2023-07115.pdf

that these are generally the immediate need beneficiaries who are not confirmed to be LIS-eligible. We VerDate Sep<11>2014 21:20 Apr 11, 2023 Jkt 259001 PO 00000 Frm 00026 Fmt 4701 Sfmt 4700 E:\FR\FM\12APR2.SGM 12APR2ddrumheller on DSK120RN23PROD with RULES222145 Federal Register / Vol. 88, No. 70 / Wednesday, April 12, 2023 / Rules and Regulations proposed in  423.2524(c)(1)(i) that for the 2024 plan year, the LI NET sponsor includes in its bid the assumption that Payment Rate A cannot exceed a 2 percent increase from the prior years Payment A, which is a figure CMS will provide to the LI NET sponsor. For the 2025 plan year and subsequent plan years, proposed  423.2524(c)(1)(ii) would require the LI NET sponsor to specify its assumption for any increase needed to the prior years Payment Rate A, submitting justification to CMS in its bid if the cap exceeds 2 percent. Any proposed increase in Payment Rate A from year-to-year would not be able to exceed the percentage cap. Similar to how CMS determines reasonableness in evaluating a plans anticipated profit in the bid, we would use the same reasonableness standard in setting and negotiating the cap on Payment Rate A in the bid. In  423.2524(c)(2), we proposed that Payment Rate B would reflect the projected net costs of the Part D drugs dispensed to individuals who receive the LI NET benefit. Payment Rate B would be the estimated actual drug costs minus direct and indirect remuneration (DIR). In the demonstration, we apply risk corridors to Payment Rate B so that excess gains and losses are shared between CMS and the LI NET sponsor. These risk corridors are symmetrical in sharing upside and downside risk, but are narrower than the risk corridors provided for under section 1860D15(e) of the Act and applicable to other Part D plans. Because the risk corridors in the demonstration are so narrow, the LI NET sponsor has not assumed as much risk for LI NET as traditional Part D plans assume. CMS has not shared risk on Payment Rate A, in keeping with typical Part D plans for which CMS does not share risk on margin or administrative costs. In 2012, CMS revised the risk corridors under the LI NET demonstration to limit payment adjustments on Payment Rate B. For the portion of a plans cost for drugs that is between the target amount and the threshold upper limit (101 percent of the target amount), the LI NET sponsor pays 100 percent of this amount. For the portion of the plans cost for drugs that exceeds the threshold upper limit, the government pays 99.9 percent and the plan pays 0.1 percent. Similarly, if a plans cost for drugs is between the target amount and the threshold lower limit (99 percent of the target amount), the LI NET sponsor keeps 100 percent of the difference between the drug cost and the target amount. If a plans cost for drugs is lower than the threshold lower limit, the government keeps 99.9 percent and the plan keeps 0.1 percent of the difference between the plans drug cost and the threshold lower limit. Both under the demonstration and for other Part D plans, after a payment year is over and the deadline for submitting payment data for that payment year has passed, we reconcile the payments for the year. This allows us to narrow the gap between what predicted and actual costs were in a given year, as well as share risk with plan sponsor in gains and losses. To provide for payment reconciliation and risk sharing in the LI NET program, we proposed in  423.2524(d) to establish the payment policies for reconciliation and risk corridors, including adopting targeted provisions of existing risk sharing requirements. Proposed  423.2524(d)(1) provides that CMS would conduct LI NET payment reconciliation each year for Payment Rates A and B after the annual PDE data submission deadline has passed and make the resulting payment adjustment consistent with  423.343(a). In  423.2524(d)(2), we proposed to establish the same risk corridors for Payment Rate B that apply under the demonstration: no risk sharing within 1 percent of the target amount and symmetrical 0.1 percent risk sharing beyond the 1 percent corridor. To carry out risk sharing as part of reconciliation, we proposed to have  423.336(c) apply to LI NET, which requires a plan sponsor to provide necessary cost data information to CMS and authorizes CMS to make either lump-sum payments or adjustments based on the risk corridor calculations. Proposed  423.2524(e) would establish that the LI NET contract is subject to the existing provision at  423.346 pertaining to payment reopenings. Per  423.346, CMS may reopen and revise an initial or reconsidered final payment determination for up to 5 payment years. Under the demonstration, each LI NET reconciliation has been in alignment with  423.346 and included the prior 5 years of PDEs. The most recently completed payment year gets reconciled for the first time along with reopening the prior 4 years. For example, in 2019, PBP 008 for payment year 2018 was reconciled for the first time while PBPs 004007 (for payment years 2014 through 2017) were reopened. Sequestration is not used or accounted for in reconciliation, consistent with how we apply sequestration for other Part D plans. Under the demonstration, we maintain consistency between LI NETs PDE and DIR reporting deadlines and the reporting deadlines that apply to Part D plans (for example, the yearly deadline for data used for payment year reconciliation is June 30th). Enrollment, risk adjustment, and PDE certifications (attestations) are collected under the LI NET demonstration just like other contracts, and we proposed to adopt the requirements in  423.505(k)(1) through (5), except for certifying to reinsurance data because LI NET does not receive a reinsurance subsidy. This proposal would require the LI NET sponsor to certify to the accuracy, completeness, and truthfulness of all data related to payment. As noted earlier in this section of this final rule, as a general matter, all payment rights and responsibilities under Part D that otherwise apply and are not explicitly waived in proposed  423.2536 would apply to the LI NET program, as appropriate. Proposed  423.2524(f) would provide that the LI NET sponsor could appeal the payment calculation under  423.350. Proposed  423.2524(g) would establish that the LI NET contractor is subject to the report and return overpayment requirements under  423.360. 7. Part D Program Waivers Because the LI NET sponsor is a Part D sponsor and the LI NET contract is a PDP contract, many existing provisions in Part 423 apply to LI NET. The exceptions are those provisions waived by the statute, those provisions that are inapplicable to LI NET, and the requirements we proposed to waive through this rulemaking. Section 1860D14(e)(5)(A) of the Act provides that paragraphs (1) and (3)(B) of section 1860D4(a) of the Act, subparagraphs (A) and (B) of section 1860D4(b)(3) of the Act, and paragraphs (1)(C) and (2) of section 1860D4(c) of the Act do not apply to the LI NET program; thus, requirements relating to dissemination of general information and the provision of formulary information, formulary requirements, and medication therapy management (MTM) program requirements do not apply to LI NET. For this reason, we proposed to waive formulary requirements in  423.120(b), 423.128(e)(5), and 423.128(e)(6) and MTM program requirements in  423.153. Section 1860D14(e)(5)(B) of the Act contains broad waiver authority to waive such other requirements of title XI and this title as may be necessary to carry out the purposes of the program established under this subsection. We also proposed to waive for LI NET some of the cost control and quality improvement requirements in Part 423 VerDate Sep<11>2014 21:20 Apr 11, 2023 Jkt 259001 PO 00000 Frm 00027 Fmt 4701 Sfmt 4700 E:\FR\FM\12APR2.SGM 12APR2ddrumheller on DSK120RN23PROD with RULES222146 Federal Register / Vol. 88, No. 70 / Wednesday, April 12, 2023 / Rules and Regulations Subpart D, except for the provisions we explicitly proposed to adopt in  423.2508(d)(1) through (d)(5) that relate to appropriate dispensing, patient safety, electronic dispensing, QIO activities, compliance, and accreditation. This proposal would waive requirements that would not make sense in the context of temporary coverage with access to an open formulary. The requirements we proposed to waive pertain to drug utilization management programs, medication therapy management programs, and consumer satisfaction surveys. We solicited comment on whether we should waive any additional regulatory provisions related to paragraphs (1) and (3)(B) of section 1860D4(a) of the Act and subparagraphs (A) and (B) of section 1860D4(b)(3) of the Act. We proposed that the LI NET sponsor submit most of the certifications listed in  423.505(k), with the exception that we are waiving the certification of accuracy of data for price comparison in paragraph (k)(6), given that the LI NET plan is not one for which beneficiaries shop. Part D beneficiaries receiving a low- income subsidy are not eligible for the coverage gap discount program, and under the demonstration LI NET is not subject to coverage gap discount requirements under subpart W of Part 423. Thus, we proposed in  423.2536(i) to waive subpart W in full for LI NET. We proposed in  423.2536(j) to waive the MLR requirements in subpart X of Part 423. Section 1857 of the Act as incorporated into section 1860D14(e) does not speak to MLR requirements for LI NET. Under the LI NET demonstration, CMS does not require the LI NET sponsor to meet the minimum medical loss ratio (MLR) requirement or to report the MLR for the LI NET contract as it does for other Part D contracts. This is due to the unique payment structure for the contract. Under Part D, a sponsor submits a single bid including estimated administrative costs, returns on investment, and drug costs, which are risk-adjusted. After a payment year concludes, Part D sponsors are required under subpart X of Part 423 to report the MLR for each contract, and if the MLR for a contract is below 85 percent, the sponsor is required to remit payment to CMS. Enrollment sanctions are applied to contracts that fail to meet the minimum MLR requirement for 3 consecutive years, and contracts that fail to meet the requirement for 5 consecutive years are subject to termination. The minimum MLR requirement is intended to create incentives for Part D sponsors to reduce administrative costs such as marketing costs, profits, and other such uses of plan revenues, and to help ensure that taxpayers and enrolled beneficiaries receive value from Medicare health plans. Because of the limits we proposed to place on how much administrative costs in LI NET under Payment Rate A can increase year over year and because of the differing payment structure, we do not believe MLR reporting should be applicable to LI NET. The Affordable Care Act amended section 1893(h) of the Act to expand the use of Recovery Audit Contractors (RACs) to include the MA and Part D programs. Section 1893(h)(9) of the Act specifies that, under contracts with the Secretary, Part D RACs are required to ensure that each PDP has an anti-fraud plan in effect and to review the effectiveness of each such anti-fraud plan, to examine claims for reinsurance payments to determine whether PDPs submitting such claims incurred costs in excess of the costs allowed, and to review estimates submitted by PDPs with respect to the enrollment of high- cost beneficiaries and compare such estimates with the numbers of such beneficiaries actually enrolled by such plans. Because the LI NET sponsor must enroll every eligible LI NET beneficiary, and because LI NET does not receive reinsurance, a Part D RACs review or examination of LI NET claims would likely be extremely limited in scope. As other audit, oversight, and compliance requirements would continue to apply to the LI NET program, the other program integrity safeguards we have proposed for the LI NET program would be adequate, and we therefore proposed to waive application of the RAC requirements in subpart Z of Part 423. In surveying the items under Part 423 for the Voluntary Medicare Prescription Drug Benefit, we attempted to categorize existing requirements as applicable, inapplicable, or a candidate for waiver. We solicited comment on whether there are additional provisions in part 423 that we did not mention in the proposed rule and that we should address for LI NET. 8. Technical Corrections In the course of this rulemaking, we noticed the need for a technical correction in  423.505(b)(22), which requires Part D sponsors to address and resolve complaints received by CMS against the Part D sponsor. The regulation text currently refers to MA organization when it should refer to Part D sponsor, and thus we proposed to make the correction. We also proposed to make a technical correction in the header of subpart Z of Part 423. The header in regulation text currently is Recovery Audit Contractor Part C Appeals Process when it should be referring to Part D. Thus, we proposed to make the technical correction so the header correctly reads,