional work for a GS–13–5 Federal 

employee. The 2021 hourly wage for a 

GS–13–5 Federal employee for the 

Baltimore Washington Area, which is 

close to the average hourly wage over all 

localities, is $56.31.100 We allow 100 

percent for fringe benefits and overtime, 

increasing the hourly wage to $112.62. 

Thus, the expected additional annual 

cost for reviewing the contract is $788. 

a. Exclusively Aligned Enrollment for 

FIDE SNPs 

As described in section II.A.5.a. of 

this final rule, we are requiring 

exclusively aligned enrollment for FIDE 

SNPs beginning in 2025. We noted that 

12 D–SNPs may lose FIDE SNP status 

and no longer qualify for the frailty 

adjustment described in section 1853(a) 

of the Act and the regulation at 

§ 422.308(c)(4). Of these 12 FIDE SNPs, 

six are currently receiving the frailty 

adjustment. We believe that these six 

FIDE SNPs are likely to have exclusively 

aligned enrollment by CY 2025 as only 

a small fraction of their current 

enrollment is currently unaligned and 

there are multiple options through 

which MA organizations can meet the 

requirement. Therefore, we do not 

believe the final rule will result in a 

significant reduction of Medicare 

payments from FIDE SNPs losing the 

frailty adjustment. 

b. Capitation for Medicare Cost-Sharing 

and Behavioral Health Services for FIDE 

SNPs 

We do not anticipate any cost 

transfers from the State to FIDE SNPs 

resulting from the final rule amendment 

of the definition of FIDE SNP (at 

§ 422.2) to require that the capitated 

contract with the State Medicaid agency 

for a FIDE SNP must include coverage 

of Medicare cost-sharing (that is, 

payment by Medicaid of Medicare costsharing for the dually eligible 

individual), where applicable, and 

Medicaid behavioral health services. We 

initially estimated that all FIDE SNPs 

include coverage of Medicare costsharing in their capitated contracts with 

the State Medicaid agency; however, we 

learned that Tennessee does not capitate 

FIDE SNPs for cost-sharing. In this final 

rule, we are making the requirement 

related to cost-sharing applicable 

starting in 2025. We expect policy 

changes in Tennessee before 2025 will 

allow all current FIDE SNPs to meet the 

new definition. As noted in section 

II.A.5.b. of this final rule, most FIDE 

SNPs already include Medicaid 

behavioral health benefits in their 

capitated contracts with the State 

Medicaid agency. The remaining FIDE 

SNPs in California and Pennsylvania 

that do not currently cover Medicaid 

behavioral health benefits would likely 

become HIDE SNPs, which is also 

defined at § 422.2 (with revisions 

adopted in this final rule). These 

impacted D–SNPs would not experience 

a direct impact on costs when becoming 

a HIDE SNP as benefits covered by the 

impacted D–SNP would not change. Nor 

would impacted D–SNPs experience a 

change to Medicare revenue, as none of 

the impacted D–SNPs receive the frailty 

adjustment. 

We received no comments on our 

analysis and are finalizing it without 

modification. 

3. Additional Opportunities for 

Integration Through State Medicaid 

Agency Contracts (§ 422.107) 

As described in section II.A.6. of this 

final rule, we are finalizing new 

paragraph (e) at § 422.107 to describe 

conditions through which States may 

require certain contract terms for D– 

SNPs with exclusively aligned 

enrollment and how CMS would 

facilitate compliance with those 

contract terms. This final rule allows 

States to further promote integration 

using the State Medicaid agency 

contract with D–SNPs, with the goal of 

improving beneficiary experiences and 

health plan oversight. Section 

422.107(e) applies only for State 

Medicaid agency contracts through 

which the State requires exclusively 

alignment enrollment, as defined in 

§ 422.2, and establishes that States may 

choose to require and CMS would 

permit MA organizations—through the 

existing MA application process—to 

establish MA contracts that only include 

one or more State-specific D–SNPs and 

require that all such D–SNPs use 

integrated member materials. 

a. State Medicaid Agency Contract 

Requirements 

Section IV.B.4. of this final rule 

describes the total cost for the State to 

update the State Medicaid agency’s 

contract with the D–SNPs in its market 

to address the changes in this final rule 

and consult with CMS to ensure 

contract changes meet the requirements 

at § 422.107(e). Half of the cost ($20,618) 

could be claimed by the State as Federal 

financial participation for 

administrative costs of the Medicaid 

program, born by the Federal 

Government. In addition to updating the 

State Medicaid agency contract, a State 

choosing to further integration through 

§ 422.107(e) would need to determine 

readiness and make changes to State 

policy. The State’s time and cost for 

adopting this final rule would depend 

on the State’s current level of 

integration. For example, 11 States 

currently have a policy requiring some 

or all of the D–SNPs in the State to have 

exclusively aligned enrollment, and 

Massachusetts, New Jersey, and New 

York have worked with CMS to 

integrate some member materials. These 

States that have taken steps toward 

integration may use less time and 

resources to take advantage of the new 

processes at § 422.107(e) than States just 

beginning to integrate Medicare and 

Medicaid using D–SNPs. Given the 

uncertainty involved in estimating State 

behavior and levels of existing 

integration, we are not estimating any 

additional burden outside of updating 

the State Medicaid agency contract with 

D–SNPs. We did not receive any 

comments on what State resources 

would be needed to use the pathway for 

requiring or achieving higher integration 

and collaboration with CMS as 

described in § 422.107(e) in a State with 

limited D–SNP integration (for example, 

a State with no FIDE SNPs or HIDE 

SNPs). 

b. Limiting Certain MA Contracts to D– 

SNPs 

At § 422.107(e), we are codifying a 

pathway that would result, in certain 

circumstances, in contracts that only 

include one or more D–SNPs with 

exclusively aligned enrollment within a 

State. Because Star Ratings are reported 

at the contract level, having a contract 

with only the D–SNPs in a particular 

State would allow dually eligible 

individuals in that State to ascertain the 

full quality performance of a D–SNP and 

better equip States to work with their D– 

SNPs to improve health equity. 

We describe the collection of 

information burden for MA 

organizations resulting from 

establishing a D–SNP-only contract in 

section IV.B.4.b. of this final rule. 

However, the additional Part C and D 

applications necessary to create separate 

contracts covering only D–SNPs in a 

particular state also result in additional 

Federal costs. While the collection of 

information packages lay out the 

Federal burden to process Part C and D 

applications, they do not list out the 

cost per contract application. We 

estimate the additional contract 

submissions for D–SNP only contracts 

would at most cost an additional 

$50,000 in labor burden for the Federal 

Government annually. 


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We note impacted D–SNP contracts 

may have changes to their quality bonus 

payments (QBP), as the new contract’s 

payment will initially be calculated 

from the parent organization’s 

enrollment-weighted average quality 

rating and eventually only on the 

performance under the new contract. 

We are unable to predict if QBPs will 

increase or decrease for these MA 

organizations due to separating D–SNPs 

from the original contracts into separate 

contracts. 

c. Integrated Member Materials 

As described in section II.A.6.b. of 

this final rule, to provide a more 

coordinated beneficiary experience we 

are finalizing at § 422.107(e) a pathway 

by which States and CMS would 

collaborate to establish model materials 

when a State chooses to require through 

its State Medicaid agency contract that 

certain D–SNPs use an integrated SB, 

Formulary, and combined Provider and 

Pharmacy Directory. Section 

422.107(e)(1) establishes factual 

circumstances that commit CMS to 

certain actions under paragraphs (e)(2) 

and (3). 

In section IV.B.4.c. of this final rule, 

we note that we do not intend to 

significantly change timelines for D– 

SNPs to prepare materials, nor do we 

intend to mandate that States require D– 

SNPs to use integrated materials. We do 

not estimate any additional costs for 

States or plans to implement integrated 

member materials at § 422.107(e) due to 

existing State efforts to work with 

Medicaid managed care plans to comply 

with information requirements at 

§ 438.10 and to work with D–SNPs to 

populate Medicaid benefits for Medicare 

member materials. This final rule 

assures interested States that, under the 

conditions outlined in § 422.107(e), 

CMS would do its part to make it 

possible for D–SNPs to comply with 

State Medicaid agency contract terms 

for D–SNP-only contracts and integrated 

enrollee materials. Therefore, we do not 

estimate any additional burden for 

States or plans to implement integrated 

member materials at § 422.107(e). 

We anticipate costs to CMS will be 

similar to past work done to collaborate 

with States to improve the integration 

and effectiveness of materials for dually 

eligible beneficiaries. To test materials, 

we conducted individual interviews 

with dually eligible individuals and 

desk reviews by contractors, CMS 

subject matter experts, and advocacy 

organizations. Since 2015, we have 

tested an integrated EOC, ANOC, SB, 

Formulary, and combined Provider and 

Pharmacy Directory. 

We estimate that each of the model 

documents under § 422.107(e)—the SB, 

Formulary, and combined Provider and 

Pharmacy Directory—will require 40 

hours of work from CMS staff (a GS–13– 

5 Federal employee) working at 

$112.62/hr. The projected cost to the 

Federal Government for 120 hours (40 

hours × 3 documents) of a GS–13–5 

employee is $13,500. 

In our experience, a desk review from 

a contractor is approximately $10,000 

per document and a study of the 

documents consisting of dually eligible 

individuals’ interviews costs $25,000 

per document. Therefore, we anticipate 

the contractor costs for integrated 

member materials to be $105,000 

($10,000 × 3 documents + $25,000 × 3 

documents). Therefore, the total cost to 

the Federal Government of our final rule 

on integrating member materials is 

$118,500. 

d. Joint State/CMS Oversight 

In section II.A.6.c. of this final rule, 

we discuss our changes at 

§ 422.107(e)(3) to better coordinate State 

and CMS monitoring and oversight of 

D–SNPs that operate under the 

conditions described at paragraph (e)(1). 

These coordination mechanisms include 

sharing relevant plan information, 

coordinating program audits, and 

consulting on network exception 

requests. We cannot estimate the cost of 

uncoordinated State and Federal 

oversight, but we believe this provision 

would result in a reduction in 

administrative burden for D–SNPs. 

States will have the ability to determine 

what level of resources is needed for 

their related work, and we believe States 

likely to elect to use the pathway 

described in § 422.107(e) would already 

have resources invested in coordinating 

care between MCOs and D–SNPs and 

would otherwise make choices that 

avoid significant increases in State 

burden. 

At paragraph (e)(3)(i), we are 

finalizing that CMS would grant State 

access to HPMS, or any successor 

system, to facilitate monitoring and 

oversight for a D–SNP with exclusively 

aligned enrollment in an MA contract 

that only includes one or more D–SNPs 

operating within the State. Our final 

rule will require the State officials and 

employees accessing HPMS to comply 

with applicable laws and CMS policies 

and standards for access to that system, 

including keeping information 

confidential and maintaining system 

security. This access will allow State 

users the ability to directly view D–SNP 

information without requiring or asking 

the D–SNP to send the information to 

the States and would facilitate StateCMS communication on D–SNP 

performance since more people are able 

to review the data and information. MA 

organizations may benefit when it 

reduces the need for States to separately 

obtain the same information that is 

already available in HPMS. 

Providing this HPMS access to State 

users would require HPMS contractors 

to update several modules, including 

user access and coding changes needed 

to implement the necessary access. 

HPMS contractors estimated that there 

would be a one-time update costing 

approximately $750,000. 

We received no comments on our 

analysis and are finalizing it without 

modification. 

4. Attainment of the Maximum Out-ofPocket (MOOP) Limit (§§ 422.100 and 

422.101) 

As described in section II.A.12. of this 

final rule, we are finalizing a revision to 

which costs are tracked and accumulate 

toward the MOOP limit for dually 

eligible enrollees in MA plans under 

§ 422.101(d) for MA regional plans and 

§ 422.100(f)(4) and (5) for all other MA 

plans. Our rule will result in MA 

organizations that, under current policy, 

rarely or never pay cost-sharing above 

the MOOP limit for dually eligible 

enrollees being held responsible for 

payment of cost-sharing amounts above 

the MOOP limit. As a result, our final 

rule may lead to an increase in the plan 

bids relative to the benchmark for 

dually eligible individuals who would 

receive the same cost-sharing protection 

provided by the MOOP that is now 

afforded to non-dually eligible 

individuals. However, in the short term, 

as we note above, MA organizations 

may prefer to reduce their profit 

margins, rather than raise their bids and 

thereby reduce the rebate dollars 

available for supplemental benefits. 

Specifically, we are finalizing that all 

cost-sharing for Medicare Parts A and B 

services accrued under the plan benefit 

package, including cost-sharing paid by 

any applicable secondary or 

supplemental insurance (such as 

through Medicaid, employer(s), and 

commercial insurance) and any costsharing that remains unpaid (such as 

because of limits on Medicaid liability 

for Medicare cost-sharing under the 

lesser-of policy and the cost-sharing 

protections afforded certain dually 

eligible individuals), is counted towards 

the MOOP limit. This will ensure that 

once an enrollee, including a dually 

eligible individual with cost-sharing 

protections, has accrued cost-sharing 

(deductibles, coinsurance, or copays) 

that reaches the MOOP limit, the MA 

plan must pay 100 percent of the cost 


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of covered Medicare Part A and Part B 

services. As a result, the State Medicaid 

agency will no longer be responsible for 

any Medicare cost-sharing for the 

remainder of the year. In addition, 

providers serving dually eligible MA 

enrollees with Medicare cost-sharing 

above the MOOP limit will be fully 

reimbursed for this cost-sharing for the 

remainder of the year. Now, some of 

that cost-sharing is unpaid because of 

limits on State payment of Medicare 

cost-sharing and prohibitions on 

collection of Medicare cost-sharing from 

certain dually eligible beneficiaries. We 

believe this change to the cost-sharing 

that MA organizations must use to 

determine when the MOOP limit has 

been reached will mitigate existing 

provider payment disincentives related 

to serving dually eligible MA enrollees. 

This change will also eliminate the 

perceived need for providers to bill 

dually eligible for non-paid 

coinsurance, which although 

prohibited, is not uncommon. As a 

result, this final rule may improve 

access to providers, including 

specialists, who currently limit the 

number of dually eligible MA enrollees 

they serve or decline to contract with D– 

SNPs. However, we are unable to 

quantify the extent to which any 

improved access would affect utilization 

of services by dually eligible MA 

enrollees and thereby affect Medicare 

spending. 

Our final rule will increase the 

amount of MA organization payments to 

providers serving dually eligible 

individuals enrolled in MA plans after 

the MOOP limit is reached. As a result, 

our final rule may lead to an increase in 

the plan bids relative to the benchmark 

for dually eligible individuals who 

would receive the same cost-sharing 

protection provided by the MOOP that 

is now afforded non-dually eligible 

individuals. 

To estimate the costs of the final rule, 

we started with CY 2022 bid data to 

estimate the Medicare cost-sharing 

accrued by dually eligible beneficiaries 

with cost-sharing protections (fullbenefit dually eligible individuals and 

QMB enrollees) above the mandatory 

MOOP level ($7,550 in 2022). We 

estimated the cost of Medicare costsharing above this MOOP level to be on 

average $22.99 per person per month. 

Then we multiplied this amount by 41 

percent to reflect the portion of dually 

eligible enrollees in MA organizations 

that already accrue cost-sharing towards 

the MOOP level to arrive at $9.43 as the 

additional per person per month bid 

cost. Based on projected MA enrollment 

of dually eligible beneficiaries and other 

factors described in this section, this 

final rule would result in additional 

payments from MA organizations to 

health care providers serving high cost 

dually eligible MA enrollees, 

represented in the annual MA bid costs 

shown in column 2 of Table 13. 

Only a portion of the projected higher 

MA organization bids for MOOP 

benefits represent higher costs to 

Medicare. MA rebates are calculated as 

an average of 68 percent of the 

difference between the bids and 

benchmarks. The additional cost to the 

Medicare Trust Funds is estimated to be 

the remaining 32 percent increase in 

bids. After reflecting the change in 

rebates, the per member per month cost 

to Medicare of the final rule is 32 

percent of $9.43, or $3. 

To project annual costs, we used 

projected enrollment by dually eligible 

beneficiaries in MA plans, as well as 

Trustee’s Report U.S. Per Capita Costs 

(USPCC) cost and utilization trends. We 

also projected annual increases in the 

mandatory MOOP amounts under 

current regulations. The cost to 

Medicare based on our final rule will be 

partly offset by the savings to Medicaid 

for payment of Medicare cost-sharing 

over the MOOP limit for dually eligible 

individuals. While some State Medicaid 

agencies may save as much as the 

projected increase in bid costs per 

dually eligible MA enrollee in their 

State, the savings from this final rule 

will likely be less for most States. The 

majority of States have a ‘‘lesser-of’’ 

policy, under which the State caps its 

payment of Medicare cost-sharing so 

that the sum of Medicare payment and 

cost-sharing does not exceed the 

Medicaid rate for a particular service. 

We estimate that, based on average 

differences in State Medicaid and 

Medicare provider contracted rates, 39 

percent of the costs of MOOP coverage 

under our final rule represents Medicaid 

savings. Of those savings, 57 percent 

accrue to the Federal Government based 

on the average FMAP rate of 57 percent. 

Those annual savings are shown in 

column 4 of Table 13. 

Finally, 25 percent of the additional 

Medicare costs that represent Part B 

costs (Part B accounts for 60 percent of 

the costs of Parts A and B benefits 

provided by Medicare Advantage 

organizations) are offset by beneficiary 

premiums for Part B, as shown in 

column 6 of Table 13. The total Federal 

costs of the final rule, net of Federal 

Medicaid savings and the Part B 

premium offset are shown in column 7 

of Table 13. 

We note that there is uncertainty 

inherent in this analysis. In using the 

bid data, we made some assumptions 

about the extent to which MA 

organizations are already counting all 

cost-sharing in the plan benefit, 

including amounts paid by Medicaid 

programs, towards the MOOP limit. In 

addition, MA organizations may prefer 

to reduce their gain/loss margins, rather 

than substantially change their benefit 

package, when rebates are reduced in 

the short term. However, our estimate of 

the added bid benefit costs does not 

assume that MA organizations will 

absorb any portion of these costs by 

reducing their gain/loss margins. 


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No additional goods or services are 

being created. Rather, the money that 

States would pay or that would remain 

unpaid for Parts A and B services is now 

being paid by the plans and hence by 

the Trust Fund. Hence these amounts 

are considered transfers from the Trust 

Fund to the States. 

We received no comments on our 

analysis and are finalizing this analysis 

without modification. 

5. Special Requirements During a 

Disaster or Emergency for Medicare 

Advantage Plans (§ 422.100(m)) 

We are not scoring the finalized 

revisions to § 422.100(m) (Special 

Requirements during a Disaster or 

Emergency). As stated in the February 

12, 2015 final rule (80 FR 7953), we 

recognize that disasters can create 

unavoidable disruptions and increased 

costs for MA organizations. Our primary 

goal during a disaster is the provision of 

continued and uninterrupted access to 

medically necessary plan-covered 

services for all enrollees. Our intention 

is to facilitate achievement of this goal 

by ensuring that plans facilitate 

increased access to providers from 

whom enrollees in the disaster area may 

seek high quality services at in-network 

cost-sharing. We do not believe that 

these temporary and unusual episodes 

of increased access will incentivize 

enrollees in a negative way or result in 

significant cost increases for affected 

MA organizations. We believe this is 

still relevant as most of our final 

revisions clarify our current policy. 

More detailed arguments for not scoring 

are presented after a discussion of the 

finalized revisions. 

Our final amendments to § 422.100(m) 

include codifying our current practice of 

imposing the special requirements at 

§ 422.100(m)(1) on MA organizations 

only when there is a disruption of 

access to health care as stated in the 

preamble to the February 12, 2015, final 

rule (80 FR 7953) and in our responses 

to comments and questions from MA 

organizations and others in 

administration of the existing 

requirement during the pandemic. We 

receive many questions and inquiries 

during a disaster or emergency so we 

believe this has been fully complied 

with; because we are clarifying through 

notice and comment rulemaking, these 

clarifications may result in enhanced 

compliance with this requirement and 

may contribute to reduced costs. 

Consequently, we do not believe the 

proposal to clarify what amounts to a 

disruption of access to health care and 

how the special requirements only 

apply when there is a disruption in 

connection with a declared emergency 

or disaster has an impact because it is 

consistent with current application of 

the regulation and MA organizations are 

already complying. 

We are also finalizing adding a 

transition period of 30 days between a 

disaster or emergency ending and the 

end of the special requirements to 

§ 422.100(m)(3). We do not believe these 

provisions would create impact. Some 

MA organizations may already allow 

flexibilities to enrollees following a 

disaster or emergency, such as a 

transition period to allow additional 

time for enrollees to return to innetwork providers. Additionally, many 

MA plans have experience with 

disasters or other changes in cost that 

arise annually. The nature of the 

business cycle shows that MA plans 

may experience losses due to short-term 

disasters or emergencies in certain 

years, which may be offset with profits 

in the following years. Although the 

cost burden for a longer disaster or 

emergency is different than that for a 

shorter disaster, our recent experience 

with the COVID–19 PHE shows that 

CMS is aware of this cost burden and as 

each specific situation develops, is 

responding with certain flexibilities. 

For these reasons, we are not further 

scoring the special requirements during 

a disaster or emergency provision. 

6. Provisions Relating to Past 

Performance (§§ 422.504 and 423.505) 

We are finalizing an update the past 

performance measures at 42 CFR 

422.504 and 423.505 in order to better 

ensure CMS’ capacity to limit new 


khammond on DSKJM1Z7X2PROD with RULES2ER09MY22.017</GPH>

TABLE 13: 10-YEAR AGGREGATE PROJECTED COSTS($ MILLIONS) FROM 

MOOP PROVISION* 

Additional 

Bid Benefit 

Costs for MA 

Organization 

s for Cost- Total Medicare 

Sharing Medicare- Federal Savings to Costs minus Impact of 

Above the Only Benefit Medicaid from MOOP Medicaid Part B Premium MOOP 

Year MOOP Costs Provision Savings Offsets Provision 

(3) = 32% * 

(1) (2) (2) (4) =39% * 57% * (2) (5) = (3) - (4) (6) = 60% * 25% *(3) (7) = (5) - (6) 

2023 805.8 257.9 179.1 78.7 38.7 40.0 

2024 879.5 281.4 195.5 85.9 42.2 43.7 

2025 963.2 308.2 214.1 94.1 46.2 47.9 

2026 1,052.5 336.8 234.0 102.8 50.5 52.3 

2027 1,145.8 366.7 254.7 111.9 55.0 56.9 

2028 1,279.2 409.3 284.4 125.0 61.4 63.6 

2029 1,391.1 445.2 309.2 135.9 66.8 69.1 

2030 1,502.2 480.7 333.9 146.8 72.1 74.7 

2031 1,619.7 518.3 360.1 158.2 77.7 80.5 

2032 1,730.6 553.8 384.7 169.1 83.1 86.0 

Totals 12,369.5 3,958.2 2,749.7 1,208.5 593.7 614.8 

*Explanatory equations in the second row of the table are further elaborated on in the narrative. 
Federal Register / Vol. 87, No. 89 / Monday, May 9, 2022 / Rules and Regulations 27879 

applications and applications for service 

area expansions by low performers 

when these new plans and/or service 

area expansions would not be in the 

best interest of the Medicare program. 

Although there are no tangible costs to 

organizations, there may be future costs 

that may or may not occur. 

Organizations that fail to meet CMS’ 

requirements will have applications 

denied, resulting in their inability to 

gain enrollment, thus losing potential 

future dollars. On the other hand, some 

organizations may actually improve 

performance, because of the 

ramifications of being a poor performer. 

In these cases, these organizations will 

actually be in a better position, 

potentially having higher Star Ratings, 

resulting in additional funds if the 

organization receives performance pay 

for their Star Ratings. The CMS costs are 

as follows: 

• To perform the calculations, we 

estimate— 

++ 2 staff at the GS 13–5 level 

working at $112.62/hr would have to 

perform a total of 24 hours of work (12 

hours for each staff); and 

++ 2 staff at the GS 14–9 level 

working at $148.74/hr would have to 

perform 10 hours of work. 

• To notify plans, we estimate that 1 

staff at the GS–13–5 level working at 

$112.62/hr will have to perform 3 hours 

of work. 

The aggregate annual cost to the 

government is therefore $4,528. 

7. Marketing and Communications 

Requirements on MA and Part D Plans 

To Assist Their Enrollees (§§ 422.2260, 

423.2260, 422.2267, and 423.2267) 

We have presented a discussion of 

collection of information burden 

associated with this provision in section 

IV.B.11. of this final rule. In this section, 

we summarize comments on the 

impacts of these provisions. 

Comment: Comments suggested that 

the MLI as proposed would impose a 

greater burden on plans than we 

anticipated in the proposed rule. 

However, the comments suggesting this 

did not indicate why this was the case 

or what aspect of the burden we failed 

to address. 

Response: On review, we believe our 

assessment of the burden on plans as 

discussed in the Regulatory Impact 

Assessment of this rule is accurate. We 

also believe the burden on plans is 

acceptable considering the vital nature 

of the MLI. As indicated earlier in the 

preamble and the response to a previous 

comment, certain required documents 

(under §§ 422.2267(e) and 423.2267(e)) 

are vital to a beneficiary’s 

understanding of the MA, Part D, and 

cost plan programs. While those 

organizations must provide translation 

services, the requirement is less 

effective if beneficiaries are not aware of 

the availability of and right to the 

translation services. As such, the 

requirement to provide the MLI with 

required documents alerts the 

beneficiary to services that may help to 

prevent misunderstanding of the 

program and thus avoid beneficiary 

harm. Additionally, the MLI replaces 

OCR’s analogous language assistance 

tagline requirement that was, based on 

scope and size, more burdensome than 

the MLI. Furthermore, CMS required 

plans to deliver the MLI until 2016, 

when it was replaced by OCR’s 

analogous requirement. Finally, the MLI 

improves communication affecting a 

variety of health issues, acting as a 

bridge to education and awareness. This 

should ultimately improve beneficiary 

health and reduce the cost of beneficiary 

care. 

8. Revisions to the Medical Loss Ratio 

Reporting Requirements (§§ 422.2460 

and 423.2460) 

As discussed in section II.G. of this 

final rule, we are finalizing our proposal 

to reinstate the detailed MLR reporting 

requirements in effect for CYs 2014 

through 2017, and to require separate 

reporting of amounts spent on 

supplemental benefits. 

The paperwork burden associated 

with these provisions, $2.3 million, is 

estimated in section IV.B.12. of this 

final rule and included in the summary 

table below. There is also additional 

anticipated impact to the Federal 

Government. Most of the impact will 

arise from projections of future 

increases or decreases in MLR 

remittances, which are amounts that 

were originally paid from CMS to MA 

organizations or Part D sponsors, which 

they have to return to CMS (although 

the remittances go to the Treasury 

General Fund and not the Medicare 

Trust Funds from which they 

originated). 

In the proposed rule, we explained 

that if we reinstate and add to the 

detailed MLR reporting requirements, as 

we proposed and are now finalizing, we 

will continue to pay a contractor to 

perform desk reviews and analyses of 

the reported data in order to identify 

omissions or suspected inaccuracies and 

to communicate its findings to MA 

organizations and Part D sponsors in 

order to resolve potential compliance 

issues, at a level comparable to the 

amount we paid for similar services for 

the contract years for which MA 

organizations and Part D sponsors were 

previously required to submitted 

detailed MLR data (that is, contract 

years 2014 through 2017). As a starting 

point for our analysis of the estimated 

cost increase associated with the 

additional desk review and analysis 

services that we anticipate a contractor 

will perform for us starting with 

contract year 2023 MLR reporting, we 

noted that, in the Regulatory Impact 

Analysis for the April 2018 final rule 

which had previously eliminated the 

detailed MLR reporting requirements, 

we assumed that by significantly 

reducing the amount of MLR data that 

MA organizations and Part D sponsors 

would be required to report to CMS 

annually starting with CY 2018, we had 

also eliminated the need for CMS to 

continue paying a contractor 

approximately $390,000 each year in 

connection with desk reviews of the 

detailed MLR reports. However, the 

April 2018 final rule indicated that the 

entire amount we paid to our desk 

review contractor would no longer be 

necessary once we stopped collecting 

detailed MLR data on an annual basis. 

As noted in the proposed rule, this has 

not been our experience, and in the 

years since we scaled back the reporting 

requirements, we have continued to find 

value in having our contractor perform 

MLR-related administrative tasks. Prior 

to CY 2018, the funding for these 

administrative tasks was included in the 

$390,000 figure that the April 2018 final 

rule identified as representing payment 

for desk reviews only. These 

administrative tasks include sending 

reminders to MA organizations and Part 

D Sponsors to submit their MLR data 

and attestations by the applicable 

deadlines, following up with MA 

organizations and Part D sponsors about 

their questions regarding their MLR 

submissions, and triaging 

communications to CMS so that matters 

requiring additional input from us are 

brought to our attention timely. CMS 

currently pays the contractor 

approximately $230,000 per year to 

perform these services. 

The proposed rule estimated that, if 

we finalized the detailed MLR reporting 

requirements as we had, and if we 

resume conducting desk reviews of the 

detailed MLR data, we will increase the 

amount that we pay our contractor for 

desk reviews and MLR-related 

administrative services so that the total 

payment amount will approximately 

equal to the total amount we paid to our 

contractor for those services prior to the 

elimination of the detailed MLR 

reporting requirements (that is, 

$390,000). In other words, we expect 

that we will need to pay our contractor 

an additional $160,000 per year to 


khammond on DSKJM1Z7X2PROD with RULES2
27880 Federal Register / Vol. 87, No. 89 / Monday, May 9, 2022 / Rules and Regulations 

perform MLR desk reviews of the 

detailed MLR data that CMS will be 

requiring MA organizations and Part D 

sponsors to submit to us on an annual 

basis, starting with CY 2023, under the 

requirements we are now finalizing. 

In addition, CMS currently pays a 

contractor $300,000 each year for 

software development, data 

management, and technical support 

related to MLR reporting. The 

Regulatory Impact Analysis for the April 

2018 final rule estimated that we would 

be able to reduce this amount by 

$100,000 because we would no longer 

need to maintain and update the MLR 

reporting software with validation 

features, to receive certain data extract 

files, or to provide support for desk 

review functionality. However, contrary 

to our expectations, since CY 2018, CMS 

has continued to require technical 

support related to submission of the 

MLR Data Forms, such that, even 

without requiring significant updates to 

the MLR reporting software, we have 

continued to pay a contractor $300,000 

for data management and technical 

support services. The proposed rule 

noted that we anticipate that we will 

continue to pay this amount for software 

development, data management, and 

technical support related to MLR 

reporting if the proposed changes to the 

MLR reporting requirements are 

finalized. 

Table 14 presents expected additional 

payments (transfers) from MA 

organizations and Part D sponsors to the 

Treasury arising because they are 

projected to pay more in MLR 

remittances to the Treasury. These 

additional payments are transfers since 

no goods or services are being created. 

The impact to the Medicare Trust Funds 

is $0. 

Based on internal CMS data, the raw 

average of total remittances for CYs 

2014–2019 is $153 million. As 

discussed in section II.G.2. of this final 

rule, when CMS collected detailed MLR 

data pursuant to the reporting 

requirements that were in effect for CYs 

2014–2017, the desk review contractor 

frequently detected potential errors or 

omissions in the reported data, which 

were brought to the attention of the MA 

organization or Part D sponsor that 

submitted the data, with a request to 

explain or correct the data. This process 

often resulted in the MA organization or 

Part D sponsor finding it necessary to 

resubmit the contract’s MLR Report after 

revising the figures in the Report or 

attaching supplementary materials to 

explain details of its expense allocation 

methodology. A summary of the MLR 

remittances for the initial MLR 

submission versus the final MLR 

submission for CYs 2014–2017 can be 

found in Table 14. These 4 years 

represent the time period when detailed 

MLR data was submitted to CMS and 

subjected to desk reviews. 

The percent change in MLR 

remittances increased on average 6.7 

percent between the initial and final 

MLR submissions during the MLR desk 

review periods for CYs 2014–2017. We 

anticipate that, if finalized, the 

amendments to §§ 422.2460 and 

423.2460 would increase future 

remittance amounts by an average of 6.7 

percent due to CMS receiving detailed 

MLR data and conducting desk reviews 

of the detailed MLR data. 

To estimate the amount of additional 

remittances under the regulations we 

are adopting in this final rule, we 

evaluated the MLR for those contracts 

that failed to meet the 85 percent 

minimum MLR requirement for CYs 

2016–2019. The MLR remittances for 

CYs 2014 and 2015 were much lower 

than those for the more recent years and 

so these older years were excluded from 

the base period that is used to project 

future remittances. For CYs 2016 and 

2017, we examined the MLR prior to 

desk reviews, or in the Initial MLR 

Submission. For CYs 2018 and 2019, 

when there were not desk reviews of 

detailed MLR data, we examined the 

finalized total MLR remittances. The 

average remittances for these years (CYs 

2016 and 2017 prior to desk reviews and 

CYs 2018 and 2019) equaled $204.0 

million. In order to project the increase 

in remittances for CYs 2023–2032, the 

$204.0 million was inflated using 

estimated enrollment and per capita 

increases based on Tables IV.C1. and 

IV.C3. of the 2021 Medicare Trustees 

Report, with ordinary inflation (Table 

II.D1. of the 2021 Medicare Trustees 

Report) carved out of the estimates. We 

continued to assume that remittance 

amounts would increase by 6.7 percent 

for the entire projection period due to 

the restatement of desk reviews of 

detailed MLR data, after the application 

of enrollment and per capita increases. 

Table 15 is based on data from the 

Office of the Actuary, some of which 

may be found in the annual Trustees 

Report. The calculations started with a 

$13.7 million additional cost to MA 

organizations and Part D sponsors in CY 


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TABLE 14: CHANGE IN MLR REMITTANCES BETWEEN INITIAL AND 

FINAL MLR SUBMISSION 

Initial MLR FinalMLR Percent 

Contract Year (CY) Submission Submission Change Change 

2014 36,884,719 37,074,217 189,498 0.5% 

2015 28,128,535 22,064,688 (6,063,847) -27.5% 

2016 200,308,358 242,402,915 42,094,557 17.4% 

2017 223,244,933 222,058,179 (1,186,754) -0.5% 

2014-2017 488,566,545 523,599,999 35,033,454 6.7% 

2018 92,639,916 94,502,390 1,862,474 -----

2019 298,124,406 298,124,406 ----- -----

Average (2016-2019): 1 204,045,022 ----- -----

1 The average remittance is calculated using the initial MLR submission for CY s 2016 and 2017 and the fmal MLR 

submission for CYs 2018 and 2019. 
Federal Register / Vol. 87, No. 89 / Monday, May 9, 2022 / Rules and Regulations 27881 

2019 (This amount is not shown in the 

table which is a 10 year table starting 

from CY 2023). The cost in each 

successive contract year is obtained by 

adding the MA enrollment increases 

expressed as a percentage in column (2), 

then adding the average annual per 

capita increase in expenditures, 

expressed as a percentage in column (3), 

and then dividing by ordinary inflation 

expressed as a percentage column (4). 

The calculations can be illustrated 

starting with the CY 2023 net cost ($20.3 

million) and deriving the $21.5 million 

CY 2024 cost. We have $20.3 million * 

(1+3.8%) * (1+4.8%) / (1+2.5%) = $21.5 

million. 

We are finalizing our impact analysis 

without change. 

9. Pharmacy Price Concessions in the 

Part D Negotiated Price (§§ 423.100 and 

423.2305) 

As discussed in section II.H.3. of this 

final rule, at §§ 423.100 and 423.2305, 

we are finalizing our proposal to adopt 

a new definition of ‘‘negotiated price’’ to 

include all pharmacy price concessions 

received by the plan sponsor for a 

covered Part D drug, and to reflect the 

lowest possible reimbursement a 

network pharmacy will receive, in total, 

for a particular drug through all phases 

of the Part D benefit In response to 

comments, we will retain the current 

regulatory definition of ‘‘negotiated 

prices’’ for 2023 and delete the current 

definition of ‘‘negotiated prices’’ (in the 

plural) and add a definition of 

‘‘negotiated price’’ (in the singular) to 

make clear that a negotiated price can be 

set for each covered Part D drug, and the 

amount of the pharmacy price 

concessions may differ on a drug by 

drug basis for 2024 and thereafter. We 

are finalizing the definition of 

‘‘negotiated price’’ that was proposed 

and that is intended to ensure that the 

prices available to Part D enrollees at 

the point of sale are inclusive of all 

pharmacy price concessions beginning 

with plan year 2024 onward. The 

requirement to apply pharmacy price 

concessions the negotiated price will 

apply in all phases of the Part D benefit. 

The provision would have several 

impacts on prescription drug costs for 

government, beneficiaries, Part D 

sponsors, and manufacturers. Tables 16, 

17, and 18 summarize these impacts, 

which are discussed in more detail in 

the narrative that follows. We note that 

this provision would also have one-time 

administrative costs for Part D sponsors. 

This cost is discussed in the Collection 

of Information section of this final rule. 

a. Impact on Prescription Drug Costs for 

Government, Beneficiaries, Part D 

Sponsors, and Manufacturers 

Tables 16, 17, and 18 summarize the 

10-year impacts we have modeled for 

requiring that sponsors apply all 

pharmacy price concessions to the 

negotiated price in all phases of the Part 

D benefit. These tables estimate a 

modest potential indirect effect on 

pharmacy payment as a result of 

pharmacies’ independent business 

decisions. Specifically, the estimates 

assume that pharmacies will seek to 

retain 2 percent of the existing 

pharmacy price concessions they 

negotiate with plan sponsors and other 

third parties to compensate for pricing 

risk and differences in cash flow and we 

assume that these business decisions 

will result in a slight increase in 

pharmacy payments of 0.2 percent of 

Part D gross drug cost. 

Tables 16, 17, and 18 reflect the 

impact of these provisions to enrollees, 

manufacturer gap discounts, and the 

Federal Government respectively. 

Overall beneficiaries are expected to 

save $26.5 billion, manufacturers pay 

$16.8 billion less in gap discounts, and 

the government cost is expected to 

increase $46.8 billion dollars over 2024– 

2032. 

Under this provision, we anticipate 

that beneficiaries would see lower 

prices at the pharmacy point-of-sale and 

on Plan Finder for most drugs, 

beginning immediately in the year the 

proposed change would take effect 

(2024). (This is summarized in Table 16 

in the row ‘‘Beneficiary Costs’’ which 

reflects a sum of the rows ‘‘Costsharing’’ and ‘‘Premiums.’’) Lower 

point-of-sale prices would result 

directly in lower cost-sharing costs for 

non-low-income beneficiaries, and on 

average we expect these cost-sharing 

decreases would exceed the premium 

increases. While the amounts will vary 


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TABLE 15: MLR COST {TRANSFERS) FROM MA ORGANIZATIONS AND 

PART D SPONSORS ($ MILLIONS) TO THE TREASURY 

Average 

Annual Per 

MA Capita Net Cost 

Contact Enrollment Increase in Ordinary (Savings) 

Year Increase Expenditures Inflation ($ millions) 

(1) (2) (3) (4) (5) 

2023 4.1% 4.8% 2.5% 20.3 

2024 3.8% 4.8% 2.5% 21.5 

2025 3.7% 5.4% 2.5% 22.9 

2026 3.6% 5.4% 2.5% 24.4 

2027 3.3% 5.3% 2.5% 25.9 

2028 3.1% 5.5% 2.5% 27.5 

2029 2.8% 5.5% 2.5% 29.1 

2030 2.6% 4.4% 2.5% 30.4 

2031 2.3% 7.2% 2.4% 32.6 

2032 1.8% 4.9% 2.4% 34.0 

Totals 268.6 
27882 Federal Register / Vol. 87, No. 89 / Monday, May 9, 2022 / Rules and Regulations 

depending on an individual 

beneficiary’s prescriptions, plan sponsor 

benefits, and contractual arrangements, 

we expect more than half of the nonlow-income, non-employer group 

beneficiaries to see lower total costs, 

inclusive of cost-sharing decreases and 

premium increases. For example, a 

beneficiary who takes no medications 

will probably see a premium increase 

and no cost-sharing decreases, whereas 

a beneficiary who takes several 

medications each month is likely to see 

cost-sharing decreases that are greater 

than the premium increase. For lowincome beneficiaries, whose out-ofpocket costs are funded through 

Medicare’s low-income cost-sharing 

payments, cost-sharing savings resulting 

from lower point-of-sale prices would 

accrue to the Government. Plan 

premiums would likely increase as a 

result of the change to the definition of 

negotiated price—if pharmacy price 

concessions are required to be passed 

through to beneficiaries at the point of 

sale, fewer such concessions could be 

apportioned to reduce plan liability in 

the bid, which would have the effect of 

increasing the cost of coverage under 

the plan. At the same time, the 

reduction in cost-sharing obligations 

would be large enough to lower 

beneficiaries’ overall out-of-pocket costs 

on average. 

The increasing cost of coverage under 

Part D plans as a result of pharmacy 

price concessions being applied at the 

point of sale as proposed would likely 

have a more significant impact on 

Government costs, which would 

increase overall due to the significant 

growth in Medicare’s direct funding of 

plan premiums and low-income 

premium payments. However, partially 

offsetting the increase in direct funding 

and low-income premium payment 

costs for the government would be 

decreases in Medicare’s reinsurance and 

low-income cost-sharing payments. 

Decreases in Medicare’s reinsurance 

payments result when lower negotiated 

prices slow down the progression of 

beneficiaries through the Part D benefit 

and into the catastrophic phase, and 

when the Government’s 80 percent 

reinsurance payments for allowable 

drug costs incurred in the catastrophic 

phase are based on lower negotiated 

prices. Similarly, low-income costsharing payments would decrease if 

beneficiary cost-sharing obligations 

decline due to the reduction in prices at 

the point of sale. Finally, the slower 

progression of beneficiaries through the 

Part D benefit would also have the effect 

of reducing aggregate manufacturer gap 

discount payments as fewer 

beneficiaries would enter the coverage 

gap phase or progress entirely through 

it. These effects are presented in Table 

18. 

These impacts assume that the 

definition of ‘‘negotiated price’’ would 

apply for Part D drugs in all phases of 

the Part D benefit (applicable drugs in 

the coverage gap phase of the benefit). 

While we initially proposed excluding 

the coverage gap phase from this policy, 

we are finalizing the alternative 

proposal which applies this policy to 

the entire benefit. This policy increases 

beneficiary savings and government 

costs relative to the initial proposal, but 

simplifies administration and provides 

greater transparency to beneficiaries. 

Table 16 shows the increased total 

savings to enrollees which is projected 

to be $26.5 billion for the period from 

2024–2032. As explained in the 

previous narratives, the total savings to 

enrollees’ accounts for both cost-sharing 

savings and expected premium 

increases. 


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ER09MY22.020</GPH>khammond on DSKJM1Z7X2PROD with RULES2

TABLE 16. TOTAL IMP ACTS TO ENROLLEES (BILLIONS $) FOR 2024 THROUGH 2032 WIT

APPLICABLE DRUGS IN COVERAGE GAP 

Year 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 

Beneficiary Costs $0.00 $0.00 ($1.73) ($1.88) ($2.04) ($2.39) ($2.77) ($3.20) ($3.65) ($4.15) ($4.69) 

Cost-Sharing $0.00 $0.00 ($2.62) ($2.85) ($3.10) ($3.63) ($4.22) ($4.86) ($5.57) ($6.33) ($7.16) 

Premium $0.00 $0.00 $0.89 $0.97 $1.05 $1.24 $1.44 $1.67 $1.91 $2.18 $2.47 

*Negative numbers indicate savings; positive numbers indicate costs. Numbers are in billions of$ 

ER09MY22.021</GPH>khammond on DSKJM1Z7X2PROD with RULES2

TABLE 17: TOTAL IMPACTS TO MANUFACTURERS (BILLIONS $) FOR 2024 THROUGH 2032 W

COVERAGE GAP 

Year 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 203

Manufacturer Gap Discount $0.00 $0.00 ($1.25) ($1.37) ($1.51) ($1.66) ($1.83) ($2.00) ($2.19) ($2.38) ($2.

*Negative numbers indicate savings; positive numbers indicate costs. Numbers are in billions of dollars($). 
We received comments on our impact 

analysis. 

Comment: A commenter stated that 

while this final rule is a step in the right regulatory impact analysis of how this 

direction CMS must conduct a complete 


ER09MY22.022</GPH>khammond on DSKJM1Z7X2PROD with RULES2

TABLE 18: TOTAL IMPACTS TO GOVERNMENT FOR 2024 THROUGH 2032 WITH APPLICATIO

DRUGS IN THE COVERAGE GAP 

2022 2023 2024 2025 2026 2027 2028 2029 2030 203

Government Costs $0.00 $0.00 $3.27 $3.56 $3.88 $4.41 $4.98 $5.60 $6.27 $7.

Direct Payments $0.00 $0.00 $6.74 $7.29 $7.95 $8.83 $9.78 $10.80 $11.90 $13.Reinsurance $0.00 $0.00 ($1.92) ($2.08) ($2.29) ($2.28) ($2.26) ($2.22) ($2.16) ($2.0

LI Cost-Sharing $0.00 $0.00 ($1.83) ($1.96) ($2.12) ($2.53) ($2.98) ($3.48) ($4.02) ($4.6LI Premium $0.00 $0.00 $0.29 $0.31 $0.33 $0.38 $0.44 $0.50 $0.56 $0.

*Negative numbers indicate savings; positive numbers indicate costs. Numbers are in billions of dollars ($). 
27886 Federal Register / Vol. 87, No. 89 / Monday, May 9, 2022 / Rules and Regulations 

rule affects all types of specialty 

pharmacies. There was concern that 

because of the more expensive drugs 

sold by specialty pharmacies that this 

final rule would not meet their needs 

even though in aggregate it improved 

the program. 

Response: CMS does not collect data 

on pharmacy price concessions at the 

pharmacy level, and this information is 

not publicly available. In order to 

estimate, for example, the effects on 

specialty pharmacies in particular, we 

would need to speculate on the relative 

difference between price concessions to 

those pharmacies versus retail 

pharmacies. As we do not have any 

basis for developing this difference, it is 

not possible to meaningfully analyze 

impacts by type of pharmacy. 

Comment: A commenter offered that 

in addition to the financial impacts 

described in the rule, there may be 

additional improvements in health 

outcomes and medical costs resulting 

from improved medication adherence as 

a result of lower negotiated prices. 

Response: We agree that it is possible 

that there will be effects on health 

outcomes. We do not have adequate 

information to quantify these impacts at 

this time because the actual cost-sharing 

effects will vary considerably with how 

plan sponsors reflect this in their benefit 

design. For example, it is possible that 

the plans will concentrate these effects 

on certain categories of drugs, and many 

health effects may take several years to 

realize. 

Comment: We received several 

comments requesting that the financial 

impacts include analysis by type of 

retail pharmacy. 

Response: We do not have sufficient 

data to determine impacts by type of 

pharmacy, as the pharmacy price 

concessions are not reported in 

connection to a particular pharmacy or 

type of pharmacy. 

Comment: A commenter stated that 

CMS did not disclose their assumptions 

in developing the tables. These would 

include future Part D membership, 

trends in drug utilization, drug cost, 

network contracting, manufacturer 

rebates, drug mix, benefit designs, and 

general inflation. The commenter noted 

that CMS did disclose that they 

assumed pharmacies would seek to 

retain 2 percent of the existing 

pharmacy concessions for risk and 

cashflow. Most importantly, CMS did 

not disclose how lowest reimbursement 

was applied in the model. 

Response: We modeled the lowest 

reimbursement as the negotiated price, 

rather than having bonus payments to 

pharmacies that would lower DIR and 

therefore lead to higher premiums. 

Aggregate forecasts for the Part D 

program payments, including cost and 

DIR trends similar to those used in our 

analysis, may be found in the Medicare 

Trustees Report for 2021, a publicly 

available resource (https://

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

medicare-trustees-report.pdf). More 

detailed assumptions are based on CMS 

internal data that is not public, and if 

made public could adversely affect Part 

D bid submissions, such as drug mix or 

beneficiary progression through the 

benefit. For example, sharing the 

assumptions on the projected mix of 

price concessions by drug could allow 

sponsors to infer whether their current 

mix presents opportunities for greater 

price concessions on certain drugs. 

Comment: Several commenters 

commissioned an independent actuarial 

analysis to gain additional insight into 

the proposed rule’s potential impacts. 

The actuary performing the independent 

analysis believed that the CMS 

assumption of pharmacies negotiating 2 

percent of the concessions would 

produce a different value than what was 

shown in the proposed rule. 

Response: We assumed that 2 percent 

of only the existing pharmacy price 

concessions impacted by this policy are 

reflected as an offset to pharmacies for 

the change in cashflow and risk. As the 

proposed rule specified that the new 

definition for the term ‘‘negotiated 

price’’ would not apply in the coverage 

gap, we did not apply the 2 percent 

assumption to price concessions in the 

coverage gap in the proposed rule. This 

difference between applying the 2 

percent assumption to the entire benefit 

or excluding the coverage gap explains 

the discrepancy. 

As the proposed rule specified that 

the new definition for the term 

‘‘negotiated price’’ would not apply in 

the coverage gap, we did not apply the 

2 percent assumption to price 

concessions in the coverage gap in the 

proposed rule. 

Comment: Several commenters 

commissioned an independent actuarial 

analysis to gain additional insight into 

the proposed rule’s potential impacts. 

The actuary performing the independent 

analysis noted that premium is an 

important factor—perhaps the most 

important factor—in the purchase 

decisions of members. 

Response: We agree that Part D 

sponsors are highly motivated to keep 

premiums low. CMS agrees that 

premiums are a key factor influencing 

insurance purchasing decisions and we 

have taken premium levels into account 

in our analysis. 

Comment: A commenter questioned 

the difference between the calculations 

provided in the Alternative Analysis 

section of the proposed rule (section 

V.E.2.) and the calculations provided in 

the narrative in section V.D.8. of the 

proposed rule, the difference between 

them being inclusion of the coverage 

gap. The commenter questioned the 

validity of assuming a 6% drop in 

manufacturer cost between the two 

tables. 

Response: We thank the commenter 

for their feedback. The manufacturer 

cost is impacted not only directly by the 

change in negotiated price used for 

calculating the coverage gap discount on 

a particular drug, but also by changing 

the amount of spending in the gap phase 

of the benefit. As negotiated prices 

decrease from this policy, there is less 

spending in the coverage gap phase of 

the benefit. 

Comment: A commenter provided an 

alternative analysis that considered the 

effects of an incentive payment of 4.3 

percent of drug cost to the pharmacies 

after the point of sale, rather than the 

net payment to the pharmacy paid at the 

point of sale assumed in the RIA. They 

noted that this is another possible 

payment arrangement under the 

proposed rule. 

Response: While an interesting 

example, we believe this approach is 

unlikely. A bonus payment to 

pharmacies would further increase 

premiums because it would decrease the 

DIR paid to the plan sponsor. Recent 

data indicate an increase in DIR of 512 

percent between 2009 and 2018, which 

suggests plan sponsors are very focused 

on increasing DIR. 

Comment: A few commenters 

commissioned an independent actuarial 

analysis to gain additional insight into 

the proposed rule’s potential impacts. 

These analyses assumed pharmacy DIR 

was applied at the POS in all phases 

including the coverage gap. The results 

were generally consistent with the 

direction and magnitude of CMS’s 

overall findings by stakeholder. The 

independent analyses assumed no 

behavior changes among stakeholders, 

which, if considered, could have a 

material impact on the estimates. The 

independent analyses indicated that at 

best 29 percent of beneficiaries may see 

cost-sharing savings that exceed their 

increases in premiums. By contrast, at 

least 38 percent of beneficiaries may 

realize higher net costs, as their 

premium increases typically outweigh 

their cost-sharing savings, and 33 

percent (low income enrollees) may see 

little or no change in OOP costs. 

Response: We appreciate the feedback 

and additional analysis shared in this 

comment. As noted by the commenter, 

the overall magnitude and direction of 


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Federal Register / Vol. 87, No. 89 / Monday, May 9, 2022 / Rules and Regulations 27887 

cost impacts is broadly similar to the 

results in the regulatory impact analysis. 

We agree that low income beneficiaries 

will not see significant impacts from the 

rule. We do not wholly agree with the 

percentages of beneficiaries described in 

the analysis. For non-low income 

beneficiaries, we disagree with the 

characterization in the comment that no 

beneficiaries ending in the deductible 

phase will benefit. On the contrary, 

those beneficiaries who are nearly at the 

end of the deductible could see 

substantial cost decreases as they are 

paying the full negotiated price of any 

drug in that phase. This is also 

implicitly acknowledged in the 

independent analysis with the caveat 

that beneficiaries in this phase would 

‘‘typically’’ not see a cost decrease. 

We are finalizing our impact analysis 

without change. We appreciated the 

additional analysis provided by 

commenters. For the more complete 

analysis providing a range of potential 

future impacts, we note that our 

estimates of government cost are within 

the range they estimated. We believe the 

independent analysis largely confirms 

our results and the majority of 

differences are due to more granular 

data in the CMS analysis. 

E. Alternatives Considered Analysis 

The major drivers of cost and transfers 

in this rule include the MLR and Part D 

pharmacy price concessions provisions. 

The aggregate impact of each of these 

over 10 years exceeds $100 million. 

Alternative analysis is provided below 

for these provisions. 

1. Alternatives Related to the Medical 

Loss Ratio Reporting Requirements (42 

CFR 422.2460, 423.2460) 

As an alternative to our proposal to 

reinstate and add to the detailed MLR 

reporting requirements in effect for CYs 

2014–2017, we considered continuing to 

collect minimal MLR data, as required 

under current §§ 422.2460 and 

423.2460, and to use our authority 

under §§ 422.2480 and 423.2480 to 

require that entities selected for MLR 

audits provide us with more detailed 

MLR data, and with any underlying 

records that can be used to substantiate 

amounts included in the calculation of 

each contract’s MLR and the amount of 

any remittance owed to CMS. In 

addition to their primary function as a 

mechanism for obtaining information 

that can be used to validate audited MA 

organizations’ and Part D sponsors’ 

compliance with the applicable 

requirements for calculating and 

reporting MLR information to CMS, we 

believe that audits are in general wellsuited for examining matters such as 

where and how calculation errors occur, 

and identifying areas where we might be 

able to reduce the incidence of errors 

through revisions to our regulations and 

guidance. By contrast, desk reviews of 

detailed MLR data are more useful for 

quickly reviewing large amounts of data 

in order to identify possible errors or 

omissions that might affect the MLR 

calculation, and for identifying marketwide trends in how MA organizations 

and Part D sponsors might be adjusting 

their expenditures in response to rule or 

policy changes that affect how MLRs are 

calculated. Given CMS’ interest in better 

understanding how MA organizations 

and Part D sponsors’ are calculating 

their MLRs in general, and in flagging 

areas where calculation errors might be 

impacting the MLR calculation so that 

they can be addressed promptly, we 

decided that our goals would be better 

served if we were to require MA 

organizations and Part D sponsors to 

report detailed MLR data to us directly, 

and to subject that data to desk reviews, 

rather than to attempt to collect the 

same or similar MLR data using our 

audit authority. 

An additional reason we chose at this 

time not to rely solely on MLR audits to 

identify errors in MA organizations’ and 

Part D sponsors’ MLR submissions is 

that we believe this approach would 

result in a greater burden for the Federal 

Government and cumulatively across all 

MA organizations and Part D sponsors 

than would the proposed reinstatement 

of the detailed MLR reporting 

requirements. We note that, in the April 

2018 final rule, CMS indicated that we 

did not believe that eliminating the 

detailed MLR reporting requirements 

would weaken MLR compliance 

oversight, and in connection with this 

we noted that had not changed our 

authority under § 422.2480 or 

§ 423.2480 to conduct selected audit 

reviews of the data reported under 

§§ 422.2460 and 423.2460 for purposes 

of determining that remittance amounts 

under §§ 422.2410(b) and 423.2410(b) 

and sanctions under §§ 422.2410(c) and 

(d) and 423.2410(c) and (d) were 

accurately calculated, reported, and 

applied (73 FR 16675). However, in that 

rule, we did not account for the 

increased cost to CMS, or the additional 

cumulative burden across all MA 

organization and Part D sponsors, if we 

were to scale up our MLR audit 

operations to a sufficient degree to 

perform effective compliance oversight 

in the absence of detailed MLR 

reporting requirements. 

Based on CMS’ historical costs in 

auditing MLRs, we estimate that 

individual audits would cost the 

government approximately $71,000 per 

audit. We anticipate that, in order to 

effectively monitor MLR compliance 

using audits, we would need to audit 

one-third of MA and Part D contracts, or 

an average of 194 contracts per year, at 

a cost of approximately $13.8 million 

per year. By contrast, we estimate that 

the proposed reinstatement of the 

detailed MLR reporting requirements 

would result in a relatively small 

increase in burden for MA organizations 

and Part D sponsors, as we expect that 

they would already need to be tracking 

most of the information included in the 

detailed MLR Report template in order 

to calculate their MLRs in accordance 

with current requirements. 

2. Alternatives Related to Pharmacy 

Price Concessions in the Part D 

Negotiated Price (§ 423.100) 

As discussed in section II.H.3. of this 

final rule, we proposed to adopt a new 

definition of ‘‘negotiated price’’ to 

include all pharmacy price concessions 

received by the plan sponsor for a 

covered Part D drug, and to reflect the 

lowest possible reimbursement a 

network pharmacy will receive, in total, 

for a particular drug. 

In the analysis provided in section 

IV.D.8. of this final rule, we estimate the 

impact of our proposal to require 

application of pharmacy price 

concessions to the negotiated price at 

the point-of-sale in all phases of the Part 

D benefit. In this alternative analysis, 

we consider the added impact of only 

requiring application of pharmacy price 

concessions to the negotiated price of 

applicable drugs outside of the coverage 

gap phase. 

This alternative proposal would be 

more complex, but produces a smaller 

premium impact. Given that Part D 

sponsors are highly focused on 

premium targets for their competitive 

position, we would expect the 

pharmacy price concessions to be held 

back from the point of sale transaction 

and reimbursed at a later date. 

Table 19 shows decreased savings to 

pharmaceutical manufacturers if 

pharmacy price concessions are applied 

to applicable drugs in the coverage gap. 


khammond on DSKJM1Z7X2PROD with RULES2
Table 20 shows the impact to the 

Government. As explained in the rule, the total Government cost reflects 

narrative of section IV.D.8. of this final 

direct payments, reinsurance, low 

four separate components including 


ER09MY22.023</GPH>khammond on DSKJM1Z7X2PROD with RULES2

TABLE 19*: IMPACT($ BILLIONS) OF CONCESSIONS EXCLUDES APPLICATION TO APPLIC

COVERAGE GAP AND USES A 2023 STARTING DATE 

TA 

Label Item/Year 2023 2024 2025 2026 2027 2028 2029 

(A) Gross Drug Covered Cost (GDCC) -$14.4 -$15.8 -$17.2 -$19.0 -$20.9 -$22.9 -$25.

Drug Cost Covered by Plan (Supplemental and non-Part D) 

(B) CCP -$10.5 -$11.6 -$12.7 -$13.6 -$14.6 -$15.6 -$16.

(C) OOP including Gap Discount -$3.9 -$4.2 -$4.6 -$5.4 -$6.3 -$7.2 -$8.

(D) General Premium Payment $4.8 $5.2 $5.6 $6.3 $7.0 $7.8 $8.

(E) Reinsurance -$1.4 -$1.6 -$1.7 -$1.7 -$1.7 -$1.7 -$1.

(F) LIS Cost-Sharing -$1.2 -$1.3 -$1.4 -$1.7 -$2.1 -$2.4 -$2.

(G) LIS Premium $0.2 $0.2 $0.2 $0.3 $0.3 $0.4 $0.

(H) Total Government $2.3 $2.5 $2.7 $3.1 $3.6 $4.0 $4.

(I) Enrollee Cost-Sharing -$1.7 -$1.9 -$2.0 -$2.4 -$2.8 -$3.3 -$3.

(J) Enrollee Premiums $0.6 $0.7 $0.7 $0.9 $1.0 $1.2 $1.

(K) Total Enrollee Costs -$1.1 -$1.2 -$1.3 -$1.5 -$1.8 -$2.1 -$2.

(L) Total Benefits 2.9 3.2 3.5 4.0 4.6 5.2 5.

(M) Gap Discount -$0.9 -$1.0 -$1.1 -$1.2 -$1.4 -$1.5 -$1.

*Negative numbers indicate savings. Positive numbers indicate costs. Row totals are found in Table 17. 
Federal Register / Vol. 87, No. 89 / Monday, May 9, 2022 / Rules and Regulations 27889 

income cost-sharing payments, and lowincome premium payments. We note, that this cost is a transfer. More 

specifically, the identical Rx that was 

formerly paid for by enrollees is now 

being paid for by the Government. 

F. Accounting Statement and Table 

In accordance with OMB Circular A– 

4, Table 21 depicts an accounting 

statement summarizing the assessment 

of the benefits, costs, and transfers 

associated with this regulatory action. 

Table 21 is based on the summary of 

costs presented in Tables 22 and 23. 

Tables 22 and 23 reflect all costs in both 

the COI and RIA sections. This 

summary table allocates impact by year 

and by whether it is a cost or transfer 

(no provisions of this rule have a 

savings impact). In all tables, costs are 

expressed as positive amounts. 

However, in the transfer row negative 

numbers correspond to payments by the 

government (which in the provisions of 

this rule may come from the Treasury or 

Medicare Trust Fund) while positive 


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TABLE 20*: TOTAL IMP ACTS FOR 2023 THROUGH 2032 WITHOUT 

APPLICATION TO APPLICABLE DRUGS IN COVERAGE GAP 

Total Per Percent Member-Per-Year (in $ billions) 2023-2032111 Change 

Beneficiary Costs (K) ($21.30) ($36.66) -2% 

Cost-Sharing (I) ($33.10) ($57.03) -6% 

Premium (J) $11.80 $20.37 5% 

Government Costs $40.00 $69.17 3% 

Direct Payment (D) $76.70 $132.47 83% 

Reinsurance (E) ($15.80) ($27.27) -2% 

LI Cost-Sharing (F) ($24.40) ($42.15) -5% 

LI Premium (G) $3.50 $6.13 7% 

Manufacturer Gap Discount (M) ($14.60) ($25.19) -6% 

*Negative numbers indicate savings; positive numbers equal costs. Minor discrepancies between the sums in Tables 

16 and 17 are due to rounding. 

Note: These values represent the annualized average impacts divided by the average total Part D projected enrollees. 

Actual impacts will vary depending on beneficiary status and plan. 

TABLE 21: ACCOUNTING STATEMENT 

Estimate at 

Estimate at 7% 3% 

(In 2022 (In 2022 

Category Dollars) Dollars) Years Covered Affected Stakeholders 

Net Annualized 

Monetized Cost 3.1 3.1 CYs 2023-2032 MA organizations, Part D sponsors, and 

($ Millions) contractors for the Federal Government 

The transfers in this row combine: (1) transfers 

arising from the pharmacy price concessions 

Net transfers from the provision from the Medicare Trust Fund to plan 

Medicare Trust Fund 4,341.7 4,564.1 CYs 2023-2032 enrollees and pharmaceutical manufacturers; and 

($ Millions) (2) transfers arising from the MOOP provision 

from the Medicare Trust Fund to States and 

providers of duals. 

Transfers to the United The transfers in this row arising from the MLR 

States Treasury 26.0 26.5 CYs 2023-2032 provision are from MA organizations and Part D 

($ Millions) sponsors to the United States Treasury. 
27890 Federal Register / Vol. 87, No. 89 / Monday, May 9, 2022 / Rules and Regulations 

numbers indicate savings. There are 3 

transfers in this rule: The MOOP 

provision is a cost to the Medicare Trust 

Fund (TF) (the corresponding gain to 

States and providers of duals in equal 

amounts is not shown in Tables 22 and 

23). The MLR provision is a savings to 

the Treasury (the corresponding loss in 

equal amount to the plans is not shown 

in the Tables 22 and 23). The pharmacy 

price concessions provision incurs a 

cost to the Medicare Trust Fund, and 

savings to enrollees and manufacturers. 

However, there is a small difference 

between what the Trust Fund pays and 

what beneficiaries and manufacturers 

gain. The difference is due to the 

assumption that pharmacies will seek to 

retain a small portion of the current DIR 

to compensate for differences in cash 

flow and pricing risk. Therefore, Tables 

22 and 23 list separately the impacts on 

the Trust Fund, the enrollees, and the 

manufacturers. However, the row ‘‘Total 

transfers from the Trust Fund’’ only 

reflects the sum of the Trust Fund 

payments for the pharmacy price 

concessions provision and the MOOP 

provision (it does not offset this amount 

by the savings to enrollees and 

manufacturers). Similarly, Table 21 

reflects separately, annualized transfers 

to the Treasury and annualized transfers 

from the Trust Fund for the MOOP and 

pharmacy price concessions provision. 

Thus, complete detailed amounts on all 

provisions may be found in Tables 22 

and 23. 

BILLING CODE 4120–01–P 


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ER09MY22.026</GPH>khammond on DSKJM1Z7X2PROD with RULES2

TABLE 22: SUMMARY TABLE OF COSTS and TRANSFERS BY PROVISION AND YEAR

2023 2023 2024 2024 2025 2025 2026 2026 2027 

Costs Transfers Cost Transfers Cost Transfers Cost Transfers Cost 

Total Costs 2.8 4.2 3.9 2.8 2.8 Total transfers 

(United States 

Treasurv) 20.3 21.5 22.9 24.4 

Total Transfers 

(Medicare Trust 

Fund) (40.0) (3312.0) (3604.2) (3933.1) 

MOOP (40.0) ( 43.7) (47.9) (52.3) 

Enrollee Advisory 

Committee 1.0 1.0 1.0 

HRAs 0.0 

Network Adequacy 0.0 0.0 0.0 0.0 0.0 

HIDE, FIDE Definition 0.0 D-SNP contracts 1.1 Past Performance 0.0 

Unified 

Appeals/Grievances 0.0 

Marketing MultilanErUage insert 0.3 0.3 0.3 0.3 0.3 MLR Paperwork 2.3 2.3 2.3 2.3 2.3 MLR Treasury 20.3 21.5 22.9 24.4 MLR Contractor 0.2 0.2 0.2 0.2 0.2 Rx.PDE 

Transmission Costs 1.4 0.1 0.1 0.1 

Rx cost to TF 

( expressed as a 

negative number) (3268.3) (3556.3) (3880.8) 

Rx Savings 

Enrollees 1731.1 1882.9 2044.0 

Rx Savings Manufacturers 1251.6 1368.2 1512.6 

NOTE: Entries of$0.0 reflect rounding to tenths ofa million. However, the sum of these numbers adds a total of about $0.1 million and hen

numbers are obtained by dividing the corresponding numbers in the Summary COi table by 1,000,000. Positive numbers in the cost columns 

columns, positive numbers indicate savings to the Federal Government while negative numbers indicate costs to the Federal Government. 

ER09MY22.027</GPH>khammond on DSKJM1Z7X2PROD with RULES2

TABLE 23: SUMMARY TABLE OF COSTS AND TRANSFERS BY PROVISION AND YEAR($ 

2028 2028 2029 2029 2030 2030 2031 2031 2032 

Costs Transfers Cost Transfers Cost Transfers Cost Transfers Cost 

Total Costs 2.8 2.8 2.8 2.8 2.8 Total transfers 

(United States 27.5 29.1 30.4 32.6 

Treasurv) Total Transfers 

(Medicare Trust 

Fund) (5041.7) (5670.6) (6348.9) (7082.2) 

MOOP (63.6) (69.1) (74.7) (80.5) 

Enrollee Advisory 1 1 1 1 1 

Committee 

HRA 

Network Adequacy 0.0 0.0 0.0 0.0 0.0 

HIDE,FIDE Definition D-SNP contracts 

Past Performance 

Unified Appeals/Grievances 

Marketing Multi- 0.3 0.3 0.3 0.3 0.3 language insert 

MLR Paperwork 2.3 2.3 2.3 2.3 2.3 MLR Treasury 27.5 29.1 30.4 32.6 MLR Contractor 0.2 0.2 0.2 0.2 0.2 RxAdmin 0.1 0.1 0.1 0.1 0.1 Rx cost to TF 

( expressed as a 

negative number) (4978.1) (5601.4) (6274.2) (7001.7) 

Rx Savings 

Enrollees 2775.0 3195.0 3652.0 4150.3 

Rx Savings 

Manufacturers 1826.1 2000.6 2185.9 2382.4 

NOTE: Entries of $0.0 reflect rounding to tenths of a million. However, the sum of these numbers adds a total of about $0.1 million and hence these numbers were 

by dividing the corresponding numbers in the Summary COi table by 1,000,000. Positive numbers in the cost columns represent costs. In the transfer columns, posi

Federal Government while negative numbers indicate costs to the Federal Government. 
Federal Register / Vol. 87, No. 89 / Monday, May 9, 2022 / Rules and Regulations 27893 

BILLING CODE 4120–01–C 

F. Conclusion 

The previous analysis, together with 

the preceding preamble, provides an 

RIA. This rule at an annualized average 

cost of 3.1 million, during the first 10 

years after implementation, provides 

efficiencies and improves marketing and 

communications, past performance 

measures, Star Ratings, network 

adequacy, medical loss ratio reporting, 

requirements during disasters or public 

emergencies, D–SNP program, MOOP, 

as well as cost efficiencies to enrollees 

for prescription drugs. Additionally, 

there are a variety of transfers to and 

from the Federal Government (the 

Medicare Trust Fund and the United 

States Treasury) which in aggregate will 

increase dollar spending by $4.3 to $4.5 

billion annually. We estimate that this 

rule generates $2.0 million in 

annualized costs, discounted at 7 

percent relative to year 2016, over an 

infinite time horizon. 

In accordance with the provisions of 

Executive Order 12866, this final rule 

was reviewed by the Office of 

Management and Budget. 

Chiquita Brooks-LaSure, 

Administrator of the Centers for 

Medicare & Medicaid Services, 

approved this document on April 22, 

2022. 

List of Subjects 

42 CFR Part 417 

Administrative practice and 

procedure, Grant programs—health, 

Health care, Health insurance, Health 

maintenance organizations (HMO), Loan 

programs—health, Medicare, Reporting 

and recordkeeping requirements. 

42 CFR Part 422 

Administrative practice and 

procedure, Health facilities, Health 

maintenance organizations (HMO), 

Medicare, Penalties, Privacy, Reporting 

and recordkeeping requirements. 

42 CFR Part 423 

Administrative practice and 

procedure, Emergency medical services, 

Health facilities, Health maintenance 

organizations (HMO), Medicare, 

Penalties, Privacy, Reporting and 

recordkeeping requirements. 

For the reasons set forth in the 

preamble, the interim rule amendments 

to 42 CFR 417.472, 422.152, 422.166, 

422.252, 423.182, and 423.186, which 

published at 85 FR 19230 (April 6, 

2020) and 85 FR 54820 (September 2, 

2020), are adopted as final and the 

Centers for Medicare & Medicaid 

Services further amends 42 CFR chapter 

IV as set forth below: 

PART 422—MEDICARE ADVANTAGE 

PROGRAM 

■ 1. The authority citation for part 422 

continues to read as follows: 

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

■ 2. Section 422.2 is amended by— 

■ a. In the definition of ‘‘Fully 

integrated dual eligible special needs 

plan’’: 

■ i. Revising paragraphs (2) and (3); 

■ ii. Removing the period at the end of 

paragraph (4) and adding a semicolon in 

its place; and 

■ iii. Adding paragraphs (5) and (6); and 

■ b. Revising the definition of ‘‘Highly 

integrated dual eligible special needs 

plan’’. 

The revisions and additions read as 

follows: 

§ 422.2 Definitions. 

* * * * * 

Fully integrated dual eligible special 

needs plan * * * 

(2) Whose capitated contract with the 

State Medicaid agency requires coverage 

of the following benefits, to the extent 

Medicaid coverage of such benefits is 

available to individuals eligible to enroll 

in a fully integrated dual eligible special 

needs plan (FIDE SNP) in the State, 

except as approved by CMS under 

§ 422.107(g) and (h): 

(i) Primary care and acute care, and 

for plan year 2025 and subsequent years 

including Medicare cost-sharing as 

defined in section 1905(p)(3)(B), (C), 

and (D) of the Act, without regard to the 

limitation of that definition to qualified 

Medicare beneficiaries; 

(ii) Long-term services and supports, 

including coverage of nursing facility 

services for a period of at least 180 days 

during the plan year; 

(iii) For plan year 2025 and 

subsequent years, behavioral health 

services; 

(iv) For plan year 2025 and 

subsequent years, home health services 

as defined in § 440.70 of this chapter; 

and 

(v) For plan year 2025 and subsequent 

years, medical supplies, equipment, and 

appliances, as described in 

§ 440.70(b)(3) of this chapter; 

(3) That coordinates the delivery of 

covered Medicare and Medicaid 

services using aligned care management 

and specialty care network methods for 

high-risk beneficiaries; 

* * * * * 

(5) For plan year 2025 and subsequent 

years, that has exclusively aligned 

enrollment; and 

(6) For plan year 2025 and subsequent 

years, whose capitated contract with the 

State Medicaid agency covers the entire 

service area for the dual eligible special 

needs plan. 

* * * * * 

Highly integrated dual eligible special 

needs plan means a dual eligible special 

needs plan offered by an MA 

organization that provides coverage of 

Medicaid benefits under a capitated 

contract that meets the following 

requirements— 

(1) The capitated contract is between 

the State Medicaid agency and— 

(i) The MA organization; or 

(ii) The MA organization’s parent 

organization, or another entity that is 

owned and controlled by its parent 

organization; 

(2) The capitated contract requires 

coverage of the following benefits, to the 

extent Medicaid coverage of such 

benefits is available to individuals 

eligible to enroll in a highly integrated 

dual eligible special needs plan (HIDE 

SNP) in the State, except as approved by 

CMS under § 422.107(g) or (h): 

(i) Long-term services and supports, 

including community-based long-term 

services and supports and some days of 

coverage of nursing facility services 

during the plan year; or 

(ii) Behavioral health services; and 

(3) For plan year 2025 and subsequent 

years, the capitated contract covers the 

entire service area for the dual eligible 

special needs plan. 

* * * * * 

■ 3. Section 422.100 is amended by— 

■ a. In paragraph (f)(4), removing the 

word ‘‘incurred’’ and adding in its place 

the word ‘‘accrued’’. 

■ b. In paragraph (f)(5)(iii), removing the 

word ‘‘incurred’’ and adding in its place 

the word ‘‘accrued’’. 

■ c. Revising paragraphs (m)(1) 

introductory text and (m)(2) 

introductory text; 

■ d. Removing paragraph (m)(2)(ii)(B); 

■ e. Redesignating paragraph 

(m)(2)(ii)(A) as paragraph (m)(2)(ii); 

■ f. Revising paragraphs (m)(3) and (4) 

and (m)(5)(i); and 

■ g. Adding paragraph (m)(6). 

The revisions and addition read as 

follows: 

§ 422.100 General requirements. 

* * * * * 

(m) * * * 

(1) Access to covered benefits during 

disasters or emergencies. When a 

disaster or emergency is declared as 

described in paragraph (m)(2) of this 

section and there is disruption of access 

to health care as described in paragraph 

(m)(6) of this section, an MA 

organization offering an MA plan must, 

until the end date specified in 

paragraph (m)(3) of this section occurs, 


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27894 Federal Register / Vol. 87, No. 89 / Monday, May 9, 2022 / Rules and Regulations 

ensure access to covered benefits in the 

following manner: 

* * * * * 

(2) Declarations of disasters or 

emergencies. A declaration of a disaster 

or emergency will identify the 

geographic area affected by the event 

and may be made as one of the 

following: 

* * * * * 

(3) End of the special requirements for 

the disaster or emergency. An MA 

organization must continue furnishing 

access to benefits as specified in 

paragraphs (m)(1)(i) through (iv) of this 

section for 30 days after the conditions 

described in paragraph (m)(3)(i) or (ii) of 

this section occur with respect to all 

applicable emergencies or after the 

condition described in paragraph 

(m)(3)(iii) of this section occurs, 

whichever is earlier: 

(i) All sources that declared a disaster 

or emergency that include the service 

area declare an end. 

(ii) No end date was identified as 

described in paragraph (m)(3)(i) of this 

section, and all applicable emergencies 

or disasters declared for the area have 

ended, including through expiration of 

the declaration or any renewal of such 

declaration. 

(iii) There is no longer a disruption of 

access to health care as defined in 

paragraph (m)(6) of this section. 

(4) MA plans unable to operate. An 

MA plan that cannot resume normal 

operations by the end of the disaster or 

emergency as described in paragraph 

(m)(3)(i) or (ii) of this section must 

notify CMS. 

(5) * * * 

(i) Indicate the terms and conditions 

of payment during the disaster or 

emergency for non-contracted providers 

furnishing benefits to plan enrollees 

residing in the affected service area(s). 

* * * * * 

(6) Disruption of access to health care. 

A disruption of access to health care for 

the purpose of paragraph (m) of this 

section is an interruption or interference 

in the service area (as defined at § 422.2) 

such that enrollees do not have the 

ability to access contracted providers or 

contracted providers do not have the 

ability to provide needed services to 

enrollees, resulting in MA plans failing 

to meet the normal prevailing patterns 

of community health care delivery in 

the service area under § 422.112(a). 

■ 4. Section 422.101 is amended by— 

■ a. In paragraph (d)(4), removing 

‘‘(d)(3)’’ and ‘‘incurred’’ and adding in 

their places ‘‘(3)’’ and ‘‘accrued’’, 

respectively. 

■ b. Revising paragraph (f)(1)(i). 

The revision reads as follows: 

§ 422.101 Requirements relating to basic 

benefits. 

* * * * * 

(f) * * * 

(1) * * * 

(i) Conduct a comprehensive initial 

health risk assessment of the 

individual’s physical, psychosocial, and 

functional needs as well as annual 

health risk reassessment, using a 

comprehensive risk assessment tool that 

CMS may review during oversight 

activities, and ensure that the results 

from the initial assessment and annual 

reassessment conducted for each 

individual enrolled in the plan are 

addressed in the individuals’ 

individualized care plan as required 

under paragraph (f)(1)(ii) of this section. 

Beginning in 2024, the comprehensive 

risk assessment tool must include one or 

more questions from a list of screening 

instruments specified by CMS in subregulatory guidance on each of the 

following domains: 

(A) Housing stability; 

(B) Food security; and 

(C) Access to transportation. 

* * * * * 

■ 5. Section 422.107 is amended by— 

■ a. Revising the section heading and 

paragraphs (c)(6) and (d); 

■ b. Redesignating paragraph (e) as 

paragraph (i); and 

■ c. Adding new paragraph (e) and 

paragraphs (f) through (h). 

The revisions and additions read as 

follows: 

§ 422.107 Requirements for dual eligible 

special needs plans. 

* * * * * 

(c) * * * 

(6) The verification of an enrollee’s 

Medicaid eligibility. 

* * * * * 

(d) Additional minimum contract 

requirement. (1) For any dual eligible 

special needs plan that is not a fully 

integrated or highly integrated dual 

eligible special needs plan, except as 

specified in paragraph (d)(2) of this 

section, the contract must also stipulate 

that, for the purpose of coordinating 

Medicare and Medicaid-covered 

services between settings of care, the 

SNP notifies, or arranges for another 

entity or entities to notify, the State 

Medicaid agency, individuals or entities 

designated by the State Medicaid 

agency, or both, of hospital and skilled 

nursing facility admissions for at least 

one group of high-risk full-benefit dual 

eligible individuals, identified by the 

State Medicaid agency. The State 

Medicaid agency must establish the 

timeframe(s) and method(s) by which 

notice is provided. In the event that a 

SNP authorizes another entity or entities 

to perform this notification, the SNP 

must retain responsibility for complying 

with the requirement in this paragraph 

(d)(1). 

(2) For a dual eligible special needs 

plan that, under the terms of its contract 

with the State Medicaid agency, only 

enrolls beneficiaries who are not 

entitled to full medical assistance under 

a State plan under title XIX of the Act, 

paragraph (d)(1) of this section does not 

apply if the SNP operates under the 

same parent organization and in the 

same service area as a dual eligible 

special needs plan limited to 

beneficiaries with full medical 

assistance under a State plan under title 

XIX of the Act that meets the 

requirements at paragraph (d)(1) of this 

section. 

(e) Additional opportunities in certain 

integrated care programs. (1) CMS 

facilitates operationalization as 

described in paragraphs (e)(2) and (3) of 

this section if a State Medicaid agency 

requires MA organizations offering dual 

eligible special needs plans with 

exclusively aligned enrollment to do 

both of the following: 

(i) Apply for, and seek CMS approval 

to establish and maintain, one or more 

MA contracts that only include one or 

more dual eligible special needs plans 

with a service area limited to that State. 

(ii) Use required materials that 

integrate Medicare and Medicaid 

content, including at a minimum the 

Summary of Benefits, Formulary, and 

combined Provider and Pharmacy 

Directory that meets Medicare and 

Medicaid managed care requirements 

consistent with applicable regulations 

in parts 422, 423, and 438 of this 

chapter. 

(2) The requirements, processes, and 

procedures applicable to dual eligible 

special needs plans and the MA 

program, including for applications, 

bids, and contracting procedures under 

§§ 422.250 through 422.530, remain 

applicable. Because implementation of 

the contract provisions described in 

paragraph (e)(1) of this section may 

require administrative steps that cannot 

be completed between reviewing the 

contract and the start of the plan year, 

CMS begins good faith work following 

receipt of a letter from the State 

Medicaid agency indicating intent to 

include the provisions described in 

paragraph (e)(1) of this section in a 

future contract year and collaborate 

with CMS on implementation. 

(3) When the conditions of paragraph 

(e)(1) of this section are met— 

(i) Following a State request, CMS 

grants access for State Medicaid agency 

officials to the Health Plan Management 


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System (HPMS) (or its successor) for 

purposes of oversight and informationsharing related to the MA contract(s) 

described in paragraph (e)(1)(i) of this 

section, as long as State Medicaid 

agency officials agree to protect the 

proprietary nature of information to 

which the State Medicaid agency may 

not otherwise have direct access. State 

access to the Health Plan Management 

System (or its successor) is subject to 

compliance with HHS and CMS policies 

and standards and with applicable laws 

in the use of HPMS data and the 

system’s functionality. CMS may 

terminate a State official’s access to the 

Health Plan Management System (or its 

successor) if any policy is violated or if 

information is not adequately protected; 

and 

(ii) CMS coordinates with States on 

program audits, including informationsharing on major audit findings and 

coordination of audits schedules for the 

D–SNPs subject to paragraph (e)(1) of 

this section. 

(f) Enrollee advisory committee. Any 

MA organization offering one or more 

D–SNPs in a State must establish and 

maintain one or more enrollee advisory 

committees that serve the D–SNPs 

offered by the MA organization in that 

State. 

(1) The enrollee advisory committee 

must include at least a reasonably 

representative sample of the population 

enrolled in the dual eligible special 

needs plan or plans, or other 

individuals representing those 

enrollees, and solicit input on, among 

other topics, ways to improve access to 

covered services, coordination of 

services, and health equity for 

underserved populations. 

(2) The enrollee advisory committee 

may also advise managed care plans that 

serve D–SNP enrollees under title XIX 

of the Act offered by the same parent 

organization as the MA organization 

offering the D–SNP. 

(g) Permissible carve-outs of long-term 

services and supports for FIDE SNPs 

and HIDE SNPs. A plan meets the FIDE 

SNP or HIDE SNP definition at § 422.2, 

even if its contract with the State 

Medicaid agency for the provision of 

services under title XIX of the Act has 

carve-outs of long-term services and 

supports, as approved by CMS, that— 

(1) Apply primarily to a minority of 

the beneficiaries eligible to enroll in the 

dual eligible special needs plan who use 

long-term services and supports; or 

(2) Constitute a small part of the total 

scope of long-term services and 

supports provided to the majority of 

beneficiaries eligible to enroll in the 

dual eligible special needs plan. 

(h) Permissible carve-outs of 

behavioral health services for FIDE 

SNPs and HIDE SNPs. A plan meets the 

FIDE SNP or HIDE SNP definition at 

§ 422.2, even if its contract with the 

State Medicaid agency for the provision 

of services under title XIX of the Act has 

carve-outs of behavioral health services, 

as approved by CMS, that— 

(1) Apply primarily to a minority of 

the beneficiaries eligible to enroll in the 

dual eligible special needs plan who use 

behavioral health services; or 

(2) Constitute a small part of the total 

scope of behavioral health services 

provided to the majority of beneficiaries 

eligible to enroll in the dual eligible 

special needs plan. 

* * * * * 

■ 6. Section 422.116 is amended by 

revising paragraph (a)(1)(ii) and adding 

paragraph (d)(7) to read as follows: 

§ 422.116 Network adequacy. 

(a) * * * 

(1) * * * 

(ii) Beginning with contract year 2024, 

an applicant for a new or expanding 

service area must demonstrate 

compliance with this section as part of 

its application for a new or expanding 

service area and CMS may deny an 

application on the basis of an evaluation 

of the applicant’s network for the new 

or expanding service area. 

* * * * * 

(d) * * * 

(7) New or expanding service area 

applicants. Beginning with contract year 

2024, an applicant for a new or 

expanding service area receives a 10- 

percentage point credit towards the 

percentage of beneficiaries residing 

within published time and distance 

standards for the contracted network in 

the pending service area, at the time of 

application and for the duration of the 

application review. In addition, 

applicants may use a Letter of Intent 

(LOI), signed by both the MA 

organization (MAO) and the provider or 

facility with which the MAO has started 

or intends to negotiate, in lieu of a 

signed contract at the time of 

application and for the duration of the 

application review, to meet network 

standards. As part of the network 

adequacy review process, applicants 

must notify CMS of their use of LOIs to 

meet network standards in lieu of a 

signed contract and submit copies upon 

request and in the form and manner 

directed by CMS. At the beginning of 

the applicable contract year, the credit 

and the use of LOIs no longer apply and 

if the application is approved, the MA 

organization must be in full compliance 

with this section, including having 

signed contracts with the provider or 

facility. 

* * * * * 

§ 422.164 [Amended] 

■ 7. Section 422.164 is amended by 

removing and reserving paragraph (i). 

■ 8. Section 422.166 is amended by— 

■ a. Revising paragraph (a)(2)(i); 

■ b. Adding paragraph (i)(12); and 

■ c. Removing and reserving paragraphs 

(j)(1)(v) and (j)(2). 

The revision and addition read as 

follows: 

§ 422.166 Calculation of Star Ratings. 

(a) * * * 

(2) * * * 

(i) The method maximizes differences 

across the star categories and minimizes 

the differences within star categories 

using mean resampling with the 

hierarchal clustering of the current 

year’s data. Effective for the Star Ratings 

issued in October 2022 and subsequent 

years, CMS will add a guardrail so that 

the measure-threshold-specific cut 

points for non-CAHPS measures do not 

increase or decrease more than the value 

of the cap from one year to the next. The 

cap is equal to 5 percentage points for 

measures having a 0 to 100 scale 

(absolute percentage cap) or 5 percent of 

the restricted range for measures not 

having a 0 to 100 scale (restricted range 

cap). New measures that have been in 

the Part C and Part D Star Rating 

program for 3 years or less use the 

hierarchal clustering methodology with 

mean resampling with no guardrail for 

the first 3 years in the program. 

* * * * * 

(i) * * * 

(12) Special rules for the 2023 Star 

Ratings only. For the 2023 Star Ratings 

only, for measures derived from the 

Health Outcomes Survey only, CMS 

does not apply the provisions in 

paragraph (i)(9) or (10) of this section 

and CMS does not exclude the numeric 

values for affected contracts with 60 

percent or more of their enrollees in the 

FEMA-designated Individual Assistance 

area at the time of the extreme and 

uncontrollable circumstance from the 

clustering algorithms or from the 

determination of the performance 

summary and variance thresholds for 

the Reward Factor. 

* * * * * 

■ 9. Section 422.252 is amended by 

revising the definition of ‘‘New MA 

plan’’ to read as follows: 

§ 422.252 Terminology. 

* * * * * 

New MA plan means a MA contract 

offered by a parent organization that has 


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not had another MA contract in the 

previous 3 years. For purposes of 2022 

quality bonus payments based on 2021 

Star Ratings only, new MA plan means 

an MA contract offered by a parent 

organization that has not had another 

MA contract in the previous 4 years. 

* * * * * 

■ 10. Section 422.502 is amended by 

revising paragraphs (b)(1) introductory 

text and (b)(1)(i) to read as follows: 

§ 422.502 Evaluation and determination 

procedures. 

* * * * * 

(b) * * * 

(1) Except as provided in paragraphs 

(b)(2) through (4) of this section, if an 

MA organization fails during the 12 

months preceding the deadline 

established by CMS for the submission 

of contract qualification applications to 

comply with the requirements of the 

Part C program under any current or 

prior contract with CMS under title 

XVIII of the Act, CMS may deny an 

application based on the applicant’s 

failure to comply with the requirements 

of the Part C program under any current 

or prior contract with CMS even if the 

applicant currently meets all of the 

requirements of this part. 

(i) An applicant may be considered to 

have failed to comply with a contract for 

purposes of an application denial under 

paragraph (b)(1) of this section if during 

the applicable review period the 

applicant does any of the following: 

(A) Was subject to the imposition of 

an intermediate sanction under subpart 

O of this part or a determination by 

CMS to prohibit the enrollment of new 

enrollees in accordance with 

§ 422.2410(c), with the exception of a 

sanction imposed under § 422.752(d). 

(B) Failed to maintain a fiscally sound 

operation consistent with the 

requirements of § 422.504(b)(14). 

(C) Filed for or is currently in State 

bankruptcy proceedings. 

(D) Received any combination of Part 

C or D summary ratings of 2.5 or less in 

both of the two most recent Star Rating 

periods, as identified in § 422.166. 

(E) Met or exceeded 13 points for 

compliance actions for any one contract. 

(1) CMS determines the number of 

points each MA organization 

accumulated during the performance 

period for compliance actions based on 

the following point values: 

(i) Each corrective action plan issued 

during the performance period under 

§ 422.504(m) counts for 6 points. 

(ii) Each warning letter issued during 

the performance period under 

§ 422.504(m) counts for 3 points. 

(iii) Each notice of noncompliance 

issued during the performance period 

under § 422.504(m) counts for 1 point. 

(2) CMS adds all the point values for 

each MA organization to determine if 

any organization meets CMS’ identified 

threshold. 

* * * * * 

■ 11. Section 422.503 is amended by 

revising paragraphs (b)(5)(i) and (ii) to 

read as follows: 

§ 422.503 General provisions. 

* * * * * 

(b) * * * 

(5) * * * 

(i) Not accept, or share a corporate 

parent organization owning a 

controlling interest in an entity that 

accepts, new enrollees under a section 

1876 reasonable cost contract in any 

area in which it seeks to offer an MA 

plan that is not a dual eligible special 

needs plan. 

(ii) Not accept, or be either the parent 

organization owning a controlling 

interest of or subsidiary of an entity that 

accepts, new enrollees under a section 

1876 reasonable cost contract in any 

area in which it seeks to offer an MA 

plan that is not a dual eligible special 

needs plan. 

* * * * * 

■ 12. Section 422.504 is amended by 

revising paragraph (m) to read as 

follows: 

§ 422.504 Contract provisions. 

* * * * * 

(m) Issuance of compliance actions 

for failure to comply with the terms of 

the contract. The MA organization 

acknowledges that CMS may take 

compliance actions as described in this 

section or intermediate sanctions as 

defined in subpart O of this part. 

(1) CMS may take compliance actions 

as described in paragraph (m)(3) of this 

section if it determines that the MA 

organization has not complied with the 

terms of a current or prior Part C 

contract with CMS. 

(i) CMS may determine that an MA 

organization is out of compliance with 

a Part C requirement when the 

organization fails to meet performance 

standards articulated in the Part C 

statutes, regulations in this chapter, or 

guidance. 

(ii) If CMS has not already articulated 

a measure for determining 

noncompliance, CMS may determine 

that an MA organization is out of 

compliance when its performance in 

fulfilling Part C requirements represents 

an outlier relative to the performance of 

other MA organizations. 

(2) CMS bases its decision on whether 

to issue a compliance action and what 

level of compliance action to take on an 

assessment of the circumstances 

surrounding the noncompliance, 

including all of the following: 

(i) The nature of the conduct. 

(ii) The degree of culpability of the 

MA organization. 

(iii) The adverse effect to beneficiaries 

which resulted or could have resulted 

from the conduct of the MA 

organization. 

(iv) The history of prior offenses by 

the MA organization or its related 

entities. 

(v) Whether the noncompliance was 

self-reported. 

(vi) Other factors which relate to the 

impact of the underlying 

noncompliance or the lack of the MA 

organization’s oversight of its operations 

that contributed to the noncompliance. 

(3) CMS may take one of three types 

of compliance actions based on the 

nature of the noncompliance. 

(i) Notice of noncompliance. A notice 

of noncompliance may be issued for any 

failure to comply with the requirements 

of the MA organization’s current or 

prior Part C contract with CMS, as 

described in paragraph (m)(1) of this 

section. 

(ii) Warning letter. A warning letter 

may be issued for serious and/or 

continued noncompliance with the 

requirements of the MA organization’s 

current or prior Part C contract with 

CMS, as described in paragraph (m)(1) 

of this section and as assessed in 

accordance with paragraph (m)(2) of this 

section. 

(iii) Corrective action plan. (A) 

Corrective action plans are requested for 

particularly serious or continued 

noncompliance with the requirements 

of the MA organization’s current or 

prior Part C contract with CMS, as 

described in paragraph (m)(1) of this 

section and as assessed in accordance 

with paragraph (m)(2) of this section. 

(B) CMS issues a corrective action 

plan if CMS determines that the MA 

organization has repeated or not 

corrected noncompliance identified in 

prior compliance actions, has 

substantially impacted beneficiaries or 

the program with its noncompliance, or 

must implement a detailed plan to 

correct the underlying causes of the 

noncompliance. 

* * * * * 

■ 13. Section 422.530 is amended by 

revising paragraph (c)(4) to read as 

follows: 

§ 422.530 Plan crosswalks. 

* * * * * 

(c) * * * 

(4) When— 


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(i) A renewing D–SNP has another 

new or renewing D–SNP, and the two 

D–SNPs are offered to different 

populations, enrollees who are no 

longer eligible for their current D–SNP 

may be moved into the other new or 

renewing D–SNP offered by the same 

MA organization if they meet the 

eligibility criteria for the new or 

renewing D–SNP and CMS determines it 

is in the best interest of the enrollees to 

move to the new or renewing D–SNP in 

order to promote access to and 

continuity of care for enrollees relative 

to the absence of a crosswalk exception. 

For the crosswalk exception in this 

paragraph (c)(4)(i), CMS does not permit 

enrollees to be moved between different 

contracts; or 

(ii) An MA organization creates a new 

MA contract when required by a State 

as described in § 422.107(e), eligible 

enrollees may be moved from the 

existing D–SNP that is non-renewing, 

reducing its service area, or has its 

eligible population newly restricted by 

a State, to a D–SNP offered under the D– 

SNP-only contract, which must be of the 

same plan type operated by the same 

parent organization. For the crosswalk 

exception in this paragraph (c)(4)(ii), 

CMS permits enrollees to be moved 

between different contracts. 

* * * * * 

■ 14. Section 422.561 is amended by 

revising the definition of ‘‘Applicable 

integrated plan’’ to read as follows: 

§ 422.561 Definitions. 

* * * * * 

Applicable integrated plan means 

either of the following: 

(1) Before January 1, 2023. (i) A fully 

integrated dual eligible special needs 

plan with exclusively aligned 

enrollment or a highly integrated dual 

eligible special needs plan with 

exclusively aligned enrollment; and 

(ii) The Medicaid managed care 

organization, as defined in section 

1903(m) of the Act, through which such 

dual eligible special needs plan, its 

parent organization, or another entity 

that is owned and controlled by its 

parent organization covers Medicaid 

services for dually eligible individuals 

enrolled in such dual eligible special 

needs plan and such Medicaid managed 

care organization. 

(2) On or after January 1, 2023. (i)(A) 

A fully integrated dual eligible special 

needs plan or highly integrated dual 

eligible special needs plan with 

exclusively aligned enrollment; and 

(B) The Medicaid managed care 

organization, as defined in section 

1903(m) of the Act, through which such 

dual eligible special needs plan, its 

parent organization, or another entity 

that is owned and controlled by its 

parent organization covers Medicaid 

services for dually eligible individuals 

enrolled in such dual eligible special 

needs plan and such Medicaid managed 

care organization; or 

(ii) A dual eligible special needs plan 

and affiliated Medicaid managed care 

plan where— 

(A) The dual special needs plan, by 

State policy, has enrollment limited to 

those beneficiaries enrolled in a 

Medicaid managed care organization as 

described in paragraph (2)(ii)(B) of this 

definition; 

(B) There is a capitated contract 

between the MA organization, the MA 

organization’s parent organization, or 

another entity that is owned and 

controlled by its parent organization; 

and 

(1) A Medicaid agency; or 

(2) A Medicaid managed care 

organization as defined in section 

1903(m) of the Act that contracts with 

the Medicaid agency; and 

(C) Through the capitated contract 

described in paragraph (2)(ii)(B) of this 

definition, Medicaid benefits including 

primary care and acute care, including 

Medicare cost-sharing as defined in 

section 1905(p)(3)(B), (C), and (D) of the 

Act, without regard to the limitation of 

that definition to qualified Medicare 

beneficiaries, and at a minimum, one of 

the following: Home health services as 

defined in § 440.70 of this chapter, 

medical supplies, equipment, and 

appliances as described in § 440.70(b)(3) 

of this chapter, or nursing facility 

services are covered for the enrollees. 

* * * * * 

■ 15. Section 422.629 is amended by— 

■ a. Revising paragraph (d); 

■ b. In paragraph (k)(4)(ii), removing the 

phrase ‘‘integrated organization 

determination decision’’ and adding in 

its place the phrase ‘‘integrated 

reconsideration determination’’; 

■ c. Revising paragraph (l)(1); and 

■ d. Adding paragraph (l)(4). 

The revisions and addition read as 

follows: 

§ 422.629 General requirements for 

applicable integrated plans. 

* * * * * 

(d) Evidence. The applicable 

integrated plan must do the following: 

(1) Provide the enrollee— 

(i) A reasonable opportunity, in 

person and in writing, to present 

evidence and testimony and make legal 

and factual arguments for integrated 

grievances, and integrated 

reconsiderations; and 

(ii) Information on how evidence and 

testimony should be presented to the 

plan. 

(2) Inform the enrollee of the limited 

time available for presenting evidence 

sufficiently in advance of the resolution 

timeframe for appeals as specified in 

this section if the case is being 

considered under an expedited 

timeframe for the integrated grievance 

or integrated reconsideration. 

* * * * * 

(l) * * * 

(1) The following individuals or 

entities can request an integrated 

grievance, integrated organization 

determination, and integrated 

reconsideration, and are parties to the 

case: 

(i) The enrollee. 

(ii) The enrollee’s representative, 

including any person authorized under 

State law. 

* * * * * 

(4) The following individuals or 

entities may request an integrated 

reconsideration and are parties to the 

case: 

(i) An assignee of the enrollee (that is, 

a physician or other provider who has 

furnished or intends to furnish a service 

to the enrollee and formally agrees to 

waive any right to payment from the 

enrollee for that service). 

(ii) Any other provider or entity (other 

than the applicable integrated plan) who 

has an appealable interest in the 

proceeding. 

■ 16. Section 422.631 is amended by 

adding paragraph (d)(3) to read as 

follows: 

§ 422.631 Integrated organization 

determinations. 

* * * * * 

(d) * * * 

(3) Timeframe for requests for 

payment. The applicable integrated plan 

must process requests for payment 

according to the ‘‘prompt payment’’ 

provisions set forth in § 422.520. 

* * * * * 

■ 17. Section 422.633 is amended by 

revising the section heading and 

paragraphs (e)(1) and (f)(3)(i) 

introductory text to read as follows: 

§ 422.633 Integrated reconsiderations. 

* * * * * 

(e) * * * 

(1) Applicable integrated plans must 

accept requests to expedite integrated 

reconsiderations from either of the 

following: 

(i) An enrollee. 

(ii) A provider making the request on 

behalf of an enrollee, when the request 

is not a request for expedited payment. 

* * * * * 


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(f) * * * 

(3) * * * 

(i) The applicable integrated plan may 

extend the timeframe for resolving any 

integrated reconsideration other than 

those concerning Part B drugs by 14 

calendar days if— 

* * * * * 

■ 18. Section 422.634 is amended by 

revising paragraph (d) to read as 

follows: 

§ 422.634 Effect. 

* * * * * 

(d) Services not furnished while the 

appeal is pending. (1) If an applicable 

integrated plan reverses its decision to 

deny, limit, or delay services that were 

not furnished while the appeal was 

pending, the applicable integrated plan 

must authorize or provide the disputed 

services promptly and as expeditiously 

as the enrollee’s health condition 

requires but no later than the earlier 

of— 

(i) 72 hours from the date it reverses 

its decision; or 

(ii)(A) With the exception of a Part B 

drug, 30 calendar days after the date the 

applicable integrated plan receives the 

request for the integrated 

reconsideration (or no later than upon 

expiration of an extension described in 

§ 422.633(f)); or 

(B) For a Part B drug, 7 calendar days 

after the date the applicable integrated 

plan receives the request for the 

integrated reconsideration. 

(2) For a Medicaid benefit, if a State 

fair hearing officer reverses an 

applicable integrated plan’s integrated 

reconsideration decision to deny, limit, 

or delay services that were not 

furnished while the appeal was 

pending, the applicable integrated plan 

must authorize or provide the disputed 

services promptly and as expeditiously 

as the enrollee’s health condition 

requires but no later than 72 hours from 

the date it receives notice reversing the 

determination. 

(3) Reversals by the Part C 

independent review entity, an 

administrative law judge or attorney 

adjudicator at the Office of Medicare 

Hearings and Appeals, or the Medicare 

Appeals Council must be effectuated 

under same timelines applicable to 

other MA plans as specified in 

§§ 422.618 and 422.619. 

* * * * * 

■ 19. Section 422.2260 is amended by 

adding the definition of ‘‘Third-party 

marketing organization (TPMO)’’ in 

alphabetical order to read as follows: 

§ 422.2260 Definitions. 

* * * * * 

Third-party marketing organization 

(TPMO) means organizations and 

individuals, including independent 

agents and brokers, who are 

compensated to perform lead 

generation, marketing, sales, and 

enrollment related functions as a part of 

the chain of enrollment (the steps taken 

by a beneficiary from becoming aware of 

an MA plan or plans to making an 

enrollment decision). TPMOs may be a 

first tier, downstream or related entity 

(FDRs), as defined under § 422.2, but 

may also be entities that are not FDRs 

but provide services to an MA plan or 

an MA plan’s FDR. 

■ 20. Section 422.2265 is amended by 

adding paragraphs (b)(13) and (14) to 

read as follows: 

§ 422.2265 Websites. 

* * * * * 

(b) * * * 

(13) Instructions on how to appoint a 

representative including a link to the 

downloadable version of the CMS 

Appointment of Representative Form 

(CMS Form–1696). 

(14) Enrollment instructions and 

forms. 

* * * * * 

■ 21. Section 422.2267 is amended by— 

■ a. Redesignating paragraphs (e)(30) 

through (38) as paragraphs (e)(32) 

through (40). 

■ b. Adding new paragraphs (e)(30) and 

(31) and paragraph (e)(41). 

The additions read as follows: 

§ 422.2267 Required materials and 

content. 

* * * * * 

(e) * * * 

(30) Member ID card. The member ID 

card is a model communications 

material that plans must provide to 

enrollees as required under § 422.111(i). 

The member ID card— 

(i) Must be provided to new enrollees 

within ten calendars days from receipt 

of CMS confirmation of enrollment or 

by the last day of the month prior to the 

plan effective date, whichever is later; 

(ii) Must include the plan’s— 

(A) Website address; 

(B) Customer service number (the 

member ID card is excluded from the 

hours of operations requirement under 

§ 422.2262(c)(1)(i)); and 

(C) Contract/PBP number; 

(iii) Must include, if issued for a PPO 

and PFFS plan, the phrase ‘‘Medicare 

limiting charges apply.’’; 

(iv) May not use a member’s Social 

Security number (SSN), in whole or in 

part; 

(v) Must be updated whenever 

information on a member’s existing card 

changes; in such cases an updated card 

must be provided to the member; 

(vi) Is excluded from the translation 

requirement under paragraph (a)(2) of 

this section; and 

(vii) Is excluded from the 12-point 

font size requirement under paragraph 

(a)(1) of this section. 

(31) Multi-language insert (MLI). This 

is a standardized communications 

material which states, ‘‘We have free 

interpreter services to answer any 

questions you may have about our 

health or drug plan. To get an 

interpreter, just call us at [1–xxx–xxx– 

xxxx]. Someone who speaks [language] 

can help you. This is a free service.’’ in 

the following languages: Spanish, 

Chinese, Tagalog, French, Vietnamese, 

German, Korean, Russian, Arabic, 

Italian, Portuguese, French Creole, 

Polish, Hindi, and Japanese. 

(i) Additional languages that meet the 

5-percent service area threshold, as 

required under paragraph (a)(2) of this 

section, must be added to the MLI used 

in that service area. A plan may also opt 

to include in the MLI any additional 

language that do not meet the 5-percent 

service area threshold, where it 

determines that this inclusion would be 

appropriate. 

(ii) The MLI must be provided with 

all required materials under paragraph 

(e) of this section. 

(iii) The MLI may be included as a 

part of the required material or as a 

standalone material in conjunction with 

the required material. 

(iv) When used as a standalone 

material, the MLI may include 

organization name and logo. 

(v) When mailing multiple required 

materials together, only one MLI is 

required. 

(vi) The MLI may be provided 

electronically when a required material 

is provided electronically as permitted 

under paragraph (d)(2) of this section. 

* * * * * 

(41) Third-party marketing 

organization disclaimer. This is 

standardized content. The disclaimer 

consists of the statement: ‘‘We do not 

offer every plan available in your area. 

Any information we provide is limited 

to those plans we do offer in your area. 

Please contact Medicare.gov or 1–800– 

MEDICARE to get information on all of 

your options.’’ The MA organization 

must ensure that the disclaimer is as 

follows: 

(i) Used by any TPMO, as defined 

under § 422.2260, that sells plans on 

behalf of more than one MA 

organization unless the TPMO sells all 

commercially available MA plans in a 

given service area. 


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(ii) Verbally conveyed within the first 

minute of a sales call. 

(iii) Electronically conveyed when 

communicating with a beneficiary 

through email, online chat, or other 

electronic means of communication. 

(iv) Prominently displayed on TPMO 

websites. 

(v) Included in any marketing 

materials, including print materials and 

television advertisements, developed, 

used or distributed by the TPMO. 

■ 22. Section 422.2274 is amended by 

revising the section heading and adding 

paragraph (g) to read as follows: 

§ 422.2274 Agent, broker, and other thirdparty requirements. 

* * * * * 

(g) TPMO oversight. In addition to any 

applicable FDR requirements under 

§ 422.504(i), when doing business with 

a TPMO, either directly or indirectly 

through a downstream entity, MA plans 

must implement the following as a part 

of their oversight of TPMOs: 

(1) When a TPMO is not otherwise an 

FDR, the MA organization is responsible 

for ensuring that the TPMO adheres to 

any requirements that apply to the MA 

plan. 

(2) Contracts, written arrangements, 

and agreements between the TPMO and 

an MA plan, or between the TPMO and 

an MA plan’s FDR, must ensure the 

TPMO: 

(i) Discloses to the MA organization 

any subcontracted relationships used for 

marketing, lead generation, and 

enrollment. 

(ii) Records all calls with beneficiaries 

in their entirety, including the 

enrollment process. 

(iii) Reports to plans monthly any 

staff disciplinary actions or violations of 

any requirements that apply to the MA 

plan associated with beneficiary 

interaction to the plan. 

(iv) Uses the TPMO disclaimer as 

required under § 422.2267(e)(41). 

(3) Ensure that the TPMO, when 

conducting lead generating activities, 

either directly or indirectly for an MA 

organization, must, when applicable: 

(i) Disclose to the beneficiary that his 

or her information will be provided to 

a licensed agent for future contact. This 

disclosure must be provided as follows: 

(A) Verbally when communicating 

with a beneficiary through telephone. 

(B) In writing when communicating 

with a beneficiary through mail or other 

paper. 

(C) Electronically when 

communicating with a beneficiary 

through email, online chat, or other 

electronic messaging platform. 

(ii) Disclose to the beneficiary that he 

or she is being transferred to a licensed 

agent who can enroll him or her into a 

new plan. 

■ 23. Section 422.2460 is amended by 

revising paragraphs (a), (b) introductory 

text, and (d) and adding paragraph (e) to 

read as follows: 

§ 422.2460 Reporting requirements. 

(a) Except as provided in paragraph 

(b) of this section, for each contract year, 

each MA organization must submit to 

CMS, in a timeframe and manner 

specified by CMS, a report that includes 

the data needed by the MA organization 

to calculate and verify the medical loss 

ratio (MLR) and remittance amount, if 

any, for each contract under this part, 

including the amount of incurred claims 

for original Medicare covered benefits, 

supplemental benefits, and prescription 

drugs; total revenue; expenditures on 

quality improving activities; non-claims 

costs; taxes; licensing and regulatory 

fees; and any remittance owed to CMS 

under § 422.2410. 

(b) For contract years 2018 through 

2022, each MA organization must 

submit to CMS, in a timeframe and 

manner specified by CMS, the following 

information: 

* * * * * 

(d) Subject to paragraph (e) of this 

section, the MLR is reported once, and 

is not reopened as a result of any 

payment reconciliation processes. 

(e) With respect to an MA 

organization that has already submitted 

to CMS the MLR report or MLR data 

required under paragraph (a) or (b) of 

this section, respectively, for a contract 

for a contract year, paragraph (d) of this 

section does not prohibit resubmission 

of the MLR report or MLR data for the 

purpose of correcting the prior MLR 

report or data submission. Such 

resubmission must be authorized or 

directed by CMS, and upon receipt and 

acceptance by CMS, is regarded as the 

contract’s MLR report or data 

submission for the contract year for 

purposes of this subpart. 

■ 24. Section 422.2490 is amended by 

redesignating paragraph (b)(2) as 

paragraph (b)(2)(i) and adding paragraph 

(b)(2)(ii) to read as follows: 

§ 422.2490 Release of Part C MLR data. 

* * * * * 

(b) * * * 

(2) * * * 

(ii) Amounts that are reported as 

expenditures for a specific type of 

supplemental benefit, where the entire 

amount that is reported represents costs 

incurred by the only plan under the 

contract that offers that benefit. 

* * * * * 

PART 423—VOLUNTARY MEDICARE 

PRESCRIPTION DRUG BENEFIT 

■ 25. The authority citation for part 423 

continues to read as follows: 

Authority: 42 U.S.C. 1302, 1306, 1395w– 

101 through 1395w–152, and 1395hh. 

■ 26. Section 423.100 is amended by 

adding in alphabetical order the 

definition of ‘‘Price concession’’ to read 

as follows: 

§ 423.100 Definitions. 

* * * * * 

Price concession means any form of 

discount, direct or indirect subsidy, or 

rebate received by the Part D sponsor or 

its intermediary contracting 

organization from any source that serves 

to decrease the costs incurred under the 

Part D plan by the Part D sponsor. 

Examples of price concessions include 

but are not limited to: Discounts, 

chargebacks, rebates, cash discounts, 

free goods contingent on a purchase 

agreement, coupons, free or reducedprice services, and goods in kind. 

* * * * * 

■ 27. Effective January 1, 2024, 

§ 423.100 is further amended by 

removing the definition of ‘‘Negotiated 

prices’’ and adding in alphabetical order 

the definition of ‘‘Negotiated price’’ to 

read as follows: 

§ 423.100 Definitions. 

* * * * * 

Negotiated price means the price for 

a covered Part D drug that— 

(1) The Part D sponsor (or other 

intermediary contracting organization) 

and the network dispensing pharmacy 

or other network dispensing provider 

have negotiated as the lowest possible 

reimbursement such network entity will 

receive, in total, for a particular drug; 

(2) Meets all of the following: 

(i) Includes all price concessions (as 

defined in this section) from network 

pharmacies or other network providers; 

(ii) Includes any dispensing fees; and 

(iii) Excludes additional contingent 

amounts, such as incentive fees, if these 

amounts increase prices; and 

(3) Is reduced by non-pharmacy price 

concessions and other direct or indirect 

remuneration that the Part D sponsor 

passes through to Part D enrollees at the 

point of sale. 

* * * * * 

§ 423.184 [Amended] 

■ 28. Section 423.184 is amended by 

removing and reserving paragraph (i). 

■ 29. Section 423.186 is amended by— 

■ a. Revising paragraphs (a)(2)(i) and 

(i)(9); and 

■ b. Removing and reserving paragraph 

(j)(1)(iv). 


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The revisions read as follows: 

§ 423.186 Calculation of Star Ratings. 

(a) * * * 

(2) * * * 

(i) The method maximizes differences 

across the star categories and minimizes 

the differences within star categories 

using mean resampling with the 

hierarchal clustering of the current 

year’s data. Effective for the Star Ratings 

issued in October 2022 and subsequent 

years, CMS will add a guardrail so that 

the measure-threshold-specific cut 

points for non-CAHPS measures do not 

increase or decrease more than the value 

of the cap from one year to the next. The 

cap is equal to 5 percentage points for 

measures having a 0 to 100 scale 

(absolute percentage cap) or 5 percent of 

the restricted range for measures not 

having a 0 to 100 scale (restricted range 

cap). New measures that have been in 

the Part C and D Star Rating program for 

3 years or less use the hierarchal 

clustering methodology with mean 

resampling with no guardrail for the 

first 3 years of the program. 

* * * * * 

(i) * * * 

(9) Special rules for the 2022 Star 

Ratings only. For the 2022 Star Ratings 

only, CMS will not apply the provisions 

in paragraph (i)(7) or (8) of this section 

and CMS will not exclude the numeric 

values for affected contracts with 60 

percent or more of their enrollees in the 

FEMA-designated Individual Assistance 

area at the time of the extreme and 

uncontrollable circumstance from the 

clustering algorithms or from the 

determination of the performance 

summary and variance thresholds for 

the Reward Factor. 

* * * * * 

■ 30. Section 423.503 is amended by 

revising the section heading and 

paragraphs (b)(1) introductory text and 

(b)(1)(i) to read as follows: 

§ 423.503 Evaluation and determination 

procedures. 

* * * * * 

(b) * * * 

(1) Except as provided in paragraphs 

(b)(2) through (4) of this section, if a Part 

D plan sponsor fails during the 12 

months preceding the deadline 

established by CMS for the submission 

of contract qualification applications to 

comply with the requirements of the 

Part D program under any current or 

prior contract with CMS under title 

XVIII of the Act CMS may deny an 

application based on the applicant’s 

failure to comply with the requirements 

of the Part D program under any current 

or prior contract with CMS even if the 

applicant currently meets all of the 

requirements of this part. 

(i) An applicant may be considered to 

have failed to comply with a contract for 

purposes of an application denial under 

paragraph (b)(1) of this section if during 

the applicable review period the 

applicant: 

(A) Was subject to the imposition of 

an intermediate sanction under subpart 

O of this part, or a determination by 

CMS to prohibit the enrollment of new 

enrollees under § 423.2410(c). 

(B) Failed to maintain a fiscally sound 

operation consistent with the 

requirements of § 423.505(b)(23). 

(C) Filed for or is currently under 

state bankruptcy proceedings. 

(D) Received any combination of Part 

C or Part D summary ratings of 2.5 or 

less in both of the two most recent Star 

Rating periods, as identified in 

§ 423.186. 

(E) Met or exceeded 13 points for 

compliance actions on any one contract. 

(1) CMS determines the number of 

points each Part D plan sponsor 

accumulated during the performance 

period for compliance actions based on 

the following point values: 

(i) Each corrective action plan issued 

during the performance period under 

§ 423.505(n) counts for 6 points. 

(ii) Each warning letter issued during 

the performance period under 

§ 423.505(n) counts for 3 points. 

(iii) Each notice of noncompliance 

issued during the performance period 

under § 423.505(n) counts for 1 point. 

(2) CMS adds all the point values for 

each Part D plan sponsor to determine 

if any organization meets CMS’ 

identified threshold. 

* * * * * 

■ 31. Section 423.505 is amended by 

revising paragraph (n) to read as 

follows: 

§ 423.505 Contract provisions. 

* * * * * 

(n) Issuance of compliance actions for 

failure to comply with the terms of the 

contract. The Part D plan sponsor 

acknowledges that CMS may take 

compliance actions as described in this 

section or intermediate sanctions as 

defined in subpart O of this part. 

(1) CMS may take compliance actions 

as described in paragraph (n)(3) of this 

section if it determines that the Part D 

plan sponsor has not complied with the 

terms of a current or prior Part D 

contract with CMS. 

(i) CMS may determine that a Part D 

plans sponsor is out of compliance with 

a Part D requirement when the 

organization fails to meet performance 

standards articulated in the Part D 

statutes, regulations in this chapter, or 

guidance. 

(ii) If CMS has not already articulated 

a measure for determining 

noncompliance, CMS may determine 

that a Part D plan sponsor is out of 

compliance when its performance in 

fulfilling Part D requirements represents 

an outlier relative to the performance of 

other Part D plan sponsors. 

(2) CMS bases its decision on whether 

to issue a compliance action and what 

level of compliance action to take on an 

assessment of the circumstances 

surrounding the noncompliance, 

including all of the following: 

(i) The nature of the conduct. 

(ii) The degree of culpability of the 

Part D plan sponsor. 

(iii) The adverse effect to beneficiaries 

which resulted or could have resulted 

from the conduct of the Part D plan 

sponsor. 

(iv) The history of prior offenses by 

the Part D plan sponsor or its related 

entities. 

(v) Whether the noncompliance was 

self-reported. 

(vi) Other factors which relate to the 

impact of the underlying 

noncompliance or the lack of the Part D 

plan sponsor’s oversight of its 

operations that contributed to the 

noncompliance. 

(3) CMS may take one of three types 

of compliance actions based on the 

nature of the noncompliance. 

(i) Notice of noncompliance. A notice 

of noncompliance may be issued for any 

failure to comply with the requirements 

of the Part D plan sponsor’s current or 

prior Part D contract with CMS, as 

described in paragraph (n)(1) of this 

section. 

(ii) Warning letter. A warning letter 

may be issued for serious and/or 

continued noncompliance with the 

requirements of the Part D plan 

sponsor’s current or prior Part D 

contract with CMS, as described in 

paragraph (n)(1) of this section and as 

assessed in accordance with paragraph 

(n)(2) of this section. 

(iii) Corrective action plan. (A) 

Corrective action plans are issued for 

particularly serious and/or continued 

noncompliance with the requirements 

of the Part D plan sponsors’ current or 

prior Part D contract with CMS, as 

described in paragraph (n)(1) of this 

section and as assessed in accordance 

with paragraph (n)(2) of this section. 

(B) CMS issues a corrective action 

plan if CMS determines that the Part D 

plan sponsor has repeated or not 

corrected noncompliance identified in 

prior compliance actions, has 

substantially impacted beneficiaries or 

the program with its noncompliance, 


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and/or must implement a detailed plan 

to correct the underlying causes of the 

noncompliance. 

* * * * * 

■ 32. Section 423.2260 is amended by 

adding the definition of ‘‘Third-party 

marketing organization (TPMO)’’ in 

alphabetical order to read as follows: 

§ 423.2260 Definitions. 

* * * * * 

Third-party marketing organization 

(TPMO) are organizations and 

individuals, including independent 

agents and brokers, who are 

compensated to perform lead 

generation, marketing, sales, and 

enrollment related functions as a part of 

the chain of enrollment (the steps taken 

by a beneficiary from becoming aware of 

a Part D plan or plans to making an 

enrollment decision). TPMOs may be a 

first tier, downstream or related entity 

(FDRs), as defined under § 423.4, but 

may also be entities that are not FDRs 

but provide services to a Part D sponsor 

or a Part D sponsor’s FDR. 

■ 33. Section 423.2265 is amended by 

adding paragraphs (b)(14) and (15) to 

read as follows: 

§ 423.2265 Websites. 

* * * * * 

(b) * * * 

(14) Instructions on how to appoint a 

representative including a link to the 

downloadable version of the CMS 

Appointment of Representative Form 

(CMS Form-1696). 

(15) Enrollment instructions and 

forms. 

* * * * * 

■ 34. Section 423.2267 is amended by— 

■ a. Redesignating paragraphs (e)(32) 

through (37) as paragraphs (e)(34) 

through (39); and 

■ b. Adding new paragraphs (e)(32) and 

(33) and paragraphs (e)(40) and (41). 

The additions read as follows: 

§ 423.2267 Required materials and 

content. 

* * * * * 

(e) * * * 

(32) Member ID card. The member ID 

card is a model communications 

material that plans must provide to 

enrollees as required under 

§ 423.128(d)(2). The member ID card— 

(i) Must be provided to new enrollees 

within 10 calendars days from receipt of 

CMS confirmation of enrollment or by 

the last day of month prior to the plan 

effective date, whichever is later; 

(ii) Must include the Part D 

sponsor’s— 

(A) Website address; 

(B) Customer service number (the 

member ID card is excluded from the 

hours of operations requirement under 

§ 423.2262(c)(1)(i)); and 

(C) Contract/PBP number; 

(iii) Must include, if issued for a 

preferred provider organization (PPO) 

and PFFS plan, the phrase ‘‘Medicare 

limiting charges apply.’’; 

(iv) May not use a member’s Social 

Security number (SSN), in whole or in 

part; 

(v) Must be updated whenever 

information on a member’s existing card 

changes; in such cases an updated card 

must be provided to the member; 

(vi) Is excluded from the translation 

requirement under paragraph (a)(2) of 

this section; and 

(vii) Is excluded from the 12-point 

font size requirement under paragraph 

(a)(1) of this section. 

(33) Multi-language insert (MLI). This 

is a standardized communications 

material which states, ‘‘We have free 

interpreter services to answer any 

questions you may have about our 

health or drug plan. To get an 

interpreter, just call us at [1–xxx–xxx– 

xxxx]. Someone who speaks [language] 

can help you. This is a free service.’’ in 

the following languages: Spanish, 

Chinese, Tagalog, French, Vietnamese, 

German, Korean, Russian, Arabic, 

Italian, Portuguese, French Creole, 

Polish, Hindi, and Japanese. 

(i) Additional languages that meet the 

5-percent service area threshold, as 

required under paragraph (a)(2) of this 

section, must be added to the MLI used 

in that service area. A plan may also opt 

to include in the MLI any additional 

language that do not meet the 5-percent 

service area threshold, where it 

determines that this inclusion would be 

appropriate. 

(ii) The MLI must be provided with 

all required materials under paragraph 

(e) of this section. 

(iii) The MLI may be included as a 

part of the required material or as a 

standalone material in conjunction with 

the required material. 

(iv) When used as a standalone, the 

MLI may include organization name and 

logo. 

(v) When mailing multiple required 

materials together, only one MLI is 

required. 

(vi) The MLI may be provided 

electronically when a required material 

is provided electronically as permitted 

under paragraph (d)(2) of this section. 

* * * * * 

(40) Limited access to preferred costsharing pharmacies. This is 

standardized content that must— 

(i) Be used on all materials 

mentioning preferred pharmacies when 

there is limited access to preferred 

pharmacies; and 

(ii) Include the following language: 

‘‘<insert organization/plan name>’s 

pharmacy network includes limited 

lower-cost, preferred pharmacies in 

<insert geographic area type(s) and 

state(s) for which plan is an outlier)>. 

The lower costs advertised in our plan 

materials for these pharmacies may not 

be available at the pharmacy you use. 

For up-to-date information about our 

network pharmacies, including whether 

there are any lower-cost preferred 

pharmacies in your area, please call 

<insert Member Services phone number 

and TTY> or consult the online 

pharmacy directory at <insert 

website>.’’ 

(41) Third-party marketing 

organization disclaimer. This is 

standardized content. The disclaimer 

consists of the statement: ‘‘We do not 

offer every plan available in your area. 

Any information we provide is limited 

to those plans we do offer in your area. 

Please contact Medicare.gov or 1–800– 

MEDICARE to get information on all of 

your options.’’ The Part D sponsor must 

ensure that the disclaimer is as follows: 

(i) Used by any TPMO, as defined 

under § 423.2260, that sells plans on 

behalf of more than one Part D sponsor 

unless the TPMO sells all commercially 

available Part D plans in a given service 

area. 

(ii) Verbally conveyed within the first 

minute of a sales call. 

(iii) Electronically conveyed when 

communicating with a beneficiary 

through email, online chat, or other 

electronic means of communication. 

(iv) Prominently displayed on TPMO 

websites. 

(v) Included in any TPMO marketing 

materials, including print materials and 

television advertising. 

■ 35. Section 423.2274 is amended by 

revising the section heading and adding 

paragraph (g) to read as follows: 

§ 423.2274 Agent, broker, and other thirdparty requirements. 

* * * * * 

(g) TPMO oversight. In addition to any 

applicable FDR requirements under 

§ 423.505(i), when doing business with 

a TPMO, either directly or indirectly 

through a downstream entity, Part D 

sponsor must implement the following 

as a part of their oversight of TPMOs: 

(1) When TPMOs is not otherwise an 

FDR, the Part D sponsor is responsible 

for ensuring that the TPMO adheres to 

any requirements that apply to the Part 

D sponsor. 

(2) Contracts, written arrangements, 

and agreements between the TPMO and 

a Part D plan, or between a TPMO and 

a Part D plan’s FDR, must ensure the 

TPMO: 


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(i) Discloses to the plan any 

subcontracted relationships used for 

marketing, lead generation, and 

enrollment. 

(ii) Record all calls with beneficiaries 

in their entirety, including the 

enrollment process. 

(iii) Report to plans monthly any staff 

disciplinary actions or violations of any 

requirements that apply to the Part D 

sponsor associated with beneficiary 

interaction to the plan. 

(iv) Use the TPMO disclaimer as 

required under § 423.2267(e)(41). 

(3) Ensure that the TPMO, when 

conducting lead generating activities, 

either directly or indirectly for a Part D 

sponsor, must, when applicable: 

(i) Disclose to the beneficiary that his 

or her information will be provided to 

a licensed agent for future contact. This 

disclosure must be provided: 

(A) Verbally when communicating 

with a beneficiary through telephone; 

(B) In writing when communicating 

with a beneficiary through mail or other 

paper; and 

(C) Electronically when 

communicating with a beneficiary 

through email, online chat, or other 

electronic messaging platform. 

(ii) When applicable, disclose to the 

beneficiary that he or she is being 

transferred to a licensed agent who can 

enroll him or her into a new plan. 

■ 36. Effective January 1, 2024, 

§ 423.2305 is amended by— 

■ a. Revising paragraphs (1) and (2) of 

the definition of ‘‘Negotiated price’’; and 

■ b. Designating the undesignated 

paragraph following the definition of 

‘‘Negotiated price’’ as paragraph (4). 

The revisions read as follows: 

§ 423.2305 Definitions. 

* * * * * 

Negotiated price * * * 

(1) The Part D sponsor (or other 

intermediary contracting organization) 

and the network dispensing pharmacy 

or other network dispensing provider 

have negotiated as the lowest possible 

reimbursement such network entity will 

receive, in total, for a particular drug; 

(i) Includes all price concessions (as 

defined in § 423.100) from network 

pharmacies or other network providers; 

and 

(ii) Excludes additional contingent 

amounts, such as incentive fees, if these 

amounts increase prices; 

(2) Is reduced by those discounts, 

direct or indirect subsidies, rebates, 

non-pharmacy price concessions, and 

direct or indirect remuneration that the 

Part D sponsor has elected to pass 

through to Part D enrollees at the pointof-sale; and 

* * * * * 

■ 37. Section 423.2460 is amended by 

revising paragraphs (a), (b) introductory 

text, and (d) and adding paragraph (e) to 

read as follows: 

§ 423.2460 Reporting requirements. 

(a) Except as provided in paragraph 

(b) of this section, for each contract year, 

each Part D sponsor must submit to 

CMS, in a timeframe and manner 

specified by CMS, a report that includes 

the data needed by the Part D sponsor 

to calculate and verify the medical loss 

ratio (MLR) and remittance amount, if 

any, for each contract under this part, 

including the amount of incurred claims 

for prescription drugs, supplemental 

benefits, total revenue, expenditures on 

quality improving activities, non-claims 

costs, taxes, licensing and regulatory 

fees, and any remittance owed to CMS 

under § 423.2410. 

(b) For contract years 2018 through 

2022, each Part D sponsor must submit 

to CMS, in a timeframe and manner 

specified by CMS, the following 

information: 

* * * * * 

(d) Subject to paragraph (e) of this 

section, the MLR is reported once, and 

is not reopened as a result of any 

payment reconciliation processes. 

(e) With respect to a Part D sponsor 

that has already submitted to CMS the 

MLR report or MLR data required under 

paragraph (a) or (b) of this section, 

respectively, for a contract for a contract 

year, paragraph (d) of this section does 

not prohibit resubmission of the MLR 

report or MLR data for the purpose of 

correcting the prior MLR report or data 

submission. Such resubmission must be 

authorized or directed by CMS, and 

upon receipt and acceptance by CMS, is 

regarded as the contract’s MLR report or 

data submission for the contract year for 

purposes of this subpart. 

Dated: April 27, 2022. 

Xavier Becerra, 

Secretary, Department of Health and Human 

Services. 

[FR Doc. 2022–09375 Filed 4–29–22; 4:15 pm] 

BILLING CODE 4120–01–P 


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