Federal Register/Vol. 83, No. 73/Monday, April 16, 2018/Rules and Regulations

16440 Federal Register / Vol. 83, No. 73 / Monday, April 16, 2018 / Rules and Regulations

DEPARTMENT OF HEALTH AND rule (Cost Sharing Limits for Medicare regulation meets the Administration’s HUMAN SERVICES Parts A and B Services)). Those priorities to reduce burden and provide provisions are applicable for contract the regulatory framework to develop Centers for Medicare & Medicaid year 2020 (January 1, 2020). E- MA and Part D products that better meet Services Prescribing and the Part D Prescription the individual patient’s health care Drug Program; Updating Part D E needs. These changes being finalized 42 CFR Parts 405, 417, 422, 423, 460, Prescribing Standards discussed in will empower MA and Part D plans to and 498 section II.D.8. of this final rule is meet the needs of enrollees at the local [CMS–4182–F] applicable January 1, 2020 conditioned level, and should result in more enrollee on The Office of the National choice and more affordable options. RIN 0938–AT08 Coordinator for Health Information Additionally, this regulation includes a Technology (ONC) adopting the same number of provisions that will help Medicare Program; Contract Year 2019 standard for use in its Electronic Health address the opioid epidemic and Policy and Technical Changes to the Record Certification Program by that mitigate the impact of increasing drug Medicare Advantage, Medicare Cost date. prices in the Part D program. Plan, Medicare Fee-for-Service, the Medicare Prescription Drug Benefit FOR FURTHER INFORMATION CONTACT: 2. Summary of the Major Provisions Theresa Wachter, (410) 786–1157, Programs, and the PACE Program a. Implementation of the Part C Issues. AGENCY: Centers for Medicare & Marie Manteuffel, (410) 786–3447, Comprehensive Addiction and Recovery Medicaid Services (CMS), HHS. Part D Issues. Act of 2016 (CARA) Provisions ACTION: Final rule. Kristy Nishimoto, (206) 615–2367, In line with the agency’s response to Beneficiary Enrollment and Appeals the President’s call to end the scourge SUMMARY: This final rule will revise the Issues. of the opioid epidemic, this final rule Medicare Advantage (MA) program (Part Raghav Aggarwal, (410) 786–0097, implements statutory provisions of the C) regulations and Prescription Drug Part C and D Payment Issues. Comprehensive Addiction and Recovery Benefit program (Part D) regulations to Vernisha Robinson-Savoy, (443) 826– Act of 2016 (CARA), which amended implement certain provisions of the 9925, Compliance Program Training the Social Security Act and was enacted Comprehensive Addiction and Recovery Issues. into law on July 22, 2016. CARA Act (CARA) to further reduce the Frank Whelan, (410) 786–1302, includes new authority for Medicare number of beneficiaries who may Preclusion List Issues. Part D plans to establish drug potentially misuse or overdose on Shelly Winston, (410) 786–3694, Part management programs effective on or opioids while still having access to D E-Prescribing Program. after January 1, 2019. Through this final important treatment options; implement SUPPLEMENTARY INFORMATION: rule, CMS has established a framework certain provisions of the 21st Century under which Part D plan sponsors may Cures Act; support innovative I. Executive Summary and Background establish a drug management program approaches to improve program quality, A. Executive Summary for beneficiaries at risk for prescription accessibility, and affordability; offer drug abuse or misuse, or ‘‘at-risk beneficiaries more choices and better 1. Purpose beneficiaries.’’ Specifically, under drug care; improve the CMS customer The primary purpose of this final rule management programs, Part D plans will experience and maintain high is to make revisions to the Medicare engage in case management of potential beneficiary satisfaction; address Advantage (MA) program (Part C) and at-risk beneficiaries, through contact program integrity policies related to Prescription Drug Benefit Program (Part with their prescribers, when such payments based on prescriber, provider D) regulations based on our continued beneficiary is found to be taking a and supplier status in MA, Medicare experience in the administration of the specific dosage of opioids and/or cost plan, Medicare Part D and the Part C and Part D programs and to obtaining them from multiple PACE programs; provide an update to implement certain provisions of the prescribers and multiple pharmacies the official Medicare Part D electronic Comprehensive Addiction and Recovery who may not know about each other. prescribing standards; and clarify Act and the 21st Century Cures Act. The Sponsors may then limit at-risk program requirements and certain changes are necessary to— beneficiaries’ access to coverage of technical changes regarding treatment of • Support Innovative Approaches to controlled substances that CMS Medicare Part A and Part B appeal Improving Quality, Accessibility, and determines are ‘‘frequently abused rights related to premiums adjustments. Affordability; drugs’’ to a selected prescriber(s) and/or DATES: • Improve the CMS Customer network pharmacy(ies) after case Effective Date: This rule is effective Experience; and management with the prescribers for the June 15, 2018. • Implement Other Changes. safety of the enrollee. CMS also limits The incorporation by reference of In addition, this final rule makes the use of the special enrollment period certain publications listed in the rule is technical changes related to treatment of (SEP) for dually- or other low income approved by the Director of the Federal Part A and Part B premium adjustments subsidy (LIS)-eligible beneficiaries by Register as of June 15, 2018. and updates the NCPDP SCRIPT those LIS-eligible beneficiaries who are Applicability Dates: The applicability standard used for Part D electronic identified as at-risk or potentially at-risk date of the provisions of this rule is prescribing. While the Part C and Part for prescription drug abuse under such January 1, 2019 except for the D programs have high satisfaction a drug management program. Finally, provisions in §§ 422.100(f)(4) and (5) among enrollees, we continually these provisions will codify the current and 422.101(d) (discussed in section evaluate program policies and Part D Opioid Drug Utilization Review II.A.4. of this final rule (Maximum Out- regulations to remain responsive to (DUR) Policy and Overutilization of-Pocket Limit for Medicare Parts A current trends and newer technologies, Monitoring System (OMS) by integrating and B Services)) and § 422.100(f)(6) and provide increased flexibility to this current policy with drug (discussed in section II.A.5. of this final serve patients. Specifically, this management program provisions.

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Through the adoption of this policy, changing the timeframe for delivery of prescribers of Part D drugs and from 2011 through 2017, there was a 76 the MA and Part D EOC to the first day providers of MA services and items to percent decrease (almost 22,500 of the Annual Election Period (AEP), enroll in Medicare in order for the Part beneficiaries) in the number of Part D rather than 15 days prior to that date. D drug or MA service or item to be beneficiaries identified as potential very Allowing Part C and Part D plans to covered. As a replacement, a Part D plan high risk opioid overutilizers. Thus, provide the EOC electronically will sponsor will be required to reject, or drug management programs will expand alleviate plan burden related to printing require its pharmacy benefit manager to upon an existing, innovative, successful and mailing and reduce the number of reject, a pharmacy claim for a Part D approach to reduce opioid paper documents that enrollees receive drug if the individual who prescribed overutilization in the Part D program by from plans. Changing the date by which the drug is included on the ‘‘preclusion improving quality of care through plans must provide the EOC to enrollees list.’’ Similarly, an MA service or item coordination while maintaining access will allow plans more time to finalize to necessary pain medications, and will the formatting and ensure the accuracy will not be covered if the provider that be an important next step in addressing of the information in the EOC. Changing furnished the service or item is on the the opioid epidemic and safeguarding the date will also separate the mailing preclusion list. The preclusion list will the health and safety of our nation’s and receipt of the EOC from the Annual consist of certain individuals and seniors. Notice of Change (ANOC), which entities that are currently revoked from describes the important changes in a the Medicare program under 42 CFR b. Revisions to Timing and Method of patient’s plan from one year to the next. 424.535 and are under an active Disclosure Requirements The ANOC must be delivered 15 days reenrollment bar, or have engaged in Consistent with agency efforts prior to the AEP and will be received by behavior for which CMS could have supporting innovative approaches to enrollees ahead of the EOC, thus revoked the individual or entity to the improve quality, accessibility, and allowing enrollees to focus on materials extent applicable if they had been affordability and reduce burden, we are that drive decision-making during the enrolled in Medicare, and CMS finalizing changes to align the MA and AEP. We see this final change as an determines that the underlying conduct Part D regulations in authorizing CMS to overall reduction of burden that our that led, or would have led, to the set the manner of delivery for regulations have on plans and enrollees. revocation is detrimental to the best mandatory disclosures in both the MA In aggregate, we estimate a savings (to interests of the Medicare program. We and Part D programs. CMS will use this plans for not producing and mailing authority to allow MA plans to meet the believe that this change from an hardcopy EOCs) of approximately $54.7 enrollment requirement to a preclusion disclosure and delivery requirements for million each year, 2019 through 2023. certain documents by relying on notice list requirement will reduce the burden of electronic posting and provision of c. Preclusion List Requirements for on Part D prescribers and MA providers the documents in hard copy when Prescribers in Part D and Individuals without compromising our program requested, when previously the and Entities in MA, Cost Plans, and integrity efforts. PACE documents, such as the Evidence of 3. Summary of Costs, Savings and Coverage (EOC), had to be provided in This final rule will rescind current Benefits of the Major Provisions hard copy. Additionally, we are regulatory provisions that require

Provision Savings and benefits Costs

Implementation of the Comprehensive Addiction The purpose of this provision is to create a The creation of lock in-status is a burden to and Recovery Act of 2016. lock-in status for certain at-risk bene- plans. The cost to industry is estimated at ficiaries. In addition to the benefits of pre- about $2.8 million per year. This $2.8 mil- venting opioid and benzodiazepine depend- lion cost arises from (i) the uploading and ency in beneficiaries, we estimate, in 2019, preparing of additional notices to enrollees a reduction of $19 million in Trust Fund ex- ($101,721), (ii) the re-negotiation of con- penditures because of reduced opioid tracts between Part D sponsors and phar- scripts. This $19 million reduction modestly macies ($547,415), (iii) the programming of increases to a $20 million reduction in 2023. edits about lock-ins into the systems of Part D sponsors ($2,152,332), and (iv) the right of enrollees to appeal a status of lock-in ($35,183). Revisions to Timing and Method of Disclosure We estimate 67% of the current 47.8 million Requirements. beneficiaries will prefer use of the internet versus hard copies. This will result in a savings to the industry of $54.7 million each year, 2019 through 2023. This is due to a reduction in printing and mailing costs. Preclusion List Requirements for Prescribers in For 2019, this provision saves providers $34.4 For 2019, this provision costs Part D spon- Part D and Individuals and Entities in MA, million. For 2020 and future years, there sors or their PBMs $9.3 million. For 2020 Cost Plans, and PACE. are no savings. The $34.4 million in savings and future years, costs are negligible to providers arises because of removal of (below $50,000). The $9.3 million cost the requirement of MA providers and sup- arises because of programming and staff pliers and Part D prescribers to enroll in resources needed to produce and send re- Medicare as a prerequisite for furnishing quired notifications to enrollees and pre- health care items and services. Part C pro- scribers. viders and suppliers save $24.1 million in reduced costs while Part D providers save $10.3 million in reduced costs.

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Provision Savings and benefits Costs

Physician Incentive Plans—Update Stop-Loss For 2019, this provision reduces required rein- Protection Requirements. surance resources by $204.6 million. The $204.6 million savings increases yearly because of expected enrollment increases and medical inflation; the savings is $281.8 million in 2023. The savings arise because we are replacing the current insurance schedule in the regulation with updated stop-loss insurance requirements that will allow insurance with higher deductibles. This updated schedule will result in a significant reduction to the cost of obtaining stop-loss insurance. The higher deductibles are consistent with the increase in medical costs due to inflation. Through transfers, the 2019 $204.6 million savings results in $71.6 savings to the Medicare Trust Fund and $133 million savings (in the form of rebates) to Medicare Advantage (MA) organizations. It is likely that some of the savings to MA organizations will result in increased health care benefits to MA enrollees.

B. Background this final rule. Summaries of the public sponsors may limit at-risk beneficiaries’ In the proposed rule titled ‘‘Medicare comments that are within the scope of access to coverage of controlled Program; Contract Year 2019 Policy and the proposed rule and our responses to substances that CMS determines are Technical Changes to the Medicare those public comments are set forth in ‘‘frequently abused drugs’’ to a selected Advantage, Medicare Cost Plan, the various sections of this final rule prescriber(s) and/or pharmacy(ies). Medicare Fee-for-Service, the Medicare under the appropriate heading. While such programs, commonly Prescription Drug Benefit Programs, and However, we note that in this final rule referred to as ‘‘lock-in programs,’’ have the PACE Program’’ which appeared in we are not addressing comments been a feature of many state Medicaid the November 28, 2017 Federal Register received with respect to the provisions programs for some time, prior to the (82 FR 56336), we proposed to revise of the proposed rule that we are not enactment of CARA, there was no the Medicare Advantage program (Part finalizing at this time. Rather, we will statutory authority to allow Part D plan C) regulations and Prescription Drug address them at a later time, in a sponsors to require beneficiaries to Benefit program (Part D) regulations to subsequent rulemaking document, as obtain controlled substances from a implement certain provisions of the appropriate. certain pharmacy or prescriber in the Medicare Part D program. Thus, Comprehensive Addiction and Recovery II. Provisions of the Proposed Rule and Act (CARA) and the 21st Century Cures although drug management programs Analysis of and Responses to Public are voluntary, this rule codifies a Act; improve program quality, Comments accessibility, and affordability; improve framework that will place requirements the CMS customer experience; address A. Supporting Innovative Approaches to upon such programs when established program integrity policies related to Improving Quality, Accessibility, and by Part D sponsors. payments based on prescriber, provider Affordability This final rule implements the CARA Part D drug management program and supplier status in Medicare 1. Implementation of the Advantage, Medicare cost plan, provisions by integrating them with the Comprehensive Addiction and Recovery current Part D Opioid Drug Utilization Medicare Part D and the PACE Act of 2016 (CARA) Provisions programs; provide a proposed update to Review (DUR) Policy and a. Medicare Part D Drug Management Overutilization Monitoring System the official Medicare Part D electronic 1 prescribing standards; clarify program Programs (OMS) (‘‘current policy’’). This requirements; and make certain The Comprehensive Addiction and integration will mean that Part D plan technical changes regarding treatment of Recovery Act of 2016 (CARA), enacted sponsors implementing a drug Medicare Part A and Part B appeal into law on July 22, 2016, amended the management program could limit an at- rights related to premium adjustments. Social Security Act and includes new risk beneficiary’s access to coverage of We received approximately 1,669 authority for the establishment of drug frequently abused drugs beginning 2019 timely pieces of correspondence management programs in Medicare Part through a beneficiary-specific point-of- containing multiple comments on the D, effective on or after January 1, 2019. sale (POS) claim edit and/or by CY 2019 proposed rule. While we are In accordance with section 704(g)(3) of requiring the beneficiary to obtain finalizing several of the provisions from CARA and revised section 1860D–4(c) frequently abused drugs from a selected the proposed rule, there are a number of of the Act, CMS must establish through 1 In using the term ‘‘current policy’’, we refer to provisions from the proposed rule that notice and comment rulemaking a the aspect of our current Part D opioid we intend to address later and a few that framework under which Part D plan overutilization policy that is based on retrospective we do not intend to finalize. We also sponsors may establish a drug DUR and case management. Please refer to the CMS note that some of the public comments management program for beneficiaries website, ‘‘Improving Drug Utilization Review Controls in Part D’’ at https://www.cms.gov/ were outside of the scope of the at-risk for prescription drug abuse, or Medicare/Prescription-Drug-Coverage/Prescription proposed rule. These out-of-scope ‘‘at-risk beneficiaries.’’ Under such a DrugCovContra/RxUtilization.html which contains public comments are not addressed in Part D drug management program, CMS communications regarding the current policy.

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pharmacy(ies) and/or prescriber(s) after programs build from and are integrated management program for a beneficiary case management and notice to the with existing policy, we expect sponsors who received an approved exception to beneficiary. To do so, the beneficiary will be able to implement them a cumulative opioid MME safety edit, will have to meet clinical guidelines expeditiously. and as part of the at-risk determination, that factor in that the beneficiary is Comment: We received one may determine that continuing the taking opioids over a sustained time suggestion that CMS pilot different approved exception is no longer period and that the beneficiary is approaches for implementing the CARA appropriate. obtaining them from multiple drug management program provisions, For example, a plan implemented a prescribers and/or multiple pharmacies. specifically the ‘‘lock-in’’ provisions, as hard formulary-level cumulative MME This final rule also implements a we did before implementing our current opioid edit at 200 MME with 2 or more limitation on the use of the special policy. opioid prescribers. A beneficiary enrollment period (SEP) for low income Response: Because the CARA drug received their opioids from 2 prescribers subsidy (LIS)-eligible beneficiaries who management provisions will be and has a cumulative MME that exceeds are identified as potential at-risk integrated with our current policy, 200 MME. They trigger the edit and beneficiaries or at-risk beneficiaries. albeit with some modifications to that request a coverage determination. The We received the following general policy, we are not persuaded that an prescriber attests to medical necessity comments and our responses follow: additional pilot is necessary since plan and the exception request is approved. Comment: Commenters were overall sponsors already have experience with At a later time, the beneficiary seeks supportive of our proposal. Some addressing potential opioid opioids from 3 additional prescribers, commenters found it to be a overutilization. and meets the CARA/OMS criteria. conservative and uniform approach to Comment: A commenter requested Through case management, the implementing the CARA drug that CMS acknowledge the work it will prescriber verifies the beneficiary is at- management program provisions. Other take for Standard Development risk and agrees to prescriber lock-in due commenters included specific Organizations (SDOs) to implement the to care coordination issues. suggestions for improvements with their finalized CARA provisions. In overall supportive or neutral comments. particular, the commenter noted that b. Integration of CARA and the Current Response: We thank the commenters development of any codes and Part D Opioid DUR Policy and OMS for their comments. We summarize and messaging associated with the new Our proposal was to integrate the respond to specific recommendations CARA-related requirements will take CARA Part D drug management program later in this preamble. time to implement. provisions with our current policy and Comment: We received a request that Response: We understand that any codify them both. Specifically, under we confirm that nothing in the final rule modifications to existing standards to this regulatory framework, we proposed impacts PACE organizations’ waivers of accurately achieve the desired that Part D plan sponsors may Part D requirements in § 423.153. This functionalities to further the electronic voluntarily adopt drug management commenter also asked that existing exchange of information between programs through which they address waivers of § 423.153 be extended to healthcare stakeholders about the final potential overutilization of frequently include § 423.153(f) unless such a CARA provisions may require time. We abused drugs identified retrospectively waiver is not needed due to the rely on SDOs to coordinate these efforts, through the application of clinical voluntary nature of drug management and CMS is committed to working with guidelines/OMS criteria that identify programs. the SDOs during this process, if needed. potential at-risk beneficiaries and Response: PACE organizations are not Comment: A commenter requested conduct case management which excluded from OMS reporting under the clarification on how to handle incorporates clinical contact and current policy. Additionally, because of concurrent DUR edits, such as prescriber verification that a beneficiary the voluntary nature of the provisions formulary-level cumulative opioid MME is an at-risk beneficiary. If deemed under § 423.153(f), a waiver is not safety edits, and the drug management necessary, a sponsor could limit at-risk necessary for PACE organizations. program. Specifically, the comment beneficiaries’ access to coverage for However, to the extent that PACE sought clarification on whether the drug such drugs through pharmacy lock-in, organizations commence drug management program beneficiary- prescriber lock-in, and/or a beneficiary- utilization management activities specific POS claim edits or lock-in specific point-of-sale (POS) claim edit. covered under § 423.153(f), PACE limitations would take precedence over Finally, sponsors would report to CMS organizations must comply with the an approved exception to a cumulative the status and results of their case requirements of 423.153(f). opioid MME safety edit. management through OMS and any Comment: We received comments Response: A plan sponsor may beneficiary coverage limitations they that expressed concern about the time implement formulary-level coverage have implemented through MARx, needed for Part D plan sponsors to make rules for opioids (that is, prior CMS’ system for payment and the necessary systems changes to authorization, quantity limits or step enrollment transactions. Thus, although implement compliant drug management therapy) or safety edits, and implement drug management programs are programs. a drug management program. The voluntary, our proposal was to codify a Response: Section 704(g)(1) of CARA formulary and coverage rules would framework that will place requirements states that the amendments made by this apply to all enrollees (unless they obtain upon such programs when established section shall apply to prescription drug an exception), and the drug by Part D sponsors. plans (and MA–PD plans) for plan years management program would apply to We stated that we foresee that all plan beginning on or after January 1, 2019. potential at-risk and at-risk sponsors will implement such drug However, given the current national beneficiaries. A Part D sponsor’s management programs based on our opioid epidemic, we expect that Part D concurrent and retrospective DUR experience that all plan sponsors are sponsors will diligently implement programs should be closely coordinated. complying with the current policy; the fully-functional drug management In certain circumstances, it may be fact that our proposal largely programs in 2019. Moreover, as the new appropriate for a sponsor to make an at- incorporates the CARA drug requirements for drug management risk determination through the drug management provisions into existing

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CMS and sponsor operations; and defined in § 423.100); (ii) Not an program and then becomes dually- especially, in light of the national exempted beneficiary; and (iii) eligible constitutes a potential or at-risk opioid epidemic and the declaration Determined to be at-risk for misuse or beneficiary under our proposed that the opioid crisis is a nationwide abuse of such frequently abused drugs definitions. Public Health Emergency. under a Part D plan sponsor’s drug Response: Such a beneficiary would Comment: Commenters expressed management program in accordance not automatically be considered to be a strong support for integrating the drug with the requirements of § 423.153(f); or potential at-risk or an at-risk beneficiary management program provisions of (2) With respect to whom a Part D plan under a Part D sponsor’s drug CARA with the current policy. sponsor receives a notice upon the management program. Rather, whether Commenters expressed that our beneficiary’s enrollment in such such a beneficiary is a potential at-risk proposal is reasonable, thoughtful, sponsor’s plan that the beneficiary was or at-risk beneficiary would depend thorough, practical, and comprehensive; identified as an at-risk beneficiary (as upon whether he or she meets the that it builds on a successful existing defined in paragraph (1) of this clinical guidelines and is determined to Medicare Part D program; that it will definition) under the prescription drug be an at-risk beneficiary under the involve a common set of procedures and plan in which the beneficiary was most process set forth in this rule. An help ensure a streamlined and efficient recently enrolled, such identification automatic determination based on a process rather than creating a separate had not been terminated upon beneficiary’s inclusion and status in a one that would require additional disenrollment, and the new plan has Medicaid drug management program oversight and add administrative adopted the identification. We noted would not be appropriate because each burden. We did not receive comments that we included the phrase, ‘‘and the Medicaid drug management program that opposed integrating the drug new plan has adopted the has its own criteria and requirements for management program provisions of identification’’ to both definitions for reviewing and addressing recipients CARA with the current policy. cases where a beneficiary has been who may be at-risk for prescription drug Response: We thank the commenters identified as a potential at-risk or at-risk abuse or misuse and its own for their supportive comments and are beneficiary by the immediately prior interventions. We also note that finalizing this integration approach to plan to indicate that the beneficiary’s Medicaid programs are not required to our proposal. status in the subsequent plan is not comply with section 1860D–4(c)(5) as automatic. Part D drug management programs are. (1) Requirements for Part D Drug We received the following comments To the extent a Part D sponsor is Management Programs (§§ 423.100 and and our response follows: aware or discovers based on reliable 423.153) Comment: A commenter did not information that a beneficiary who We proposed the following believe that a definition for a ‘‘potential meets the clinical guidelines was definitions in establishing requirements at-risk beneficiary’’ was needed, nor the locked-in under a Medicaid drug for Part D drug management programs. additional prescriber verification the management program, that sponsor may commenter associated with the consider that information in deciding (i) Definitions (§ 423.100) definition. whether to determine that a beneficiary (A) Definition of ‘‘Potential At-Risk Response: We disagree. Although as is an at-risk beneficiary under the Beneficiary’’ and ‘‘At-Risk Beneficiary’’ we noted above, section 1860D–4(c)(5) requirements of this final rule. Also, any (§ 423.100) of the Act does not explicitly define a beneficiary entering the Part D program ‘‘potential at-risk beneficiary,’’ it refers will be immediately subject to their Section 1860D–4(c)(5)(C) of the Act to a beneficiary who is potentially at- plan’s formulary-level controls to contains a definition for ‘‘at-risk risk in section 1860D–4(c)(5)(B)(ii), address opioid overutilization before beneficiary’’ that we proposed to codify which addresses initial notices; in they may be identified as potentially at- at § 423.100. In addition, although the 1860D–4(c)(5)(H)(i) which addresses risk, so any opioid overutilization by the section 1860D–4(c)(5) of the Act does data disclosures; and in section 1860D– beneficiary in his or her new Part D plan not explicitly define a ‘‘potential at-risk 4(c)(5)(I) which addresses the sharing of may be addressed by these controls. beneficiary,’’ it refers to a beneficiary information for subsequent plan Comment: We received a comment who is potentially at-risk in several enrollments. Therefore, we proposed to requesting clarification with regard to a subsections. define a potential at-risk beneficiary in person who is locked-in under an Accordingly, we proposed to define § 423.100, as the CARA drug employer plan and then becomes these two terms at § 423.100 as follows: management program provisions clearly eligible for a Part D EGWP, if the EGWP Potential at-risk beneficiary means a contemplate this status for a beneficiary. can continue the lock-in in the Part D Part D eligible individual—(1) Who is With respect to additional prescriber plan or at least consider the prior lock- identified using clinical guidelines (as verification of a potential at-risk in as part of a new determination. defined in § 423.100); or (2) With beneficiary, we believe this comment is Response: Beginning with plan year respect to whom a Part D plan sponsor based on a misunderstanding of our 2019, Part D sponsors, including receives a notice upon the beneficiary’s proposal, as we did not propose that a sponsors of EGWPs, may adopt drug enrollment in such sponsor’s plan that beneficiary’s status as a potential at-risk management programs that meet the the beneficiary was identified as a beneficiary must be verified. Rather, we requirements we are finalizing in this potential at-risk beneficiary (as defined proposed and are finalizing a rule. Under a Part D prescription drug in paragraph (1) of this definition) under requirement, as we discuss later in this management program, sponsors may the prescription drug plan in which the preamble, that a prescriber must verify implement a prescriber and/or beneficiary was most recently enrolled, that a beneficiary is at-risk, which pharmacy lock-in or beneficiary-specific such identification had not been serves as his or her professional opinion POS claim edit for frequently abused terminated upon disenrollment, and the that a Part D plan sponsor takes into drugs with respect to an at-risk new plan has adopted the identification. account during case management. beneficiary. Similar to a Medicaid At-risk beneficiary means a Part D Comment: We received a question beneficiary who becomes newly eligible eligible individual—(1) who is—(i) whether an individual who is subject to for Medicare and enrolls in Part D, a Identified using clinical guidelines (as lock-in under his or her Medicaid person who is locked-in under a

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commercial plan does not automatically risk beneficiary to explicitly schedule designation by the Drug meet the definition of an at-risk acknowledge that it is the Part D Enforcement Administration; (2) beneficiary we are finalizing in sponsor that determines which Government or professional guidelines § 423.100. Rather, such a person first beneficiaries are at-risk beneficiaries that address that a drug is frequently must be determined to be an at-risk under its drug management program. abused or misused; and (3) An analysis beneficiary in accordance with the The definition of potential at-risk of Medicare or other drug utilization or requirements we are finalizing at beneficiary will read: A Part D eligible scientific data. This definition is § 423.153(f). individual—(1) Who is identified using intended to provide enough specificity In other words, in order for a clinical guidelines (as defined in for stakeholders to know how the beneficiary to be eligible to be § 423.100); or (2) With respect to whom Secretary will determine a frequently immediately locked-in to a prescriber or a Part D plan sponsor receives a notice abused drug, while preserving flexibility pharmacy in a Part D plan in which they upon the beneficiary’s enrollment in to update which drugs CMS considers to are newly enrolled, the plan from which such sponsor’s plan that the beneficiary be frequently abused drugs based on they most recently disenrolled must be was identified as a potential at-risk relevant factors, such as actions by the a Part D plan in which he or she was beneficiary (as defined in paragraph (1) Drug Enforcement Administration and/ determined to be an at-risk beneficiary of this definition) under the prescription or trends observed in Medicare or under that plan’s drug management drug plan in which the beneficiary was scientific data. Since we did not receive program. When a new enrollee comes most recently enrolled and such any specific comments to change this from a non-Part D plan in which the identification had not been terminated definition, we are finalizing it as beneficiary was subject to lock-in, upon disenrollment. The definition of proposed. however, the sponsor can consider the at-risk beneficiary will read: At-risk Comment: A commenter requested prior lock-in if it learns or knows of it beneficiary means a Part D eligible that CMS include the criteria, resources, based upon reliable information which individual—(1) Who is—(i) Identified and the evidence basis upon which it is legally available to the sponsor in using clinical guidelines (as defined in will rely to determine that a drug is a conjunction with the information it § 423.100); (ii) Not an exempted frequently abused drug for purposes of gathers from the case management beneficiary; and (iii) Determined to be a drug management program. process, the beneficiary, and the at-risk for misuse or abuse of such Response: The definition of frequently sponsor’s other relevant internal sources frequently abused drugs by a Part D plan abused drug that we are finalizing and data. sponsor under its drug management indicates that criteria, resources, and Comment: A commenter asked if a program in accordance with the evidence basis will be the DEA schedule Part D sponsor may consider opioid requirements of § 423.153(f); or (2) With designation, government, and utilization information from external respect to whom a Part D plan sponsor professional drug guidelines, and sources during case management, such receives a notice upon the beneficiary’s analyses of drug utilization or scientific as a state prescription drug monitoring enrollment in such sponsor’s plan that data. program (PDMP) in making the the beneficiary was identified as an at- We did not receive any further determination if a beneficiary is at-risk. risk beneficiary (as defined in the comment on the definition of Response: As noted above with paragraph (1) of this definition) under ‘‘frequently abused drug’’ and are respect to beneficiaries who were the prescription drug plan in which the therefore finalizing it as proposed. locked-in under an employer or beneficiary was most recently enrolled Consistent with current policy, we Medicaid plan before enrolling in and such identification had not been proposed that opioids are frequently Medicare Part D, we encourage sponsors terminated upon disenrollment. abused drugs, except buprenorphine for to use all reliable sources legally medication-assisted treatment (MAT) available to them to obtain an accurate (B) Definition of ‘‘Frequently Abused and injectables. As we stated in the account of a potential at-risk or at-risk Drug’’, ‘‘Clinical Guidelines’’, ‘‘Program preamble to the proposed rule, we plan beneficiary’s utilization of frequently Size’’, and ‘‘Exempted Beneficiary’’ to publish and update a list of abused drugs. (§ 423.100) frequently abused drugs for purposes of After considering the comments, we Because we use these terms in the Part D drug management programs. are finalizing the definition of potential proposed definitions of ‘‘potential at- Comment: All commenters agreed that at-risk beneficiary and at-risk risk beneficiary’’ and ‘‘at-risk the Secretary should determine that beneficiary with minor modifications beneficiary,’’ we proposed to define opioids are frequently abused drugs, for clarity. First, we are removing the ‘‘frequently abused drug’’, ‘‘clinical many referencing the national opioid phrase ‘‘and the new plan adopted the guidelines’’, ‘‘program size’’, and overuse epidemic. identification’’ from paragraph (2) of ‘‘exempted beneficiary’’ at § 423.100 as Response: We appreciate that both definitions. As we noted above, the follows: stakeholders are focused on the opioid purpose of this language was to indicate • public health emergency. that the beneficiary’s at-risk status in the Frequently Abused Drug Comment: Some of these commenters subsequent plan is not automatic, which Section 1860D–4(c)(5)(G) of the Act agreed with our proposal to determine we meant for purposes of the limitation defines ‘‘frequently abused drug’’ as a only opioids, except buprenorphine for on the special enrollment period (SEP) drug that is a controlled substance that medication-assisted treatment (MAT) for LIS beneficiaries with an at-risk the Secretary determines to be and injectables, as frequently abused status. However, as we discuss later in frequently abused or diverted. drugs, at least in the initial this preamble, this limitation will be Consistent with the statutory definition, implementation of Part D drug triggered or continued by Part D we proposed to define ‘‘Frequently management programs, in order to allow sponsors sending the initial and second abused drug’’ at § 423.100 to mean a CMS and stakeholders to focus on notices to such beneficiaries, as controlled substance under the Federal opioid overuse and gain experience applicable, so we no longer believe this Controlled Substances Act that the with the use of lock-in as a tool to phrase is necessary in these definitions. Secretary determines is frequently address overutilization in the Part D Second, we also are making a minor abused or diverted, taking into account program, before potentially determining clarifying change in the definition of at- the following factors: (1) The drug’s other controlled substances as

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frequently abused drugs. These use of opioids and benzodiazepines, and Response: We agree with the commenters urged CMS to wait until opioids and other such depressants, the commenter’s concern, and for this drug management programs were FDA added Boxed Warnings—its reason we are not modifying the clinical established, and testing and monitoring strongest warnings—to the drug labeling guidelines for 2019 to include indicate that the program can be of prescription opioid pain and cough benzodiazepine use, even though administered in a manner that does not medicines, and benzodiazepines.6 Given benzodiazepines will be considered a limit beneficiary access to needed these developments, these commenters frequently abused drug for 2019. This medications before expanding the stressed the importance of Part D plan means that a beneficiary who is programs further. Some of these sponsors being able to use the tools that determined to be at-risk based on commenters were concerned that an at- will be available to them under drug clinical guidelines that look at the risk beneficiary would have to obtain all management programs to address the beneficiary’s opioid use could have a frequently abused drugs from one dangers of concurrent opioid and coverage limitation applied under a pharmacy or one prescriber and that this benzodiazepine use. drug management program to both could disrupt patient care if the Response: In light of these comments, opioids and benzodiazepines to manage pharmacy did not carry all frequently we are persuaded that it is appropriate current and future concurrent use. For abused drugs. that drug management programs are able example, a sponsor could require an at- However, some commenters urged us to address concurrent opioid and risk beneficiary to obtain both opioids to determine that all controlled benzodiazepine use. Such a and benzodiazepines from one selected substances are frequently abused drugs. determination is consistent with the pharmacy. These commenters were particularly definition of frequently abused drugs We believe that this is appropriate focused on a determination as to that we are finalizing. First, the based on the robust evidence that benzodiazepines, and to a lesser extent, Secretary determines benzodiazepines concurrent benzodiazepine use with muscle relaxants. Due to this focus, are frequently abused or diverted, taking opioids results in an even higher risk of an adverse health event than use of these commenters referred to the CDC into account that they are controlled Guideline that specifically recommends opioids alone. We will expect to rarely substances under the Controlled that clinicians avoid prescribing opioid see a sponsor apply a limitation only to Substances Act (CSA) and that pain medication and benzodiazepines an at-risk beneficiary’s access to prescription benzodiazepines are on concurrently whenever possible due to coverage for benzodiazepines, since to Schedule IV, where the DEA places increased risk for overdose. They also do so, the beneficiary would have to substances that have a potential for referred to CMS work in this area: (1) have met the clinical guidelines which abuse. In addition, the Secretary takes The fact that CMS added a concurrent look at opioid use that is potentially into account that the FDA has issued a benzodiazepine-opioid flag to OMS in risky. However, we acknowledge that warning about the risks associated with October 2016 in response to the CDC prescriber agreement during case using opioids and benzodiazepines Guideline and after our own research on management could rarely lead to such the use of benzodiazepines among concurrently. Further, the CDC included an outcome. For example, no opioid Medicare beneficiaries 2 to alert Part D in its evidence-based opioid prescribing prescriber agrees to a beneficiary- sponsors that concurrent use may be an guideline a caution to co-prescribe specific POS claim edit for opioids, but issue that should be addressed during opioids and benzodiazepines. Finally, rather, all but one states they will no case management; 3 and (2) the fact that CMS’ own statistics reveal that 51 longer prescriber opioids to coordinate we have stated that a sponsor may percent of Part D beneficiaries that will the beneficiary’s use. However, the implement a beneficiary-specific claim be identified as potentially at-risk under benzodiazepine prescriber agrees to edit at POS for non-opioid medications the 2019 clinical guidelines we are such an edit for benzodiazepines. We under the current policy.4 They further finalizing are using opioids and discuss prescriber agreement in more referred to a statistic from the National benzodiazepines concurrently compared detail later in this preamble. Institute on Drug Abuse that 30 percent to 24 percent across all Part D opioid Given that we are finalizing two of overdoses involving opioids also users. This statistic is indicative that categories of drugs as frequently abused involve benzodiazepines.5 Finally, these concurrent use is even more of a danger drugs for 2019, depending upon what a commenters pointed out that the FDA among potential at-risk beneficiaries plan sponsor learns during case has found that the growing combined than Medicare Part D beneficiaries management, we reiterate that the use of opioid medicines with generally. Therefore, the Secretary sponsor may have to permit a benzodiazepines or other drugs that determines that benzodiazepines are a beneficiary to obtain frequently abused depress the central nervous system has frequently abused drug for purposes of drugs from more than one pharmacy resulted in serious side effects, Part D drug management programs and/or more than one prescriber in including slowed or difficult breathing beginning in 2019. However, the clinical order to provide reasonable access, if and deaths. These commenters further guidelines will still only consider a the sponsor applies lock-in as a noted that in an effort to decrease the beneficiary’s opioid use, as we explain coverage limitation, which we discuss just below. later in this preamble. 2 https://www.cms.gov/Medicare/Prescription- Comment: A commenter agreed with Comment: A few commenters Drug-Coverage/PrescriptionDrugCovContra/ our statement in the proposed rule that suggested that Part D sponsors be able Downloads/Concurrent-Use-of-Opioids-and- there is difficulty in establishing to expand their drug management Benzodiazepines-in-a-Medicare-Part-D-Population- programs to include additional CY-2015.pdf. overuse guidelines for non-opioid 3 Please refer to the memo, ‘‘Medicare Part D substances. The commenter stated that frequently abused drugs based on their Overutilization Monitoring System (OMS) Update: this underscores the need for a robust experience with their enrollees. One Addition of the Concurrent Opioid-Benzodiazepine evidence base to support determining suggested that a sponsor be required to Use Flag’’ dated October 21, 2016. that additional types of drugs are submit such an expansion to CMS for 4 Supplemental Guidance Related to Improving approval. Drug Utilization Review Controls in Part D’’ frequently abused drugs. September 6, 2012. Response: We disagree with this 5 https://www.drugabuse.gov/drugs-abuse/ 6 https://www.fda.gov/Drugs/DrugSafety/ comment. Section 1860D–4(c)(5)(G) of opioids/benzodiazepines-opioids. ucm518473.htm. the Act defines ‘‘frequently abused

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drug’’ as a drug that is a controlled ‘‘abuse-deterrent technologies have not CMS cannot determine the MME. As substance that the Secretary determines yet proven successful at deterring the such, buprenorphine products are not to be frequently abused or diverted. most common form of abuse— used to determine the beneficiary’s Consistent with this statutory provision, swallowing a number of intact capsules average daily MME. However, we will we believe it is appropriate that the or tablets to achieve a feeling of still use prescription opioids, including determination of frequently abused euphoria. Moreover, the fact that a all formulations of buprenorphine for drugs not be plan-specific, but rather be product has abuse-deterrent properties pain and MAT, to determine opioid consistent across Part D plans, as this does not mean that there is no risk of prescribers and opioid dispensing will permit better oversight and promote abuse. It means, rather, that the risk of pharmacies in the clinical guidelines. consistency across all Part D drug abuse is lower than it would be without • Clinical Guidelines & Program Size management programs. such properties.’’ Also, ADFs do not We proposed that future prevent patients who may be using Section 1860D–4(c)(5)(C)(i)(I) of the determinations of frequently abused opioids for therapeutic reasons from Act requires at-risk beneficiaries to be drugs by the Secretary primarily be taking higher doses than prescribed or identified using clinical guidelines that included in the annual Medicare Parts diverting the opioid. For these reasons, indicate misuse or abuse of frequently C&D Call Letter or in similar guidance, we disagree that abuse-deterrent abused drugs and that are developed by if necessary, to address midyear entries formulations should be excluded from the Secretary in consultation with to the drug market or evolving the determination of frequently abused stakeholders. We proposed to include a government or professional guidelines drugs. definition of ‘‘clinical guidelines’’ that or relevant data analysis, which will be Comment: A few commenters asked cross references standards that we subject to public comment. We CMS to clarify whether methadone, a proposed at § 423.153(f) for how the proposed that this approach would be Part D drug when indicated for pain, guidelines will be established and consistent with our approach under the would be included in the definition of updated. Specifically, we proposed to current policy and necessary for Part D a frequently abused drug under the drug define clinical guidelines for purposes drug management programs to be management program. Other of a Part D drug management program responsive to changing public health commenters agreed with excluding in § 423.100 as criteria to identify issues over time. buprenorphine for MAT from the potential at-risk beneficiaries who may Comment: We received comments definition of frequently abused drug as be determined to be at-risk beneficiaries supportive of our proposal to apply the not to limit patient access to treatment under such programs, and that are standards we are establishing in and noted that removing buprenorphine developed in accordance with the rulemaking to future determinations of as a frequently abused drug is consistent standards in § 423.153(f)(16) and frequently abused drugs through the with the CDC’s approach to exclude beginning with contract year 2020, will annual Medicare Parts C&D Call Letter, buprenorphine from the determination be published in guidance annually. or in similar guidance. We did not of a person’s daily opioid MME. We also proposed to add receive any comments that opposed this Response: Yes, methadone for pain is § 423.153(f)(16) to state that potential at- proposed approach. included in the definition of a risk beneficiaries and at-risk Response: We appreciate the frequently abused drug for purposes of beneficiaries are identified by CMS or a comments. Part D drug management programs, Part D sponsor using clinical guidelines Comment: A commenter asked us to consistent with current policy/OMS. that: (1) Are developed with stakeholder confirm that we would use the same Although buprenorphine is recognized consultation; (2) Are based on the process to determine that a drug is no by the DEA as a drug of abuse, we thank acquisition of frequently abused drugs longer a frequently abused drug. the commenters that agreed with from multiple prescribers, multiple Response: We will apply the same excluding buprenorphine for MAT from pharmacies, the level of frequently regulatory standards and use the same the definition of frequently abused drug abused drugs, or any combination of process that we use to determine that a so that access to MAT, such as these factors; (3) Are derived from drug is a frequently abused drug when buprenorphine, is not impacted. expert opinion and an analysis of determining that a drug no longer is a However, the commenters’ reference to Medicare data; and (4) Include a frequently abused drug for purposes of the CDC’s exclusion of buprenorphine program size estimate. This proposed Part D drug management programs. from the determination of a person’s approach to developing and updating Comment: A few commenters urged daily opioid MME made us believe that the clinical guidelines is intended to CMS to exclude abuse-deterrent (AD) commenters may be conflating the provide enough specificity for opioids from this definition of definition of a frequently abused drug stakeholders to know how CMS will ‘‘frequently abused drug’’ as there is no with the clinical guidelines and determine the guidelines by identifying evidentiary data to support the thesis associated opioid dosage thresholds. the standards we will apply in that AD opioids are frequently abused Therefore, we realize that we need to be determining them. and existing observation data supports more specific about what opioid use, This proposed approach also their exclusion from this broad opioid prescribers, and opioid indicated that the program size will be standard. dispensing pharmacies means in the determined as part of the process to Response: The FDA requires a boxed clinical guidelines, which we also develop the clinical guidelines—a warning on opioid abuse-deterrent discuss later. process into which stakeholders will formulations (ADFs), because even with Since the publication of the proposed provide input. Section 1860D– these formulations there is still potential rule, the CDC removed the conversion 4(c)(5)(C)(iii) of the Act states that the for addiction, abuse, misuse, and factors for all formulations of Secretary shall establish policies, diversion. The FDA has also noted 7 that buprenorphine, for pain and for MAT, including the guidelines and from the most recent CDC MME exemptions, to ensure that the 7 ‘‘Abuse-Deterrent Opioids—Evaluation and conversion factor file (https:// population of enrollees in drug Labeling Guidance for Industry’’, U.S. Department www.cdc.gov/drugoverdose/data-files/ management programs could be of Health and Human Services, Food and Drug _ _ _ _ Administration, Center for Drug Evaluation and CDC Oral Morphine Milligram effectively managed by plans. We Research (CDER), Clinical Medical, April 2015. Equivalents_Sept_2017.xlsx). Therefore, proposed to define ‘‘program size’’ in

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§ 423.100 to mean the estimated apply them through OMS in 2018, commenters pointed out that such population of potential at-risk which can result in sponsors identifying beneficiaries benefit from better beneficiaries in drug management beneficiaries earlier. This is because coordination of care, which case programs (described in § 423.153(f)) CMS evaluates enrollees quarterly using management and coverage limitations operated by Part D plan sponsors that a 6-month look back period, whereas on frequently abused drugs can support. the Secretary determines, as part of the sponsors may evaluate enrollees more Another commenter referred to process to develop clinical guidelines, frequently (for example, monthly). beneficiaries with high dose utilization can be effectively managed by such We also described other clinical regardless of the number of prescribers sponsors. guidelines that we considered in the as appropriate for review by drug Comment: We did not receive any Regulatory Impact Analysis section of management programs. specific comments about the definition the proposed rule. Stakeholders were As to program size, a commenter we proposed for clinical guidelines in invited to comment on those options stated that the proposed clinical § 423.100, nor the standards we and any others that would identify more guidelines would identify a reasonable proposed in § 423.153(f)(16). or fewer potential at-risk beneficiaries. number of potential at-risk beneficiaries. Response: We are therefore finalizing Comment: We received comments Another commenter proposed the definition and standards as that were overall supportive of the alternative criteria involving a lower proposed, with one modification adding clinical guidelines/criteria we proposed MME level that it stated would identify language so that the guidelines will be for 2019 with the estimated program more than 300,000 Part D beneficiaries published in guidance annually size of 33,053. However we did receive as potentially at-risk, whereas the other beginning with contract year 2020 a few comments suggesting criteria for commenters (including those guidance, since we are publishing the the clinical guidelines that were not commenters that requested increased 2019 clinical guidelines in this final among the alternate options we flexibility) did not provide a program rule. included in the RIA. Some of these size estimate. On the other hand, we did Comment: We received comments supportive comments supported the not receive comments that the clinical supportive of our proposal to apply the guidelines without reservation, making guidelines we proposed would identify standards we are establishing in statements such as noting the guidelines a potential at-risk beneficiary rulemaking for clinical guidelines in align with the CDC Guideline or that population that cannot be effectively § 423.153(f)(16) to develop future OMS they understood or supported CMS’ managed by Part D plan sponsors, and criteria through the annual Medicare desire to gain experience with the use because the proposed guidelines are the Parts C&D Call Letter process beginning of lock-in as a drug management tool same as the OMS criteria for 2018 that with plan year 2020. before adopting clinical guidelines with were established through the 2018 Parts We did not receive comments that flexibility and/or that would identify C&D Call Letter process, we did not specifically opposed this proposed more potential at-risk beneficiaries. expect such comments. approach. These commenters want CMS to adopt We received a few comments that the Response: We appreciate these a clear and universal set of guidelines proposed clinical guidelines appear to comments. which minimizes customer and be aimed at primarily limiting the Because Part D drug management provider confusion, as well as program size arbitrarily rather than programs will be integrated with the administrative burden when submitting permitting scientific evidence and current policy/OMS beginning in 2019, and receiving OMS quarterly reports. clinical research to dictate the most there will be no separate OMS criteria These commenters assert that voluntary appropriate guidelines. in 2019 and beyond. For plan year 2019, plan guidelines would increase Response: We appreciate the we proposed the clinical guidelines to confusion and fragmentation across the commenters that provided a specific be the OMS criteria established for plan Medicare landscape. However, some suggestion for criteria; however, these year 2018. The clinical guidelines for commenters urged that Part D plan criteria were not among the alternate use in drug management programs we sponsors should have complete options we included in the RIA. proposed for 2019 are: Use of opioids flexibility to identify potential at-risk Therefore, we decline to adopt these with an average daily MME greater than beneficiaries, or at least some flexibility suggestions, as the clinical guidelines or equal to 90 mg for any duration to identify additional ones consistent are to be developed by the Secretary in during the most recent 6 months and with our current policy. These consultation with stakeholders. either: 4 or more opioid prescribers and commenters emphasized that sponsors We were persuaded by the 4 or more opioid dispensing pharmacies should be able to establish and update commenters that Part D sponsors should OR 6 or more opioid prescribers, targeting criteria and program features have some flexibility in adopting regardless of the number of opioid based on evolving clinical evidence and targeting criteria for potential at-risk dispensing pharmacies. feedback and the specific needs of their beneficiaries in order to be able to We estimated that these criteria members. Some of these commenters identify more such beneficiaries, which would identify approximately 33,053 referred to the experience Part D in turn enables sponsors to be able to do potential at-risk beneficiaries in the Part sponsors and their PBMs have gained in more to address the opioid overuse D program based on 2015 data, whom identifying opioid overutilization public health emergency. In addition, we believe are at the highest risk of among their plan members over the last flexibility in adopting targeting criteria death or overdose due to their opioid several years and the need to be able to for potential at-risk beneficiaries is use. Also, under our proposal, we stated do more to address the opioid overuse consistent with the current policy, and that Part D plan sponsors will not be crisis. Some commenters referred in we wish to be more conservative in able to vary the criteria of the guidelines particular to beneficiaries who do not varying from that policy for the same to include more or fewer beneficiaries in have an average daily MME of greater or reasons. However, we still believe it their drug management programs, as equal to 90 mg but who are filling prudent to place certain parameters they may under the current policy, opioids prescriptions from many around the beneficiaries who may be except that we proposed to continue to different prescribers or pharmacies that identified as potentially at-risk by permit plan sponsors to apply the they may currently address but would sponsors for their drug management criteria more frequently than CMS will not be able to under our proposal. These programs, particularly as we gain

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experience with the use of lock-in as a MME greater than or equal to 90 mg for expressed concerns about not being able drug management tool. any duration during the most recent 6 to continue to address plan members Given that no other commenter months and either: 3 or more opioid who are receiving opioids from a large recommended a specific program size, prescribers and 3 or more opioid number of prescribers or pharmacies but there is no discernible consensus that a dispensing pharmacies OR 5 or more who do not meet a particular MME population of more than 300,000 would opioid prescribers, regardless of the threshold. be manageable for Part D sponsors. We number of opioid dispensing We note that we do not anticipate that therefore decline to adopt these criteria pharmacies. OMS will report beneficiaries meeting as the clinical guidelines for that reason, This means that beneficiaries meeting these supplemental criteria to sponsors; and also because we want sponsors to these criteria will be reported to however, Part D sponsors may review focus on the Part D population that is at sponsors by OMS and sponsors with beneficiaries who meet them—and must the highest risk. Also, as we noted drug management programs must report them to OMS if they do—at a previously, the statute requires us to review each case and report their level that is manageable for their drug establish policies to ensure that the findings back to OMS as they do today management programs in conjunction populations of enrollees in a consistent with how they have operated with the potential at-risk beneficiaries prescription drug management program under the current policy. In addition, reported by OMS minimum criteria, can be effectively managed by plans. sponsors may not vary these minimum whom they must address. Therefore, we disagree that the clinical criteria. However, as we previously Thus, the final clinical guidelines for guidelines arbitrarily limit the size of stated, sponsors will be permitted to 2019 will result in an estimated program these programs. apply the minimum criteria more size of approximately 67,173 After publication of the proposed frequently using their own prescription beneficiaries—44,332 of whom Part D rule, we conducted an analysis of the claims data than CMS will apply them sponsors with drug management clinical guidelines/OMS criteria for through OMS quarterly. According to programs must review and 22,841 of 2019 that we proposed using 2017 PDE our analysis of 2017 PDE data, these whom such sponsors may review. We data, as the original estimates were minimum criteria would identify 44,332 believe this program size can be based on 2015 data. We were pleased to potential at-risk beneficiaries and is the effectively managed by plans because confirm that the current policy, which option based on 90 MME in the RIA that we have already received feedback from will be integrated into Part D drug has a revised program size estimate Part D sponsors through the final 2018 management programs, continues to which is closest to our original estimate Medicare Parts C&D Call Letter process make substantial progress in reducing of 33,053 but that would not identify that 33,000 beneficiaries are potential opioid overutilization in the fewer at-risk beneficiaries. Given the manageable. Thus, we conclude that Part D program. The reduction in the scope of the opioid crisis, and current 44,332 beneficiaries are associated with number of beneficiaries meeting the data showing significant reduction in the option included in the RIA of the OMS criteria between 2015 and 2017 far the number of beneficiaries meeting the proposed rule that is the closest in outpaced previous trends. We thank the OMS criteria, finalizing criteria that number without identifying fewer Part D sponsors that have executed the would have resulted in a smaller potential at-risk beneficiaries and is current policy, the providers who have program size could undermine the consistent with historical program size participated, and the various increasing momentum in addressing under the current policy. Moreover, we stakeholders who have provided helpful opioid overutilization in the Medicare received no comments that 33,053 input over the years. Part D program. beneficiaries is the largest program size According to this analysis, the 2019 Second, we are finalizing Part D sponsors can manage. Finally, as clinical guidelines/OMS criteria we supplemental criteria to provide we stated above, sponsors may review proposed would identify an estimated sponsors with some flexibility in the additional 22,841 beneficiaries at a 11,753 potential at-risk beneficiaries adopting criteria for their drug level that is manageable for their drug rather than the 33,053 we originally management programs. This means that management programs. estimated. Given the incremental sponsors may continue to report These final criteria for 2019 meet the approach we have taken with the additional beneficiaries to OMS—as definition of clinical guidelines that we current policy over the years since its they do today under the current policy. are finalizing. They are criteria to inception, this revised estimate provides However, unlike the current policy, identify potential at-risk beneficiaries an opportunity to adjust the clinical such beneficiaries must meet the who may be determined to be at-risk guidelines/OMS criteria downward in following supplemental criteria: Use of beneficiaries under drug management terms of prescriber and pharmacy opioids (regardless of average daily programs, and they were developed in thresholds which will incorporate more MME) during the most recent 6 months accordance with the standards we are potential at-risk beneficiaries in 2019. with 7 or more opioid prescribers OR 7 finalizing in § 423.153(f)(16) and Therefore, after considering the or more opioid dispensing pharmacies. beginning for 2020, will be published in comments and this updated data, we are These supplemental criteria were guidance annually. These criteria also doing two things with respect to our included in the additional criteria adhere to the standards we proposed in clinical guidelines proposal, which we options that we considered and are § 423.153(f)(16) because: (1) They were will identify a similar program size as included in a options chart in the developed with stakeholder the one we proposed, as well as strike Regulatory Impact Analysis (RIA) of the consultation in that we solicited a balance between those commenters proposed rule; specifically, in Row 2 of comment on them in the proposed rule; wanting complete flexibility to adopt option 6. Using 2017 data, we estimate (2) they are based on the acquisition of criteria to identify potential at-risk that these supplemental criteria would frequently abused drugs from multiple beneficiaries and those urging no identify an additional 22,841 potential prescribers, multiple pharmacies, and flexibility. First, we are finalizing at-risk beneficiaries. We believe these the level of frequently abused drugs in alternative criteria that we considered in criteria would be responsive to the that they identify potential at-risk the RIA as Option 3 as minimum concern of the commenters who, in beneficiaries taking opioids and criteria. These minimum criteria are: urging us to allow flexibility for obtaining them from 7 or more Use of opioids with an average daily sponsors to adopt targeting criteria, prescribers or 7 or more pharmacies; (3)

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they are derived from our and alignment between Government overutilizer count. Therefore, we commenters’ expert opinion that programs. included these beneficiaries as potential obtaining opioids from many prescribers Moreover, our implementation of the opioid overutilizers under the current or many pharmacies is a potentially CARA drug management program policy, and we will continue to utilize dangerous utilization pattern of provisions focuses on beneficiaries who this methodology for OMS reporting of frequently abused drugs due to an are receiving opioids from multiple potential at-risk beneficiaries for drug apparent lack of coordination of care prescribers and/or multiple pharmacies, management programs. that warrants further review and this not just at a certain MME level. In If a sponsor performs case opinion is supported by the fact that addition, our finalized requirements for management for a potential at-risk this pattern is highly unusual in the Part drug management programs require Part beneficiary who was reported through D program as it represents 0.11 percent D sponsors to engage in case OMS and discovers that the high use of beneficiaries; and (4) they include a management with prescribers, obtain was a result of appropriate prescription program size estimate. their verification that the beneficiary is overlap and not misuse, we would We have consolidated the clinical at-risk and their agreement before expect the sponsor to stop conducting guidelines/OMS criteria in Table 1 for implementing a prescriber lock-in or case management for that beneficiary, easier reference. We note that we were beneficiary-specific claim edit, as long and to not send the initial notice to the not persuaded by the commenter who as the prescribers are responsive to case beneficiary. urged us to adopt criteria that would management. This means that decisions Comment: A commenter requested address high opioid use regardless of about the amount of frequently abused that CMS clarify that the language ‘‘for the number of prescribers or drugs an at-risk beneficiary should any duration during the most recent 6 pharmacies, as one purpose of drug receive are made by the beneficiary’s months’’ means that the opioid use management programs, and lock-in tools prescriber(s) if they are responsive and occurred during the most recent 6 specifically, is to promote better care not based on the targeting threshold for months and not 6 months of consistent coordination among multiple providers. review of the beneficiary’s utilization. use. Response: We confirm that this Comment: Some commenters Thus, this approach is aimed at addressing overutilization of frequently language means that the opioid use suggested that if we have concerns with occurred during the most recent 6 allowing Part D sponsors flexibility in abused drugs while maintaining access to such drugs when medically necessary months. adopting targeting criteria for potential Comment: A commenter suggested at-risk beneficiaries, that we establish a in the Part D program. Comment: A commenter proposed that CMS apply path analysis to develop process through which a sponsor could modifying ‘‘for any duration’’ in the clinical guidelines to identify potential submit their guidelines to CMS. clinical guidelines to permit at-risk beneficiaries using the Integrated Response: We thank these beneficiaries a reasonable overlap time Data Repository (IDR), which is a data commenters for their idea, but we prefer to refill medications and suggested that warehouse that integrates multiple data the approach we have taken as CMS set a reasonable overlap period of sources and supports analytics across providing consistency across the entire no more than 3 days for the purposes of CMS. Part D program and a program size, as identifying potential at-risk Response: We thank the commenter required by CARA. beneficiaries. for suggesting an approach in the IDR to Comment: A few commenters urged Response: CMS performed an improve identification of potential at- caution in the use of policies extensive analysis of the OMS criteria risk beneficiaries for CMS to consider. determining access to medications using 2015 data (https://www.cms.gov/ We proposed that under the clinical based upon thresholds such as MME, Medicare/Prescription-Drug-Coverage/ guidelines, prescribers associated with which the commenters viewed as a PrescriptionDrugCovContra/Downloads/ the same single Tax Identification potentially problematic type of one-size- Revised-OMS-Criteria-Modification- Number (TIN) be counted as a single fits all approach. These commenters Analysis.pdf). Adjusting the clinical prescriber, because we have found noted that scientific literature does not guideline MME calculation for each under the current policy that such support the establishment of a beneficiary to account for overlapping prescribers are typically in the same recommended maximum dose for fills would be difficult to operationalize group practice that is coordinating the opioids. These commenters also pointed from a data analysis perspective since it care of the patients served by it, and out that the use of such thresholds may would be dependent on the number of failing to do so would result in a high result in a false impression of a superior fills and the opioids dispensed, volume of false positives reported safety profile, which we interpreted to including strength each beneficiary through OMS. Thus, it is appropriate to mean that referring to a specific MME received. For this reason, CMS chose to count such prescribers as one, so as not level as potentially dangerous may give calculate the MME daily dose using the to identify beneficiaries through OMS the impression that a level below that average daily dose during the opioid who are not potentially at-risk. amount is universally safe. usage. We included ‘‘for any duration’’ In this regard, in applying the clinical Response: We agree with the in the clinical guidelines since this guidelines criteria, CMS proposed to commenter that the CDC Guideline— means that these beneficiaries reached count prescribers with the same TIN as and our clinical guidelines for Part D or exceeded the MME level in a short one prescriber, unless any of the drug management programs that refer to period of time, and received their prescribers are associated with multiple it—are not intended as a maximum opioids from multiple prescribers and TINs. We also proposed that when a threshold for prescribing, as we noted in pharmacies. This indicates potential pharmacy has multiple locations that the preamble to the proposed rule. In coordination of care issues or misuse. share real-time electronic data, all the absence of dosing limits in the FDA- We found that the number of additional locations of the pharmacy collectively approved labeling for opioids, we are overutilizers with an episode length less be treated as one pharmacy under the using the CDC guideline to establish a than 90 days for any of the MME dose clinical guidelines. For example, under threshold to identify potentially high- thresholds analyzed ranged from only the criteria we are finalizing, a risk beneficiaries who may benefit from 57 to 320 beneficiaries, or 1 to 2 percent beneficiary who meets the 90 MME closer monitoring and to create of the 90+ day episode opioid criterion and received opioid

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prescriptions from 3 prescribers in the clarify that under the current policy/ pharmacy. This may result in the same group practice and 2 independent OMS we use the NPI to first identify sponsor not or no longer conducting opioid prescribers (1 group practice + 2 single prescribers, and then we further case management for a beneficiary prescribers = 3 prescribers) and filled group single prescribers with the same because the beneficiary does not meet the prescriptions at 4 opioid dispensing single TIN. We will continue this the clinical guidelines, or in the sponsor pharmacies that do not share real-time methodology for the clinical guidelines sending the beneficiary an alternate electronic data, will still meet the under the drug management program. second notice that the beneficiary is not criteria, which is appropriate. However, We appreciate the comment regarding at-risk if the sponsor discovers this a beneficiary who meets that 90 MME real-time prescriber data, but we did not information after it provided the criterion and received opioid propose such a system for Part D beneficiary with the initial notice. prescriptions from 3 prescribers in the prescribers. same group practice and 1 independent Comment: We received several We note that group practices and opioid prescriber (1 group practice + 1 comments supporting our proposal that chain pharmacies are discussed later in prescriber = 2 prescribers) and filled the when a pharmacy has multiple locations this preamble in the context of the prescriptions at 4 opioid dispensing that share real-time electronic data, all selection of a prescriber(s) and pharmacies that do not share real-time locations of the pharmacy collectively pharmacy(ies) in cases when a Part D electronic data will not meet the be treated as one pharmacy under the plan limits a beneficiary’s access to criteria. clinical guidelines. We also received coverage of frequently abused drugs to Comment: Several commenters many comments that Part D plan selected pharmacy(ies) and/or supported the proposal conceptually to sponsors and their PBMs do not have prescriber(s). count prescribers associated with the the systems capabilities to account for As noted above, Table 1 shows that in same single TIN as a single prescriber, pharmacies that have multiple locations 2017 approximately 44,332 beneficiaries but many of these commenters noted that share real-time electronic data, in would have met the minimum criteria of that some Part D plans sponsors and order to treat all locations of the the 2019 clinical guidelines that we are PBMs do not have access to prescriber pharmacy collectively as one pharmacy. finalizing, which is approximately 0.10 TIN information. A few commenters We received one comment that they are percent of the 45 million beneficiaries recommended that CMS count able to, but that there are operational enrolled in Part D in 2017. prescribers with the same National challenges to synthesizing the data to be Approximately, 22,841 additional Provider Identifier (NPI) as a single useful for drug management programs. beneficiaries will have met the prescriber, and a commenter suggested Response: As we stated in the supplemental criteria that we are that CMS require prescribers to share proposed rule, section 1860D–4(c)(5)(D) real-time electronic data through an of the Act specifies that for purposes of finalizing, which is approximately 0.05 electronic health record (EHR). limiting access to coverage of frequently percent. To derive this estimated Response: We appreciate the support abused drugs to those obtained from a population of potential at-risk for this proposal as well as the selected pharmacy, if the pharmacy has beneficiaries, we analyzed prescription information on the operational multiple locations that share real-time drug event data (PDE) from 2017,8 using challenges. After considering these electronic data, all such locations of the the CDC opioid drug list and MME comments, we are finalizing this aspect pharmacy collectively are treated as one conversion factors, and applying the of the clinical guidelines for 2019. Part pharmacy. Because of this statutory criteria we are finalizing as the clinical D plan sponsors without the ability to requirement, it makes sense to us to guidelines. This estimate is over- group prescribers using the TIN through consider such multiple locations as one inclusive because we did not exclude data analysis will have to make these pharmacy for purposes of the clinical beneficiaries in long-term care (LTC) determinations during case guidelines, similar to how we account facilities who will be exempted from management. If a sponsor finds that the for group practices, to reduce false drug management programs, as we multiple opioid prescribers for the positives, particularly because the discuss later in this section. beneficiary are from a single group purpose of the guidelines is to identify However, based on similar analyses practice, and therefore, the beneficiary when a beneficiary may be at risk for we have conducted, this exclusion will does not meet the clinical guidelines, overutilization because they use not result in a noteworthy reduction to the sponsor could stop conducting case multiple pharmacies. Therefore, we are our estimate. Also, we were unable to management for that beneficiary, and finalizing this aspect of the clinical count all locations of a pharmacy that would not send the initial notice to the guidelines for 2019. has multiple locations that share real- beneficiary. We will issue guidance and We understand that we, and time electronic data as one, which is a updated OMS technical user guides to apparently most sponsors and their topic we discussed earlier and will plan sponsors at a later time, including PBMs, do not have the systems return to later. Thus, there likely are data sources and standard responses capability to automatically determine beneficiaries counted in our estimate used in OMS reporting, which may when a pharmacy is part of a chain. include providing such feedback to Therefore, Part D plan sponsors without who will not be identified as potential CMS. this capability will have to make these at-risk beneficiaries because they are in In addition, this information may be determinations during case an LTC facility or only use multiple discovered after the sponsor provided management. If through such case locations of a retail chain pharmacy that the beneficiary the initial notice. In such management, a plan sponsor finds that share real-time electronic data. an event, the sponsor would send the multiple locations of a pharmacy used 8 beneficiary an alternate second notice by the beneficiary share real-time Unique count of beneficiaries who met the criteria in any 6 month measurement period that the beneficiary is not at-risk. To the electronic data, the sponsor will be (January 2017–June 2017; April 2017–September comments about grouping by NPI, we required to treat those locations as one 2017; or July 2017–December 2017).

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As clarified above, since the CDC • Exempted Beneficiary We received the following comments removed all formulations of and our response follows: We proposed that an exempted buprenorphine, for pain and for MAT, Comment: Commenters were overall from the most recent CDC MME beneficiary, with respect to a drug management program, would mean an supportive of our proposal to exempt conversion factor file, buprenorphine beneficiaries who have a cancer enrollee who: (1) Has elected to receive products are not used to determine the diagnosis. A few of the commenters hospice care; (2) Is a resident of a long- beneficiary’s average daily MME. noted that the CDC Guideline term care facility, of a facility described However, we will use prescription recommendations do not apply to active in section 1905(d) of the Act, or of opioids, including all buprenorphine cancer treatment. Many of these another facility for which frequently products for pain and MAT, to commenters asked for more guidance on abused drugs are dispensed for residents determine opioid prescribers and opioid how this exemption, which is a feature dispensing pharmacies under the through a contract with a single of the current policy, would be minimum criteria. Similarly, sponsors pharmacy; or (3) Has a cancer diagnosis. operationalized. Others felt the must include all prescription opioids, While the first two exceptions are exemption is too broad and could be including all buprenorphine products, required under CARA, we proposed to applied to beneficiaries who have not to determine opioid prescribers and exercise the authority in section 1860D– been treated for cancer in years or who opioid dispensing pharmacies under the 4(c)(5)(C)(ii)(III) of the Act to treat a are being treated for non-terminal supplemental criteria. beneficiary who has a cancer diagnosis cancer but possibly do have an opioid as an exempted individual. We did not overuse issue that needs to be propose to exempt additional categories addressed. A few commenters disagreed of beneficiaries. with the exemption as an inappropriate

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one-size-fits-all approach. Even the treated for active cancer-related pain Pharmacy (NLTCP), as defined in commenters who did not support the that we are finalizing. Chapter 5 of the Medicare Prescription exemption noted that the cancer While we understand the concerns of Drug Benefit Manual, asserting that such population is unique and must be the commenters who did not support pharmacies are required to meet handled delicately. this exemption about potential minimum performance and service Response: We thank the commenters inappropriate opioid use among this criteria, including performing drug for their supportive comments as to the population, we note that this exemption utilization reviews and identifying exemption for cancer. Our intent is to is a feature of the current policy, which inappropriate drug usage. Another exempt beneficiaries who are currently has reportedly been working well and asked for clarification on whether being treated for active cancer-related we therefore believe it is appropriate to beneficiaries serviced by long-term care pain from Part D drug management extend it to drug management programs. pharmacies are exempt or if the programs and this is the exemption we We agree that this population deserves exemption is limited to beneficiaries in are finalizing based on the comments. heightened protection but we are long-term care facilities. While our current policy generally finalizing an exemption that we believe Response: Section 1860D– excludes beneficiaries with cancer is narrowly tailored to address the 4(c)(5)(C)(ii) of the Act exempts diagnoses from OMS reporting,9 we concerns of commenters who urged us residents of a long-term care facility believe it is appropriate to be more to proceed with caution with respect to rather than pharmacy claims submitted specific with respect to regulatory this exemption. by long-term care pharmacies. parameters for Part D prescription drug Comment: Many commenters Therefore, we find it is appropriate to management programs. Therefore, the supported the exemption for finalize an exemption that takes the comments have persuaded us that we beneficiaries in the LTC setting. A few same approach as the statute. However, need to be more precise with this commenters recommended that we not we note that beneficiaries serviced by codified exemption. exempt LTC beneficiaries from long-term care pharmacies may meet As we noted in the proposed rule, retrospective drug utilization review another exemption, such as the one for there are some limitations around this (DUR) processes. A commenter asked if beneficiaries residing in facilities for exemption under the current policy due it could still implement a beneficiary- which frequently abused drugs are to our current data sources which will specific claim edit at POS for frequently dispensed for residents through a remain when implementing the drug abused drugs if it independently contract with a single pharmacy. management program clinical determined an LTC resident to be at- Comment: A few commenters stated guidelines. For example, there may be a risk. that they will need the Long-Term lag in current year diagnosis data in Response: Section 1860D– Institution (LTI) report to be released on CMS systems and the RxHCC codes 4(c)(5)(C)(ii) exempts beneficiaries in a monthly basis rather than the current from the risk adjustment processing the LTC setting, and we therefore do not quarterly basis. system are based on diagnosis data from have the authority to permit plans to the past year. Therefore, Part D plan include them in Part D drug Response: We thank the commenters sponsors will have to identify such management programs. We are for their comment and will explore if exempted beneficiaries through the case finalizing this exemption as proposed. more frequent reporting is feasible. management process if they are Because beneficiary-specific POS claim Comment: Many commenters inadvertently reported through OMS or edits for frequently abused drugs are supported the proposed exemption for when the sponsor is reviewing cases included in drug management programs beneficiaries who are residents of a pursuant to applying the minimum through the integration approach we are facility for which frequently abused clinical guidelines more frequently than finalizing, a sponsor may not implement drugs are dispensed for residents CMS and the supplemental criteria of such an edit for an exempt beneficiary. through a contract with a single the clinical guidelines. Plan sponsors However, while exempt beneficiaries pharmacy. Others urged us to propose may have more recent cancer diagnosis are exempt from drug management one. information or learn this information programs, they are not exempt from Response: We clarify for commenters through clinical contact with retrospective DUR processes. Part D that the proposed rule included an prescribers. Plan sponsors may plan sponsors still must comply with its exemption for beneficiaries who are currently refer to the CDC Guideline as other utilization management residents of a facility for which a reference which distinguishes active obligations in § 423.153, and could frequently abused drugs are dispensed cancer treatment from cancer survivors implement a beneficiary-specific edit for for residents through a contract with a with chronic pain who have completed drugs other than frequently abused single pharmacy, as required by Section cancer treatment, are in clinical drugs, for example, if necessary to 1860D–4(c)(5)(C)(ii). Therefore, we are remission, or are under cancer comply with those obligations. In finalizing this exemption as proposed. surveillance only. We will monitor addition, sponsors may also still review Comment: Many commenters urged health care guidelines that address this the use of drugs that constitute us to extend an exemption to topic and issue guidance as warranted frequently abused drugs by beneficiaries beneficiaries in assisted living facilities, to further refine the execution of the in LTC facilities and work with such asserting that such beneficiaries are at exemption for beneficiaries being facilities to identify patterns of very low risk of substance abuse and inappropriate or medically unnecessary that applying lock-in to them could be 9 Currently, for OMS, the following beneficiaries care among enrollees. However, as just disruptive and undermine their care. are excluded from OMS reporting: Those with ICD– stated, the sponsors cannot implement Other commenters opposed such an 10–CM codes associated with American Medical exemption and urged us to proceed with Association (AMA) Physician Consortium for beneficiary-specific edits for drugs that Performance Improvement (PCPI) ICD–10 cancer constitute frequently abused drugs, nor caution in carving out multiple diagnoses in the Common Working File (CWF) data prescriber or pharmacy lock-in for such exemptions that could undermine the during the 12 months prior to the end of the drugs. purpose of drug management programs. measurement period or cancer RxHCCs in the latest Other commenters referred to the Risk Adjustment Processing System (RAPS). Note, Comment: A commenter requested this is currently aligned with the Pharmacy Quality that CMS exempt any Part D claim difficulty in identifying such Alliance opioid overuse measure specifications. submitted by a Network Long-Term Care beneficiaries to exempt them.

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Response: Based on the comments medication when they need them the because drugs and biologicals covered received, we are not persuaded that most. Some commenters noted that the under the Medicare Part A per-diem beneficiaries in assisted living facilities CDC Guideline exempts patients payments to a Medicare hospice should be exempt from Part D drug receiving palliative and end-of-life care. program are excluded from coverage management programs, because we do Others disagreed, asserting that we had under Part D. Therefore, in 2014,10 we not believe that these facilities routinely put sufficient safeguards in place to strongly encouraged sponsors to place dispense drugs to their residents protect such beneficiaries in drug beneficiary-level PA requirements on through a contract with a single management programs. Other only four categories of prescription pharmacy, and therefore these commenters referred to the difficulty in drugs including analgesics. As a result, beneficiaries could be identified by the identifying such beneficiaries in order a small number of beneficiaries who clinical guidelines on this or another to exempt them. elected hospice care have been basis and be potentially at-risk. Response: We are persuaded that identified and excluded from the However, if a sponsor learned during beneficiaries who are receiving non- current policy/OMS. case management that a beneficiary hospice palliative and end-of-life care resides in an assisted living facility that but have not elected hospice should be Comment: A few commenters does dispense drugs through a contract exempted from Part D drug management requested clarification on the practical with a single pharmacy, then the programs. While we wish to exercise meaning of an exempted individual. sponsor must exempt such resident caution and thoughtfulness in Specifically, they asked if the from its drug management program. establishing regulatory exemptions beneficiary is exempted from only In addition, we are persuaded that versus clinical guidelines/criteria, as we coverage limitations or from many exemptions for certain group of noted above, we agree based on the retrospective DUR processes. A beneficiaries or ones that are crafted too multiple comments that such commenter opposed our proposal that broadly would risk undermining the beneficiaries should be treated the same drug management programs would purpose of drug management programs. as beneficiaries who have elected supersede the current policy in that Therefore, we decline to establish a hospice care for purposes of drug beneficiary-specific edits would no separate exemption for assisted living management programs, as they are very longer be permitted on non-opioid facility residents. We note that several similar in their health care status, if not medications. Another commenter required features of Part D drug their health benefit plan status. While requested clarification on the status of management programs, such as case we expect that Part D plan sponsors and existing beneficiary-specific POS claim management, multiple written PBMs would not inappropriately place edits for opioids and benzodiazepines beneficiary notices, the right to appeal such beneficiaries in their drug beginning January 1, 2019. and our general oversight, will serve as management programs, an actual beneficiary safeguards should a Part D regulatory exemption from drug Response: Exempted beneficiaries are sponsor inappropriately limit a management programs would be more exempted from Part D drug management beneficiary’s coverage to frequently definitive. Furthermore, adding these programs. Also, because we are abused drugs through a drug exemptions would align the drug integrating the ‘‘lock-in’’ component of management program. management programs with the CDC the drug management programs with the Comment: A commenter questioned Guideline, which was developed by current policy, going forward, how a drug management program experts and specifically provides beneficiary-specific POS edits and lock- should handle at-risk beneficiaries who recommendations for primary care in for frequently abused drugs will be move in and out of an LTC facility. clinicians who are prescribing opioids permitted only in compliance with Response: An at-risk beneficiary who for chronic pain outside of active cancer § 423.153(f). However, as we noted moves into an LTC facility becomes an treatment, palliative care, and end-of- earlier, the prescription drug individual exempted from a drug life care. Therefore for consistency with management program requirements that management program and a sponsor the CDC Guideline, beneficiaries who we are finalizing in this rule do not must remove such beneficiary from such are receiving non-hospice palliative and affect plan sponsors’ obligation to program as soon as it reliably learns that end-of-life care but who have not comply with other requirements the beneficiary has moved into an LTC elected hospice will be exempted from pertaining to coverage or utilization facility, whether that be via the Part D drug management programs as management. Part D plan sponsors are beneficiary, the facility, a pharmacy, a well. still obligated to conduct other drug prescriber, or an internal or external As discussed in the proposed rule, the utilization review and management report. A beneficiary who moves out of data challenges to identify these Part D consistent with existing DUR an LTC facility is no longer exempted beneficiaries will still exist for CMS and requirements, which includes reviewing unless he or she meets another prong of we anticipate for Part D sponsors also. utilization for any Part D drug and may the finalized definition of exempted Therefore, we will explore options for include implementing beneficiary- beneficiary. refining OMS reporting in this regard, specific POS claim edits on drugs that Comment: Several commenters and sponsors will have to identify these are not frequently abused drugs, if suggested that an exemption for exempted beneficiaries through the case necessary. However, we do not have beneficiaries who are receiving non- management process. specific guidance in this area, but we hospice palliative and end-of-life care We also remind Part D sponsors that would expect the sponsor to employ the would be appropriate in light of the drugs and biologicals covered under the same level of diligence and exemption for beneficiaries who have Medicare Part A per-diem payments to documentation with respect to elected hospice care. A few of these a Medicare hospice program are beneficiary-level POS claim edits for commenters asserted that without an excluded from coverage under Part D. non-frequently abused drugs that we exemption in the regulation, For a prescription drug to be covered beneficiaries could be included in a under Part D for a beneficiary who has 10 Please see the most recent CMS guidance, drug management program at a plan elected hospice, the drug must be for ‘‘Update on Part D Payment Responsibility for sponsor’s discretion and experience treatment unrelated to the terminal Drugs for Beneficiaries Enrolled in Medicare restricted access to pain-control illness or related conditions. This is Hospice’’, issued on November 15, 2016.

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require for drug management programs, report potential at-risk beneficiaries information about incoming enrollees consistent with current policy.11 who meet the minimum criteria of the who will meet the definition of a In addition, beneficiaries for whom clinical guidelines to sponsors through potential at-risk and an at-risk Part D sponsors have implemented the OMS. Currently, we have the ability beneficiary in proposed § 423.100 and beneficiary-specific POS claim edits for to exempt beneficiaries in LTC facilities, respond to requests from other sponsors opioids and/or benzodiazepines before in hospice, and with active cancer- for information about potential at-risk January 1, 2019 can continue to be related pain. Sponsors may have more and at-risk beneficiaries who recently subject to those edits under the current current data or obtain information disenrolled from the sponsor’s policy after December 31, 2018, which through the case management and prescription drug benefit plans. means that they may remain in place notification processes to further exempt To codify these requirements, we unless removed under the current beneficiaries, including those receiving proposed the written policies and policy. For example, as the result of a palliative or end-of-life care. procedures specified at § 423.153(f)(1) coverage determination or appeal.12 To (see 82 FR 56510). (ii) Requirements of Drug Management We received the following comments the extent that such a beneficiary is Programs (§§ 423.153, 423.153(f)) reported through OMS on January 1, and our response follows: 2019 or later to a sponsor with a drug As noted previously, we proposed to Comment: We received a comment management program, that sponsor codify a regulatory framework under strongly supportive of the requirements must comply with the requirements we which Part D plan sponsors may adopt in this provision. Response: We thank the commenter are finalizing in this rule. drug management programs to address for the support. Comment: A commenter suggested overutilization of frequently abused drugs. Therefore, we proposed to amend Comment: We received a few that CMS develop a process by which comments inquiring what credentials additional categories of exempted § 423.153(a) by adding this sentence at the end: ‘‘A Part D plan sponsor may are needed for clinical staff who individuals could be evaluated and conduct case management. The added that are evidence-based and establish a drug management program for at-risk beneficiaries enrolled in their commenters were concerned that the involve health care practitioners. clinical staff conducting case Response: We will evaluate the prescription drug benefit plans to address overutilization of frequently management be adequately qualified to implementation of the drug perform it in terms of education and management programs. Based on this abused drugs, as described in paragraph (f) of this section,’’ in accordance with training. These commenters stated that experience or new or emerging relevant unqualified case managers could health care information, we will our authority under revised section 1860D–4(c)(5)(A) of the Act. significantly detract from the benefit of consider proposing additional Part D drug management programs. exemptions through rulemaking as We also proposed to revise § 423.153 by adding a new paragraph (f) about Response: We agree that the necessary. requirement that clinical staff conduct Comment: A commenter asked how to drug management programs for which the introductory sentence will read: ‘‘(f) case management needs more detail. handle retroactive notifications that CMS expects that such clinical staff would qualify a beneficiary for an Drug Management Programs. A drug management program must meet all the conducting case management as part of exemption. a Part D plan sponsor’s drug Response: As we stated in a previous following requirements.’’ Thus, the requirements that a Part D plan sponsor management program would be a response with regard to beneficiaries physician or other appropriate health who move into LTC facilities, a sponsor must meet to operate a drug management program will be codified in care professional with sufficient must remove an exempted beneficiary expertise to conduct medical necessity from a drug management program as various provisions under § 423.153(f). We received the following comments reviews related to potential opioid soon as it reliably learns that the overutilization. While we are not beneficiary is exempt, whether that be and our response follows: Comment: While CMS received many specifying particular credentials for via the beneficiary, the facility, a comments that were supportive of drug clinical staff, in response to these pharmacy, a prescriber, or an internal or management programs as a whole, we comments, we are clarifying in the external report. did not receive comments specific to finalized version of § 423.153(f)(1)(i) Based on these comments, we are these provisions. that clinical staff must have a current finalizing with modification the Response: We are therefore finalizing and unrestricted license to practice following definition for exempted as proposed. within the scope of his or her profession beneficiary: An exempted beneficiary, in a State, Territory, Commonwealth of (iii) Written Policies & Procedures with respect to a drug management the United States (that is, Puerto Rico), (§ 423.153(f)(1)) program, will mean an enrollee who: (1) or the District of Columbia. Has elected to receive hospice care or is We proposed to require Part D Comment: We received several receiving palliative or end-of-life care; sponsors document their programs in comments that a dentist should be (2) is a resident of a long-term care written policies and procedures that are required to be included on the case facility, of a facility described in section approved by the applicable P&T management team when a prescriber of 1905(d) of the Act, or of another facility committee and reviewed and updated as frequently abused drugs is a dentist. for which frequently abused drugs are appropriate, which is consistent with Response: We decline to adopt this dispensed for residents through a the current policy. Also consistent with recommendation. We do not want to be contract with a single pharmacy; or (3) the current policy, we proposed to overly prescriptive as to the specific is being treated for active cancer-related require that these policies and background of licensed clinical staff pain. Given this exemption, CMS will procedures address the appropriate conducting case management. We credentials of the personnel conducting believe the plan should have some 11 See ‘‘Supplemental Guidance Related to case management and the necessary and flexibility, beyond what is discussed in Improving Drug Utilization Review Controls in Part D,’’ dated September 6, 2012. appropriate contents of files for case the preceding response and described in 12 Patient Safety Analysis Overutilization management. We additionally proposed § 423.153(f)(1)(i), to determine Monitoring System User Guide. January 2018. to require sponsors to monitor appropriate credentials of the clinical

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staff conducting case management based include the changes regarding the management outreach is not necessary on the facts and circumstances of the licensure of the clinical staff conducting because it has already been performed case. case management and the required by a prior Part D sponsors for the Comment: We received a question documentation of the substance of beneficiary. We discuss potential at-risk asking how prescriber agreement should prescriber and beneficiary contacts. and at-risk beneficiaries who change be documented and shared with plans again later in this preamble. appropriate parties. We also received a (iv) Case Management/Clinical Contact/ The information that the plan sends to few comments that a Part D sponsor Prescriber Verification (§ 423.153(f)(2)) the prescribers and elicits from them is must ensure that any records of contacts To meet the requirements of section intended to assist a Part D sponsor to between the sponsors and prescribers 1860D–4(c)(5)(C) and section 1860D– understand why the beneficiary meets under drug management programs must 4(c)(5)(B)(i)(II) of the Act, we proposed the clinical guidelines and if a be easily accessible to at-risk in a new § 423.153(f)(2) to require Part limitation on access to coverage for beneficiaries who wish to appeal and D sponsors’ clinical staff to engage in frequently abuse drugs is warranted for that these records are easily able to be case management for each potential at- the safety of the beneficiary. Also, auto-forwarded to the Independent risk beneficiary for the purpose of sponsors will use this information to Review Entity (IRE). engaging in clinical contact with the choose standardized responses in OMS Response: We agree that such prescribers of frequently abused drugs and provide information to MARx about information must be documented and and verifying whether a potential at-risk any plan coverage limitations that the available to appropriate parties beneficiary is an at-risk beneficiary. sponsors implement. We will address including at-risk beneficiaries and the Specifically, we proposed that a new required reporting to OMS and MARx IRE, when applicable. To comply with § 423.153(f)(2) would state that the by sponsors again later. § 423.153(f)(1)(ii), sponsors must sponsor’s clinical staff must conduct Our proposed § 423.153(f)(2) used the document contact with prescribers case management for each potential at- terms ‘‘reasonable attempts’’ and during case management, for example, if risk beneficiary for the purpose of ‘‘reasonable period’’ rather than specify a prescriber agreed with the plan engaging in clinical contact with the a required number of attempts or a sponsor to implement a limit on the prescribers of frequently abused drugs specific timeframe for plan sponsor to beneficiary’s access to coverage for and verifying whether a potential at-risk call prescribers. We explained that this frequently abused drugs pursuant to beneficiary is an at-risk beneficiary. was due to the competing priorities of § 423.153(f)(4). Also, the sponsor must Proposed § 423.153(f)(2)(i) would sponsors’ diligently addressing opioid document if the beneficiary calls the further state that, except as provided in overutilization in the Part D program sponsor to provide his or her pharmacy paragraph (f)(2)(ii) of this section, the through case management, which may or prescriber preferences for lock-in. To sponsor must do all of the following: necessitate telephone calls to the make this clearer, we are adding • Send written information to the prescribers, while being cognizant of the language to § 423.153(f)(1)(ii) such that beneficiary’s prescribers that the need to be judicious in contacting the necessary and appropriate contents beneficiary meets the clinical guidelines prescribers telephonically in order to of files for case management must and is a potential at-risk beneficiary; not unnecessarily disrupt their include documentation of the substance • Elicit information from the practices. We further stated that we of prescriber and beneficiary contacts. prescribers about any factors in the wished to leave flexibility in the Comment: We received a comment beneficiary’s treatment that are relevant regulation text for sponsors to balance that we should require Part D plan to a determination that the beneficiary these priorities on a case-by-case basis sponsors’ policies and procedures for is an at-risk beneficiary, including in their drug management programs. clinical contact to include secure whether prescribed medications are However, we note that we proposed a 3 identity verification safeguards to appropriate for the beneficiary’s medical attempts/10 business days requirement protect prescribers from ‘‘phishing’’ conditions or the beneficiary is an for sponsors to conclude that a communications that attempt to trick exempted beneficiary; and prescriber is unresponsive to case • prescribers into disclosing patient In cases where the prescribers have management in § 423.153(f)(4) discussed information. not responded to the inquiry described later in this section. Response: We decline to make this a in (f)(2)(i)(B), make reasonable attempts We received the following comments requirement specific to Part D drug to communicate telephonically with the and our response follows: management programs. We note that prescribers within a reasonable period Comment: We received a comment health care providers’ offices and Part D after sending the written information. requesting that a plan sponsor be able to sponsors are both covered entities under We proposed to add paragraph (ii) to communicate to CMS if no prescriber Health Insurance Portability and § 423.153(f)(2) that would specify that will verify that the beneficiary is at-risk. Accountability Act of 1996. We also the exception would be for Response: We plan to expand and encourage Part D sponsors to have identification by prior plan. If a modify OMS and the MARx system to written policies and procedures for their beneficiary was identified as a potential accommodate the CARA drug staff who contact providers to at-risk or an at-risk beneficiary by his or management program provisions we are proactively identify themselves in a her most recent prior plan, and such finalizing here. We will issue additional manner that should reasonably satisfy identification has not been terminated guidance and technical instructions as the providers of their identity and for in accordance with paragraph (f)(14) of needed. providers to likewise have written this section, the sponsor meets the Comment: We received a comment practice policies and procedures to requirements in paragraph (f)(2)(i) of asking that we recommend that Part D reasonably establish the identity of the this section, so long as the sponsor sponsors encourage prescribers during staff of health benefit plans who contact obtains case management information case management to discuss drug them and do not proactively establish from the previous sponsor and such management programs with their their identity. information is still clinically adequate patients. We also received a request that Given these comments and our and up to date. This proposal is to avoid we issue guidance to plan sponsors responses, we are finalizing unnecessary burden on health care directing them to encourage prescribers, § 423.153(f)(1) with modification to providers when additional case as part of the required clinical contact,

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to perform a comprehensive substance should be aware that such beneficiaries Comment: We received a question abuse disorder screening and/or may later be reported through OMS if whether a Part D sponsor, under a drug assessment of the patient deemed to be they meet the clinical guidelines. Also, management program, may implement a a potential at-risk beneficiary, and if we note that pursuant to combination of a beneficiary-specific indicated, refer him or her for follow-up § 423.153(f)(2)(i), the sponsor must POS claim edit, prescriber and/or treatment with a pain specialist or conduct case management for every pharmacy lock-in for frequently abused addiction treatment provider. potential at-risk beneficiary, unless an drugs, and whether these limitations Response: We encourage Part D plan exception applies. may be implemented at different times. sponsors to undertake both of these After considering these comments, we Another comment recommended that suggestions, but decline to require it at are finalizing the proposed language in plan sponsors be permitted to establish this time, as we believe prescribers, in § 423.153(f)(2) with the modification a prescriber lock-in concurrently with a their professional discretion by and described. beneficiary-specific POS claim edit and large will undertake appropriate not require the plan to contact the adjusted treatment plans with their (v) Limitations on Access to Coverage prescribers separately for each patients and/or MA–PDs will negotiate for Frequently Abused Drugs limitation. such issues with their network (§ 423.153(f)(3)) Response: We acknowledge that there providers. We also remind commenters We proposed to describe all the tools may be cases where a plan may impose that not all Part D prescription drug that will be available to sponsors to one or more coverage limitations for plans have network providers. limit an at-risk beneficiary’s access to frequently abused drugs simultaneously Comment: We received some coverage for frequently abused drugs on an at-risk beneficiary, and at a later comments that Part D sponsors should under a drug management program in time, add new limitations and/or not be permitted to telephone § 423.153(f)(3). Our proposal specified terminate existing ones. Thus, a plan prescribers in order to avoid disrupting that subject to the requirements of sponsor may choose to implement their practices. paragraph (f)(4) of this section, a Part D multiple limitations on access to Response: We decline to adopt this plan sponsor may do all of the coverage for frequently abused drugs for suggestion. The clinical guidelines following: an at-risk beneficiary at one time. identify beneficiaries who are • Implement a point-of-sale claim For instance, after case management, potentially at-risk for a serious adverse edit for frequently abused drugs that is a plan sponsor may decide to pursue health event, including death, due to specific to an at-risk beneficiary. implementation of a POS claim edit, their opioid use and apparent lack of prescriber lock-in, and pharmacy lock- • In accordance with paragraphs coordinated care. The requirements we in for an at-risk beneficiary (f)(10) and (f)(11) of this section, limit are finalizing permit sponsors to simultaneously because of the an at-risk beneficiary’s access to escalate the steps they take during case circumstances of the particular case. In coverage for frequently abused drugs to management to engage in clinical this instance, prescriber agreement those that are— contact with the beneficiary’s would be necessary to implement the prescribers of frequently abused drugs. ++ Prescribed for the beneficiary by POS edit and the prescriber lock-in. We would expect such prescribers to one or more prescribers; A plan sponsor may also implement understand such sponsors’ attempts to ++ Dispensed to the beneficiary by additional coverage limitations over make them aware of important one or more network pharmacies; or time (for example, start with a information in this regard that they ++ Specified in both paragraphs beneficiary-level POS edit, subsequently likely do not know. (f)(3)(ii)(B)(1) and (2) of this section. add a prescriber lock-in, and Comment: We received a comment Paragraph (iii)(A) will state that if the subsequently add a pharmacy lock-in) that integrated delivery systems use sponsor implements an edit as specified because the case has not resolved itself communication tools other than in paragraph (f)(3)(i) of this section, the as expected after initial case telephone calls to escalate matters to sponsor must not cover frequently management. We remind plan sponsors prescribers and that CMS should allow abused drugs for the beneficiary in that when implementing additional such systems to use such tools instead. excess of the edit, unless the edit is coverage limitations, the plan sponsor Response: Our intent is for Part D terminated or revised based on a must repeat the case management sponsors to use the most effective means subsequent determination, including a process including prescriber designed to elicit a prescriber response successful appeal. Paragraph (iii)(B) will verification, prescriber agreement, if to case management. Therefore, based state that if the sponsor limits the at-risk applicable, and notice requirements for on this comment, we are modifying the beneficiary’s access to coverage as each additional limitation, and that regulatory language in specified in paragraph (f)(3)(ii) of this such actions would also confer a new 60 § 423.153(f)(2)(i)(C). section, the sponsor must cover day appeal timeframe. We discuss this Comment: We received a question frequently abused drugs for the scenario further in the appeal section of whether a gaining sponsor must beneficiary only when they are obtained this preamble. immediately lock-in a new enrollee if from the selected pharmacy(ies) and/or Furthermore, a plan sponsor might the sponsor receives notice from the prescriber(s), or both, as applicable, (1) also terminate existing limitations on losing sponsor that the enrollee was in accordance with all other coverage access to coverage over time (for locked-in by the losing sponsor. requirements of the beneficiary’s example, an at-risk beneficiary may Response: No. Part D sponsors are prescription drug benefit plan, unless have a POS edit and pharmacy lock-in responsible for their own drug the limit is terminated or revised based and the plan sponsor terminates the management programs. As such, a on a subsequent determination, pharmacy lock-in and leaves in place gaining sponsor is not required to but including a successful appeal, and (2) the POS edit). may do so under certain circumstances except as necessary to provide While we are allowing plan sponsors as we discuss later in this preamble. reasonable access in accordance with to make such additions/terminations to Also, we note that with respect to at-risk paragraph (f)(12) of this section. limitations to access to coverage for beneficiaries that are new to a plan, We received the following comments frequently abused drugs for an at-risk sponsors that do not take any action and our response follows: beneficiary, we recognize that such

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changes might be disruptive and/or accordance with Section 1860D– pharmacy lock-in would create confusing for the beneficiary, and thus 4(c)(5)(B)(i)(II). additional administrative burden and strongly discourage plans from making We also proposed in paragraph inefficiencies and thus prevent drug frequent changes to such limitations for § 423.153(f)(4)(i)(B) that the sponsor management programs from responding a particular at-risk beneficiary. To would be required to obtain the in a timely fashion to potentially minimize such disruption and ensure agreement of the prescribers of dangerous overutilization of frequently such actions are taken in the manner frequently abused drugs with the abused drugs. These commenters also contemplated by the statute, we have limitation, unless the prescribers were argued that sponsors of stand-alone Part added a provision at § 423.153(f)(5)(iv) not responsive to the required case D plans do not have contracts with most to the regulation text which specifies management. We invited stakeholders to of the prescribers and, therefore, have that, if a plan intends to make changes comment on not requiring prescriber limited opportunity to have clinical to the limitations imposed on a agreement to implement pharmacy lock- contact with these prescribers. beneficiary under their drug in. Moreover, many commenters felt it was management program after the We further proposed in paragraph not appropriate to require that the beneficiary has been identified as at- § 423.153(f)(4)(i)(C) that the sponsor prescriber agree to pharmacy lock-in risk, the plan sponsor is required to must first provide notices that complied when the pharmacy is not required to provide the beneficiary notices under with § 423.153(f)(5) and (f)(6) to the agree when a sponsor applies prescriber the rules established at § 423.153(f)(5) beneficiary in accordance with section lock-in to an at-risk beneficiary. through (f)(8) and discussed later in this 1860D–4(c)(5)(B)(i)(I) of the Act. We Other commenters supported our preamble. Additionally, we will closely additionally proposed in paragraph proposal to require prescriber agreement monitor information submitted by § 423.153(f)(4)(ii) that a sponsor has for pharmacy lock-in. These sponsors to CMS in OMS and MARx complied with the requirement in commenters argued that provider and complaint data to make sure plans § 423.153(f)(2)(i)(C) to make reasonable discretion and clinical judgment is are not inappropriately disrupting attempts to communicate telephonically appropriate to prevent pharmacy lock-in beneficiary access to coverage for with prescribers with a reasonable from being implemented by Part D frequently abused drugs by making period if the prescribers were not sponsors inappropriately and impeding frequent changes to the limitations on responsive after 3 attempts to contact legitimate patient access. access to coverage. While we are not them within 10 business days. Finally, Response: CMS was persuaded by currently imposing limitations on how we proposed language in commenters’ rationale that requiring many times the plan can make such § 423.153(f)(4)(ii) that would provide an prescriber agreement for pharmacy lock- changes, we will re-evaluate this policy exception to the case management in could undermine one purpose of drug requirement in § 423.153(f)(2) in cases management programs, which is to in the future if it becomes problematic. when a potential or an at-risk promptly address potentially dangerous In response to this comment, we are beneficiary was identified as such by overutilization of frequently abused finalizing this provision as proposed, the beneficiary’s most recent prior drugs. While we recognize that except we are modifying § 423.153(f)(3) prescription drug benefit plan and the prescriber agreement is an essential to state a Part D plan sponsor may do sponsor had obtained the case component of prescriber lock-in, and ‘‘any or all of the following,’’ and management information from the prescriber agreement is preferred in the § 423.153(f)(3)(ii)(C) to simply state sponsor and updated it as appropriate. case of a beneficiary-specific claim edit ‘‘both.’’ This will make clearer that read We discussed such cases elsewhere in for frequently abused drugs, we are now as a whole, § 423.153(f)(3) means that a this section. We also discuss proposed persuaded that prescriber agreement to Part D sponsor may use the tool of a § 423.153(f)(4)(iv) that would have pharmacy lock-in is not essential, as beneficiary-specific point-of-sale edit, or imposed a 6-month delay before a pharmacy lock-in is primarily about prescriber or pharmacy lock-in, or any sponsor could implement prescriber where the drugs are dispensed and not combination of these three tools to limit lock-in later in this preamble. who wrote the prescription or its an at-risk beneficiary’s access to We received the following comments dosage. Therefore, we are finalizing this coverage of frequently abused drugs and our responses follow: provision with this modification. Plan under its drug management program. Comment: A commenter suggested sponsors will not be required to obtain (vi) Requirements for Limiting Access to that we allow a coverage limitation to be the agreement of the prescribers of Coverage for Frequently Abused Drugs put in place through a drug management frequently abused drugs to implement a (§ 423.153(f)(4)) program if a prescriber requests one to pharmacy lock-in. However, we do note assist in coordinating the care for his or that should a prescriber proactively alert We proposed in § 423.153(f)(4) that her patient. the plan sponsor that they do not before a Part D plan sponsor could limit Response: If the beneficiary meets the believe that pharmacy lock-in is the access of at-risk beneficiary to clinical guidelines/OMS criteria we are appropriate for a particular at-risk coverage for frequently abused drugs, finalizing, and a prescriber requests beneficiary, we expect the plan sponsor the sponsor would first be required to during case management that a coverage to take such information into take certain actions. We proposed in limitation be implemented for the consideration. paragraph § 423.153(f)(4)(i)(A) that a beneficiary, the sponsor may implement On the point of prescriber agreement, sponsor would be required to conduct it in accordance with the requirements we also wish to note that it was unclear the case management discussed earlier, we are finalizing for drug management in some of the statements if the which includes clinical contact to programs in this rule. commenters understood that section determine whether prescribed Comment: Many commenters stated 1860D–4(c)(5)(C)(iv) and Section medications are appropriate for the that Part D sponsors should not have to 1860D–4(c)(5)(B)(i)(II) of the Act potential at-risk beneficiary’s medical seek prescriber agreement to limit at- require, respectively, that a Part D conditions that is required by section risk beneficiaries to a pharmacy(ies) for sponsor engage in clinical contact with 1860D–4(c)(5)(C)(iv) of the Act and access to coverage for frequently abused prescribers regarding whether prescriber verification that the drugs. These commenters argued that medications are appropriate for a beneficiary is an at-risk beneficiary in requiring prescriber agreement for beneficiary’s medical condition and to

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verify that a beneficiary is at-risk before prescriber of frequently abused drugs, as Response: A prescriber is of course limiting access to coverage for determined by case management. free to have any of these reactions to frequently abused drugs. Thus, Response: We agree that in order for case management. A plan sponsor eliminating the need to obtain drug management programs to operate cannot implement prescriber lock-in for prescriber agreement to a pharmacy effectively, and prevent the resource- the beneficiary, unless at least one lock-in does not eliminate the intensive process of obtaining prescriber agrees to prescriber lock-in, requirement to comply with agreement from multiple prescribers, a as discussed earlier. Typically, we § 423.153(f)(2) and (f)(4)(i)(A) with Part D sponsor should not have to would expect the one prescriber to agree respect to pharmacy lock-in. obtain the agreement to prescriber lock- to prescriber lock-in and agree to serve Comment: Several commenters asked in of all the at-risk beneficiary’s as the prescriber. A sponsor cannot CMS to provide additional details about prescribers of frequently abused drugs. lock-in a beneficiary to a prescriber who what options Part D plan sponsors Therefore, we are changing the language disagrees, unless the prescriber changes would have if a prescriber does not of § 423.153(f)(4)(i)(B) to refer to at least their mind, which must be documented agree to a pharmacy lock-in. one prescriber, which means that only in the case file. Response: As mentioned above, we one prescriber has to agree to prescriber We foresee a situation when a are not finalizing the proposal that lock-in or a beneficiary-specific POS prescriber initially disagrees with sponsors must receive prescriber edit. prescriber lock-in and asserts that he or agreement before placing an at-risk In addition, we believe the language she must be able to continue to beneficiary in pharmacy lock-in. of § 423.153(f)(4)(ii)(B) needs to be prescribe frequently abused drugs for clearer that prescribers must be Comment: In general, commenters the beneficiary. In such a case, if responsive in the case of a prescriber supported our proposal that a Part D another prescriber has agreed to serve as lock-in, meaning that non-responsive sponsor would have to obtain prescriber the prescriber to which the beneficiary prescribers cannot constitute agreement agreement before implementing is locked into, a plan sponsor may need as they can in the case of a beneficiary- prescriber lock-in or a beneficiary- to again ask the first prescriber if he or specific POS edit. Therefore, we are specific claim edit at POS for frequently she would agree to be a prescriber the finalizing the § 423.153(f)(4) with this abused drugs to limit an at-risk beneficiary is locked into, and the modification in paragraph (ii)(A) and a beneficiary’s access to coverage for beneficiary is ultimately locked into two new (B). prescribers to ensure reasonable access frequently abused drugs, in cases when Comment: We received a comment a prescriber is responsive to case pursuant to § 423.153(f)(12), which we suggesting that a better approach to discuss further below. This could management. These commenters prescriber agreement would be for at- maintained that the prescribers are in happen, for example, when a risk beneficiaries to identify a primary beneficiary has been obtaining opioids the best position to understand the prescriber to help drug management and from multiple prescribers and beneficiary’s background and know increase beneficiary safety. benzodiazepines from one psychiatrist. additional relevant considerations. Response: As noted above, we have However, many commenters voiced modified our proposal and are finalizing A sponsor may have to permit an at-risk their recommendation that the Part D that all prescribers do not have to agree beneficiary to obtain opioids from the sponsor be able to implement prescriber to prescriber lock-in in order for a plan prescriber who agreed to the lock-in lock-in without obtaining agreement to implement prescriber lock-in for an limitation and benzodiazepines from the from all prescribers. Several at-risk beneficiary; rather, at least one psychiatrist, who initially did not agree commenters expressed that it would be prescriber has to agree. However, we to prescriber lock-in, but ultimately difficult to get all prescribers to agree to believe that the prescriber who agrees to does agree to serve that beneficiary in a any limitation, and suggested that as prescriber lock-in for a beneficiary lock-in capacity. long as at least one prescriber of should be identified through the plan With respect to a beneficiary-specific frequently abused drugs agreed to the sponsor as a result of case management, POS claim edit for frequently abused limitation, sponsors should be able to and not the at-risk beneficiary. There drugs, however, a plan sponsor may not proceed with a prescriber lock-in. may be a conflict of interest in having implement one at a dosage that is lower Commenters suggested that plan an at-risk beneficiary select whom they than the highest dosage a prescriber sponsors will have already coordinated asserts is medically necessary, which is consider to be their ‘‘primary’’ 13 with the prescribers during case prescriber for purposes of prescriber consistent with our current policy. If a prescriber neither agrees nor management, at which time the sponsor agreement, given they might be disagrees with a limitation on access to will have confirmed the appropriateness motivated to select a ‘‘primary’’ coverage for frequently abused drugs, of the medication and verified with a prescriber that they feel would not agree such a prescriber may be considered by prescriber that the beneficiary is at risk. to prescriber lock-in, such that they can the sponsor to be non-responsive, and Thus, these commenters further continue receiving inappropriate an at-risk beneficiary could not be suggested that obtaining formal amounts of frequently abused drugs. We locked into that prescriber. approval of the lock-in will only serve reiterate that the requirement that at to delay initiating the lock-in. Comment: We received a comment least one prescriber agree is for suggesting that 30 days be the time Commenters also raised the point that agreement to lock-in is different from period during which a Part D sponsors a given prescriber may be contributing the beneficiary’s preferences for the must attempt to reach an unresponsive to the overutilization, in which case his prescriber to which they will be locked prescriber. or her approval may not be obtained and into, which we discuss later in this Response: We believe 30 days is too requested clarification how a sponsor preamble. long considering that drug management should act in a beneficiary’s best Comment: We received comments programs involve frequently abused interest if prescribers disagree with each that a prescriber should be able to agree, drugs and multiple prescribers and other about the implementation of a disagree or neither agree nor disagree claim edit or lock-in. Some commenters with a limitation on a beneficiary’s 13 Supplemental Guidance Related to Improving recommended that CMS require access to coverage for frequently abused Drug Utilization Review Controls in Part D, approval only from the primary drugs. September 6, 2012.

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pharmacies; that the clinical guidelines We proposed in § 423.153(f)(5) that if prescriber(s) that the beneficiary is an identify beneficiaries who are at a Part D plan sponsor intends to limit at-risk beneficiary in accordance with potentially at high risk for an adverse the access of a potential at-risk the applicable statutory language, the health event due to the amount of such beneficiary to coverage for frequently beneficiary will still be a potential at- drugs they are taking; and that there is abused drugs, the sponsor will be risk beneficiary from the sponsor’s an apparent lack of coordinated care. required to provide an initial written perspective when the sponsor provides Comment: We received a comment notice to the potential at-risk the beneficiary the initial notice. This is that a sponsor should only be required beneficiary. We also proposed that the because the sponsor has yet to solicit to attempt to reach a prescriber twice in language be approved by the Secretary information from the beneficiary about 10 business days rather than 3 times in and be in a readable and understandable his or her use of frequently abused order to establish that the prescriber is form that contains the language required drugs, and such information may have unresponsive. by section 1860D–4(c)(5)(B)(ii) of the a bearing on whether a sponsor Response: We decline to make this Act, as well as additional detail identifies a potential at-risk beneficiary change as this is our current policy and specified in the proposed regulation as an at-risk beneficiary. we received minimal comment on this text. Moreover, we proposed that a sponsor proposed requirement. The purpose of In proposed paragraph should not send a potential at-risk the policy is to ensure that sponsors (f)(5)(ii)(C)(2)—which will require a beneficiary an initial notice until after have diligently tried to involve description of public health resources the sponsor has been in contact with the prescribers in the case management that are designed to address prescription beneficiary’s prescribers of frequently process. drug abuse—we proposed to require that abused drugs as part of case We wish to note that we believe the the notice contain information on how management, so as to avoid language we proposed in to access such services. We also unnecessarily alarming the beneficiary. § 423.153(f)(4)(iii) which provides an included a reference in proposed This is because the result of case exception to case management is paragraph (ii)(C)(4) to the fact that a management may be that the sponsors duplicative of the language we beneficiary will have 30 days to provide takes a ‘‘wait and see’’ approach to discussed above that we are finalizing in information to the sponsor, which is a observe if the prescribers adjust their § 423.153(f)(2)(ii). Therefore, we are timeframe we discuss later in this management of, and opioid deleting the language in preamble. We proposed an additional prescriptions they are writing for, the § 423.153(f)(4)(iii). requirement in paragraph (ii)(C)(5) that beneficiary. We noted that while this Given the foregoing, we are finalizing the sponsor include the limitation the approach is acceptable, we still expect § 423.153(f)(4) with modification, sponsor intends to place on the sponsors to address the most egregious including ones to assist the reader in beneficiary’s access to coverage for cases of apparent opioid overutilization more easily understanding the cross- frequently abused drugs, the timeframe without unreasonable delay. references. for the sponsor’s decision, and, if Under our proposed approach, a We will also state in paragraph (ii)(A) applicable, any limitation on the sponsor will provide an initial notice to that, except as provided in paragraph availability of the SEP. Finally, we a potential at-risk beneficiary if the (ii)(B) which regards a prescriber proposed a requirement in paragraph sponsor intends to limit the limitation, if the sponsor complied with (ii)(C)(8) that the notice contain other beneficiary’s access to coverage for the requirement of paragraph (f)(2)(i)(C) content that CMS determines is frequently abused drugs, and the of this section about attempts to reach necessary for the beneficiary to sponsor will provide a second notice to an at-risk beneficiary when it actually prescribers, and the prescribers were not understand the information required in imposes a limit on the beneficiary’s responsive after 3 attempts by the the initial notice. We noted that our proposed access to coverage for frequently abused sponsor to contact them within 10 implementation of the statutory drugs. Alternatively, the sponsor will business days, then the sponsor has met requirements for the initial notice will provide an alternate second notice if it the requirement of paragraph (f)(4)(i)(B) permit the notice also to be used when decides not to limit the beneficiary’s of this section which regards eliciting the sponsor intends to implement a access to coverage for frequently abused information from the prescribers. beneficiary-specific POS claim edit for drugs. The second notice and alternate Paragraph (i)(B) will state that the frequently abused drugs. second notice are discussed later in this sponsor may not implement a prescriber Although section 1860D–4(c)(5) is final rule. limitation pursuant to silent as to the sequence of the steps of Finally, we proposed to require at § 423.153(f)(3)(ii)(A) if no prescriber was clinical contact, prescriber verification, § 423.153(f)(5)(iii) that the Part D plan responsive. and the initial notice, we proposed to sponsor make reasonable efforts to (vii) Beneficiary Notices and Limitation implement these requirements such that provide the beneficiary’s prescriber(s) of of Special Enrollment Period they will occur in the following order: frequently abused drugs with a copy of (§§ 423.153(f)(5), 423.153(f)(6), first, the plan sponsor will conduct the the notice required under paragraph 423.153(f)(7), 423.153(f)(8), 423.38) case management which encompasses (f)(5)(i). clinical contact and prescriber We received the following comments (A) Initial Notice to Beneficiary and verification required by § 423.153(f)(2) related to the initial notice, and general Sponsor Intent To Implement Limitation and obtain prescriber agreement if comments applicable to all the proposed on Access to Coverage for Frequently required by § 423.153(f)(4), and notices, and our responses follow: Abused Drugs (§ 423.153(f)(5)) subsequently, if applicable, the plan Comment: We received many The notices referred to in proposed sponsor will provide the initial notice comments related to our proposal to § 423.153(f)(4)(i)(C) are the initial and indicating the sponsor’s intent to limit require written beneficiary notice both second notice that section 1860D– the beneficiary’s access to frequently when a plan identifies the beneficiary as 4(c)(5)(B)(i)(I) of the Act requires Part D abused drugs. Further, under our potentially at risk for prescription drug sponsors to send to potential at-risk and proposal, although the proposed abuse, and again when the plan at-risk beneficiaries regarding their drug regulatory text of (f)(4)(i) states that the determines the beneficiary is at risk and management programs. sponsor must verify with the implements a beneficiary-level POS edit

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and/or a pharmacy or prescriber lock-in implement them into their drug that, while CMS does not require for frequently abused drugs. Some management programs. telephonic or email notification in commenters disagreed with our Comment: We received some addition to the required written notices, proposal to require two notices, stating comments related to requirements to plans are not precluded from doing so. that a second notice would be translate these beneficiary notices. Some Comment: A commenter asked why unnecessary, confusing, or overly of the commenters stated that these CMS proposed to require that the initial burdensome. notices should be designated to be notice contain contact information for Several other commenters strongly among materials subject to translation other organizations that can provide supported our proposal to require the requirements in proposed §§ 422.2268 assistance to beneficiaries regarding the two notifications, including the and 423.2268. A commenter asked for sponsor’s drug management program. proposed change to the existing OMS clarification on whether plans are Response: Such information is process that would require the initial required to include section 1557 statutorily required under § 1860D– and second notices before a plan taglines with these notices. 4(c)(5)(B)(ii)(VII) to be included in the imposes a beneficiary-specific edit at Response: While CMS is still initial notice. As specified in the statute, POS. Commenters stated that requiring developing instructions related to it should be similar to the information multiple notices will increase the translation requirements to provide provided in other standardized Part D likelihood that affected beneficiaries guidance on the requirements at beneficiary notices. We expect the will be notified of their status and aware §§ 422.2268 and 423.2268, we note that, notice may include, for example, of how they could dispute it. A 423.128(d)(1)(iii) requires Part D plan contact information for the enrollee’s commenter wanted CMS to require more sponsors’ call centers to have interpreter State Health Insurance Program (SHIP), than two notices, because CMS did not services available to call center 1–800–MEDICARE, the Medicare Rights propose to require acknowledgement of personnel to answer questions from Center, and/or other organizations as receipt from the beneficiary. limited-English proficient beneficiaries. appropriate. Response: We thank those These obligations are based on Medicare Comment: We received some commenters who agreed with our regulations and other civil rights laws, comments that supported our proposal proposals to require two notices and to such as Title VI of the Civil Rights Act to require plan sponsors to make integrate existing OMS process into a of 1964, that apply to Medicare health reasonable efforts to provide copies of uniform process for all drug and drug plans. Applicability of Section notices to the potentially at-risk and at- management program restrictions. 1557, and the scope of requirements for risk beneficiary’s prescriber(s). While we appreciate the concerns access for limited English proficient Response: We thank these expressed by commenters who do not beneficiaries, and what is a significant commenters for their support. agree with our proposal, as we noted in communication are determined by the Comment: A few commenters opined the proposed rule, the statute at Office for Civil Rights (OCR). that Part D plan sponsors and third § 1860D–4(c)(5)(B) clearly requires Comment: A commenter urged CMS party administrators do not have access written beneficiary notification both to consider implementing additional to a list of all State and Federal public upon identification as a potential at-risk requirements for beneficiary health resources designed to address beneficiary and again when the plan notification, including establishing prescription drug abuse. These determines the beneficiary is at risk. We requirements stipulating information commenters stated that requiring plans do not agree that additional notices that must be written on envelopes operating in multiple states to compile beyond what we proposed should be containing written notices, adding such a list would be overly burdensome, required, as it would be overly requirements for telephonic or email and requested that CMS provide burdensome on plans and provide little notification in addition to written templates containing such information value to beneficiaries. notices, and requirements for as required under proposed Comment: Several commenters asked prescribers to contact beneficiaries to § 423.153(f)(5)(ii)(C)(2). Another if stakeholders will have an opportunity confirm receipt of the required notices. commenter asked if MA–PD plans will to comment on the beneficiary notices Response: We agree with the be allowed to include information about and for more information on whether commenter that detailed beneficiary plan-specific mental health benefits in they can be modified by plans and when notification is important, both upon addition to State and Federal resources. they will be released. A commenter identification as a potential at-risk Response: CMS appreciates the input requested that CMS conduct focus- beneficiary and again either confirming provided by these commenters. While group testing with beneficiaries to the at-risk identification or that the plan the notice templates and instructions ensure the notice is understandable. has determined the beneficiary is not at- are still under development, CMS Response: As discussed in section risk. However, we disagree with this expects to provide information on III.B.14 of this final rule, these notices commenter that additional notice Federal and State public health are subject to approval by the Office of requirements are necessary or advisable. resources to assist plans in meeting the Management and Budget (OMB) under We believe it would be overly statutory requirement at § 1860D– the Paperwork Reduction Act of 1995 burdensome to require plans to include 4(c)(5)(B)(ii)(II) to include such (44 U.S.C. 3501 et seq.). The notices will specific information on the outside of information in the initial notice. Under be posted in the Federal Register to give mailing envelopes and there is no such the existing regulations at § 423.505(i), stakeholders an opportunity to review precedent for similar beneficiary notices Part D plan sponsors are ultimately and comment before final versions of in the Part D program, such as notices responsible for adhering to all terms and the notices are posted. CMS will of coverage denials or transition letters. conditions of their contract with CMS, consider testing through beneficiary While CMS expects that prescribers of including compliance with all Federal focus groups, time permitting. The frequently abused drugs will laws, regulations and CMS instructions notices and accompanying instructions communicate regularly with their related to activities or responsibilities will contain detailed information about patients, we do not believe it is delegated to a third party. Pursuant to permissible modifications by plans. necessary to require prescribers to the regulation at § 423.153(f)(5)(ii)(C)(2), CMS intends to release the notices with confirm that beneficiaries received the which we are finalizing as proposed, sufficient time for plan sponsors to required plan notices. Finally, we note plans will be also required to include

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information about relevant benefits and notify dually- and other low income rule. (See section II.A.10 for a more services covered by the plan, such as subsidy (LIS)-eligible beneficiaries that detailed discussion of Part D SEP medical, mental health and MAT they would be unable to use the special changes.) benefits. enrollment period (SEP) for LIS We received the following comments Comment: Some commenters stated beneficiaries due to their potential at- and our response follows: that CMS should specify in regulation risk status. (Hereafter, this SEP is Comment: We received many text that initial notices must not be sent referred to as the ‘‘duals’ SEP’’). This comments supporting the limitation of to potential at-risk beneficiaries until limitation is related to, but distinct the duals’ SEP for those individuals the plan has communicated with and from, other changes to the duals’ SEP identified as potential at-risk or at-risk received clinical information from the discussed in the proposed rule. for overutilizing frequently abused beneficiary’s prescribers. These We proposed that once a dually- or drugs. Commenters noted that this commenters noted that failure to other LIS-eligible individual is limitation would support care conduct case management prior to identified as a potential at-risk coordination for this population, ensure sending the initial notice would beneficiary, and the sponsor intends to that these beneficiaries are effectively interfere with doctor-patient limit the beneficiary’s access to coverage managed, and prevent those that do relationships and unnecessarily alarm for frequently abused drugs, the sponsor abuse drugs from frequent plan beneficiaries who may be determined will provide an initial notice to the switching, and either changing to a Part not to be at-risk. beneficiary and the duals’ SEP would no D plan without a drug management Response: We agree with these longer be available to the otherwise program, or accessing opioids because commenters that initial notices should eligible individual. This means that he of a gap in information sharing across not be sent to beneficiaries before the or she would be unable to use the duals’ plans. Several commenters stated that plan has engaged in case management SEP to enroll in a different plan or this move would support their state’s and attempted to communicate with the disenroll from the current Part D plan. efforts in curbing the opioid epidemic. beneficiary’s prescriber(s), and this is The limitation would be effective as of Response: We appreciate the support specified in the regulation text at the date the Part D plan sponsor for our proposal to limit the SEP for § 423.153(f)(2)(i). However, we know identifies an individual to be potentially individuals identified as potential at- from experience with the OMS process at-risk. risk or at-risk for overutilizing that prescribers are not always We proposed that, consistent with the frequently abused drugs. responsive to the plan’s attempts to timeframes discussed in proposed Comment: A commenter requested make clinical contact; therefore, we paragraph § 423.153(f)(7), if the Part D that CMS confirm that any limitations proposed at § 423.153(f)(2)(i)(C) that plan sponsor takes no additional action on Part D LIS-eligible individuals would plans must make additional attempts to to identify the individual as an at-risk not impact the ability of such contact such prescribers. Additionally, beneficiary within 90 days from the individuals to make an enrollment or we proposed at § 423.153(f)(4) that plans initial notice, the ‘‘potentially at-risk’’ disenrollment during other enrollment cannot limit access to frequently abused designation and the duals’ SEP periods for which he or she is eligible. drugs unless the plan has conducted limitation would expire. If the sponsor Commenters specifically asked about case management and obtained determines that the potential at-risk the AEP and the SEPs available for agreement from prescribers (or made beneficiary is an at-risk beneficiary, the individuals to enroll in or disenroll certain attempts to contact prescribers). duals’ SEP would not be available to from Program for All-inclusive Care We believe this approach strikes an that beneficiary until the date the (PACE) or enroll in a 5-Star plan. appropriate balance between ensuring beneficiary’s at-risk status is terminated Response: We note that the sufficient access to frequently abused based on a subsequent determination, enrollment limitation for a potential at- drugs and protecting at-risk including a successful appeal, or at the risk or an at-risk individual will not beneficiaries from potential harm in the end of a 12-month period calculated apply to other Part D enrollment absence of improved care coordination. from the effective date of the limitation, periods, including the AEP or other After consideration of the comments as specified in the second notice SEPs, including new SEPs that will be received on this section, we are provided under § 423.153(f)(6), established at § 423.38(c)(9) and (c)(10) finalizing our proposal with whichever is sooner. and are discussed in more detail in modification to clearly codify the policy We noted that auto- and facilitated section II.A.10. of this final rule. In the that a sponsor should not provide the enrollment of LIS eligible individuals event that an individual is subject to initial notice to the beneficiary until and plan annual reassignment processes this limitation, but is eligible for another after the sponsor has engaged in the would still apply to dual- and other LIS- enrollment period, he or she may use required case management by adding eligible individuals who were identified that enrollment period to make a the phrase ‘‘after conducting the case as an at-risk beneficiary in their change. For example, a potential at-risk management required by previous plan. Furthermore, we noted or at-risk dually- or other LIS-eligible § 423.153(f)(2)’’ at the beginning of that the proposed enrollment limitations individual who is subject to the duals’ § 423.153(f)(5)(i). for Medicaid or other LIS-eligible SEP limitation may use the PACE SEP individuals designated as at-risk to enroll in or disenroll from PACE, or (B) Limitation on the Special beneficiaries would not apply to other they may use the 5-Star Rating SEP to Enrollment Period for LIS Beneficiaries Part D enrollment periods, including the enroll in an MA plan, PDP, or cost plan With an At-Risk Status (§ 423.38) AEP or other SEPs, including when an with a Star Rating of 5 stars during the Section 704(a)(3) of CARA gave the individual has a gain, loss, or change in year in which that plan has the 5-star Secretary the discretion to limit the SEP Medicaid or LIS eligibility. We overall rating, provided the enrollee for full benefit dually eligible (FBDE) proposed that the ability to use the meets the other requirements to enroll beneficiaries outlined in section 1860D– duals’ SEP would not be permissible in that plan. 1(b)(3)(D) of the Act. In addition to once the individual is enrolled in a plan Comment: A commenter asked for providing relevant information to a that has identified him or her as a clarification as to whether the SEP potential at-risk beneficiary, we potential at-risk beneficiary or at-risk limitation for potential at-risk or at-risk proposed that the initial notice will beneficiary under § 423.100 of this final individuals would apply when a

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beneficiary loses Medicaid eligibility Response: Information related to an prior plan, the new plan will still have and goes through the deeming process individual’s at-risk status, including the to make their own determination permitted in capitated models under beginning and end dates for any regarding the individual’s status and Financial Alignment Initiative limitation imposed, will be stored in send the individual the appropriate demonstrations. The commenter stated MARx and available to plans for notice, which will trigger the SEP that, in their state, a beneficiary is enrollment processing via the User limitation, as we have explained allowed to remain in the demonstration Interface (UI) and the beneficiary elsewhere in this preamble. Although Medicare-Medicaid Plan (MMP) for up eligibility query (BEQ). CMS will reject the beneficiary’s prior at-risk to 3 months while he or she tries to a submitted enrollment for a beneficiary designation is an indicator that the new regain Medicaid eligibility. If the who is subject to the SEP limitation and plan will have to initiate case beneficiary regains Medicaid eligibility the plan will be notified with a unique management and may even allow them within this 3 month window, would the transaction reply code (TRC). We will to bypass the first notice and go straight state be required to allow the also notify plans via a TRC if a member to issuing the second notice, the at-risk beneficiary to change his or her has a change in their at-risk status determination is not directly enrollment? The commenter stated, that, period. We will provide further transferable. now, they automatically re-enroll the subregulatory guidance on system and In addition, while we assume that all beneficiary back into the MMP. operational changes that will occur to Part D sponsors will have drug Response: The period of deemed effectuate this limitation, as well as the management programs in place, it is not continued eligibility provides an larger drug management program. a requirement. opportunity for individuals in Dual Comment: To further assist in these With respect to the need for the SEP Special Needs Plans (D–SNPs) or MMPs efforts to curb opioid misuse, a limitation, this policy is still needed to who lose Medicaid eligibility to stay commenter requested that CMS share prevent potential and at-risk enrolled in their plan for a short time,14 data about any members in Part D plans beneficiaries from making frequent plan while they try to regain Medicaid who are subject to this SEP limitation to changes after they receive the initial and eligibility. However, should an target Medicaid wrap services, second notices, as applicable, and thus, individual be eligible to leave the plan, including supplemental behavioral avoid the care coordination that drug and takes an action to leave the plan, health and substance use treatment management plans are intended to using any valid SEP, the plan must services. provide. honor the disenrollment request. It is Response: We thank the commenter We note that the SEP limitation— our view that a change in Medicaid for their suggestion and we will explore whether it is a first time designation or status, especially loss of Medicaid data sharing for states to provide one that is being applied after eligibility, is an important event with additional services to these individuals. enrollment into a new plan—will be potentially significant financial impacts Comment: A commenter effective as of the date on the initial to the beneficiary. As a result, the SEP recommended that CMS allow potential notice that the Part D plan sponsor outlined in § 423.38(c)(9) will remain at-risk or at-risk individuals to use the provides to an individual identified to available to a potential at-risk or at-risk duals’ SEP to change to another plan if be potentially at-risk. We are revising individual, even if the person is that plan has an established drug that language in § 423.38(c)(4) to state provided a deeming period by an MMP management program in place. that beneficiaries that have been or D–SNP. This will permit individuals Response: We appreciate the notified that they are potentially at-risk in a capitated model under the comment; however, we disagree with or at-risk, and such identification has Financial Alignment Initiative allowing individuals identified as not been terminated in accordance with demonstrations to change plans using potentially at risk or at risk to use the § 423.153(f)), will not be able to use the the duals’ SEP, within 3 months of a duals’ SEP. Even if an at-risk individual duals’ SEP. gain, loss, or change to Medicaid or LIS joined another plan that had a drug Comment: A commenter encouraged eligibility, or notification of such. management program in place, there CMS to offer increased resources to Comment: We received several would be challenges in terms of SHIPs to provide targeted outreach to comments relating to the operational preventing a gap managing their the dual eligible and LIS populations aspects of implementing this limitation potential or actual overutilization of who will be impacted by these changes. on the duals’ SEP. Commenters frequently abused drugs due to the The commenter stated that CMS should requested clarification on how a plan timing of information sharing between also conduct outreach and education to sponsor would know if a potential at- the plans and possible difference in providers and pharmacies, including risk or at-risk beneficiary was not provider networks. mental health and substance use eligible to use the duals’ SEP, and how Comment: A commenter stated that providers, as well as community based the MARx system would be because the ‘‘at-risk’’ status is organizations (such as recovery learning operationalized to effectuate this transferable from one plan to another, communities), as these changes have a change. A commenter requested an individual will not avoid the specific impact on beneficiaries with clarification on how these individuals implications of the lock-in by utilizing substance use disorders. The commenter would be prevented from utilizing the the SEP. As such, the commenter stated that these efforts will help ensure duals’ SEP. believed that the dual SEP should not be that beneficiaries most likely to be limited. impacted by these changes, and their 14 Under the capitated model of the Financial Response: We disagree. First, for providers, are made aware well in Alignment Initiative demonstration, MMPs may general clarification purposes, the at- advance of implementation. Also, the provide up to 3 months of deemed continued eligibility for individuals who lose MMP eligibility risk determination will not commenter encouraged CMS and the due to short-term loss of Medicaid. As outlined in automatically transfer and be applied by Administration for Community Living Chapter 2 of the Medicare Managed Care Manual, a new Part D plan in the event a (ACL) to provide continued funding for D–SNPs must provide at least 1 month and up to potentially at-risk or at-risk beneficiary state Ombudsman programs that serve 6 months of deemed continued eligibility for individuals who lose eligibility due to loss of changes plans. Even though a gaining dual eligible populations enrolled in Medicaid, but are reasonably expected to regain plan will be able to see if a new member demonstration products, and to allow Medicaid within that timeframe. had an at-risk determination with their states to use this funding to serve dual

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eligible beneficiaries enrolled in any statement, and that the drug would be appeal that determination. We intend to integrated care product, including, for covered but for the fact that it is an off provide maximum transparency to the example FIDE SNPs. formulary drug. Since these protections beneficiary by ensuring, consistent with Response: CMS appreciates the apply to all beneficiaries, they also the statutory requirements, that the comment, and we will continue to protect dually-eligible and other LIS- beneficiary has information about explore avenues for beneficiary and eligible beneficiaries. appeal rights during the at-risk provider outreach and education; Comment: A couple of commenters determination process. however, provisions for addressing cost stated that maintaining maximum Comment: A commenter stated that and funding resources is outside of the flexibility regarding enrollment in nothing in the law would make a dual- scope of this rule. Medicare Part D and the ability to eligible at- risk or potentially at-risk Comment: Several commenters change PDPs best serves the interests of beneficiary ineligible for an SEP. opposed the limitation of the duals’ SEP low-income beneficiaries, especially Response: We disagree with the for at-risk beneficiaries. Commenters American Indian and Alaskan Native commenter. Section 704(a)(3) of CARA cited issues, such as limited access to (A/I and A/N) beneficiaries. The gives the Secretary the discretion to prescription drugs and the possible risks commenters further stated that a limit the SEP for FBDE beneficiaries of medical complications and increased decision to change plans is often made outlined in section 1860D–1(b)(3)(D) of costs resulting from such access in order to access a specific prescription the Social Security Act (the Act). As barriers. They also noted the drug. The commenters further requested discussed previously, the duals’ SEP vulnerability and special needs of this that, if the proposed regulation is was extended to all other subsidy- population. A commenter stated that retained, CMS specify an exemption for eligible beneficiaries by regulation so this limitation is unnecessary, as the Indian Health Service (IHS)-eligible that all LIS-eligible beneficiaries are current OMS program in Part D individuals as inserting the Medicare treated uniformly. typically resolves cases of potential Part D drug plans into the relationship Comment: A commenter is concerned misuse without resorting to any between Medicare/IHS beneficiaries and that dually- and other LIS-eligible beneficiary-specific tactic and would their IHS/Tribal providers would not be individuals inappropriately identified result in beneficiaries losing access to helpful. We discuss IHS beneficiaries as potentially at-risk may not an important patient protection. again further below. understand the process for correcting a Response: We appreciate the Response: CMS disagrees with determination that was made in error or comments. As we stated in the proposed establishing population-based may otherwise be inappropriate. The rule, based on the 2015 data in CMS’ exceptions to the duals’ SEP limitation. commenter further stated that some OMS, more than 76 percent of all In our view, all potential at-risk and at- beneficiaries will be erroneously beneficiaries estimated to be potential risk beneficiaries should be afforded the identified and not confirmed as at-risk at-risk beneficiaries are LIS-eligible opportunity to benefit from the care and they should not be subject to the individuals. It is our view that the SEP coordination that the drug management SEP limitation as a result of poor data, limitation will be an important tool to program is designed to provide. We do plan error, or some other reason reduce the opportunities for dual and not believe it is prudent at this time to unrelated to the beneficiary’s action. LIS-eligible beneficiaries designated as carve out a subset of at-risk beneficiaries Response: We appreciate the at-risk to switch plans, and circumvent to which special rules apply. As comments. We believe that there will be the care coordination that a drug previously mentioned, there are sufficient safeguards in the design and management program is designed to opportunities for potential at-risk and implementation of prescription drug provide for this vulnerable population, at-risk individuals to make enrollment management programs to prevent errors especially as our nation faces an opioid choices during other election periods. and provide beneficiaries with an epidemic. As stated previously, the Also, an individual always has the right opportunity to make corrections. CMS enrollment limitation for a potential at- to request a coverage determination, expects that exempt individuals will be risk or an at-risk individual would not including an exception request for an identified through OMS. For those that apply to other Part D enrollment off-formulary drug. are not excluded based on this data, periods, including the AEP or other Comment: A couple of commenters they should be excluded by their plans SEPs. In the event that a potential at-risk expressed concern about this SEP during case management, as clinical or at-risk dually- or other LIS-eligible limitation not being appealable. A contact and prescriber verification and individual is subject to this limitation, commenter urged CMS to make the loss agreement should occur before an initial but that individual is eligible to make an of the duals’ SEP for potential at-risk notice of potential at-risk status is sent enrollment change using a different and beneficiaries appealable, as an at-risk to the individual and the SEP limitation valid election period, he or she may do beneficiary’s other non-opioid-related is imposed. Thereafter, if a beneficiary so. conditions may justify the using of an believes he or she has been identified in In the case where an individual is SEP. A commenter noted that the error, the beneficiary has a chance to prescribed a specific drug that is not on proposal stipulated an appeals process submit relevant information in response the sponsor’s formulary, the individual for beneficiaries wishing to appeal their to the initial notice. If a determination always has the right to request a at-risk status, but encouraged CMS in its is made that a beneficiary is an at-risk coverage determination for the drug. final rule to clarify whether the loss of beneficiary, a Part D sponsor must also Each Part D sponsor that provides a duals’ SEP would be appealable in any provide a second written notice to the prescription drug benefits for Part D way, and urge CMS to make a provision beneficiary which is required to provide drugs and manages this benefit through for beneficiaries who may need access clear instruction on how a beneficiary the use of a formulary must establish to this SEP despite their at-risk status. may submit further applicable and maintain exceptions procedures for Response: Similar to all other information to the sponsor. A receipt of an off formulary drug. A Part enrollment decisions, the limitation on beneficiary is also provided a right to D sponsor must grant an exception the duals’ SEP for potential at-risk or at- redetermination of the at-risk status. whenever it determines that the drug is risk individuals is not appealable. CMS expects these measures will medically necessary, consistent with the However, after an individual is provide adequate protections for all physician’s or other prescriber’s determined to be at-risk, he or she may beneficiaries.

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Comment: Another commenter modification to specify that paragraph (2), we proposed language requested clarification that the SEP is beneficiaries that have been notified that will require a sponsor to include only removed for LIS beneficiaries once that they are potentially at-risk or at-risk the limitation the sponsor is placing on the plan sponsor has completed case as defined in § 423.100, and such the beneficiary’s access to coverage for management activities, including identification has not been terminated frequently abused drugs, the effective prescriber agreement. in accordance with § 423.153(f)), will and end date of the limitation, and if Response: We appreciate the question not be able to use the duals’ SEP. applicable, any limitation on the regarding when the duals’ SEP The duals’ SEP limitation will align availability of the SEP. We proposed an limitation goes into effect. The duals’ with the revised timeframes for the additional requirement in paragraph (6) SEP limitation can go into effect without potential-at-risk and at-risk status as that the sponsor include instructions prescriber agreement; however, before addressed in section 423.153(f) of this how the beneficiary may submit the initial notice is sent, which informs final rule. That is, if the Part D plan information to the sponsor in response the beneficiary of the limitation, the sponsor takes no additional action to to the request described in paragraph sponsor is required to engage in case identify the individual as an at-risk (4). In § 423.153(f)(6)(iii), we proposed management and attempt to beneficiary within 60 days from the date that the sponsor be required to make communicate with the beneficiary’s on the initial notice, the ‘‘potentially at- reasonable efforts to provide the prescriber(s). risk’’ designation and the duals’ SEP beneficiary’s prescriber(s) of frequently Comment: A commenter urged CMS limitation will expire. At-risk abused drugs with a copy of the notice, to make a provision for LIS beneficiaries determinations will be for an initial 12 as we proposed with the initial notice. who lose access to their SEP, but need month period, with the option to extend Finally, we proposed a requirement in access to non-opioid drugs. For for a maximum of 24 months in total paragraph (7) that the notice contain example, if an LIS beneficiary is (that is, an additional 12 month period) other content that CMS determines is determined to be at-risk and loses an upon reassessment of the beneficiary’s necessary for the beneficiary to SEP, and is later diagnosed with a at-risk status at the completion of the understand the information required in different chronic condition that requires initial 12 month period. the initial notice. medication not on the beneficiary’s Also, the sponsor will generally be (C) Second Notice to Beneficiary and current formulary. The commenter required to send two notices—the first Sponsor Implementation of Limitation requested that CMS specify in the final signaling the sponsor’s intent to on Access to Coverage for Frequently rule that such a beneficiary would be implement a POS claim edit or Abused Drugs (§ 423.153(f)(6)) given special consideration when limitation (both referred to generally as submitting an appeal to their current Section 1860D–4(c)(5)(B)(i)(I) of the a ‘‘limitation’’), and the second upon plan to gain coverage of necessary non- Act requires Part D sponsors to provide implementation of such limitation. opioid drugs. a second written notice to at-risk Under our proposal, the requirement to Response: We do not believe any beneficiaries when they limit their send two notices will not apply in ‘‘special consideration’’ is necessary. An access to coverage for frequently abused certain cases involving at-risk enrollee—regardless of LIS eligibility— drugs. We proposed to codify this beneficiaries who are identified as such always has the right to request a requirement in § 423.153(f)(6)(i). As and provided a second notice by their coverage determination for a drug. In all with the initial notice, our proposed immediately prior plan’s drug cases, the standard is that the plan must implementation of the statutory management program. notify the enrollee of its coverage requirement for the second notice will We received the following comments determination decision as expeditiously also permit it to be used when the and our responses follow: as the enrollee’s health condition sponsor implements a beneficiary- Comment: We received many requires, but no later than the applicable specific POS claim edit for frequently comments related to our proposal adjudication timeframe (24 hours for an abused drugs. Specifically, we proposed requiring plans to provide a second expedited coverage determination, 72 to require the sponsor to provide the written notice to beneficiaries before hours for a standard coverage second notice when it determines that implementing a restriction under the determination). the beneficiary is an at-risk beneficiary plan’s drug management program, most Comment: A commenter noted that, and to limit the beneficiary’s access to of which supported the proposal. Other while they agree with the proposal to coverage for frequently abused drugs. commenters opposed it, expressing a implement the SEP provision, there may We further proposed to require the belief that only one notice would be be an increase in complaints and second notice to include the effective sufficient. Some of these commenters grievances against the sponsor. The and end date of the limitation. Thus, offered ideas for various alternative commenter encourages CMS to exclude this second notice will function as a approaches for CMS to consider, such as beneficiaries identified as potentially at- written confirmation of the limitation including information in the plan’s risk and at-risk from Consumer the sponsor is implementing with Evidence of Coverage that would Assessment of Healthcare Providers and respect to the beneficiary, and the replace the notices described in the Systems (CAHPS) surveys and not count timeframe of that limitation. proposed rule, or using a single notice complaints related to the duals’ SEP We also proposed that the second similar to the current OMS requirement. limitation in the Complaint Tracking notice, like the initial notice, contain Other commenters stated that the two Module (CTM) numbers for star-rating language required by section 1860D– notices required for lock-in should be purposes. 4(c)(5)(B)(iii) of the Act to which we limited to lock-in and plans should Response: Thank you for the proposed to add detail in the regulation continue to be permitted to send a comment. Our Star Ratings proposal did text. The second notice must also be single notice when implementing a not address this topic, and we plan to approved by the Secretary and be in a beneficiary-level POS edit. take this comment under advisement. readable and understandable form, as Response: We disagree with the After consideration of these well as contain other content that CMS comments recommending requiring a comments, we are finalizing the determines is necessary for the single beneficiary notice or replacing provision on the CARA duals’ SEP beneficiary to understand the one or both notices with general limitation at § 423.38(c)(4) with a information required in the notice. In information in other documents. Section

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1860D–4(c)(5)(B) requires two written public health resources addressing these commenters supported the notices before a beneficiary can be prescription drug abuse that are proposal and agreed that such notice is locked-in to a prescriber or pharmacy, available to the beneficiary. necessary to minimize beneficiary and includes a high level of specificity Response: While we agree that this confusion and limit unneeded appeals about the content of the notices. information is important to when a plan decides not to implement Moreover, the required initial and communicate to affected beneficiaries, any restrictions on frequently abused second notices contain important we recognize the potential burden that drugs. A commenter disagreed with our information about access restrictions multiple notices may place on plan proposal to require an alternate second that may be or will be placed on sponsors as well as beneficiaries. We notice, stating such notice is not potentially at-risk and at-risk note that such information is required in necessary. beneficiaries, resources such the initial notice, and the statute does Response: As we stated in the beneficiaries may need to treat potential not require it in the second notice. proposed rule, we believe that this drug dependency issues, and While CMS will not preclude plans alternate notice is necessary to ensure notification of important beneficiary from providing this information again, beneficiaries who received the initial rights. for example, if requested by the notice of an intended limitation on We also disagree with comments enrollee, we do not believe it is access to frequently abused drugs under stating that the proposed notice necessary to require that it be included the plan’s drug management program requirements for the lock-in program in both notices. are informed of the outcome of the should be limited to lock-in, and that After consideration of comments plan’s decision not to take such action. CMS should retain existing beneficiary received, we are finalizing our proposal We are finalizing § 423.153(f)(7) without notice policies, including sending only without modification to require plans to modification. one notice, when implementing send both the initial and second notice (E) Timing of Notices and Exceptions to beneficiary-level POS edits. Currently, before implementing a beneficiary-level Timing (§ 423.153(f)(8)) the application of a beneficiary-level POS edit or a pharmacy or prescriber POS claim edit is not considered a lock-in under a drug management Section 1860D–4(c)(5)(B)(iv) of the coverage determination and does not program. Act requires a Part D sponsor to provide the second notice to the beneficiary on trigger appeal rights under Subpart M. (D) Alternate Second Notice When Limit As we explained in the proposed rule, a date that is not less than 30 days after on Access Coverage for Frequently the implementation of a beneficiary- the sponsor provided the initial notice Abused Drugs by Sponsor Will Not specific POS claim edit or a limitation to the beneficiary. Although not Occur (§ 423.153(f)(7)) on the at-risk beneficiary’s coverage for specifically required by CARA, we frequently abused drugs to a selected Although not explicitly required by believe it is also important to establish pharmacy(ies) or prescriber(s) will be an the statute, we proposed at a maximum timeframe by which the aspect of an at-risk determination (a § 423.153(f)(7) that if a sponsor plan must send the second notice or the type of initial determination that will determines that a potential at-risk alternate second notice, to ensure that confer appeal rights on the beneficiary, beneficiary is not an at-risk beneficiary plans do not leave a case open consistent with section 1860D–4(c)(5)(E) and does not implement the limitation indefinitely. We proposed to specify at of the Act) under our proposal on the potential at-risk beneficiary’s § 423.153(f)(8)(i) that a Part D sponsor establishing the Part D drug access to coverage of frequently abused must provide the second notice management program. As discussed in drugs it described in the initial notice, described in paragraph (f)(6) or the subsection (c) of this preamble, we are then the sponsor will be required to alternate second notice described in finalizing the proposal to integrate the provide the beneficiary with an paragraph (f)(7), as applicable, on a date current OMS process with lock-in to alternate second notice. Specifically, we that is not less than 30 days and not create a uniform drug management proposed that such alternate second more than the earlier of the date the program for Part D. Under this final notice use language approved by the sponsor makes the relevant rule, since the application of a Secretary in a readable and determination or 90 days after the date beneficiary-level POS edit for frequently understandable form, and contain the of the initial notice described in abused drugs can only be applied upon following information: The sponsor has paragraph (f)(5). the plan’s at-risk determination and is determined that the beneficiary is not an Section 1860D–4(c)(5)(B)(iv)(II) of the subject to appeal, it is necessary to treat at-risk beneficiary; the sponsor will not Act explicitly provides for an exception those edits the same as limitations on limit the beneficiary’s access to coverage to the required 30 day minimum selected pharmacy(ies) or prescriber(s). for frequently abused drugs; if timeframe for issuing a second notice. Furthermore, we believe that applicable, the SEP limitation no longer Specifically, the statute permits the establishing an inconsistency with applies; clear instructions that explain Secretary to identify through respect to notice requirements would be how the beneficiary may contact the rulemaking concerns regarding the confusing for beneficiaries and plans. sponsor; and other content that CMS health or safety of a beneficiary or For these reasons, and because we determines is necessary for the significant drug diversion activities that believe the second notice, which beneficiary to understand the will necessitate that a Part D sponsor identifies the action taken by the plan information required in this notice. provide the second written notice to the and instructs the beneficiary how to As with the other notices, we beneficiary before the minimum 30 day exercise their statutory appeal rights, is proposed that the Part D sponsor be time period normally required has an important beneficiary protection, the required to make reasonable efforts to elapsed. notice is required both for lock-in and provide the beneficiary’s prescriber(s) of As we explained in the proposed rule, for POS edits for frequently abused frequently abused drugs with a copy of because this provision also allows an at- drugs. this notice. risk identification to carry forward to Comment: A commenter suggested We received the following comments the next plan, we believe it is that CMS require that the second notice, and our response follows: appropriate to permit a gaining plan to in addition to the initial notice, include Comment: We received a few provide the second notice to an at-risk a description of all State and Federal comments on this proposal. Some of beneficiary so identified by the most

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recent prior plan without having to wait to their plan, and give the plan information is still being processed. the minimum 30 days, if certain sufficient time to implement the However, we do not expect sponsors to conditions are met. This is consistent limitation in their systems, including routinely take the maximum amount of with our current policy under which a situations where the plan determines time to issue the second notice, and gaining sponsor may immediately that an exception to preferences under note that they must send it sooner if implement a beneficiary-specific POS § 423.153(f)(10) is warranted. they make the relevant determination claim edit, if the gaining sponsor is Comment: We received several sooner. We note that the SEP is notified that the beneficiary was subject comments supporting our proposal to addressed in an earlier section of this to such an edit in the immediately prior establish a maximum timeframe by preamble. plan and such edit had not been which sponsors must send the second or Comment: We received several terminated.15 alternate second notice. However, most comments related to our proposal at As such, at § 423.153(f)(8)(ii), we of these commenters expressed concerns § 423.153(f)(8)(ii) to, under certain proposed one exception to the timing of that 90 days is too long because circumstances, permit a gaining plan to the notices, applicable to at-risk potentially at-risk beneficiaries would immediately send a second notice beneficiaries who switch plans. The be subject to a limitation on their SEP without waiting 30 days to a beneficiary exception allows a gaining plan sponsor without appeal rights during that 90 day who is already subject to a drug to immediately provide the second timeframe. Commenters stated that, if management program coverage notice described in paragraph (f)(6) to a those beneficiaries identified as limitation (a beneficiary-specific POS beneficiary for whom the gaining potentially at-risk did not lose access to claim edit or pharmacy or prescriber sponsor received notice that the the SEP, 90 days would be acceptable. lock-in) in their immediately prior plan. beneficiary was identified as an at-risk Other commenters expressed a belief Most commenters supported our beneficiary by the prior plan and such that plans would not need 90 days to proposal to establish an exception to the identification had not been terminated. obtain beneficiary preferences and 30-day notice for at-risk beneficiaries, as The exception is only permissible if the implement relevant access limitations identified by the losing plan, when such gaining sponsor is implementing either upon receipt of those preferences. beneficiaries switch plans and the a beneficiary-specific POS edit as Response: We appreciate the gaining plan decides to continue the described in paragraph (f)(3)(i) under commenters’ feedback about the same limitation(s). Some of these the same terms as the prior plan, or a proposed 90 day maximum timeframe. commenters agreed that exceptions to limitation on access to coverage as As we noted in the preamble to the the 30 day notice should be limited to described in paragraph (f)(3)(ii), if such proposed rule, while section 1860D– circumstances where the beneficiary limitation will require the beneficiary to 4(c)(5)(B)(iv) of the Act requires plans to was already given notice by the obtain frequently abused drugs from the wait a minimum of 30 days from the previous plan. Some commenters noted same pharmacy location and/or the initial notice before providing the that because a beneficiary may be same prescriber, as applicable, that was second notice, Congress did not changing plans due to dissatisfaction selected under the immediately prior establish a maximum timeframe. with their current providers, these plan under (f)(9). Because case management, clinical beneficiaries must also have an We received the following comments contact and prescriber verification opportunity to change their preferences and our responses follow: requirements would be met before the with respect to pharmacies and Comment: Some commenters plan sends the initial notice, we agree prescribers when they change plans. recommended that the timeframe with the commenters that our proposed Other commenters supported the between the first and second notices be 90 day maximum timeframe between exception that we proposed but stated shortened to within 15 days, which the notices could be shortened. Therefore, that the statute allows exceptions under commenters believe would provide we are modifying § 423.153(f)(8)(i) to additional circumstances based on the sufficient time for beneficiaries to require the notice required under (f)(6) health and safety of the beneficiary or submit preferences. A commenter noted or alternate notice required under (f)(7) significant drug diversion activity. A that there is no added value in waiting to be provided to the beneficiary no commenter recommended that CMS 30 days after the initial notice to more than the earlier of the date the should specify that when a beneficiary provide the second notice because it sponsor makes the relevant who moves to a new plan offered by the contains similar information. determination or 60 days after the date same parent organization as their prior Response: We disagree with these of the initial notice required under plan, the plan is not required to send commenters. Outside of circumstances (f)(5). any notice to the beneficiary to continue identified by the Secretary through Given the comments received, many the restriction because such notice rulemaking, section 1860D–4(c)(5)(B)(iv) of which stated that the 90 day would only serve to confuse the requires that the second notice be maximum timeframe we proposed is too beneficiary. provided ‘‘on a date that is not less than long, we believe 60 days strikes the right Response: As we explained in the 30 days’’ after the initial notice. balance. We do not believe the proposed rule, we believe that Moreover, because the statute gives maximum timeframe should be shorter exceptions to the statutory requirement significant deference to beneficiary than 60 days, because sponsors may to wait at least 30 days before sending preferences, CMS does not believe that need this time to process information the second notice and implementing a from beneficiaries that is received at the 15 days is sufficient for beneficiaries to coverage limitation under a drug end of the minimum 30 day timeframe, receive the initial notice, identify their management program should be very or to communicate with prescribers who preferences for prescribers and/or limited. Since the drug management may have been unresponsive prior to pharmacies, potentially confer with the program is focused on improved care receiving a copy of the initial notice the preferred prescribers and/or coordination for beneficiaries who are plan provided to the beneficiary. This pharmacies, communicate preferences utilizing high doses of frequently revised timeframe is still sufficient to abused drugs and/or have multiple 15 See ‘‘Beneficiary-Level Point-of-Sale Claim limit any potential compliance issues providers, and the statute specifies that Edits and Other Overutilization Issues,’’ August 25, for sponsors related to timeliness and such exceptions be identified through 2014. unnecessary appeals where such rulemaking regarding the health or

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safety of the beneficiary or regarding information from the initial notice that POS claim edit or a pharmacy lock-in. significant drug diversion activities, we changes with the change to the new We also were concerned about do not believe that it is appropriate to plan (for example, plan contact impacting an at-risk beneficiary’s permit such an exception based on a information or relevant medical benefits relationship with their provider, and we sponsor’s concerns about the health and available to such beneficiary under the sought comment on whether a 6-month safety of a particular beneficiary because new plan). delay before a sponsor could implement that is too subjective and could After consideration of all comments prescriber lock-in would lessen burden adversely impact such beneficiaries, received on § 423.153(f)(8), we are on prescribers. who could be subject to a coverage finalizing our proposal at paragraph As a result, we proposed in limitation without notice. Rather, we are (f)(8)(i) to retain the minimum 30 day § 423.153(f)(4)(iv) that a sponsor may finalizing the exception we proposed timeframe between the initial and not limit an at-risk beneficiary’s access related to at-risk beneficiaries who second or alternate second beneficiary to coverage of frequently abused drugs switch plans and the gaining plan notices (except as provided in to a selected prescriber(s) until at least decides to continue a limitation(s) subparagraph (ii)), with a modification 6 months has passed from the date the under the same terms as the losing plan, establishing a maximum timeframe of beneficiary is first identified as a because we believe, in this instance, the 60 days between the notices. potential at-risk beneficiary. We coverage limitation(s) can safely be Additionally, we are finalizing the specifically sought comment on whether immediately implemented—namely, proposed exception to the minimum 30 this 6-month waiting period would when the beneficiary already has been day timeframe at § 423.153(f)(8)(ii), reduce provider burden sufficiently to identified as at-risk by his or her prior which permits a gaining plan to outweigh the additional case plan, and the coverage limitations immediately issue the second management, clinical contact and would continue in the same manner beneficiary notice required by (f)(6) and prescriber verification that providers under his or her new plan. We have not implement a continuation of the same may experience if a sponsor later at this time identified additional claim edit and/or pharmacy or believed a beneficiary’s access to circumstances under which an prescriber lock-in for an at-risk coverage of frequently abused drugs exception to the 30-day minimum beneficiary who was already provided should be limited to a selected between the first and second notices is the initial and second notice for such prescriber(s). warranted. We note that this final rule limitation(s) from the losing plan. As We received the following comments does not change existing requirements discussed above, we believe the and our response follows: Comment: Many commenters that Part D plan sponsors cannot pay circumstances under which a limitation expressed significant concerns with the fraudulent claims. With respect to a can be safely implemented without proposal to require a Part D plan beneficiary who changes plans within advance beneficiary notice and are sponsor to wait at least six months from the same parent organization, we are consistent with the requirements for the date the beneficiary is first clarifying that the gaining plan must such exceptions at section 1860D– 4(c)(5)(iv)(II) are limited in scope. identified as a potential at-risk still meet the requirements set forth at beneficiary before limiting that § 423.153(f)(8)(ii). We do not believe it While, at this time, we have not identified additional circumstances beneficiary to a prescriber for frequently is advisable to apply a different abused drugs, noting that it works standard to a gaining plan just because under which we believe an exception to the 30 day beneficiary notice is against the goal of CARA and defeats the it has the same parent organization as purpose of the lock-in program. the losing plan. warranted under section 1860D– 4(c)(5)(B)(iv)(II), we will continue to Moreover, many commenters also While we are finalizing our proposed evaluate this issue, and may establish expressed that a 6 month delay to exception to the timing of the notices, additional exceptions through future prescriber lock-in was not in the spirit we agree with the commenters who rulemaking. of a national public health emergency, stated that beneficiaries who change and may actually place at-risk plans should still have an opportunity (viii) Provisions Specific to Limitations beneficiaries at even greater risk for to change their preferences for on Access to Coverage of Frequently adverse health outcomes. A commenter prescribers and pharmacies. Therefore, Abused Drugs to Selected Pharmacies expressed support for the 6 month we are clarifying that an at-risk and Prescribers (§§ 423.153(f)(4) and delay, noting that it would allow time beneficiary’s right to submit new 423.153(f)(9) Through (13)) for alternative interventions to be preferences we are finalizing at (f)(9) Some of the drug management implemented so as to not burden the also applies to beneficiaries who switch program provisions in CARA are only prescriber unnecessarily. A commenter plans. While a gaining plan could still relevant to ‘‘lock-in.’’ We proposed offered a lengthy legal argument against implement the restriction without several regulatory provisions to the 6-month delay for prescriber lock-in. providing 30 day advance notice, they implement these provisions, as follows: Response: In light of these comments, must comply with the statutory and we have been persuaded not to finalize regulatory requirements to accept (A) Special Requirement To Limit require a 6 month waiting period before beneficiary preferences. Under the Access to Coverage of Frequently a plan may limit an at-risk beneficiary exception to the notice requirements Abused Drugs to Selected Prescriber(s) to a prescriber for frequently abused that we are finalizing in this rule, a (§ 423.153(f)(4)) drugs. We agree with the majority of gaining plan choosing to immediately In the proposed rule, we noted that, commenters that CMS should not impose the restriction(s) of the prior at that time, we viewed prescriber lock- impose a waiting period for plan plan is not required to resend the initial in as a tool of last resort to manage at- sponsors to implement a prescriber notice described at (f)(5) that was sent risk beneficiaries’ use of frequently lock-in for at-risk beneficiaries, and that by the prior plan, but must issue a new abused drugs, meaning when a different once a beneficiary is deemed at-risk, a version of the second notice described approach has not been successful, plan sponsor should have the full range at (f)(6). This notice, which is being whether that was a ‘‘wait and see’’ of limitations on access to coverage for developed by CMS, will allow the approach after case management or the frequently abused drugs to employ for gaining plan to include updated implementation of a beneficiary specific such beneficiaries. We are persuaded

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that our initial concern about the networks. We further proposed that a beneficiary’s preference. We therefore beneficiary’s relationship with a stand-alone PDP or MA–PD does not believe that the statute does not provider is significantly outweighed by have to accept a beneficiary’s selection contemplate requiring Part D plan the more immediate concerns for the of a non-network pharmacy, except as sponsors to select a beneficiary’s beneficiary’s safety. necessary to provide reasonable access, preference of an out-of-network In addition, we are unpersuaded that which we discuss later in this section. prescriber or pharmacy in all instances. our proposal would reduce burden on Our rationale for this proposal was that However, because our requirements providers. This is because a sponsor, in the selection of network prescribers and for drug management programs—as conducting the case management is pharmacies puts the plan sponsor in the proposed and finalized—permit stand- required under § 423.153(f)(2), to best possible position to coordinate the alone PDPs to use prescriber lock-in, the contact prescribers and the sponsor may beneficiary’s care going forward in light requirement for a sponsor to accept the seek a prescriber’s agreement to a of the demonstrated concerns with the beneficiary’s selection of a network beneficiary-specific POS claim edit beneficiary’s utilization of frequently prescriber is inapplicable, and the pursuant to § 423.153(f)(4). Thus, we abused drugs. sponsor must accept the beneficiary’s now believe that requiring a sponsor to Also, we did not propose to place a selection of a prescriber, unless an wait 6 months to contact the prescriber limit on how many times beneficiaries exception applies, such as if the again to assist with additional case can submit their preferences, but we did selection would contribute to the management for the prescriber lock-in, solicit additional comments on this beneficiary’s abuse of prescription and to possibly obtain the prescriber’s topic. Finally, under our proposal, the drugs. With regard to this exception, we agreement to such lock-in, will actually sponsor would be required to confirm note that when there is a prescriber or increase provider burden. the selection of pharmacy and/or pharmacy network, and the plan For these reasons, we are not prescriber in writing to the beneficiary sponsor asserts it would accept a finalizing the proposal that a sponsor either in the second notice, if feasible, beneficiary’s in-network pharmacy or may not limit an at-risk beneficiary’s or within 14 days of receipt of the prescriber preference(s) but such access to coverage of frequently abused beneficiary’s submission. selection would contribute to drugs to a selected prescriber(s) until at We received the following comments prescription drug abuse or drug least 6 months has passed from the date and our response follows: diversion by the beneficiary, we would the beneficiary is first identified as a Comment: Commenters widely question why such pharmacy or potential at-risk beneficiary. Therefore, supported CMS’s proposal that the prescriber is in the sponsor’s network. we have removed the language from pharmacy or prescriber in which an at- We realize that in the case of at-risk risk beneficiary is locked-into must be § 423.153(f)(4) relevant to this 6-month beneficiaries enrolled in MA plans that in-network for a plan, except to provide waiting period for prescriber lock-in. provide out-of-network coverage of reasonable access or when the plan does services and are designed and (B) Selection of Pharmacies and not have a relevant network. specifically authorized for that purpose Prescribers (§§ 423.153(f)(9) Through Specifically, commenters noted that (that is, PPO, PFFS, and cost plans), (13)) allowing selection of out of network these beneficiaries have access to (1) Beneficiary Preferences pharmacies or prescribers would supplemental services out of network. (§ 423.153(f)(9)) undermine keeping beneficiary costs However, as we stated above, Section low, and efforts to combat pharmacy- 1860D–4(c)(5)(D)(iii) states that if an at- Section 1860D–4(c)(5)(D)(iii) of the based fraud and abuse. risk beneficiary submits preferences for Act provides that, if a sponsor intends Response: We thank commenters for which in-network prescribers and to impose, or imposes, a limit on a their support. pharmacies the beneficiary would beneficiary’s access to coverage of Comment: CMS received a handful of prefer, the PDP sponsor shall select frequently abused drugs to selected comments that disagreed that a them. The requirement, discussed later, pharmacy(ies) or prescriber(s), and the prescriber should have to be in-network, that Part D prescription drug potential at-risk beneficiary or at-risk given some Medicare Advantage management programs ensure beneficiary submits preferences for a beneficiaries may receive out-of- reasonable access addresses the network pharmacy(ies) or prescriber(s), network treatment from providers due sponsor’s selection out-of-network the sponsor must select the to their relationships with the prescriber prescribers and pharmacies when pharmacy(ies) and prescriber(s) for the and the high quality of care that they necessary and therefore accommodate beneficiary based on such preferences, provide. These commenters requested our regulations at § 422.105; § 422.112 unless an exception applies, for that CMS eliminate the requirement that that permit out-of-network coverage. example, the beneficiary’s preferred a prescriber generally must be in- We note that by requiring a plan provider would contribute to the network if the plan sponsor imposes a sponsor to accept an at-risk beneficiary’s beneficiary’s abuse of prescription limit on a beneficiary’s access to selection of an out-of-network drugs. We address exceptions to coverage for frequently abused drugs to prescriber, we would in effect have a beneficiary’s preferences later in the a selected prescriber or prescribers. blanket requirement that a coordinated preamble. Response: We were not persuaded health plan to manage an at-risk In light of this language, we proposed that sponsors should have to accept a beneficiary out-of-network, which a Part D plan sponsor must accept an at- beneficiary’s selection of an out-of- would be difficult to achieve. For those risk beneficiary’s preferences for in- network prescriber or pharmacy, unless at-risk beneficiaries locked into a network prescribers and pharmacies needed to maintain reasonable access or particular prescriber(s) and/or from which to obtain frequently abused if the plan does not have a relevant pharmacy(ies), prescriptions for drugs unless an exception applies. In network. Our rationale for this is that frequently abused drugs would need to cases that involve stand-alone PDPs, we Section 1860D–4(c)(5)(D)(iii) refers be obtained from an in-network proposed that a sponsor must accept the specifically to the beneficiary selecting prescriber (when such a network exists), beneficiary’s selection of prescriber, a network prescriber(s) and/or even in the case of at-risk beneficiaries unless an exception applies, because pharmacy(ies) and the plan sponsor who are enrolled in MA plan that such PDPs do not have provider accepting such selections based on the provide for out-of-network coverage.

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Therefore, we are finalizing our management program has a financial Response: While we are not currently provision as proposed. interest. requiring that plans or PBMs report to We wish to make a point of Response: Since the selection of the CMS the percentage of times when clarification regarding at-risk pharmacy in which an at-risk beneficiary preference is/is not beneficiaries who are entitled to fill beneficiary is locked into is largely a considered and to track which prescriptions or receive services from beneficiary choice, and one they are pharmacy the plan/PBM utilizes to IHS, Tribal, and Urban Indian (ITU) provided specifically in the statute with override patient preference, we will re- organization pharmacies and providers. little exception, CMS does not find this evaluate this policy in the future if it An IHS I/T/U pharmacy or provider comment persuasive, and will finalize becomes problematic. Therefore, we may be the selected pharmacy or this provision as proposed. will closely monitor to make sure plans prescriber for such beneficiaries and Comment: A commenter stated that are not inappropriately choosing to not they may go to such a pharmacy or plan sponsors should be able to accept beneficiary preferences, in order prescriber pursuant to our reasonable implement the change in a beneficiary’s to ensure efficient operation of the access requirement, even if they are not preference within 14 days after the program and prevention of excessive in-network which we discuss again beneficiary has submitted the administrative burden. later. preference. While we received no comments Comment: Regarding a limitation on Response: We note that our proposal, specific to beneficiary appeal rights how many times beneficiaries can which we are finalizing, requires the when the plan’s selection of pharmacies submit their preferences, many sponsor to inform the beneficiary of the or prescribers for lock-in are not aligned commenters suggested that we allow an selection in the second notice or if not with the beneficiary’s submitted at-risk beneficiary to submit his or her feasible due to the timing of the preferences, we remind plans that the preferences anywhere from 1 to 3 times beneficiary’s submission of preference, statute at § 1860D–2(c)(5)(E) specifically per year, noting that it was important to in a subsequent written notice issue no states that the selection of pharmacy or cap the number of times preferences can later than 14 days after receipt of the prescriber for lock-in is subject to be submitted. A commenter noted that submission. appeal. If a beneficiary complains about being locked into a pharmacy or the beneficiary’s unlimited opportunity Accordingly, we are finalizing prescriber that is not the one they to change preferences for prescribers § 423.153(f)(9), as proposed. We note selected, such complaint must be and pharmacies will be problematic and that we added the words ‘‘or change’’ in treated as an appeal. We address burdensome, and recommended that paragraph (iii) for consistency with the beneficiary appeals rights later in this CMS place a limit on the number of rest of the regulation text in this section. preamble. times a beneficiary may change (2) Exception to Beneficiary Preferences We are finalizing the following at preferences on an annual basis, unless (§ 423.153(f)(10)) § 423.153(f)(10) Exception to Beneficiary they can provide good cause for Preferences, as proposed. requesting the change. Suggested Section 1860D–4(c)(5)(D)(iv) of the examples of good cause would include Act provides for an exception to an at- (3) Reasonable Access (§§ 423.100, moving beyond easy access to the risk beneficiary’s preference of 423.153(f)(11) 423.153(f)(12)) prescriber or pharmacy; the prescriber prescriber or pharmacy from which the If a potential at-risk beneficiary or at- has discharged the beneficiary from his/ beneficiary must obtain frequently risk beneficiary does not submit her practice; or the pharmacy is unable abused drugs, if the beneficiary’s pharmacy or prescriber preferences, to provide the requested drugs. allowable preference of prescriber or section 1860–D–4(c)(5)(D)(i) of the Act Response: While commenters raised pharmacy will contribute to provides that the Part D sponsor shall concerns that at-risk beneficiaries prescription drug abuse or drug make the selection. Section 1860–D– should have some parameters around diversion by the at-risk beneficiary. 4(c)(5)(D)(ii) of the Act further provides changing their preferences for a selected Section 1860–D–4(c)(5)(D)(iv) of the Act that, in making the selection, the pharmacy or prescriber, CMS must requires the sponsor to provide the at- sponsor shall ensure that the beneficiary balance curbing opioid overuse and risk beneficiary with at least 30 days continues to have reasonable access to misuse with ensuring reasonable access written notice and a rationale for not frequently abused drugs, taking into to selected pharmacies and prescribers. accepting his or her allowable account geographic location, beneficiary Therefore, we will allow at-risk preference for pharmacy or prescriber preference, the beneficiary’s beneficiaries to submit their preferences from which the beneficiary must obtain predominant usage of prescriber or to plan sponsors without a numerical frequently abused drugs under the plan. pharmacy or both, impact on cost- restriction during the plan year. We note We received the following comments sharing, and reasonable travel time. We that the sponsor does not have to make and our response follows: proposed § 423.153(f)(11) to codify these changes to the selection of Comment: Commenters generally statutory provisions. pharmacy(ies) and prescriber(s) based agreed with our proposal that plan Since the statute explicitly allows the on the at-risk beneficiaries preferences if sponsors may disallow a beneficiary’s beneficiary to submit preferences, we the plan sponsor believes such changes selection of a prescriber or pharmacy interpreted the additional reference to are contributing to abuse or diversion of that may contribute to prescription drug beneficiary preference in the context of frequently abused drugs, pursuant to abuse or drug diversion. reasonable access to mean that a § 423.153(f)(10), discussed above. Also, Response: We appreciate the beneficiary allowable preference should CMS will monitor for these issues and commenters support. prevail over a sponsor’s evaluation of act accordingly to ensure efficient Comment: A commenter suggested geographic location, the beneficiary’s operation of the program and prevention that CMS require plans/PBMs to report predominant usage of a prescriber and/ of excessive administrative burden. the percentage of times when or pharmacy impact on cost-sharing, Comment: A commenter stated that an beneficiary preference is/is not and reasonable travel time. In the at-risk beneficiary should not be locked- considered and to track which absence of a beneficiary preference for into pharmacies in which the plan pharmacy the plan/PBM utilizes to pharmacy and/or prescriber, however, a sponsor or PBM overseeing the drug override patient preference. Part D plan sponsor must take into

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account geographic location, the allow for situations where a patient who prescribing frequently abused drugs to a beneficiary’s predominant usage of a is locked-in is hospitalized or develops beneficiary. prescriber and/or pharmacy, impact on a new medical condition that requires Comment: We received several cost-sharing, and reasonable time travel they see a new physician, and that CMS comments that recommended that CMS in selecting a pharmacy and/or should consider providing additional re-evaluate its policy for determining prescriber, as applicable, from which flexibility in such unexpected or chain pharmacies, as identification of the at-risk beneficiary will have to unplanned situations. which pharmacies share real-time data obtain frequently abused drugs under Response: We note that drugs may be difficult in many situations, the plan. Thus, absent a beneficiary’s dispensed during a hospitalization are noting that sponsors do not have an allowable preference or plan recognition covered under the Medicare Part A effective way to manage such that the beneficiary’s selection will benefit. Aside from that, plans are arrangements, and PBMs do not have contribute to prescription drug abuse or required to provide reasonable access to the systems capabilities to discern if drug diversion, we proposed that the at-risk beneficiaries in their drug their systems are integrated and sponsor must ensure reasonable access management programs under proposed interchangeable. A commenter stated by choosing the network pharmacy or § 423.153(f)(11). Proposed support for CMS’ proposal as it relates prescriber that the beneficiary uses most § 423.153(f)(12) requires a Part D plan to chain pharmacies, but noted that frequently unless the plan is a stand- sponsor to select more than one managing this option will be alone PDP and the selection involves a prescriber to prescribe frequently challenging absent additional prescriber(s). In the latter case, the abused drugs when it reasonably instructions from CMS. prescriber will not be a network determines it is necessary to do so to Response: Section 1860D– provider, because such plans do not provide the at-risk beneficiary with 4(c)(5)(D)(ii) of the Act states that with have provider networks. In urgent reasonable access. To the extent that a respect to a pharmacy that has multiple circumstances, we proposed that new health condition necessitates an at- locations that share real-time electronic reasonable access means the sponsor risk beneficiary to change providers data, all such locations of the pharmacy must have reasonable policies and who prescribe frequently abused drugs shall collectively be treated as one procedures in place to ensure rather than see more than one, the pharmacy for purposes of an at-risk beneficiary access to coverage of beneficiary can submit a new prescriber beneficiary’s selection of pharmacies. frequently abused drugs without a delay preference, as discussed earlier. Until such pharmacies can be that may seriously jeopardize the life or With respect to a hospital emergency determined through data, sponsors with health of the beneficiary or the room visit, for example, we stated that drug management programs will have to beneficiary’s ability to regain maximum in urgent circumstances, proposed ascertain such pharmacies through the function. We stated that determining § 423.153(f)(11) requires a Part D case management and beneficiary reasonable access may be complicated sponsor to ensure an at-risk beneficiary notification processes. We therefore are when an enrollee has multiple has reasonable access in the case of finalizing this provision as proposed. addresses or his or her health care emergency services, which we stated Earlier in the preamble in responding necessitates obtaining frequently abused means that the sponsor must have to comments about prescriber drugs from more than one prescriber reasonable policies and procedures in agreement, we stated that in the case of and/or more than one pharmacy. place to ensure beneficiary access to prescriber lock-in, if a prescriber who Sections 1860D–4(c)(5)(D)(ii)(I) and (II) coverage of frequently abused drugs has not agreed to this limitation insists address this issue by requiring the Part without a delay that may seriously that he or she must be able to continue D plan sponsor to select more than one jeopardize the life or health of the to prescribe frequently abused drugs for prescriber to prescribe frequently beneficiary or the beneficiary’s ability to the beneficiary, a plan sponsor may abused drugs and more than one regain maximum function. Thus, we need to offer to lock-in the at-risk pharmacy to dispense them, as believe § 423.153(f)(11) and (12) address beneficiary to more than one prescriber applicable, when it reasonably the commenter’s concerns. to ensure reasonable access pursuant to determines it is necessary to do so to Comment: We received a comment § 423.153(f)(12), for example, if the provide the at-risk beneficiary with requesting that group practices be beneficiary has been obtaining opioids reasonable access, which we proposed permitted to designate one or more from one prescriber and to codify at § 423.153(f)(12). To address prescribers when a plan sponsor intends benzodiazepines from another. Thus, we chain pharmacies and group practices, to limit a beneficiary’s access to point out that in finalizing the drug we proposed that in the case of a group coverage of frequently abused drugs to management program regulations, we practice, all prescribers of the group a selected prescriber or prescribers at a are not interpreting the reasonable practice shall be treated as one group practice, and permit the group access provisions to require a sponsor to prescriber and all locations of a practice to modify such designation select more than one prescriber, if more pharmacy that share real-time electronic from time to time. The commenter than one prescriber has asserted during data should be treated as one pharmacy. stated that this requirement should case management that multiple We proposed to interpret these apply whether or not the prescribers at prescribers of frequently abused drugs provisions to mean that a sponsor will the group practice are all associated are medically necessary for the at-risk be required to select more than one with the same single Tax Identification beneficiary but only to consider it in the prescriber of frequently abused drugs, if Number (TIN). context of the requirement to provide more than one prescriber has asserted Response: Under the provision we reasonable access. This should also be during case management that multiple proposed and are finalizing, all the sponsor’s approach when a prescribers of frequently abused drugs prescribers of a group practice are beneficiary submits a preference for are medically necessary for the at-risk treated as one prescriber. A TIN is a more than one prescriber and/or more beneficiary. mechanism that can assist Part D than one pharmacy as his or her We received the following comments sponsors in identifying group practices, preference. and our response follows: but as discussed earlier in the preamble, Also earlier in this preamble, we Comment: A commenter noted that case management can also reveal the stated that an IHS pharmacy or provider the reasonable access provisions did not existence of a group practice that is may be the selected pharmacy or

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prescriber for at-risk beneficiaries who beneficiary, unless the selection of an prescriber has been selected as a are entitled to fill prescriptions from out-of-network pharmacy is necessary. prescriber that the beneficiary will be IHS, tribal, or Urban Indian (I/T/U) • For purposes of paragraph (f)(12) of locked into for purposes of frequently organization pharmacies and receive § 423.153, in the case of a— abused drugs. In our view, the process services through the IHS health system, ++ Pharmacy that has multiple of obtaining the prescriber agreement to and that they may go to such a locations that share real-time electronic prescriber lock-in also serves as the pharmacy or prescriber pursuant to our data, all such locations of the pharmacy receipt of confirmation from the reasonable access requirement, even if shall collectively be treated as one prescriber, not to mention our they are not in-network. Therefore, we pharmacy; and requirement that the sponsor make are adding language to § 423.153(f)(12) ++ Group practice, all prescribers of reasonable efforts to provide the to address situations when the sponsor the group practice shall be treated as prescriber with a copy of the beneficiary reasonably determines that the selection one prescriber. notices that the sponsor must provide, of an out-of-network prescriber or (4) Confirmation of Pharmacy and discussed earlier. Such an approach pharmacy is necessary to provide the Prescriber Selection (§ 423.153(f)(13)) reduces unnecessary repetition of beneficiary with reasonable access. This communication with prescribers. Section 1860D–4(c)(5)(D)(v) of the Act language also addresses our earlier For network pharmacies, this requires that, before selecting a comment that a stand-alone PDP or approach means that the notification prescriber or pharmacy, a Part D plan MA–PD does not have to accept a that the at-risk beneficiary has been sponsor must notify the prescriber and/ beneficiary’s selection of a non-network identified for inclusion in a drug or pharmacy that the at-risk beneficiary pharmacy or prescriber, except as management program and the pharmacy has been identified for inclusion in the necessary to provide reasonable access. has been selected as a pharmacy that the drug management program, which will Given the foregoing, we therefore beneficiary will be locked into for limit the beneficiary’s access to coverage finalize as proposed the following at purposes of frequently abused drugs and of frequently abused drugs to selected § 423.153(f)(11), with a modification to the pharmacy’s confirmation can be pharmacy(ies) and/or prescriber(s) and include language that the sponsor must negotiated between the plan sponsor that the prescriber and/or pharmacy has ensure reasonable access by taking into and the pharmacy, and if not, the plan been selected as a designated prescriber account ‘‘all relevant factors, including sponsor must do so on a case-by-case and/or pharmacy for the at-risk but not limited to’’ and to renumber for basis, which is also the case for out-of- beneficiary. We proposed better clarity: Reasonable access. In network prescribers and pharmacies. § 423.153(f)(13) to codify this statutory Comment: A commenter proposed an making the selections under paragraph requirement. additional exception to the confirmation (f)(12) of this section, a Part D plan We also proposed that plan sponsors requirement for plan sponsors that own sponsor must ensure that the beneficiary must obtain the network prescriber’s or or operate their own pharmacies, continues to have reasonable access to pharmacy’s confirmation that the arguing that such confirmation would frequently abused drugs, taking into selection is accepted before conveying be unnecessary given that the pharmacy account all relevant factors, including this information to the at-risk would already be confirmed, as part of but not limited to: (i) Geographic beneficiary, unless the prescriber or their integrated system. location; (ii) Beneficiary preference; (iii) pharmacy agreed in advance in its Response: We are not persuaded that The beneficiary’s predominant usage of network agreement to accept all such an exception is needed in these a prescriber or pharmacy or both; (iv) selections and the agreement specifies situations. If the pharmacy is a separate The impact on cost-sharing; (v) how the prescriber and pharmacy will legal entity from the plan sponsor, then Reasonable travel time; (vi) Whether the be notified of its selection. In these the contract could contain a blanket beneficiary has multiple residences; cases, the network provider would agree agreement stating that the pharmacy (vii) Natural disasters and similar to forgo specific notification if selected agrees to accept at-risk beneficiaries that situations; and (viii) The provision of under a drug management program to the plan sponsors locks into that emergency services. serve an at-risk beneficiary. pharmacy, as we mentioned in the We are also finalizing with We received the following comments proposed rule. If the pharmacy is the modification for the addition of and our responses follow: same legal entity as the plan sponsor, language requiring the selection of an Comment: We received a comment then notification is automatic, and no out-of-network prescriber or pharmacy that CMS should prohibit plan sponsors further notification or contract language if necessary at § 423.153(f)(12). from including in their provider would be necessary. Paragraphs (f)(12)(i) and (ii) will specify agreements any requirement that would Based on the comments and our the following: require a prescriber to confirm in responses, we are finalizing this • A Part D plan sponsor must select, advance and forego specific provision with modifications to state the as applicable— confirmation, if selected under a drug following regarding confirmation of ++ One, or, if the sponsor reasonably management program to serve an at-risk selections(s): determines it necessary to provide the beneficiary. • Before selecting a prescriber or beneficiary with reasonable access, Response: In light of this comment, pharmacy under this paragraph, a Part more than one, network prescriber who and given the fact that we are finalizing D plan sponsor must notify the is authorized to prescribe frequently a requirement for prescriber agreement prescriber or pharmacy, as applicable, abused drugs for the beneficiary, unless for prescriber lock-in, as discussed that the beneficiary has been identified the plan is a stand-alone PDP, or the earlier in the preamble, we believe the for inclusion in the drug management selection of an out-of-network provider appropriate approach is that the program for at-risk beneficiaries and is necessary; and required prescriber agreement during that the prescriber or pharmacy or both ++ One, or, if the sponsor reasonably case management satisfies the is(are) being selected as the beneficiary’s determines it necessary to provide the requirement that the plan sponsor notify designated prescriber or pharmacy or beneficiary with reasonable access, the prescriber that the at-risk beneficiary both for frequently abused drugs. For more than one, network pharmacy that has been identified for inclusion in a prescribers, this notification occurs may dispense such drugs to such drug management program and the during case management as described in

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paragraph (f)(2) or when the prescriber processes at § 423.153(f) be adjudicated made under a plan sponsor’s drug provides agreement pursuant to under the existing Part D benefit appeals management program when the paragraph (f)(4)(i)(B). process and timeframes set forth in beneficiary receives the second notice • The sponsor must receive Subpart M. Consistent with the existing explaining that access to coverage for confirmation from the prescriber(s) or Part D benefit appeals process, we frequently abused drugs will be limited. pharmacy(ies) or both, as applicable, proposed that at-risk beneficiaries (or an We believe the intent of the statute is to that the selection is accepted before at-risk beneficiary’s prescriber, on confer appeal rights to beneficiaries at conveying this information to the at-risk behalf of the at-risk beneficiary) must the point in the process at which a beneficiary, unless the pharmacy has affirmatively request IRE review of beneficiary is notified that access will agreed in advance in a network adverse plan level appeal decisions be limited and provide an explanation agreement with the sponsor to accept all made under a plan sponsor’s drug of the restrictions that will be applied such selections and the agreement management program. We also proposed under the drug management program. specifies how the pharmacy will be to amend the existing Subpart M rules As discussed earlier in this preamble, notified by the sponsor of its selection. at § 423.584 and § 423.600 related to the proposed 90 day maximum • A sponsor complies with obtaining an expedited redetermination timeframe for the plan sponsor to send paragraphs (i) and (ii) as it pertains to and IRE reconsideration, respectively, to the second or alternate second notice is a prescriber by obtaining the apply them to appeals of an at-risk being reduced to 60 days under this prescriber’s agreement pursuant to determination made under a drug final rule. Specifically, the second or § 423.153(f)(4)(i)(B). management program. While we did not alternate second notice is to be provided (ix) Drug Management Program Appeals propose to adopt auto-escalation, the to the beneficiary no more than the (§§ 423.558, 423.560, 423.562, 423.564, proposed approach ensures that an at- earlier of the date the sponsor makes the 423.580, 423.582, 423.584, 423.590, risk beneficiary has the right to obtain relevant determination or 60 days after 423.602, 423.636, 423.638, 423.1970, IRE review and higher levels of appeal the date of the initial notice. This 60 day 423.2018, 423.2020, 423.2022, 423.2032, (ALJ/attorney adjudicator, Council, and period may be used by a plan sponsor 423.2036, 423.2038, 423.2046, 423.2056, judicial review). Accordingly, we also to process information received from 423.2062, 423.2122, and 423.2126) proposed to add the reference to an ‘‘at- beneficiaries or communicate with risk determination’’ to the following prescribers who may have been Section 1860D–4(c)(5)(E) of the Act regulatory provisions that govern ALJ unresponsive prior to receiving a copy specifies that the identification of an and Council processes: §§ 423.2018, of the initial notice the plan provided to individual as an at-risk beneficiary for 423.2020, 423.2022, 423.2032, 423.2036, the beneficiary. As we also previously prescription drug abuse under a Part D 423.2038, 423.2046, 423.2056, 423.2062, noted in this preamble, we do not drug management program, a coverage 423.2122, and 423.2126. expect plans to routinely take the determination made under such a Finally, we also proposed a change to maximum amount of time to issue the program, the selection of a prescriber or § 423.1970(b) to address the calculation second notice, and note that the plan pharmacy, and information sharing for of the amount in controversy (AIC) for must send it sooner if they make the subsequent plan enrollments shall be an ALJ hearing in cases involving at-risk relevant determination sooner. subject to reconsideration and appeal determinations made under a drug Reducing this period between the initial under section 1860D–4(h) of the Act. management program in accordance notice and the second or alternate This provision also permits the option with § 423.153(f). second notice to a maximum of 60 days of an automatic escalation to external In addition to the changes related to balances plan sponsors’ need for time to review to the extent provided by the the implementation of drug process information from beneficiaries Secretary. management program appeals, we also and prescribers, if applicable, with As discussed earlier in this preamble, proposed to make technical changes to providing timely notice to beneficiaries. we proposed to integrate the lock-in § 423.562(a)(1)(ii) to remove the comma Comment: Several commenters provisions with existing Part D Opioid after ‘‘includes’’ and replace the encouraged CMS to make the appeals DUR Policy/OMS. Determinations made reference to ‘‘§§ 423.128(b)(7) and process regarding lock-in as simple as in accordance with any of those (d)(1)(iii)’’ with a reference to possible for beneficiaries to ensure that processes, at § 423.153(f), and discussed ‘‘§§ 423.128(b)(7) and (d)(1)(iv).’’ those who need particular drugs are able previously, are interrelated issues that We received the following comments to access them. These commenters we collectively refer to as an ‘‘at-risk and our responses follow: suggested that CMS implement all of the determination.’’ In this final rule, we are Comment: A few commenters strongly protections of CARA, including adding a definition of at-risk objected to beneficiaries not having automatic escalation to independent determination at § 423.560 to describe a appeal rights during their designation as review. Several commenters do not decision made under a plan sponsor’s ‘‘potential’’ at-risk beneficiaries at the agree with CMS’ interpretation of the drug management program in time the initial notice is received from CARA language on appealing lock-in accordance with § 423.153(f) that the plan sponsor. and believe automatic escalation to the involves the identification of an Response: As we noted in the IRE would ensure beneficiary due individual as an at-risk beneficiary for proposed rule, when a beneficiary is process and access to needed prescription drug abuse; a limitation, or identified as being potentially at-risk, prescription drugs. These commenters the continuation of a limitation, on an but has not yet been definitively strongly oppose the use of the existing at-risk beneficiary’s access to coverage identified as at-risk, the plan is not Part D appeals process for appeals of at- of frequently abused drugs (that is, a taking any action to limit such risk status or other consequences of beneficiary specific point-of-sale edit beneficiary’s access to frequently abused drug management, and view the process the selection of a prescriber and/or drugs. Because the plan sponsor has not as a significant barrier that will increase pharmacy and implementation of lock- taken any action to limit a beneficiary’s the timeframe for the lock-in appeals in); and information sharing for access at this point in the process, the process. Commenters expressed subsequent plan enrollments. situation is not ripe for appeal. We concerns regarding case management We proposed that at-risk proposed that a beneficiary will have and physician agreement as additional determinations made under the the right to appeal a determination hurdles for beneficiaries who are not at-

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risk, in addition to plan compliance retain their existing right to file a beneficiary will have the right to seek with the current requirements for timely grievance with the plan if they have review by the Part D IRE. appeals. A few commenters stated that complaints about the prescription drug Comment: With respect to the CARA contemplates a more streamlined management program. calculation of the amount in controversy process that is easier for beneficiaries to With respect to the comment on case (AIC) for an ALJ hearing or judicial navigate and that automatic escalation management and physician review, a commenter expressed support would allow for improved tracking and involvement, these are key components for using a formula based on the value monitoring of the scope and impact of to drug management programs and we of any refills for frequently abused drugs the lock-in program, in addition to disagree that these components create to calculate the AIC, noting that it will providing more uniform decision additional hurdles for beneficiaries provide a greater probability for higher making across various plan programs. A within the appeals process. In fact, we review, benefiting both the plan and the commenter suggested that CMS conduct believe that the extensive case beneficiary. analysis to determine which option management we expect to be performed Response: We thank the commenter would prevent or reduce bias against under plan sponsors’ drug management for expressing support for the proposal beneficiaries, as well as minimize the programs, including ongoing related to calculation of the AIC at timeframe by which the review process communications among the plan § 423.1970(b)(2) for disputes related to occurs, and upon implementation sponsor, enrollee, prescriber(s) and identification as an at-risk beneficiary closely monitor the decisions of at-risk pharmacy, will result in a relatively low under a plan sponsor’s drug status to ensure decisions are made in volume of appeals under these management program. Comment: A few commenters the best interest of the beneficiary. A programs. In addition, the appeals that requested clarification as to whether the commenter recommended a separate are processed will be informed by the beneficiary Notice of Appeal Rights appeals process that is similar to the case management conducted by the plan (reject code 569), which triggers a grievance process. sponsor and the involvement of the pharmacy to provide the beneficiary physician. Response: We agree with commenters with the standardized pharmacy notice, that the appeals process for enrollees Comment: Many commenters agreed Prescription Drug Coverage and Your identified as at-risk should be as easy to with the proposal to utilize the existing Rights (CMS–10147), should accompany navigate as possible. As we noted in the Part D appeals process for at-risk any POS claim rejections regarding proposed rule, Part D enrollees, plan beneficiaries, including not requiring prescriber or pharmacy lock-in or sponsors, and other stakeholders are automatic escalation for external review. beneficiary-specific POS edits. already familiar with the Part D benefit These commenters believed that use of Commenters recommended that the appeals process. Resolving disputes that the existing process is the simplest and CMS–10147 not be provided to arise under a plan sponsor’s drug most administratively efficient beneficiaries when a claim rejects at management program within the approach, as it is familiar to POS due to issues under a plan existing Part D benefit appeals process beneficiaries, plan sponsors, and other sponsor’s drug management program. is not only required by statute, but will stakeholders. These commenters also Response: We agree with the allow at-risk beneficiaries to be more believed that plan sponsors should have commenters that a POS claim rejection familiar with, and more easily access, the opportunity to review additional as a result of a restriction imposed the appeals process as opposed to information and potentially adjust their under a plan sponsor’s drug creating a new process specific to initial decision before the case is management program should not trigger appeals related to a drug management reviewed by the IRE. delivery of the standardized pharmacy program. Since the statute specifically Response: We thank the commenters notice (CMS–10147). The pharmacy refers to section 1860D–4(h) of the Act for expressing support for use of the notice informs a beneficiary to contact and the process we proposed is existing Part D benefit appeals process his or her Part D plan to request a consistent with the existing appeals for beneficiaries identified as at-risk coverage determination. As discussed process, we disagree with the comment under a plan sponsor’s drug above in this final rule, a determination that further analysis of options is management program. In addition to under a plan sponsor’s drug necessary to ‘‘prevent or reduce bias comporting with the statutory management program is not a coverage against beneficiaries.’’ As we noted in requirement, we agree with the determination as defined at § 423.566. the proposed rule, affording a plan commenters that use of the existing Instead, a determination made under a sponsor the opportunity to review its appeals process is the most drug management program is governed initial determination may result in administratively efficient approach and by the provisions proposed at resolution of the disputed issues at a will result in better outcomes for at-risk § 423.153(f) related to at-risk lower level of review and obviate the beneficiaries. Not only is the existing determinations. If a beneficiary need for further appeal of the issues to appeals process familiar to enrollees, disagrees with a decision made under the Part D IRE which, in turn, will plans, and the IRE, but it allows a plan § 423.153(f), the beneficiary has the minimize the time for reviewing and sponsor the opportunity to review right to appeal such decision. The at- resolving disputes. With respect to the information it used to make an at-risk risk beneficiary will be notified of this monitoring of plan sponsors’ at-risk determination under its drug appeal right pursuant to the notice decisions, appeal decisions involving at- management program (and any described at § 423.153(f)(6). risk status will be subject to review additional relevant information Comment: Several commenters under existing plan sponsor audit submitted as part of the appeal), requested clarification that when a processes. We do not believe that a promotes the resolution of issues at a beneficiary appeals their coverage process similar to the existing grievance lower level of administrative review and limitation under the drug management process, as recommended by a potentially reduces the need for the program, that the request should be commenter, would comport with the beneficiary to further appeal the issues processed as a redetermination and not statute, which requires the use of the in dispute. However, if the matter is not as a coverage determination. A few existing appeals process. However, resolved by the plan sponsor at the commenters requested clarification as to potential at-risk and at-risk beneficiaries redetermination level, an at-risk whether or not the POS edit or a lock-

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in would be a coverage determination. will apply. The manual guidance will be plan sponsor’s drug management Commenters asked if Chapter 18 of the updated, as necessary, to reflect any program. As previously noted, Prescription Drug Benefit Manual would changes relevant to drug management determinations made under the apply, and if so, noted that CMS should program disputes. With respect to the processes at § 423.153(f) will be release proposed changes to the redetermination notice, plan sponsors adjudicated under the existing Part D guidance for comment. Commenters may use CMS’ model redetermination benefit appeals process. Such inquired about how the CARA notice (with modifications) or develop determinations include limitation on provisions would impact the coverage their own notice for informing an access to coverage for frequently abused determination and redetermination enrollee of the outcome of the appeal. drugs, including a POS claim edit for processes, including approval and Comment: A few commenters frequently abused drugs that is specific denial language used by plan sponsors. suggested that these appeals be limited to an at-risk beneficiary and a limit on A commenter stated that they do not to the beneficiary-level edit, the selected an at-risk beneficiary’s access to believe that these are coverage pharmacy or the prescriber, and not the coverage for frequently abused drugs to determinations because they involve underlying criteria for identification and those that are prescribed by one or more access issues and being treated as such guidance. Commenters noted that the prescribers or dispensed to the would pose system, policy, and process appeal should be limited to the issue of beneficiary by one or more network challenges. This commenter also asked whether the beneficiary is an pharmacies. As also previously noted, for clarification on how this process appropriate candidate for lock-in, and we did not propose to revise the existing would impact the appeals auto-forward not have any other scope. A commenter definition of a coverage determination. star measure if treated as a coverage stated that the appeal should not relate In addition to a determination made determination. to whether the plan may impose prior under the processes at § 423.153(f), a Response: We did not propose to authorization or other utilization coverage determination, including an change the current definition of a management restrictions on certain exception, is also subject to appeal. For coverage determination at § 423.566. As prescriptions. Rather, according to the example, if an enrollee does not dispute we stated in the proposed rule, the types commenter, beneficiary appeals should a POS edit for a quantity limit on a drug of decisions made under a drug be limited to compliance with internal within 60 days of the date of the second management program align more closely program criteria and CMS guidance, notice pursuant to § 423.153(f)(6) but with the regulatory provisions in rather than allowing beneficiaries to later requests an exception to the Subpart D than with the provisions in challenge the underlying criteria. A quantity limit and that request is denied Subpart M. We believe it is clearer to set commenter asked that CMS clarify how by the plan sponsor, the enrollee has the forth the rules for at-risk determinations to effectuate a redetermination that right to appeal the denial of the as part of § 423.153 and cross reference requires the reversal of one limit, but exception request. While the enrollee § 423.153(f) in relevant appeals other limits remain (for example, a always has the right to request a provisions in Subpart M and Subpart U. formulary restriction and lock-in), and coverage determination, changes to The types of initial determinations which limit takes priority. This previously imposed limitations can also made under a drug management commenter stated that beneficiaries be implemented through ongoing case program (for example, a restriction on would have to receive decision notices management and a new determination the at-risk beneficiary’s access to explaining that because of the remaining under the processes at § 423.153(f). coverage of frequently abused drugs to limits, their drug access will continue to those that are prescribed for the be limited. Another commenter As noted earlier, a commenter asked beneficiary by one or more prescribers) requested guidance on whether to whether a dispute regarding pharmacy will be subject to the processes handle a dispute involving beneficiary- or prescriber selection for purposes of proposed at § 423.153(f). specific POS claim edit and a dispute lock-in and a dispute related to a What we did propose is that at-risk about a pharmacy or prescriber selection beneficiary specific POS claim edit determinations made under the under the same appeal, or the POS edit should be processed as the same appeal. processes at § 423.153(f) be adjudicated as a coverage determination and the If a beneficiary’s request for an appeal under the existing Part D benefit appeals lock-in as an appeal. raises multiple issues related to the process and timeframes set forth in Response: As explained above, the limitations imposed on the beneficiary Subpart M. Thus, we agree with these statute explicitly states that one of the under a drug management program, the commenters that a determination made issues that can be appealed is the plan sponsor must address each issue as under a drug sponsor’s drug identification as an at-risk beneficiary part of the appeal. For example, if the management program should not be for prescription drug abuse under a Part beneficiary’s appeal request includes a considered a coverage determination as D drug management program. With dispute related to pharmacy selection defined at § 423.566. If a beneficiary has respect to the comment that an enrollee and a POS edit, the adjudication and a dispute related to a determination not be permitted to challenge the disposition of the appeal would involve under the processes set forth at ‘‘underlying criteria,’’ we interpret this both issues. All disputes raised in the § 423.153(f), the beneficiary has the to mean a plan sponsor’s clinical enrollee’s appeal request that arise right to request a redetermination and guidelines used to identify potential at- under a plan’s drug management potentially higher levels of appeal. risk beneficiaries. We believe that a program will be adjudicated as a single Therefore, drug management program beneficiary disputing his or her at-risk case. Assuming the request is filed disputes are subject to the appeals determination will inherently be timely, an enrollee could later appeal provisions in Subpart M and Subpart U arguing that the plan’s criteria for another limitation imposed under the of the regulations and the guidance in identifying at-risk beneficiaries do not drug management program, such as the Chapter 18 of the Prescription Drug apply to his or her particular selection of a prescriber, and the Benefit Manual also applies. Disputes circumstances. In addition to the at-risk adjudication and disposition of that under a plan sponsor’s drug determination, an enrollee has the right appeal would relate to prescriber management program will be under the statute to appeal the selection selection for purposes of lock-in and be adjudicated under the existing appeals of a prescriber or pharmacy as well as considered separate and distinct from process and the regulatory timeframes a coverage determination made under a any previous or pending appeal

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requests. An appeal request must be Comment: A commenter asked that management and, if so, what prior filed within 60 calendar days from the CMS clarify whether these appeals are notice requirements will apply. date of the notice that explains the required to be handled based on the Response: Consistent with existing limitations imposed under the drug timeframes for a request for benefit or a rules for the exceptions process at management program (unless there is request for payment, and whether or not § 423.578(c), if a drug is found to no good cause for late filing of the appeal). these are subject to the expedited longer be safe for the enrollee, then a In addition to appealing determinations timeframes. previously approved exception request made under the processes at § 423.153(f) Response: As noted in the proposed could be terminated prior to the end of that limit a beneficiary’s access, a rule, at-risk determinations made under the plan year. This would include if the beneficiary who is subject to a Part D the processes at § 423.153(f) would be plan determines that the previously plan sponsor’s drug management adjudicated under the existing Part D approved exception is no longer safe as program always retains the right to benefit appeals process and timeframes part of an at-risk determination or request a coverage determination under set forth in Subpart M and Subpart U. ongoing case management under its existing § 423.566 for any Part D drug As such, at-risk determinations will be drug management program. A that the beneficiary believes may be subject to the benefit request timeframes determination made by a plan sponsor covered by their plan. set forth at § 423.590(a). We also under the processes at § 423.153(f) is With respect to effectuation of a proposed to amend the existing Subpart subject to appeal. For example, if a redetermination of an at-risk M rules at § 423.584 and § 423.600 determination is made under a plan determination, we agree with the related to obtaining an expedited sponsor’s drug management program to commenter that the redetermination redetermination and IRE implement a beneficiary-specific POS notice should clearly explain which reconsideration, respectively, to apply claim edit for a drug, the beneficiary aspect of the program is changing (for them to appeals of a determination will be notified of that decision per the example, change in pharmacy lock-in) made under a drug management provisions at § 423.153(f)(6) and the and which restrictions remain program. Consistent with existing rules, decision may be appealed. If the unchanged and will continue to apply the beneficiary must meet the beneficiary does not appeal the decision to the beneficiary. We would like to requirements set forth in regulation in within 60 calendar days from the date clarify that all changes must be order to obtain an expedited review of of the notice that explains the effectuated pursuant to the effectuation their at-risk determination. limitations the plan sponsor is placing rules at § 423.636 and § 423.638; in Comment: In the case of a beneficiary on the beneficiary’s access to coverage other words, one change does not take appealing the Part D plan sponsor’s for frequently abused drugs, the ‘‘priority’’ over another applicable initial selection of a prescriber or beneficiary retains the right to request a change with respect to effectuation. For pharmacy, a commenter requested coverage determination related to a example, if the outcome of a standard clarification whether the plan sponsor beneficiary-specific POS edit at any redetermination related to pharmacy must obtain confirmation of acceptance time. And, as stated above, changes to and prescriber lock-in is a change to the from the new prescriber and/or previously imposed limitations can also pharmacy and the prescriber(s) an at- pharmacy the beneficiary has selected be implemented through ongoing case risk enrollee must use, the plan sponsor as part of the appeal and whether this management and a new determination must implement both of those changes confirmation needs to be made within under the processes at § 423.153(f). concurrently and as expeditiously as the the appeals timeframes. This commenter Comment: A few commenters enrollee’s health condition requires, but expressed concern with obtaining such expressed concern regarding the lack of no later than 7 calendar days from the confirmation within the short window any proposed review criteria that would date the plan sponsor receives the for adjudicating the case. be used by plans to evaluate these redetermination request. Response: While we appreciate the appeals based on the at-risk Comment: A few commenters commenter’s concern regarding the determination. Commenters stated that suggested that CMS confirm that a timeframe for making a decision, we appeal requests for opioid restrictions beneficiary should not continue to believe that the current timeframes do not fit in any existing utilization receive inappropriate fills of opioids afford the plan sponsor sufficient time management criteria (for example during the appeals process. to obtain confirmation from a prescriber formulary and tiering exceptions Response: We thank the commenters and/or pharmacy that they have criteria) and request additional guidance for their request for confirmation that a accepted the beneficiary’s selection for from CMS. These commenters are beneficiary who has been identified as lock-in. Under the current Part D benefit concerned that if the beneficiary appeals at-risk, has received the second notice, appeals process, plan sponsors are the limitation beyond the plan, the IRE and has requested an appeal should not required to obtain similar information or ALJ/attorney adjudicator will likely continue to receive ‘‘inappropriate fills’’ from prescribers and we believe that review these restrictions similar to a of opioids during the appeals process. appeals of at-risk determinations should formulary or tiering exception and not We are interpreting ‘‘inappropriate fills’’ not be materially different from the based on the at-risk determination. A to mean a fill that does not comport outreach plans conduct as part of the commenter indicated that this type of with the specific restrictions placed on coverage determination, exceptions, and review may have an adverse impact on the at-risk beneficiary (for example, benefits appeals process. Please refer to plans’ D03 STARS Ratings, and if pharmacy lock-in). Once the beneficiary the discussion regarding confirmation of approved, an exception must be has been notified via the second notice pharmacy and prescriber selection effectuated through the end of the plan of applicable restrictions, there should earlier in this preamble. year, which could remove the enrollee be no additional fills of any of the Comment: A few commenters from case management for the rest of the drug(s) subject to the drug management requested clarification as to whether or year even if they meet the criteria for program that do not satisfy the not plans would be permitted to such. parameters of the program established terminate exceptions or implement Response: We appreciate the for the at-risk beneficiary, unless those temporary exceptions, in consultation commenters’ concerns. If the case goes restrictions are later modified through with the prescriber, prior to the end of to the IRE, or higher levels of appeal, the the appeals process. a plan year due to opioid case administrative case file assembled by

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the plan sponsor will contain the understanding of the agency’s rules and We proposed a maximum 12-month relevant information needed by the related expectations. A commenter period for both a lock-in period, and adjudicator to make an informed stated that beneficiaries are not always also for the duration of a beneficiary- decision, such as information used by aware of their exceptions and appeal specific POS claim edit for frequently the plan sponsor to determine at-risk rights and many do not understand how abused drugs. However, we also noted status, a description of the case the process works. This commenter that if the sponsor implements an management the plan has performed expressed concern that there may be a additional, overlapping limitation on and the beneficiary’s preference with lack of transparency in the appeals the at-risk beneficiary’s access to respect to prescriber or pharmacy lock- process or excessive administrative coverage for frequently abused drugs, in. We believe the regulations, burden for the beneficiary and provider, the beneficiary may experience a applicable manual guidance, the plan which may extend to those who may be coverage limitation beyond 12-months. sponsor’s review criteria and case inappropriately identified as at-risk and The same is true for at-risk beneficiaries management notes on the access subject to unnecessary access who were identified as such in the most limitations that apply to the enrollee restrictions to needed medications. recent prescription drug plan in which (which would be included in the Response: We agree with the they were enrolled and the sponsor of administrative case file) will be commenters that appeals-related their subsequent plan immediately sufficient for an adjudicator to review information and requirements should be implements a limitation on coverage of an appeal. With respect to the comment communicated in a clear, concise, and frequently abused drugs. on an approved exception, please refer consistent manner to beneficiaries, Part Section 1860–D–4(c)(5)(F)(ii) of the to the introductory section on drug D plan sponsors, and the IRE. We will Act states that nothing in CARA shall be management programs earlier in this continue to update existing materials construed as preventing a plan from preamble for a discussion of and develop new CARA related identifying an individual as an at-risk determinations where continuing an communications, such as the first and beneficiary after such termination on approved exception is no longer second notices described elsewhere in the basis of additional information on appropriate. this final rule, with these goals in mind. drug use occurring after the date of Comment: With respect to the notice of such termination. Accordingly, After consideration of these handling and reporting of appeals, a few termination of an at-risk determination comments, we are finalizing with commenters expressed concerns will not prevent an at-risk beneficiary modifications the provisions on CARA regarding the negative impact choosing from being subsequently identified as a appeals with two clarifying changes. to implement the lock-in procedures potential at-risk beneficiary and an at- First, in this final rule, we are including could potentially have on a plan. A risk beneficiary on the basis of new a definition of at-risk determination to commenter noted that opioid restriction information on drug use occurring after § 423.560 to clarify the types of actions reviews are not represented in their the date of such termination that causes reporting and there are no allowable made under the processes at § 423.153(f) the beneficiary to once again meet the values in the audit universes that would that are subject to appeal. In addition to clinical guidelines. designate a case as an opioid restriction. coverage determinations made under a We received the following comments As a result, the commenter believes that drug management program, an enrollee and our response follows: if an approved exception is terminated has the right to appeal the identification Comment: We received widespread prior to the end of the plan year, this as an at-risk beneficiary for prescription comments that suggested that a could be detected on audit and the plan drug abuse; a beneficiary specific point- maximum 12-month lock-in period was sponsor may be found to be non- of-sale (POS) edit; the selection of a arbitrary, and that automatic compliant with exception processing prescriber or pharmacy for purposes of termination of a beneficiary’s at-risk requirements. lock-in; and information sharing for status after 12 months threatens Response: If a plan sponsor makes a subsequent plan enrollments. Second, beneficiary safety. Commenters determination under its drug proposed new paragraph (a)(1)(v) at suggested that termination of such management program per the processes § 423.562 has been revised to clarify that programs should be based on the needs at § 423.153(f) that results in a finding determinations made in accordance of the beneficiary following a clinical that a drug previously approved through with the processes at § 423.153(f) are assessment, and that an arbitrary time the exception process is found to no collectively referred to as an at-risk limit assumes without any clinical longer be safe for treating the determination as defined at § 423.560. justification that he or she is no longer beneficiary’s disease or medical Finally, we did not receive comments at-risk for drug abuse after 12 months. condition, the previously approved on the technical changes to Following this period, many exception can be terminated prior to the § 423.562(a)(1)(ii) and we are finalizing commenters also recommended plan end of the plan year. With respect to the those changes as proposed. sponsors should be permitted to conduct a review of the beneficiary’s at- commenter’s concern about such a case (x) Termination of a Beneficiary’s risk status at the expiration of the first being reviewed on audit, the plan Potential At-Risk or At-Risk Status 12 months whether a beneficiary is sponsor would not be subject to a (§ 423.153(f)(14)) finding of non-compliance for having determined at-risk, and if so, implement terminated a previously authorized Section 1860–D–4(c)(5)(F) of the Act a termination after an additional 12 exception if such termination is provides that the Secretary shall months, for 24 months total. While very consistent with a clinically appropriate develop standards for the termination of few commenters supported the 12- determination made under the plan the identification of an individual as an month limitation timeframe, they did sponsor’s drug management program. at-risk beneficiary, which shall be the not provide rationale for their support. Comment: A few commenters earlier of the date the individual Response: We disagree with encourage CMS to communicate appeal- demonstrates that he or she is no longer commenters that the 12-month period related information and requirements in likely to be an at-risk beneficiary in the lock-in period we proposed is arbitrary. a clear, concise, and consistent manner absence of limitations, or the end of As we noted in the proposed rule, to beneficiaries, the IRE, and plan such maximum period as the Secretary during the Stakeholder Listening sponsors to support a uniform may specify. Session on CARA held in November

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2016, most commenters recommended a to send the at-risk beneficiary another explaining that the limitation is being maximum 12-month period for lock-in. second notice, indicating that the extended and for how long. We also noted that a 12-month lock-in limitation is being extended, and that Also, a beneficiary, their period is common in Medicaid lock-in they continue to be considered as an at- representative, or their prescriber on programs.16 Additionally, Section risk beneficiary. Aside from the required behalf of the beneficiary, is not 1860D–4(c)(5)(F) grants the Secretary prescriber agreement just described, a precluded from requesting that the plan the authority to establish a maximum plan sponsor will have discretion as to revisit its determination that the limitation period, and we choose to how they clinically assess whether an beneficiary is an at-risk beneficiary as exercise said authority. at-risk beneficiary’s demonstrates defined at § 423.100, or the terms of any CMS was, however, persuaded that a whether they are no longer likely to be limitation imposed on the beneficiary 12-month limitation maximum might be an at-risk beneficiary for prescription under the plan’s drug management too short to ensure for beneficiary safety drug abuse in the absence of limitation program. in some instances, and a longer at the conclusion of the initial 12 Based on these comments and our limitation on access to coverage for months of the limitation. This responses, we are therefore finalizing frequently abuse drugs might be needed assessment might include a review of additional language at § 423.153(f)(14). in such cases. We also re-reviewed medical records or prescription drug The revised language will specify that limitation periods in Medicaid lock-in monitoring program data, if available to the identification of an at-risk programs, and found that another very the sponsor. Given that the plan sponsor common lock-in period is 24 months. will not be required to obtain prescriber beneficiary as such must terminate as of An additional prevalent trend for agreement to extend pharmacy lock-in the earlier of the following: • Medicaid lock-in periods is the ability past the initial 12 month period, we The date the beneficiary to extend the lock-in period based on a expect the plan sponsor to have a demonstrates through a subsequent review of appropriateness of clinical basis to extend the limitation, determination, including but not limited continuance of lock-in.17 This trend such as, the plan sponsor has recently to, a successful appeal, that the aligned very closely with the many rejected claims for frequently abused beneficiary is no longer likely, in the commenters who suggested a 24-month drugs from non-selected pharmacies to absence of the limitation under this limitation period, and/or the ability of an extent that indicates the beneficiary paragraph, to be an at-risk beneficiary; the plan sponsor to extend the may abuse frequently abused drugs or limitation as a result of a clinical without the limitation. • The end of a— assessment. As a compromise between Comment: A handful of commenters ++ One year period calculated from these two options, CMS is finalizing an suggested that a limitation to coverage the effective date of the limitation, as initial 12-month limitation period as for frequently abused drugs only be specified in the notice provided under proposed, but with ability modification terminated as a result of a clinical paragraph (f)(6) of this section, unless allowing for the sponsor to extend the assessment by the at-risk beneficiary’s the limitation was extended pursuant to limitation for up to an additional 12 prescriber with no maximum limitation paragraph (f)(14)(ii)(B) of this section. months. This extension will be period. ++ Two year period calculated from dependent upon a clinical assessment Response: CMS believes it advisable the effective date of the limitation, as whether the beneficiary demonstrates to place a time limit on the duration of specified in a notice provided under that they are no longer likely, in the a limitation on access to coverage for paragraph (f)(6) of this section, subject absence of the limitation(s) the plan frequently abused drugs that a plan to the following requirements: sponsor has placed on their access to sponsor can place on an at-risk coverage for frequently abused drugs, to beneficiary in order to balance the —The plan sponsor determines at the be an at-risk beneficiary for prescription beneficiary’s right to utilize their Part D end of the one year period that there drug abuse at the conclusion of the benefit without encumbrance against is a clinical basis to extend the initial 12 months of the limitation. with the sponsor’s responsibility to limitation. Thus, the maximum limitation period manage the Part D benefit and promote —Except in the case of a pharmacy will be 24 months. the safety of its enrollees. limitation imposed pursuant to Based on the provisions discussed Comment: A commenter suggested paragraph (f)(3)(ii)(B) of this section, earlier regarding when prescriber that CMS could consider requiring Part the plan sponsor has obtained the agreement is required, we believe the D sponsors to send annual notifications agreement of a prescriber of plan sponsor must, as part of the to beneficiaries who are subjected to a frequently abused drugs for the required clinical assessment, obtain lock-in and their approving prescribers beneficiary that the limitation should prescriber agreement to extend a to let them know the lock-in will be be extended. prescriber lock-in beyond the initial 12 extended another 12 months. This would afford beneficiaries and —The plan sponsor has provided months. Prescriber agreement will also another notice to the beneficiary in be required with respect to extending prescribers an annual opportunity to request that the lock-in be reconsidered compliance with paragraph (f)(6) of beneficiary-specific POS edits. this section. However, as with the initial POS edit, or raise any concerns. —If the prescribers were not responsive one can be extended without prescriber Response: We decline to adopt this after 3 attempts by the sponsor to agreement if no prescriber is responsive. suggestion, as it does not suggest a basis contact them within 10 business days, Also, the plan sponsor will be required upon which the limitation would be extended. Under the provision we are then the sponsor has met the requirement of paragraph 16 Medicaid Drug Utilization Review State finalizing, a clinical assessment is Comparison/Summary Report FFY 2015 Annual required and, if the limitation on access (f)(14)((ii)(B)(2) of this section. Report: Prescription Drug Fee-For Service Program to coverage is extended beyond the —The sponsor may not extend a (December 2016). initial 12 month period, the plan prescriber limitation implemented 17 Medicaid Drug Utilization Review State pursuant to paragraph (f)(3)(ii)(A) of Comparison/Summary Report FFY 2016 Annual sponsor would be required to send the Report: Prescription Drug Fee-For Service Program at-risk beneficiary an additional second this section if no prescriber was (October 2017). notice pursuant to § 423.153(f)(6) responsive.

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(xi) Data Disclosure and Sharing of pending, implemented, and terminated in which a sponsor receives notice Information for Subsequent Sponsor limitations on access to coverage of about a potential at-risk beneficiary who Enrollments (§ 423.153(f)(15)) frequently abused drugs associated with has just enrolled in its plan, but the In order for Part D sponsors to their plans’ drug management programs. deadline to provide information to CMS conduct the case management/clinical We proposed to codify the data within 30 days from the date of the most disclosure and information sharing contact/prescriber verification pursuant recent prior CMS report identifying process under the current policy, with to § 423.153(f)(2), certain data disclosure potential at-risk beneficiaries pursuant the expansion just described, by adding and sharing of information must to proposed § 423.153(f)(15) might be data disclosure requirements in happen. First, CMS must identify very short. Therefore, we are modifying § 423.153. § 423.153(f)(15) such that the sponsor potential at-risk beneficiaries to We received the following comments sponsors who are in the sponsors’ Part would have to provide the information and our response follows: within 30 days from the date of the most D prescription drug benefit plans. In Comment: We received comments recent CMS report received after addition, a new sponsor must have supportive of our proposal regarding receiving such a notice. information about potential at-risk data disclosures and sharing of Comment: We received a comment beneficiaries and at-risk beneficiaries information. We did not receive requesting clarity on the issue of patient who were so identified by their comments opposed to our proposal. consent in the sharing of the patient immediately prior plan and enroll in the Response: We thank the commenters personal health information related to new sponsor’s plan and such for their support. implementation of these finalized identification had not terminated before Comment: A commenter provisions. the beneficiary disenrolled from the recommended that we clarify sponsors Response: While the commenter’s immediately prior plan. Finally, as must conduct case management with concerns about sharing personal health discussed earlier, sponsors may identify respect to potential at-risk beneficiaries information are not entirely clear, we potential at-risk beneficiaries by their who are current utilizers under the Part note that Part D plan sponsors are own application of the clinical D sponsor and not such beneficiaries required under § 423.136 to establish guidelines (that is, applying the who are identified by the prior sponsor. procedures for maintenance and sharing minimum clinical guidelines more This commenter stated further that if of medical records and other health frequently or in applying the sponsors are required to conduct case information about enrollees in supplemental clinical guidelines). It is management on potential at-risk accordance with all applicable Federal important that CMS be aware of which beneficiaries identified by the prior and State confidentiality laws. Part D beneficiaries sponsors identify on sponsor, then the response due date Comment: We received a question their own, as well as which ones have should be extended for such cases (that asking what data sources we will use to been subjected to limitations on their is, to next OMS quarter), as sponsors identify LIS beneficiaries who are access to coverage for frequently abused may need to contact the prior sponsor potentially at-risk. drugs under sponsors’ drug management for case details to conduct case Response: We plan to use OMS to programs for Part D program management for the prior claims data. In identify all potential at-risk administration and other purposes. extending the outlier response due date, beneficiaries who meet the minimum Regarding data disclosures, section this commenter urged us to consider criteria of the clinical guidelines, 1860D–4(c)(5)(H) of the Act provides that the volume of such cases may differ discussed earlier, to report to Part D that, in the case of potential at-risk based on the size of the prior sponsor. plan sponsors. We will modify the OMS beneficiaries and at-risk beneficiaries, Response: Pursuant to as appropriate to implement the Part the Secretary shall establish rules and § 423.153(f)(2)(i), sponsors are required drug management program procedures to require the Part D plan to conduct case management with requirements. We will issue guidance sponsor to disclose data, including any respect to all potential at-risk and updated OMS technical user guides necessary individually identifiable beneficiaries who are identified by CMS to plan sponsors at a later time, health information, in a form and or the sponsor applying the clinical including data sources used in OMS manner specified by the Secretary, guidelines, regardless of whether the reporting. about the decision to impose such beneficiary meets the clinical guidelines Comment: We received a question limitations and the limitations imposed based on PDE data from the whether the original plan that identified by the sponsor under this part. We plan beneficiary’s current Part D contract the beneficiary’s at-risk status has a duty to expand and modify the scope of OMS alone or across multiple contracts to inform the new plan of individual’s and the MARx system as appropriate to (including contracts the beneficiary was status. accommodate the data disclosures previously enrolled in during the Response: Plan sponsors will be necessary to oversee and facilitate Part measurement period). required to communicate beneficiaries’ D drug management programs. § 423.153(f)(2)(ii) does provide an potential and at-risk statuses to each Section 1860–D–4(c)(5)(I) of the Act exception to the case management other through the data disclosures and requires that the Secretary establish requirements with respect to potential information sharing we are finalizing in procedures under which Part D at-risk beneficiaries identified as such this section. sponsors must share information when by their most recent prior plan, if the Comment: We received a question at-risk beneficiaries or potential at-risk identification has not been terminated whether we will be providing new beneficiaries enrolled in one and the sponsor obtains case response codes for pharmacy and prescription drug plan subsequently management information from the prescriber lock-in in OMS, specifically disenroll and enroll in another previous sponsor, which is clinically whether we will eliminate the response prescription drug plan offered by the adequate and up to date. Under the code ‘‘BSC’’ which stands for next sponsor (gaining sponsor). We plan current policy, a sponsor may report in ‘‘Beneficiary did not meet sponsor’s to expand the scope of the reporting to OMS that a beneficiary’s case is under internal criteria.’’ We also received MARx under the current policy to review. We plan to keep this response. some specific suggestions to: (1) Include include the ability for sponsors to report However, because of this comment, we responses to OMS that differentiate similar information to MARx about all realize that there may be some instances between lock-in and a claim edit at POS;

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(2) add a sponsor summary page to sponsor’s plan and enrolls in another reinterpretation of the uniformity OMS; (3) make enhancements to MARx prescription drug plan offered by the requirements is not identical to these to recognize internal and external gaining sponsor; and statutory changes, but does provide a contract changes; and (4) allow for more —The edit or limitation that the sponsor comparable flexibility for MA plans that complete case management information had implemented for the beneficiary is consistent with the requirement that to be shared to obviate the needs for had not terminated before MA plans offer uniform benefits, with sponsors to contact each other. disenrollment. uniform premium and uniform cost- Response: We appreciate these sharing to all enrollees. We note that this final provision suggestions. We plan to expand and This regulatory requirement that MA modify the scope of OMS and MARx as contains a technical correction to refer plans provide uniform benefits appropriate and technically possible in to 7 days instead of 7 business days the implements both section 1852(d) of the light of the final requirements in this first instance this timeframe is used for Act, which requires that benefits under rule to accommodate the data consistency and added ‘‘as soon as the MA plan are available and disclosures necessary to oversee and possible’’ in § 423.153(f)(15(D). It also accessible to each enrollee in the plan, facilitate Part D drug management substitutes ‘‘provide information’’ for and section 1854(c) of the Act, which programs. We plan to issue guidance ‘‘respond’’ in one place for consistent requires uniform premiums for each about this expansion and details on the terminology in this section. enrollee in the plan. Previously, we modifications. Based on these (xii) Out of Scope Comments and required MA plans to offer all enrollees comments, we are finalizing Summary access to the same benefits at the same § 423.153(f)(15) with modifications to level of cost sharing. We have specify the following regarding data We received comments on the determined that these statutory disclosure: following topics which were out of provisions and the regulation at • CMS identifies potential at-risk scope of our proposal and to which we § 422.100(d) mean that we have the beneficiaries to the sponsor of the are therefore not responding: (1) CMS authority to permit MA organizations prescription drug plan in which the oversight of Part D drug management the ability to reduce cost sharing for beneficiary is enrolled. programs; (2) Education of Part D certain covered benefits, offer specific • A Part D sponsor that operates a enrollees and providers regarding tailored supplemental benefits, and offer drug management program must prescription drug management lower deductibles for enrollees that disclose any data and information to programs; (3) A seven day limit on meet specific medical criteria, provided CMS and other Part D sponsors that opioids for acute pain; (4) Additional that similarly situated enrollees (that is, CMS deems necessary to oversee Part D ideas about how to address the national all enrollees who meet the medical drug management programs at a time, opioid overuse crisis; (5) Opioid use criteria identified by the MA plan for and in a form and manner, specified by standards in Medicare Set Aside the benefits) are treated the same. In CMS. The data and information arrangement (MSAs). addition, there must be some nexus disclosures must do all of the following: 2. Flexibility in the Medicare Advantage between the health status or disease ++ Provide information to CMS Uniformity Requirements state and the specific benefit package within 30 days of receiving a report designed for enrollees meeting that about a potential at-risk beneficiary We have determined that providing health status or disease state. As from CMS. access to services (or specific cost examples, uniformity flexibility will ++ Provide information to CMS about sharing for services or items) that are allow an MA plan to offer an enrollee any potential at-risk beneficiary that tied to health status or disease state in with diabetes any or all of the following: meets paragraph (1) of the definition in a manner that ensures that similarly • Reduced cost sharing for § 423.100 that a sponsor identifies situated individuals are treated endocrinologist visits; within 30 days from the date of the most uniformly is consistent with the • More frequent foot exams as a recent CMS report identifying potential uniformity requirement in the Medicare tailored, supplemental benefit; at-risk beneficiaries. Advantage (MA) regulations at • A lower deductible. ++ Provide information to CMS about § 422.100(d). We solicited comments on In these examples, non-diabetic any potential at-risk beneficiary that this reinterpretation in the proposed enrollees will not have access to these meets paragraph (2) of the definition in rule. In response to those comments and tailored cost sharing or supplemental § 423.100 within 30 days of the date our further consideration of this issue, benefits; however, any enrollee that after which the sponsor referred to in we are providing guidance here to MA develops diabetes will then have access paragraph (2). organizations. As discussed in more to these benefits. ++ Provide information to CMS as detail below, the Bipartisan Budget Act We believe that our reinterpretation of soon as possible but no later than 7 days of 2018 (Pub. L. 115–123) amends the uniformity requirement is consistent of the date of the initial notice or second section 1853 of the Act to authorize with the underlying Part C statutory notice that the sponsor provided to a waiver of the uniformity requirement requirements because targeted beneficiary, or as soon as possible but beginning in 2020 for MA plans that supplemental benefits and cost sharing no later than 7 days of a termination provide additional supplemental reductions must be offered uniformly to date, as applicable, about a beneficiary- benefits (which are not required to be all enrollees with a specified health specific opioid claim edit or a limitation health care benefits) to chronically ill status or disease state. By tying specific on access to coverage for frequently enrollees. It also amends section 1859 of supplemental benefits to specific abused drugs. the Act to require a nationwide revision medical conditions, MA plans would be ++ Transfer case management of the Medicare Advantage Value-Based building upon the concept of medical information upon request of a gaining Insurance Design test model currently necessity and developing targeted sponsor as soon as possible but no later administered by the Center for Medicare benefits designed to treat the illnesses of than 2 weeks from the gaining sponsor’s and Medicaid Innovation, which enrollees who meet specific medical request when— provides similar flexibility to criteria. Further, treating similarly —An at-risk beneficiary or potential at- participating MA plans to offer targeted situated enrollees equally preserves the risk beneficiary disenrolls from the supplemental benefits. Our uniformity of the benefits package. This

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flexibility is similar to our policy over necessary to ensure that these tailored respect to supplemental benefits the past several years of permitting MA benefits are not provided in a provided to a chronically ill enrollee.’’ plans to adopt tiered cost-sharing, that discriminatory fashion and that the We have evaluated how this new is, allowing plans to have different cost overall package of benefits is uniform authority for the Secretary to waive sharing for contracted providers of the among similarly situated individuals. uniformity requirements relates to our same type (for example, hospitals) We view this flexibility as an extension concurrent reinterpretation of provided that enrollees are equally able of the concept that as an enrollee in uniformity requirements. We believe to access the lower cost-sharing good health without cardiac problems that a waiver of uniformity requirements providers. would not receive cardiac rehabilitation was authorized in this new provision to Such flexibility under our new services, an enrollee who does not meet allow for the delivery of different, non- interpretation of the uniformity the medical criteria would not receive uniform benefits to a subset of enrollees requirement is not without limits, the targeted benefits offered by an MA that meet a specific definition: however, as section 1852(b)(1)(A) of the plan. Chronically ill enrollee.19 We do not Act prohibits an MA plan from denying, CMS is currently testing value based believe that our reinterpretation, which limiting, or conditioning the coverage or insurance design (VBID) through the use also allows for targeted benefits based provision of a service or benefit based of our demonstration authority under on the disease state or health status, can on health-status related factors. MA section 1115A of the Act (42 U.S.C. only be accomplished through a waiver regulations (for example, 1315a, added by section 3021 of the of uniformity requirements. §§ 422.100(f)(2) and 422.110(a)) reiterate Affordable Care Act), and we note that We believe that the waiver authorized and implement this non-discrimination Bipartisan Budget Act of 2018 expands under the Bipartisan Budget Act is requirement. In interpreting these the testing of the model under section necessary in order to allow MA plans obligations to protect against 1115A(b) to all 50 states by 2020. This the flexibility to offer chronically ill discrimination, we have historically demonstration includes some of the enrollees supplemental benefits that are indicated that the purpose of the elements that are a part of our not uniform across the entire population requirements is to protect high-acuity reinterpretation of the uniformity of the chronically ill. The Bipartisan Budget Act states that supplemental enrollees from adverse treatment on the requirements. However, there are also benefits must ‘‘have a reasonable basis of their higher cost health features of the VBID demonstration that expectation of improving or maintaining conditions (79 FR 29843; 76 FR 21432; are unique to the demonstration test, the health or overall function of the and 74 FR 54634). As MA plans such as the ability for participating chronically ill enrollee.’’ This means consider this new flexibility in meeting plans to target Part D benefits, the that MA plans do not have to offer the uniformity requirement, they must restriction to certain medical uniform supplemental benefits to all be mindful of ensuring compliance with conditions, and the requirement that non-discrimination responsibilities and chronically ill enrollees, and instead, plans apply to participate. We expect obligations.18 MA plans that exercise may vary supplemental benefits offered the VBID demonstration to provide CMS this flexibility must ensure that the cost to the chronically ill as it relates to the with insights into future VBID sharing reductions and targeted individual enrollee’s specific medical innovations for the MA program. supplemental benefits are for health condition and needs. In other words, a care services that are medically related After the publication of the proposed supplemental benefit adopted under the to each disease condition. CMS will be rule, Congress passed the Bipartisan new statutory provision may not be concerned about potential Budget Act of 2018 (Pub. L. 115–123). provided to a chronically ill enrollee if discrimination if an MA plan is Section 50322 of the law expanded that benefit does not have a reasonable targeting cost sharing reductions and supplemental benefits in Section likelihood of improving that enrollee’s additional supplemental benefits for a 1852(a)(3) of the Act and also health condition. Therefore, we have large number of disease conditions, authorized waiver of the uniformity determined that the waiver of while excluding other, potentially requirements to permit MA plans to uniformity requirements and the higher-cost conditions. We will review offer targeted supplemental benefits for enactment of section 1852(a)(3)(D) of the benefit designs to make sure that the the chronically ill through new Act does not limit our authority to overall impact is non-discriminatory provisions, effective in plan year 2020. interpret sections 1851(d) and 1854(c) of and that higher acuity, higher cost Specifically, the Bipartisan Budget the Act as permitting uniform benefits enrollees are not being excluded in Act of 2018 expands supplemental to include specific services targeted for favor of healthier populations. benefits available to chronically ill groups of similarly situated specific In identifying eligible enrollees, the enrollees by adding a new subparagraph enrollees based on medical criteria. MA plan must use medical criteria that (D) to Section 1852(a)(3). This Our reinterpretation of uniformity are objective and measurable, and the subparagraph expands supplemental requirements maintains the spirit of the enrollee must be diagnosed by a plan benefits for the chronically ill to include MA regulations at § 422.100(d), which provider or have their existing diagnosis benefits that ‘‘have a reasonable aims for equal treatment across all certified or affirmed by a plan provider expectation of improving or maintaining similarly situated enrollees. A specific to assure equal application of the the health or overall function of the health status or disease state—or criteria. Objective criteria that are chronically ill enrollee and may not be meeting a specific group of medical contained in written policies and that limited to being primarily health related criteria—is merely a means of are clearly and adequately benefits.’’ These additional ‘‘grouping’’ similarly situated enrollees communicated to enrollees (such as in supplemental benefits will be for equal access to and treatment in the EOC and other plan documents) are qualitatively different than the connection with coverage of benefits. supplemental health care benefits that 18 Among these responsibilities and obligations MA plans may currently offer and may 19 The Bipartisan Budget Act specifically are compliance with Title VI of the Civil Rights Act, continue to offer to enrollees who are identifies the chronically ill as individuals with (1) section 504 of the Rehabilitation Act, the Age one or more morbidities that is life threatening and Discrimination Act, section 1557 of the Affordable not chronically ill. In addition, it limits overall function (2) has a high risk of Care Act, and conscience and religious freedom provides authority for the waiver of hospitalization and adverse outcomes, and (3) laws. uniformity requirements ‘‘only with requires intensive care coordination.

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All enrollees in that group must have We received the following comments, eliminated, or just reduced, and if lower access to the same targeted benefits. The and our response follows: cost sharing means a zero-dollar copay. new expansion of supplemental benefits Comment: A number of commenters Response: Yes, under this for the chronically ill breaks that supported CMS’ implementation of this reinterpretation, a plan may reduce or construct because the needs of one reinterpretation. These commenters eliminate a deductible, co-pay, or cost chronically enrollee may be very stated that their ability to lower cost sharing for Part C services. We remind different from those of another within sharing will help beneficiaries seek high all organizations that this is the same health status or disease state. value and effective care. reinterpretation is about MA benefits As such, a waiver was authorized to Response: We thank commentators for only and does not permit changes in provide for differences in supplemental their support of this reinterpretation. Part D cost sharing or Part D benefits, benefits across chronically ill enrollees Comment: Commenters suggested that which must be consistent with Part D in order for MA organization to craft CMS include regulatory text in the final applicable law and CMS policy. In specific supplemental benefit offerings rule that confirms that the flexibility addition, additional operational for each vulnerable plan member so that that will be allowed in the MA guidance will be provided before CY individual needs are met. uniformity requirements. 2019 bids are due. Further, our reinterpretation of Response: In this final rule, we are Comment: We also received uniformity requirements is compatible reinterpreting existing statutory and comments asking CMS to clarify with the new legislation in Bipartisan regulatory authority to allow MA whether a plan may reduce or eliminate Budget Act. Beginning in 2020, MA organizations the ability to reduce cost certain cost sharing based on plans may offer three forms of sharing for certain covered benefits, participation in a disease management supplemental benefits: ‘‘standard’’ offer specific tailored supplemental program. Response: Yes, under this supplemental benefits offered to all benefits, and offer different lower reinterpretation, a plan may restrict cost enrollees; ‘‘targeted’’ supplemental deductibles for enrollees that meet sharing reductions based on benefits offered to qualifying enrollees specific medical criteria. Thus, it is participation in a disease management by health status or disease state; and unnecessary to provide additional ‘‘chronic’’ supplemental benefits offered program so long as there is equal access regulation language. to the disease management program to the chronically ill. The first two Comment: A number of commenters (standard and targeted) will be based on objective criteria related to a requested that CMS provide additional health status or disease state. allowable in 2019. Only ‘‘chronic’’ sub-regulatory guidance surrounding supplemental benefits will be evaluated Comment: We received comments this policy. under the new expansive definition in asking CMS to clarify whether a plan Response: We will provide additional the Bipartisan Budget Act and be may offer different co-pays to a subset guidance and update all corresponding eligible for a waiver of the uniformity of the population for some visits, but guidance documents (that is, bid requirements. Standard and targeted not all. guidance and operational guidance) to supplemental benefits will be evaluated Response: We appreciate the reflect the new interpretation. This under our existing interpretation of comment and are still considering how guidance will be available before whether the benefit is ‘‘primarily health our new interpretation of the uniformity related.’’ It is possible that an enrollee contract year 2019 bids are due. requirement would apply to such qualifies for a ‘‘targeted’’ supplemental Comment: We received a number of situations. We intend to provide benefits as well as ‘‘chronic’’ comments asking that CMS issue sub- clarifying guidance on this issue supplemental benefits. In that regulatory guidance with examples for through HPMS memoranda and updates circumstance, the MA plan must permissible and impermissible actions, to the Medicare Managed Care Manual. provide the targeted supplemental as well as examples of what would be Comment: A commenter requested benefits as long as the enrollee considered discriminatory. In addition, that CMS clarify whether reduced cost establishes the required health status or others suggested that CMS specify the sharing can be extended to premiums. disease state and the benefits are medical criteria that MA plans should Response: No, this flexibility does not medically appropriate. However, the use to determine enrollee eligibility as extend to premiums; beneficiaries in the MA plan must only provide ‘‘chronic’’ well as clear guidelines for eligible same plan must have the same supplemental benefits if the benefit has tailored supplemental benefits and/or premium. Allowing different premiums a reasonable expectation of improving reduced cost sharing. would violate section 1854(c) of the Act, or maintaining the health or overall Response: CMS will provide which explicitly requires uniform function of the chronically ill enrollee. additional operational guidance before premiums. Our reinterpretation of Based on these differences, it will be CY 2019 bids are due. section 1854(c), section 1852(d) important for MA plans to identify in Comment: A commenter regarding access to benefits for all their bids and in their Evidence of recommended that CMS open its enrollees, and the regulations Coverage documents which implementing guidance to public implementing those statutes permits supplemental benefits are offered as comment prior to issuance. only reductions in Part C cost sharing ‘‘standard’’, ‘‘targeted’’, or ‘‘chronic’’ Response: We appreciate this and deductibles, and in targeting Part C benefits. CMS will evaluate the comment. We will not be able to solicit supplemental benefits. As noted acceptability of the supplemental industry comment in time for CY 2019 elsewhere, these specific benefits must benefit offering based on this bids. However, we will take this be tied to health status or disease state designation and the standards identified suggestion under consideration as we and must be applied to health care in section 1852(a)(3) of the Act. We develop future guidance and will reach services that are medically related to believe that both the new uniformity out for input as needed. each disease condition. Additionally, interpretation and the new statutory Comment: A number of commenters targeted benefits and reduced cost provision will succeed in increasing MA requested that CMS to provide certain sharing must be offered in a manner that plans’ flexibility and plan options and technical clarifications. For instance, ensures that similarly situated ultimately allow for better health commenters questioned whether the individuals are treated uniformly is outcomes. plan-level deductible could be consistent with the uniformity

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requirement in the Medicare Advantage care services that are medically related identifying eligible enrollees, the MA (MA) regulations at § 422.100(d). to each diagnosis or health condition. plan must use medical criteria that are Comment: We received a comment Note that, effective CY 2020, the objective and measurable, and the asking CMS to confirm if MA plans may Bipartisan Budget Act of 2018 calls for enrollee must be diagnosed by a plan choose to apply these flexibilities to out- a new category of supplemental benefits provider or have their existing diagnosis of-network benefits. to be made available to chronically ill certified or affirmed by a plan provider Response: CMS will provide enrollees that are not limited to being to assure equal application of the additional guidance and update all primarily health related. Because the objective criteria necessary to provide corresponding guidance documents to new benefits will not be limited to the equal treatment of similarly situated reflect the new interpretation. This primarily health related standard, it is individuals. Specifically, MA plans guidance will be available before CY possible for certain offerings to address offering targeted benefits will be 2019 bids are due. issues beyond a specific medical responsible for developing the criteria to Comment: We received comments condition, such as social supports. identify enrollees who fall within each requesting that CMS encourage plans to However, the basis for offering the new of the clinical categories selected by an offer such flexibilities to beneficiaries benefits will be based solely on an organization. Furthermore, cost sharing with specific conditions (for example, enrollees’ qualification as ‘‘chronically reductions and targeted supplemental dementia), stating that such flexibilities ill’’ and may not be based on conditions benefits must be for health care services could help the ongoing treatment. unrelated to medical conditions, such as that are medically related to each Response: In the proposed rule, we living situation and income. disease condition. stated that an MA plan may offer Comment: We received a comment Note that, effective CY 2020, the reduced cost sharing, deductibles, and urging CMS to include an affirmation Bipartisan Budget Act of 2018 calls for or targeted supplemental benefits to that C–SNPs would automatically be a new category of supplemental benefits enrollees diagnosed with specific permitted to adjust benefits and cost to be made available to chronically ill diseases. In identifying eligible sharing based on the eligibility enrollees that are not limited to being enrollees, the MA plan must use groupings that CMS has approved for primarily health related. Because the medical criteria that are objective and each C–SNP. new benefits will not be limited to the measurable, and the enrollee must be Response: CMS will update sub- primarily health related standard, it is diagnosed by a plan provider or have regulatory guidance to clarify the impact possible for certain offerings to address their existing diagnosis certified or of both this reinterpretation and the issues beyond a specific medical affirmed by a plan provider to assure Bipartisan Budget Act on SNP policy. condition, such as social supports. equal application of the objective Comment: A commenter suggested However, the basis for offering the new criteria necessary to provide equal that CMS should also provide benefits will be based solely on an treatment of similarly situated clarification on how the additional enrollees’ qualification as ‘‘chronically individuals. We do not have the benefit flexibility for highly integrated ill’’ and may not be based on conditions authority to restrict or mandate which dual eligible special needs plans (D– unrelated to medical conditions, such as diagnoses or health conditions a plan SNPs), as outlined in Chapter 16b of the living situation and income. chooses for this flexibility. Plans may Medicare Managed Care Manual, is Comment: We received a comment determine which diagnoses or health retained and/or modified under these asking CMS to expand our definition of conditions they choose to offer these provisions. health status or disease state to include flexibilities. CMS encourages plans to Response: Chapter 16b and any ‘‘medically complex patients.’’ consider the population of their plan corresponding guidance will be updated Response: We have determined that a when making these decisions. to clarify any impact this plan may only provide access to Comment: We received a number of reinterpretation has on D–SNP policy. targeted supplemental benefits (or comments requesting that CMS allow Comment: A commenter asked CMS specific cost sharing for certain services reduced cost sharing and targeting to allow plans to provide certain or items) based on health status or supplemental benefits based on supplemental benefits only to fully disease state. In identifying eligible conditions unrelated to medical integrated D–SNP (FIDE SNP) enrollees enrollees, the MA plan must use conditions, such as living situation and who do not meet nursing home level of medical criteria that are objective and income. A commenter suggested CMS care requirements that would otherwise measurable. MA plans offering targeted allow plans to reduced premiums for make them eligible for home and benefits are responsible for developing beneficiaries who sign up for automated community-based services under an the criteria to identify enrollees who fall premium payments. Elderly Waiver. within each of the clinical categories Response: The revised uniformity Response: CMS will update sub- selected by an organization. interpretation does not allow plans to regulatory guidance to clarify the impact Comment: We received comments reduce cost sharing and offer targeted of both this reinterpretation and the requesting that CMS clarify whether a supplemental benefits based on criteria Bipartisan Budget Act on D–SNP policy. plan may reduce cost sharing only for a unrelated to a diagnosis or health Comment: We received some subset of high-quality network providers condition. We have determined that a comments suggesting that CMS allow as long as all members with the same plan may only provide access to plans to reduce cost sharing and offer health status or disease state receive the targeted supplemental benefits (or targeting supplemental benefits based same lower cost sharing for using these specific cost sharing for certain services on functional status, in addition to a providers. or items) based on health status or medical condition. Response: Yes, under this flexibility, disease state. In identifying eligible Response: There must be an a plan may reduce cost sharing for enrollees, the MA plan must use underlying disease condition that is certain high-quality providers to medical criteria that are objective and diagnosed, such as Alzheimer’s disease members with a specified health status measurable. In addition, MA plans that or Parkinson’s disease, in order for the or disease state. MA plans may identify exercise this flexibility must ensure that plan to reduce cost sharing and offer high-value providers across all Medicare the cost sharing reductions and targeted targeted supplemental benefits. As provider types. This can include supplemental benefits are for health stated in the proposed rule, in physicians and practices, hospitals,

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skilled-nursing facilities, home health enrollees. We hope that the VBID noting that such requirements are in the agencies, ambulatory surgical centers, demonstration will provide CMS with VBID demonstration. etc. insights into future innovations for the Response: CMS has no plans to add Comment: Some commenters MA program. any reporting requirements related to suggested CMS delay implementation, Comment: Some commenters uniformity flexibility at this time. We do stating that plans need time to enhance suggested that CMS take a measured note that MA plans must explain the their existing internal tools and systems approach by setting initial limits on the targeted supplemental benefits and to accommodate varying benefit number of targeted conditions and reductions in cost sharing and structures for different sub-populations tailored benefit packages that an MA deductibles in their bids (OMB 0938– within a single plan. Some commented plan can offer. 0763), including information necessary that this may be administratively Response: The existing uniformity for CMS to evaluate if there is any burdensome to implement, and flexibility regulatory authority does not discrimination involved. In addition, therefore, may not be equal adoption allow CMS to limit the number of MA plans must include descriptions of across all MA organizations. targeted conditions without additional these benefits in benefit disclosures Response: CMS will permit this rulemaking. required under § 422.111. flexibility beginning in CY 2019. MA Comment: Some suggested that CMS Comment: We received a number of organizations that need additional time adopt the oversight requirements in the comments expressing concern that this VBID demonstration in allowing plans to consider whether and how to take policy could increase beneficiary to use this flexibility under the new advantage of this new flexibility are not confusion, particularly as it relates to reinterpretation. required to offer targeted supplemental marketing materials provided during the benefits or reductions in cost sharing or Response: Currently, the VBID demonstration has a number of annual election process. deductibles. We believe it is important Response: To mitigate beneficiary to allow plans the flexibility to target oversight requirements, including some confusion, CMS will require MA plans and better provide for the needs of their marketing restrictions, monitoring to that take advantage of this flexibility to enrollees. Our reinterpretation of the ensure compliance with demonstration include benefit flexibility information in uniformity requirements offers rules, data reporting to help CMS their CY 2019 EOC. Also, indication of flexibility to MA organizations in evaluate outcomes, and restricting low additional benefits and/or reduced cost designing their coverage and is not a performing plans from participation. sharing for enrollees with certain health mandate. CMS has no plans to adopt these Comment: Some commenters additional demonstration requirements. conditions will be displayed in recommended that only high- First, CMS has a robust compliance and Medicare Plan Finder. performing plans be permitted to auditing program to oversee MA plans Comment: We received several provide flexibility in the MA Uniformity and all benefit packages are reviewed by comments asking CMS to clarify Requirements. CMS. Therefore, we do not believe any whether plans will be permitted to Response: CMS appreciates these additional monitoring or compliance is market this flexibility to potential comments and believes this flexibility needed. Second, MA rules require that enrollees. Some suggested CMS permit will help enrollees seek higher value this benefit be available in marketing marketing. Others suggested CMS care. Therefore, CMS will permit all materials and transparent to enrollees. prohibit marketing. plans to use this flexibility beginning in Therefore, we cannot restrict marketing Response: Plans will be allowed to CY 2019. CMS appreciates these this benefit. Third, we believe we do not market the additional benefits and/or comments and believes this flexibility need to introduce any additional reduced cost sharing to potential will help enrollees seek higher value uniformity reporting as the VBID enrollees to give beneficiaries the care. This flexibility is not a change to reporting is designed to aide information necessary to choose the best the regulation; it is a reinterpretation of demonstration evaluation. However, plan for their health care needs. Plans an existing regulation. Therefore, all CMS will monitor the implementation will be required to follow the same CMS MAOs must comply with uniformity of this flexibility and make appropriate marketing rules for this benefit, as they requirements regardless of individual adjustments as needed. are required to follow when marketing plan performance. CMS will permit all Comment: Commenters asked that any other benefit. This includes plans to use this flexibility beginning in CMS clarify how this flexibility impacts ensuring that materials are not CY 2019. the VBID demonstration. materially inaccurate or misleading or Comment: We received a number of Response: The existing VBID otherwise make material comments suggesting that this demonstration will continue. We note misrepresentations. Specifically, CMS reinterpretation is premature. Some that Bipartisan Budget Act of 2018 will require that plans include commenters suggested that CMS wait expands the testing authority under comprehensive benefit flexibility until the VBID demonstration has section 1115A(b) to all 50 states. This information in their CY 2019 EOC and concluded. flexibility will not impact the VBID indicate the additional benefits and/or Response: The existing VBID demonstration, which is separate from reduced cost sharing in Medicare Plan demonstration will continue. this rulemaking. The new flexibilities Finder. Information regarding this discussed here will have no impact on Comment: A number of commenters demonstration can be found at https:// current VBID operations. Information expressed concern that this policy may innovation.cms.gov/initiatives/vbid/. regarding this demonstration can be lead to discrimination. For example, While we have adopted features of the found at https://innovation.cms.gov/ some commenters expressed concern VBID demonstration, the VBID initiatives/vbid/. The VBID that a plan may balance the reduction of demonstration and the new uniformity demonstration will provide CMS with cost sharing for one group by increasing flexibilities are distinct. CMS will insights into future innovations for the cost sharing for others. Further, some permit this flexibility beginning in CY MA program. commenters expressed concern that this 2019, as we believe it is important to Comment: A commenter asked if CMS could lead to lead to ‘‘cherry-picking’’ allow plans the flexibility to target and planned to implement reporting by plans for beneficiaries with low-cost better provide for the needs of their requirements related to this flexibility, conditions while discriminating against

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those with higher-cost chronic segment of an MA plan’s service area. Comment: Commenters asked CMS to conditions. Plans segments are county-level clarify if in sub-regulatory guidance that Response: As noted in the preamble portions of a plan’s overall service area plans are allowed to display multiple language, the implementation of this which, under current CMS policy, are segments in the Evidence of Coverage flexibility must not violate existing anti- permitted to have different premiums (EOC), Summary of Benefits, and other discrimination rules (for example, and cost sharing amounts as long as coverage documents. service category cost sharing and per these premiums and cost sharing Response: Plans will be required to member per month actuarial amounts are uniform throughout the follow the same CMS communication, equivalence standards communicated segment. As county-level areas, these disclosure and marketing guidelines for by CMS annually in the Call Letter). are separate rating setting areas within each segment In addition, as noted in Organizations that exercise this the plan’s service area; no further section II.B, CMS will require plans to flexibility must ensure that the cost subdivision is permitted. We are include comprehensive benefit sharing reductions and targeted proposed to revise our interpretation of flexibility information in their CY 2019 supplemental benefits only apply to the existing statute and regulations to (EOC). healthcare services that are medically allow MA plan segments to vary by Comment: A commenter noted that related to each health status or disease supplemental benefits in addition to CMS uses both ‘‘supplemental benefits’’ state. CMS will not permit cost sharing premium and cost sharing, consistent and ‘‘benefits’’ in the preamble language reductions across all benefits for an with the MA regulatory requirements and asked CMS explicitly clarify if this enrollee; cost sharing reductions must defining segments at § 422.262(c)(2). new segment benefit flexibility applies be for specific benefits related to a We received the following comments, only to supplemental benefits and not to specific health status or disease state. and our response follows: the core MA benefit package to which Specifically, plans must not target cost Comment: We received a number of beneficiaries are entitled. sharing reductions and additional comments supporting the Response: Thank you for the supplemental benefits for a large implementation of this reinterpretation. comment. All MA plans must provide number of disease conditions, while Response: We thank commentators for basic benefits—meaning Part A and Part excluding other higher-cost conditions. their support of this reinterpretation. B benefits consistent with the cost- Comment: Many commenters CMS will review benefit designs to sharing limits identified in section requested that CMS clarify if this make sure that targeted disease state(s) 1854(e)(4)(A) 20 and § 422.100(j) and segmentation can be offered to a sub-set and/or clinical condition(s) included in (k)—in all segments. We have of the network providers. the benefit design are non- determined that the statute and existing Response: The MA regulations at discriminatory and that higher acuity, regulations may be interpreted to allow § 422.2 define a provider network as higher cost enrollees are not being MA plans to vary supplemental benefits, occurring at the MA plan level: ‘‘. . . excluded in favor of healthier in addition to premium and cost populations. the providers with which an MA sharing, by segment, as long as the Comment: A commenter organization contracts or makes benefits, premium, and cost sharing are recommended that plan members arrangements to furnish to furnish uniform within each segment of an MA should have full appeal rights with covered health care services to Medicare plan’s service area. Supplemental respect to denial of access to enrollees under a MA coordinated care benefits include cost-sharing reductions supplemental benefits. plan or network PFFS plan’’. In from the actuarial equivalent on average Response: All negative coverage implementing its network adequacy of original Medicare for basic benefits decisions are subject to appeal rights. standard CMS allows for networks at the and coverage of additional services and CMS is reinterpreting existing statutory MA plan level (a provider specific plan) items not covered by original Medicare. language at section 1854(c) and 1852(d) or at the contract level. In addition to of the Act, and the implementing being inconsistent with the regulations Comment: Some commenters regulation at § 422.100(d), to allow MA we believe that allowing networks to be expressed concern that CMS is moving organizations the ability to reduce cost established at the MA plan segment too quickly in implementing this sharing for certain covered benefits, level would introduce an unnecessary reinterpretation and that such flexibility offer specific tailored supplemental level of complexity to the MA program. should be tested on a small scale first. benefits, and offer lower deductibles for Comment: A commenter asked if there Response: We believe this flexibility enrollees that meet specific medical are any restrictions to the benefits that will allow plans to better target and criteria. We have reviewed and may vary and if all supplemental provide for the needs of their considered all comments on this benefits and services are eligible, or is populations. CMS will monitor the clarification and will begin this specific to a set of supplemental implementation of this flexibility and implementing this additional flexibility benefits? make appropriate adjustments as in CY 2019. In addition, we will provide Response: Plans may vary needed. In addition, we note that MA additional operational guidance before supplemental benefits by plan segment organizations are not required to use CY 2019 bids are due. consistent with the bid submitted for this flexibility to vary benefits, cost- the segment. All basic benefits (that is, sharing and premium at the segment 3. Segment Benefits Flexibility Part A and B benefits) must be offered level. In reviewing section 1854(h) of the by all MA plans in all segments. Act and Medicare Advantage (MA) Comment: A commenter asked if the 20 Beginning in 2006, an MA plan may reduce regulations governing plan segments, we maximum out-of-pocket (MOOP) cost sharing below the actuarial value specified in section 1854(e)(4)(A) of the Act only as a mandatory have determined that the statute and amount was one of the elements that supplemental benefit. The actuarial value of the existing regulations may be interpreted may vary. deductibles, coinsurance, and copayments to allow MA plans to vary supplemental Response: Yes, because the MOOP is applicable to the basic benefits on average to benefits, in addition to premium and an element of the cost-sharing structure enrollees in an MA plan must be equal to the of the plan, each segment may have its actuarial value of the deductibles, coinsurance, and cost sharing, by segment so long as the copayments that would be applicable with respect supplemental benefits, premium, and own MOOP. This flexibility already to such benefits on average to individuals enrolled cost sharing are uniform within each exists in MA. in original Medicare.

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Comment: We received many services, the annual limit which is also beneficiaries with access to a voluntary comments related to concern about established by CMS; all cost sharing MOOP limit plan and the proportion of benefit transparency and that this (that is, deductibles, coinsurance, and total enrollees in a voluntary MOOP flexibility to offer segments with varied copayments) for Parts A and B services, limit plan has decreased significantly benefits, cost-sharing, or premiums, may excluding plan premium, must be from CY 2011 to CY 2017. lead to beneficiary confusion. included in each plan’s maximum out- Currently, CMS sets the mandatory Commenters expressed concern that this of-pocket (MOOP) amount subject to MOOP amount at approximately the flexibility will result in beneficiary these limits. As stated in the CY 2018 95th percentile of projected beneficiary confusion regarding the differences final Call Letter 21 and in the 2010 final out-of-pocket spending. Stated between plans, which may create a rule (75 FR 19710), CMS currently sets differently, 5 percent of Medicare FFS confusing environment for Medicare MOOP limits based on a beneficiary- beneficiaries are expected to incur beneficiaries trying to make informed level distribution of Parts A and B cost approximately $6,700 or more in Parts decisions when choosing plans. sharing for individuals enrolled in A and B deductibles, copayments, and Response: Plans will be required to Medicare Fee-for-Service (FFS) for local coinsurance. CMS sets the voluntary follow existing rules governing and regional MA plans. MOOP amount of $3,400 to represent mandatory disclosures (for example, CMS proposed to amend approximately the 85th percentile of § 422.111), communications and §§ 422.100(f)(4) and (5) and projected Medicare FFS out-of-pocket marketing. In addition, CMS will 422.101(d)(2) and (3) to clarify that CMS costs. The Office of the Actuary require plans to include comprehensive may use Medicare FFS data to establish conducts an annual analysis to help benefit flexibility information in their the annual MOOP limits, which have CMS determine these MOOP limits. CY 2019 EOC. historically been linked to values that Since the MOOP requirements for local In this final rule, CMS is adopting a approximate the 85th and 95th and regional MA plans were finalized in reinterpretation of section 1854(h) of the percentile of out-of-pocket expenditures regulation, a strict application of the Act and §§ 422.100(d)(2) and 422.262 to for beneficiaries in original Medicare. 95th and 85th percentiles would have allow MA organizations the ability to The proposal included that CMS have resulted in MOOP limits for local and vary supplemental benefits, in addition authority to increase the voluntary regional MA plans fluctuating from to premium and cost sharing, by MOOP limit to another percentile level year-to-year. To avoid enrollee segment, as long as the benefits, of Medicare FFS, increase the number of confusion, allow plans to provide stable premium, and cost sharing are uniform service categories that have higher cost benefit packages year over year, and within each segment of an MA plan’s sharing in return for offering a lower minimize disincentives to the adoption service area. We have reviewed MOOP amount, and implement more of the lower voluntary MOOP amount comments on our proposal and have than two levels of MOOP and cost because of fluctuations in the amount, considered these comments as we sharing limits to encourage plan CMS has exercised discretion in order to finalize the policy. Plans will be offerings with lower MOOP limits. CMS maintain stable MOOP limits from year- permitted to begin implementing this also proposed that it have authority to to-year that approximate but are not flexibility in CY 2019. increase the number of service exactly at the 85th and 95th percentile 4. Maximum Out-of-Pocket Limit for categories that have higher cost sharing of, beneficiary cost sharing in Medicare Medicare Parts A and B Services in return for offering a lower (voluntary) FFS. In the proposed rule, CMS explained (§§ 422.100(f)(4) and (5) and 422.101(d)) MOOP amount. To codify these various that it would want to change the MOOP authorities, CMS proposed regulation As provided at §§ 422.100(f)(4) and (5) limits if a consistent pattern of text permitting CMS to set the annual and 422.101(d)(2) and (3), all Medicare increasing or decreasing costs emerges MOOP limits to strike a balance Advantage (MA) plans (including over time. CMS also summarized how between limiting maximum beneficiary employer group waiver plans (EGWPs) stakeholders have suggested changes to out-of-pocket costs and potential and special needs plans (SNPs)), must how CMS establishes MOOP limits, changes in premium, benefits, and cost establish limits on enrollee out-of- including suggestions to use the most sharing, with the goal of ensuring pocket cost sharing for basic benefits appropriate data to inform its decision- beneficiary access to affordable and (meaning Parts A and B services) that do making, increase the MOOP limits and sustainable benefit packages. CMS not exceed the annual limits established the number of service categories that by CMS. CMS added § 422.100(f)(4) and intends to use the annual Call Letter have higher cost sharing in return for a (5), effective for coverage in 2011, under process to communicate its application plan offering a lower MOOP limit, and the authority of sections 1852(b)(1)(A), of the regulation and to transition implement different levels of MOOP 1856(b)(1), and 1857(e)(1) of the Act in changes to MOOP limits over time, and service category cost sharing order not to discourage enrollment by beginning no earlier than in CY 2020, to standards to encourage plan offerings individuals who utilize higher than avoid disruption to benefit designs and with lower MOOP limits. average levels of health care services minimize potential beneficiary CMS explained in the proposed rule (that is, in order for a plan not to be confusion. its goal to establish future MOOP limits discriminatory) (75 FR 19709–11). As noted in the proposed rule, CMS based on the most relevant and available Section 1858(b)(2) of the Act requires a discussed in the 2010 rulemaking (75 data, or combination of data, that limit on in-network out-of-pocket FR 19709) that it provides greater reflects beneficiary health care costs in expenses for enrollees in regional MA flexibility in establishing cost sharing the MA program and maintains MA plans. In addition, local preferred for basic benefits to MA plans that adopt benefit stability over time. Medicare provider organization (LPPO) plans, a lower, voluntary MOOP limit than is FFS data currently represents the most under § 422.100(f)(5), and regional PPO available to plans that adopt the higher, relevant and available data at this time (RPPO) plans, under section 1858(b)(2) mandatory MOOP limit. The number of so the proposal included codifying use of the Act and § 422.101(d)(3), are of Medicare FFS data in §§ 422.100(f)(4) 21 The CY 2018 final Call Letter may be accessed required to have a ‘‘catastrophic’’ limit at https://www.cms.gov/Medicare/Health-Plans/ and (5) and 422.101(d)(2) and (3). inclusive of both in- and out-of-network MedicareAdvtgSpecRateStats/Announcements-and- CMS also explained in the proposed cost sharing for all Parts A and B Documents.html. rule that it wished to have flexibility to

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change its existing methodology (of sections, while we address comments impact cost sharing and the levels of using the 85th and 95th percentiles of that focus on cost sharing limits in MOOP limits. A commenter also stated projected beneficiary out-of-pocket section II.B.5. concern about what level of change to Medicare FFS spending) in the future. Comment: The majority of MOOP limits would be considered The proposed rule was explicitly based commenters supported this proposal, ‘‘significant’’ and necessitate a multi- on a policy objective of striking the stating that CMS should primarily use year transition. Some commenters appropriate balance between limiting Medicare FFS and MA encounter data to suggested CMS maintain the current MOOP costs and potential changes in inform its decision-making, and that voluntary and mandatory MOOP limits premium, benefits, and cost sharing CMS should consider authorizing more (that is, $3,400 and $6,700) and with the goal of making sure than two levels of MOOP and associated establish additional MOOP limits beneficiaries can access affordable and cost sharing standards to encourage plan between these levels with prorated cost sustainable benefit packages. While offerings with lower MOOP limits. sharing standards to minimize any CMS intends to continue using the 85th Some commenters also made impact to benefit design and suggestions for levels of MOOP limits and 95th percentiles of projected beneficiaries. Some commenters and cost sharing service category beneficiary out-of-pocket spending for suggested CMS further change the adjustments that could be especially the immediate future to set MA MOOP regulatory cost sharing standards for limits, the proposed amendments to beneficial. inpatient, skilled nursing facility, §§ 422.100(f)(4) and (5) and Response: We thank commenters for emergency care, and other professional 422.101(d)(2) and (3) were to their support. CMS’s goal is to establish services as an incentive for plans to incorporate authority to balance these future MOOP limits based on the most factors to set the MOOPs. The flexibility relevant and available data, or adopt lower MOOP limits, while other contemplated by the proposed rule combination of data, that reflects commenters cautioned CMS to limit would permit CMS to annually adjust beneficiary health care costs in the MA changes to these categories to prevent mandatory and voluntary MOOP limits program and maintains benefit stability discrimination. based on changes in market conditions over time. This final rule limits that data Response: We appreciate the feedback and to ensure the sustainability of the to the FFS Medicare data, but as other and will take these suggestions and MA program and benefit options. data sources become accessible, concerns under consideration. CMS The proposed rule also explained how relevant, and of the quality necessary to plans to transition changes under the CMS would, in advance of each plan make these determinations, we will finalized regulations over time, year, use the annual Call Letter and engage in rulemaking to change the rule. beginning no earlier than CY 2020, to other guidance documents to explain its Comment: Many commenters avoid disruption to benefit designs and application of the regulations and the expressed concern with MA encounter minimize potential beneficiary data used to identify MOOP limits. In data being used at this time to establish confusion. The regulation standard addition, CMS committed to MOOP levels based on data quality adopted in this final rule for transitioning any significant changes issues. Commenters also encouraged §§ 422.100(f)(4) and (5) and adopted using the new proposed CMS to continue working with MA 422.101(d)(2) and (3) (that the MOOP be authority over time to avoid disruption organizations to improve the validity set to strike a balance between limiting and reliability of MA encounter data. A to benefit designs and minimize maximum beneficiary out of pocket commenter suggested CMS consider potential beneficiary confusion. costs and potential changes in premium, other data such as of Marketplace In conclusion, CMS proposed to benefits, and cost sharing, with the goal amend §§ 422.100(f)(4) and (5) and Qualified Health Plan review data. of ensuring beneficiary access to 422.101(d)(2) and (3) to clarify that CMS Response: Medicare FFS data is the affordable and sustainable benefit may use Medicare FFS data to establish most relevant and available data at this packages) will apply to determinations annual MOOP limits and to adopt a time. CMS will consider future regarding a transition period from one flexible standard for setting the MOOPs. rulemaking to use MA encounter cost particular MOOP to another MOOP. We This flexible standard would authorize data as well as Medicare FFS data to CMS to increase the voluntary MOOP establish MOOP limits. In determining anticipate that sudden and significant limit to another percentile level of completeness and accuracy of MA shifts in the MOOP would cause sudden Medicare FFS beneficiary spending; encounter data CMS does consider the changes in premiums, benefits and cost increase the number of service various managed care payment sharing, which are identified under the categories that have higher cost sharing arrangements and payment policies that new regulation text as something to be in return for offering a lower MOOP may exist between organizations, as minimized. Consistent with past amount; and implement more than two compared to Medicare FFS data (which practice, CMS will continue to publish levels of MOOP and cost sharing limits are based on relatively consistent the expected changes for the next year (as a means to encourage plan offerings payment schedules and payment and a description of how the regulation with lower MOOP limits). policies). At this time we cannot standard is applied (that is, the We received the following comments commit to a timeline for use of MA methodology used) in the annual Call on this proposal, and our response encounter data or other data sources to Letter prior to bid submission so that follows, establish MOOP limits. As we learn MA plans can submit bids consistent Nearly all commenters who provided more and are able to establish standards with MA standards. CMS has feedback on this provision (Maximum for the completeness and sufficiency of historically provided prior notice and Out-of-Pocket Limit for Medicare Parts alternate data sources, we will revisit an opportunity to comment on the Call A and B Services (§§ 422.100(f)(4) and this issue. Letter guidance document and does not (5) and 422.101(d))) also provided Comment: Some commenters noted expect that to change. This will provide feedback on the proposal at section concern with the specific methodology MA organizations adequate time to II.B.5 (Cost Sharing Limits for Medicare that CMS would use other than the 85th comment and prepare for changes. We Parts A and B Services (§ 422.100(f)(6))). or 95th percentile of Medicare FFS anticipate potential changes in MOOP In this section, we address comments beneficiary costs to establish MOOP limits or cost sharing based on MA that focus on either this section or both limits and how abrupt changes may benefit design strategies will be

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conveyed through existing enrollee memoranda and solicit comments, as comments also supported the regulation communication materials. appropriate. amendment to add a standard governing Comment: Several commenters were Comment: Some commenters reported CMS establishment of MOOP limits (to concerned about CMS’s strategy to concern with the proposal to amend strike a balance between limiting promote plan adoption of lower MOOP § 422.100(f)(6) and implement it as maximum beneficiary out of pocket limits by increasing the cost sharing described in the proposed rule strategy costs and potential changes in premium, flexibility for those plans. They because of unintended consequences, benefits, and cost sharing, with the goal suggested that allowing this flexibility such as beneficiaries having to choose of ensuring beneficiary access to may result in discriminatory benefit between plans offering different levels affordable and sustainable benefit designs as plans may raise cost sharing of MOOP limits and variability in cost packages). As noted in the proposed limits for certain service categories more sharing across services. A commenter rule, CMS will interpret and implement likely to be utilized by vulnerable suggested that CMS update plan these amendment to give CMS the beneficiaries, and that such selection resources such as Medicare authority to change MOOP limits; beneficiaries would be especially Plan Finder (MPF) to simplify the plan increase the number of service disadvantaged if they do not reach the selection process and assist categories that have higher cost sharing lower, voluntary MOOP limit. Some beneficiaries choose the plan that best in return for offering lower MOOP commenters identified concern for fits their unique health care needs. limits; and implement more than two specific service categories if their cost Response: We agree that cost sharing levels of MOOP limits. Consistent with sharing limits were raised (for example, must not be discriminatory and that it past practice, CMS will continue to inpatient and professional services) and is important to make sure that publish the expected changes for the requested CMS be especially thoughtful beneficiaries have adequate information next year and a description of how the to support their plan enrollment when considering changes to these regulation standard is applied in the decision-making. Beneficiaries typically categories. A few commenters proposed annual Call Letter prior to bid make decisions based on plan that CMS consider lowering cost sharing submission so that MA plans can submit characteristics that are important to limits for mandatory MOOP plans as bids consistent with MA standards. their needs (for example, benefits, cost another method to encourage adoption CMS plans to transition changes under sharing, MOOP limit, plan premium, of a lower MOOP limit. the finalized regulations over time, and providers) and are not familiar with beginning no earlier than CY 2020, to Response: CMS agrees that while the complexities associated with avoid disruption to benefit designs and increasing flexibility for MA plans that bidding guidance and cost sharing minimize potential beneficiary voluntarily offer lower MOOP limits can standards that plans use to prepare bids. confusion. After careful consideration of allow for improved plan design, it will To minimize beneficiary confusion, all of the comments we received, we are be important to make sure that CMS will continue evaluations and finalizing the proposal to amend vulnerable patient populations are not enforcement of the current authority §§ 422.100(f)(4) and (5) and discriminated against and that plan prohibiting plans from misleading § 422.101(d)(2) and (3) as described with designs are not confusing to beneficiaries in their communication an applicability date of January 1, 2020; beneficiaries. Other existing regulations materials. In addition, we will this applicability date is consistent with governing cost sharing designs of MA disapprove a plan bid if its proposed our intent that these new standards plans—such as the prohibition on benefit design substantially discourages apply to cost sharing limits set for plans discrimination (§ 422.100(f)(2)), enrollment in that plan by certain years after 2019. We are also finalizing requirement that certain services have Medicare-eligible individuals. In minor revisions as follows: cost sharing that is no higher than FFS addition, CMS will continue efforts to (1) In § 422.100(f)(5), we are finalizing Medicare limits (§ 422.100(j)), and improve plan offerings and plan the regulation text without the phrase requirement that overall plan cost- comparison tools and resources (for ‘‘annually determined by CMS using sharing for coverage of basic benefits example, MPF and 1–800–MEDICARE). Medicare Fee for Service and to must be actuarially equivalent to the Comment: We received a comment establish appropriate’’ in the level of cost sharing (deductible, that noted the importance of MOOP introductory text; we believe that the copayments, or coinsurance) charged to limits as part of a benefit offering for regulation text finalized in the beneficiaries under the original beneficiary protection and that there are paragraph (f)(5)(ii) is sufficiently clear Medicare program option MA plans being marketed that do not on this point. (§ 422.254(b)(4))—remain in place and have a MOOP for out-of-network (2) In § 422.100(f)(5)(ii), we will are unchanged by this final rule. CMS services. finalize the text with ‘‘CMS sets’’ in will manage the flexibility plans have in Response: CMS notes that all place of ‘‘CMS will set’’ for clarity. setting cost sharing limits to make sure Medicare LPPOs and RPPOs are that plan designs are not discriminatory. required to have a combined in- and 5. Cost Sharing Limits for Medicare For example, CMS does not intend to out-of-network MOOP limit. HMO–POS Parts A and B Services (§ 422.100(f)(6)) significantly increase cost sharing limits plans may offer out-of-network benefits In addition to MOOP Limits, MA plan as a percentage of Medicare FFS above as supplemental benefits, but are not cost sharing for Parts A and B services current levels for inpatient, primary, required to have these services is subject to additional regulatory and specialty care based on cost sharing contribute to the in-network MOOP requirements and limits in standards that CMS publishes in its limit or a combined in- and out-of- §§ 417.454(e), 422.100(f)(6), and annual Call Letter. CMS intends to network MOOP limit. 422.100(j). Section 422.100(f)(6) continue the practice of furnishing We received over 40 comments provides that cost sharing must not be information to MA organizations about pertaining to the proposal, with the discriminatory and CMS determines the methodology used to establish cost majority reflecting support to amend annually the level at which certain cost sharing limits and the thresholds CMS §§ 422.100(f)(4) and (5) and sharing becomes discriminatory. identifies as non-discriminatory through 422.101(d)(2) and (3) to clarify that CMS Sections 417.454(e) and 422.100(j) are the annual Call Letter process or Health may use Medicare FFS data to establish based on how section 1852(a)(1)(B)(iii) Plan Management System (HPMS) annual MOOP limits. The majority of and (iv) of the Act directs that cost

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sharing for certain services may not CMS have determined to be non- to exercise CMS’s authority to add (by exceed the cost sharing levels in discriminatory. In addition, and as regulation) categories of services for Medicare Fee-for-Service (FFS); under appropriate, CMS noted that we may which cost sharing may not exceed the statute and the regulations, CMS also issue guidance using Health Plan levels in Medicare FFS. may add to that list of services. CMS Management System (HPMS) As noted with regard to setting MOOP identifies Parts A and B services that are memoranda. limits under §§ 422.100 and 422.101, more likely to be used by enrollees in CMS noted in the proposed rule that CMS may consider future rulemaking establishing its cost sharing parameters while it has not established a specific regarding the use of MA encounter data for review and evaluation. The review service category cost sharing limit for all to understand program health care costs parameters are currently based on possible services, CMS has issued and compare to Medicare FFS data in Medicare FFS data and reflect a guidance that MA plans must pay at establishing cost sharing limits. combination of patient utilization least 50 percent of the contracted (or Therefore, in addition to proposing to scenarios and length of stays or services Medicare allowable) rate and that cost codify use of the FFS data, CMS used by average to sicker patients. CMS sharing for services cannot exceed 50 proposed to include in § 422.100(f)(6) uses multiple utilization scenarios for percent of the total MA plan financial that CMS would use MA encounter data some services (for example, inpatient liability for the benefit in order for the to inform utilization scenarios used to care) to guard against MA organizations cost sharing for such services to be identify discriminatory cost sharing. distributing or designing cost sharing considered non-discriminatory CMS explained that its proposal to amounts in a manner that is (Medicare Managed Care Manual, amend § 422.100(f) would allow use of discriminatory. Review parameters are Chapter 4, Section 50.1 at https:// the most relevant and appropriate also established for frequently used www.cms.gov/Regulations-and- information in determining cost sharing professional services, such as primary Guidance/Guidance/Manuals/internet- standards and thresholds. For example, and specialty care services. Only-Manuals-IOMs-Items/ analyses of MA utilization encounter CMS proposed to amend CMS019326.html). We stated our belief data can be used with Medicare FFS § 422.100(f)(6) to clarify that it may use that cost sharing (service category data to establish the appropriate Medicare FFS data to establish deductibles, copayments, or co- utilization scenarios to determine MA appropriate cost sharing limits for insurance) that fails to cover at least half plan cost sharing standards and certain services that are not the cost of a particular service or item thresholds. CMS solicited comments discriminatory. In addition, CMS acts to discriminate against those for and suggestions on this proposal, proposed to amend the regulation to whom those services and items are particularly whether additional reflect that CMS would use FFS data medically necessary and discourages regulation text is needed to achieve and MA encounter data to inform enrollment by beneficiaries who need CMS’s goal of setting and announcing patient utilization scenarios to help those services and items. If an MA plan each year presumptively discriminatory identify MA plan cost sharing standards uses a copayment method of cost levels of cost sharing. and thresholds that are not sharing, then the copayment for an in- We received the following comments discriminatory. We specifically solicited network Medicare FFS service category on this proposal, and our response comment on whether to codify that use cannot exceed 50 percent of the average follows, of MA encounter data for this purpose contracted rate of that service without Nearly all commenters who provided in § 422.100(f)(6). In this final rule, we CMS seriously questioning and feedback on this provision (Cost Sharing reiterate our intent to use the annual reviewing the cost-sharing as Limits for Medicare Parts A and B Call Letter process to communicate its discriminatory. CMS does not believe Services (§ 422.100(f)(6))) also provided application of the regulation and that cost sharing at such high levels can feedback on section II.B. 4 (Maximum announce our intent to transition legitimately serve any purpose other Out-of-Pocket Limit for Medicare Parts changes to cost sharing standards over than discriminating against the A and B Services (§§ 422.100(f)(4) and time, beginning no earlier than in CY enrollees who need and frequently use (5) and 422.101(d))). In this section, we 2020, to avoid disruption to benefit those services. Some service categories address commenters that primarily designs and minimize potential may identify specific benefits for which focus on cost sharing limits, while beneficiary confusion. This proposal is a unique copayment will apply, while section II.B.4 addresses commenters that not related to a statutory change. others are grouped, such as durable focus on MOOP limits or both of these In the proposed rule, CMS explained medical equipment or outpatient provisions. that it sought to codify authorization to diagnostic and radiological services, Comment: The majority of allow CMS to use the most relevant and which contain a variety of services with commenters supported the proposal, appropriate information in determining different levels of cost which may stating that CMS should use Medicare whether specific cost sharing is reasonably have a range of copayments. FFS data to establish non- discriminatory and to set standards and As discussed in section II.A/B.4 in the discriminatory cost sharing limits as it thresholds above which CMS believes proposed rule and this final rule, CMS is currently the most relevant and cost sharing is discriminatory. In uses (and will continue to use under appropriate information in determining addition, CMS stated its intent to revisions finalized for §§ 422.100 and cost sharing standards and thresholds. continue the practice of furnishing 422.101) Medicare FFS data in setting Commenters also supported providing information to MA organizations about limits and thresholds for MA cost guidance through the annual Call Letter the methodology used to establish cost sharing for the basic benefits (that is, the to achieve CMS’s goal of setting and sharing limits and the thresholds CMS Part A and Part B services that MA announcing each year presumptively identifies as non-discriminatory through plans must cover). Medicare FFS data discriminatory levels of cost sharing the annual Call Letter process. We currently represents the most relevant that will not be considered referenced soliciting comments before and available data at this time. CMS discriminatory or in violation of other finalizing guidance as necessary and uses it as well to evaluate the cost applicable standards. appropriate. We expect this process will sharing for specific services, apply the Response: We thank the commenters allow MA organizations to prepare plan anti-discrimination standard currently for their support. CMS intends to bids consistent with parameters that at § 422.100(f)(6), and consider whether continue the practice of furnishing

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information to MA organizations about promote plan adoption of lower MOOP revised § 422.100(f)(6). After careful the methodology used to establish cost limits by increasing the cost sharing consideration of all the comments, we sharing limits and the thresholds CMS flexibility for those plans. Commenters are finalizing our proposal to use identifies as non-discriminatory through expressed concern that allowing this Medicare FFS data along with MA the annual Call Letter process. We will flexibility may result in discriminatory encounter data to inform utilization also continue to solicit comments before benefit designs as plans may raise cost scenarios (for example, inpatient lengths finalizing guidance as necessary and sharing limits for certain service of stay) and rely on Medicare FFS data appropriate. Addressing changes in categories more likely to be utilized by to determine cost sharing standards and these vehicles that solicit comments vulnerable beneficiaries. Some thresholds. We are finalizing these provides for more timely and effective commenters referenced specific service amendments with an applicability date changes to protect beneficiaries. We categories of concern if cost sharing of January 1, 2020; this applicability expect this process will allow MA limits were raised (for example, date is consistent with our intent that organizations to prepare plan bids inpatient and professional services) and these new standards apply to cost consistent with parameters that CMS requested CMS be especially thoughtful sharing limits set for plans years after have determined to be non- when considering changes to these 2019. As MA encounter cost data discriminatory. In addition, and as categories. quality improves, CMS will consider appropriate, CMS will announce and Response: CMS agrees that while future rulemaking to incorporate with issue guidance using HPMS increasing flexibility in cost sharing Medicare FFS data to establish cost memoranda. standards for plans that voluntarily offer sharing limits. CMS intends to use the Comment: Many commenters were lower MOOP limits can allow for annual Call Letter process to concerned about the quality of MA improved plan design, it will be communicate its application of the encounter data and questioned whether important to make sure that vulnerable regulation and plans to transition such data should be used to establish patient populations are not changes under the finalized regulations cost sharing limits. A few commenters discriminated against and that plan over time, beginning no earlier than CY were concerned about using MA designs are not confusing to 2020, to avoid disruption to benefit encounter data to inform utilization beneficiaries. CMS will manage the designs and minimize potential scenarios, as proposed, based on data flexibility plans have in setting cost beneficiary confusion. We are also quality issues. A commenter proposed sharing limits to make sure that plan finalizing a minor revision to paragraph that CMS consider using a phased in designs are not discriminatory. (f)(6) to improve the flow of the text. approach over multiple years by Comment: Some commenters noted Specifically, we are separating the last blending Medicare FFS and MA concern with the specific methodology sentence into two sentences divided by encounter data for utilization analyses that CMS would use to establish cost a semicolon with minor grammatical to address data quality concerns. sharing limits and how abrupt any edits. Response: We understand the changes may be from one contract year concerns expressed by commenters to the next. A few commenters 6. Meaningful Differences in Medicare about using MA encounter data to requested CMS provide additional Advantage Bid Submissions and Bid estimate costs associated with specific guidance on its implementation of the Review (§§ 422.254 and 422.256) health care services. However, we proposed changes to § 422.100(f)(6). As provided at §§ 422.254(a)(4) and believe MA encounter data can be used Response: CMS intends to use the 422.256(b)(4), CMS will only approve a to understand utilization trends in annual Call Letter process to bid submitted by a Medicare Advantage establishing the utilization scenarios communicate its application of the (MA) organization if its plan benefit selected for cost sharing standards (for regulation and to transition changes to package (PBP) is substantially different example, 6-day and 10-day inpatient cost sharing standards over time, from those of other plans offered by the cost sharing standards). Medicare FFS beginning no earlier than CY 2020, to organization in the same area with data currently represents the most avoid disruption to benefit designs and respect to key plan characteristics such relevant and available data at this time minimize potential beneficiary as premiums, cost sharing, or benefits but we believe adding MA encounter confusion. Consistent with past offered. MA organizations may submit data to FFS data will improve our practice, CMS will continue to publish bids for multiple plans in the same area utilization scenarios for the MA annual limits, expected changes for the under the same contract only if those population. CMS may consider future next year, and a description of how the plans are substantially different from rulemaking to incorporate MA regulation standard is applied (that is, one another based on CMS’s annual encounter data with Medicare FFS data the methodology used) in the annual meaningful difference evaluation. CMS to establish cost sharing limits as well. Call Letter prior to bid submission so proposed to eliminate the meaningful Under this final rule, CMS will use that MA plans can submit bids difference requirement beginning with Medicare FFS data along with MA consistent with CMS standards. This MA bid submissions for contract year encounter data to help inform will provide MA organizations adequate (CY) 2019. Separate meaningful utilization scenarios (for example, time to comment and prepare for difference rules were concurrently inpatient lengths of stay) in establishing changes. adopted for MA and stand-alone cost sharing standards as we continue to We received over 40 comments prescription drug plans (PDPs), but this rely on Medicare FFS data to determine pertaining to the proposal, with the specific proposal was limited to the cost sharing dollar limits. We believe majority reflecting support to amend meaningful difference provision related the use of MA encounter data to inform § 422.100(f)(6) to permit use of Medicare to the MA program. A proposal related utilization scenarios is reasonable as we FFS data to establish cost sharing limits to the Part D meaningful difference are using it in conjunction with that will not be considered regulation is addressed at section III. Medicare FFS data, which mitigates discriminatory for Part A and B services II.A.16. of this final rule. concerns about the completeness and in MA plans. Commenters also generally In the proposed rule, CMS explained quality of the MA encounter data. supported continued use of the annual the goal of eliminating the meaningful Comment: Several commenters were Call Letter process for explaining our difference requirement: To improve concerned about CMS’s strategy to application and implementation of the competition, innovation, available

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benefit offerings, and provide This new tool assists beneficiaries in to offer enrollees benefits through a beneficiaries with affordable plans that choosing a plan that meets their unique subset of the overall contracted network are tailored for their unique health care health and financial needs based on a in a given service area, which are needs and financial situation. Other set of 10 quick questions. sometimes referred to as narrower regulations prohibit plans from As stated in the October 22, 2009, networks, and which was collected in misleading beneficiaries in their proposed rule (74 FR 54670 through 73) the PBP beginning in CY 2011; and (3) communication materials, provide CMS and April 15, 2010, final rule (75 FR beginning in CY 2019, provide different the authority to disapprove a bid if a 19736 through 40), CMS’s goal for the cost sharing and/or additional plan’s proposed benefit design meaningful difference evaluation was to supplemental benefits for enrollees substantially discourages enrollment in ensure a proper balance between based on defined health status or that plan by certain Medicare-eligible affording beneficiaries a wide range of disease state within the same plan individuals, and allow CMS to non- plan choices and avoiding undue (Flexibility in the Medicare Advantage renew a plan that fails to attract a beneficiary confusion in making Uniformity Requirements). These sufficient number of enrollees over a coverage selections. The meaningful flexibilities allow MA organizations to sustained period of time difference evaluation was initiated provide beneficiaries with access to (§§ 422.100(f)(2), 422.510(a)(4)(xiv), when cost sharing and benefits were health care benefits that are tailored to 422.2264, and 422.2260(e)). Therefore, relatively consistent within each plan, individual needs, but make it difficult CMS explained in the proposed rule, and similar plans within the same for CMS to objectively measure MA organizations could be expected to contract could be readily compared by meaningful differences between plans. continue designing PBPs that, within a measuring estimated out-of-pocket costs Items 1 and 3 provide greater cost service area, are different from one (OOPC) and other factors currently sharing flexibility to address individual another with respect to key benefit integrated in the evaluation’s beneficiary needs but result in a much design characteristics. CMS stated its methodology. Detailed information broader range of cost sharing values belief that any potential beneficiary about the meaningful difference being entered into the PBP. confusion would be minimized when evaluation is available in the CY 2018 CMS restated its commitment to comparing multiple plans offered by the Final Call Letter issued April 3, 2017, ensuring transparency in plan offerings MA organization. For example, (pages 115–118) and information about so that beneficiaries can make informed beneficiaries may consider the following the CMS OOPC model is available at: decisions about their health care plan factors when they make their health care https://www.cms.gov/Medicare/ choices while also noting the decisions: Plan type, Part D coverage, Prescription-Drug-Coverage/Prescription importance of encouraging competition, differences in provider network, Part B DrugCovGenIn/OOPCResources.html. innovation, and providing access to and plan premiums, and unique As discussed in the CY 2018 Final Call affordable health care approaches that populations served (for example, special Letter, the differences between similar address individual needs. CMS needs plans). In addition, CMS stated its plans must have at least a $20 per recognized that the current meaningful intent to continue the practice of member per month estimated difference methodology evaluates the furnishing information to MA beneficiary out-of-pocket cost entire plan and does not capture organizations about the bid evaluation difference. Differences in plan type (for differences in benefits that are tied to methodology through the annual Call example, HMO, LPPO), SNP sub-type, specific health conditions. As a result, Letter process and/or Health Plan and inclusion of Part D coverage are CMS noted the meaningful difference Management System (HPMS) considered meaningful differences, evaluation will not fully represent memoranda and solicit comments, as which align with beneficiary decision- benefit and cost sharing differences appropriate. This process allows CMS to making. As noted in the proposed rule, experienced by enrollees and could lead articulate bid requirements and MA premiums, risk scores, actual plan to MA organizations to focus on CMS organizations to prepare bids that satisfy utilization, and enrollment are not standards, rather than beneficiary needs, CMS requirements and standards prior included in the evaluation because when designing benefit packages. CMS to bid submission in June each year. these factors will introduce risk noted the challenges with trying to As stated in the proposed rule, selection, costs, and margin into the capture differences in provider network, although challenged by choices, evaluation, resulting in a negation of the more tailored benefit and cost sharing beneficiaries do not want their plan evaluation’s objectivity. CMS clarified designs, or other innovations. In choices to be limited and understand that the OOPC model uses the lowest addition, we are concerned that plans key decision factors such as premiums, cost sharing value for each service may be forced to potentially develop out-of-pocket cost sharing, Part D category to estimate out-of-pocket costs, more complicated and confusing benefit coverage, familiar providers, and which may or may not be a relevant designs to achieve differences between company offering the plan.22 CMS noted comparison between different plans for plans. that more sophisticated approaches to purposes of evaluating meaningful CMS recognized to satisfy current consumer engagement and decision- difference when variable cost sharing of CMS meaningful difference standards, making should help beneficiaries, this type is involved. MA organizations may have to change caregivers, and family members make Based on CMS’s efforts to revisit MA benefit coverage or cost sharing in informed plan choices. CMS cited standards and the implementation of the certain plans to establish the necessary supporting 1–800–MEDICARE and governing law to find flexibility for MA benefit value difference, even if enhancements to MPF that have beneficiaries and plans, MA substantial difference exists based on improved the customer experience, such organizations are able to: (1) Tier the factors CMS is currently unable to as including MA and Part D benefits and cost sharing for contracted providers as incorporate into the evaluation (such as a new consumer friendly tool for the CY an incentive to encourage enrollees to tiered cost sharing, and unique benefit 2018 Medicare open enrollment period. seek care from providers the plan packages based on enrollee health identifies based on efficiency and conditions). Although these changes in 22 Jacobson, G. Swoope, C., Perry, M. Slosar, M. quality data which was communicated benefits coverage may be positive or How are seniors choosing and changing health in CY 2011 guidance; (2) establish negative, CMS stated concern that the insurance plans? Kaiser Family Foundation. 2014 Provider-Specific Plans (PSPs) designed meaningful difference requirement

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results in organizations potentially We received the following comments may do so in a variety of ways, such as reducing the value of benefit offerings. on this proposal, and our response adjustments to cost sharing amounts, These are unintended consequences of follows: adding or subtracting supplemental the existing meaningful difference Comment: Some commenters fully benefits, or making changes to the evaluation and may restrict innovative supported the proposal, stating that monthly premium(s). Plans face benefit designs that address individual eliminating the meaningful difference competition in their defined market beneficiary needs and affordability. requirement will support plan areas and must also comply with Part C As discussed in the proposed rule, innovation and provide Medicare standards related to changes in benefits, CMS continually evaluates consumer beneficiaries access to plans that meet cost sharing, and premium. In addition, engagement tools and outreach their unique needs. Several commenters all beneficiaries are made aware of plan materials (including marketing, noted that eliminating the current changes including premium for the educational, and member materials) to meaningful difference requirement that upcoming year and can choose to switch ensure information is formatted established arbitrary differences plans during the annual election period. consistently so beneficiaries can easily between plans will allow MA Comment: Several commenters compare multiple plans. Annual organizations to put the beneficiary at disagreed with the proposal to eliminate guidance and model materials are the center of benefit design. This will the meaningful difference requirement provided to MA organizations to assist result in MA organizations being able to because they believe it is a beneficiary them in providing resources, such as the offer a portfolio of plan options with protection. Reasons for maintaining the plan’s Annual Notice of Change (ANOC) clear differences between benefits, meaningful difference requirement and Evidence of Coverage (EOC), which providers, and premiums that are easily included: Concerns about the ability of contain valuable information for the understood by beneficiaries. Medicare beneficiaries to make the enrollee to evaluate and select the best Commenters also noted that CMS’s nuanced comparisons among various plan for their needs. CMS invests efforts to support beneficiaries make plan types and benefit packages, limited substantial resources in engagement informed choices by maintaining resources to assist beneficiaries with strategies such as 1–800–MEDICARE, existing requirements for marketing complicated decisions, expectation that MPF, standard and electronic mail, and materials and nondiscriminatory benefit older people and people with social media to continuously designs will sufficiently safeguard disabilities do not use technology to the communicate with beneficiaries, beneficiaries if the meaningful same extent as non-Medicare difference requirement is eliminated. beneficiary populations (thereby caregivers, family members, providers, Response: We thank the commenters limiting the usefulness of MPF, a community resources, and other for supporting the proposal. We believe primary means of CMS assistance to stakeholders. this proposed change could result in beneficiaries in comparing plans), and CMS noted that MA organizations more innovative products that are more unknown resource availability to may be able to offer a portfolio of plan competitive and market-driven within a support call centers to assist options with clear differences between less restrictive regulatory framework. beneficiaries who do not have access to benefits, providers, and premiums Comment: A commenter supported or use the internet. Several comments which will allow beneficiaries to make the proposal and questioned how the were concerned that narrower networks more effective decisions if the MA agency will ensure potential savings could be potentially discriminatory or a organizations are not required to change from eliminating the meaningful means of limiting benefit access for benefit and cost sharing designs in order difference requirement will be passed enrollees. Another commenter had to satisfy §§ 422.254 and 422.256. on to beneficiaries in the form of lower concerns that eliminating the Currently, MA organizations must premiums, while also maintaining meaningful difference requirement may satisfy CMS meaningful difference coverage of essential and appropriate encourage plan risk segmentation based standards (and other requirements), benefits. on benefit design but did not include rather than solely focusing on Response: CMS expects that the any rationale for their concern. Some beneficiary purchasing needs when elimination of the meaningful difference commenters referenced plan selection establishing a range of plan options. evaluation, in conjunction with the research, such as National Institutes of CMS also noted additional beneficiary expansion of benefit flexibilities, will Health, and Brookings studies,23 noting protections including: Plans are allow organizations to provide benefit Consumers Union findings that indicate required to not mislead beneficiaries in offerings that satisfy the unique needs of beneficiaries face challenges in communication materials; CMS may beneficiaries, increase enrollee navigating the Medicare market due to disapprove a bid if CMS finds that a satisfaction, reduce overall plan not using available tools (such as MPF), plan’s proposed benefit design expenditures, and result in more substantially discourages enrollment in affordable plans. All MA plans must 23 Bertko J, Ginsburg PB, Lieberman S, Trish E, that plan by certain Medicare-eligible provide enrollees in that plan with all Antos J. Medicare Advantage: Better information individuals; and CMS may terminate Parts A and B services so beneficiaries tools, better beneficiary choices, better competition. plans that fail to attract a sufficient are assured a minimum package of U.S.C.-Brookings Schaeffer Initiative for Health Policy. Nov. 2017. Retrieved from https:// number of enrollees over a sustained covered services; many plans also www.brookings.edu/wp-content/uploads/2017/11/ period of time (§§ 422.100(f)(2), provide supplemental benefits, at the ma-consumer-reforms.pdf. 422.510(a)(4)(xiv), 422.2264, and MA organization’s option. While CMS Cognitive Functioning and Choice between 422.2260(e)). For these reasons, CMS reviews and approves MA PBPs and Traditional Medicare and Medicare Advantage; J. proposed to remove §§ 422.254(a)(4) and premiums for actuarial soundness and Michael McWilliams, Christopher C. Afendulis, Thomas G. McGuire, and Bruce E. Landon; Health 422.256(b)(4) to eliminate the satisfying CMS standards, we do not Affairs, September 2011 (http://www.ncbi.nlm.nih. meaningful difference requirement for have the legal authority to dictate MA gov/pmc/articles/PMC3513347/). MA bid submissions. CMS also solicited organizations’ business decisions to The Evidence is Clear: Too Many Health comments and suggestions on making establish premiums at a specific level. Insurance Choices Can Impair, Not Help Consumer MA organizations can adjust their plan Decision Making; Lynn Quincy and Julie Silas; sure beneficiaries have access to Consumers Union, November 2012 (http:// innovative plans that meet their unique offerings to reflect annual changes in consumersunion.org/pdf/Too_Much_Choice_Nov_ needs. medical costs and payment rates and 2012.pdf).

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confusion when using MPF, and high Beneficiaries also rely on established decision-making because of the rates of individuals not making an health plan characteristics to guide their potential increase in plan options; these active health plan selection because of decision making, such as preferences for commenters questioned if elimination of choice anxiety. Several commenters also plan type (for example, HMO or PPO), the requirement provides enough noted their general concern that the net providers (for example, established benefits to outweigh the risks. A few effect of eliminating the meaningful primary care physician being in commenters questioned whether there is difference requirement and other network), presence of Part D benefits, evidence that innovation is or will be proposals pursued in the proposed rule cost sharing, plan premium, and inhibited by the meaningful difference may have unintended consequences brand.24 In addition, dually eligible evaluation. A commenter recommended regarding beneficiary confusion that beneficiaries may choose D–SNPs that CMS formally survey MA organizations will negate the value of market provide more standardized plan options about the impact of meaningful innovation, especially for people with with little or no cost sharing difference standards as well as survey lower income and educational levels. responsibilities instead of a non-D–SNP beneficiaries regarding their satisfaction Response: We acknowledge the plan without these benefits. This allows with MA plan offerings. Some commenters’ concerns about beneficiary beneficiaries to reduce the number of commenters suggested CMS first pursue confusion. We believe that the tools health plan options of interest (for adjusting the meaningful difference CMS provides for beneficiaries to make example, focus on MA organizations requirement before eliminating it by decisions and our enforcement of offering SNP options) and simplify the either waiving the requirement if MA communication and marketing process to choose their health plan. organizations can provide alternative requirements (such as the prohibition After taking into account specific evidence to CMS that their plan on misleading beneficiaries) mitigate preferences, such as plan type, offerings are substantively different, and address these concerns. Under our beneficiaries may choose from a limited significantly reducing the current $20 existing authority at § 422.110, CMS subset of available plan options with the meaningful difference threshold will monitor to ensure organizations are assistance of plan communication between similar plans to provide more not engaging in activities that are materials and existing CMS resources flexibility, accounting for differences in discriminatory or potentially misleading such as MPF and 1–800–MEDICARE. In premiums, and providing broader addition, CMS will continue to prohibit or confusing to Medicare beneficiaries. consideration of provider network plans from misleading beneficiaries in We note that CMS has authority, differences in the evaluation. A their communication materials, clarified in this final rule, to review commenter requested that instead of disapprove a plan’s bid if its proposed marketing (review in advance of use) eliminating the meaningful difference benefit design substantially discourages and communication (review after use) requirement, CMS revise the evaluation enrollment in that plan by certain materials to ensure compliance with and require plan actuaries to attest to Medicare-eligible individuals, and allow MA program requirements. CMS will actuarial value differences among plans CMS to terminate a plan that fails to conduct outreach with organizations using a utilization profile that is attract a sufficient number of enrollees that appear to offer a large number of representative of the plan population. A over a sustained period of time so that similar plans in the same county few comments stated that if CMS was to any potential beneficiary confusion is place a limit on the number of plans an following bid submissions and minimized when comparing multiple communicate any general concerns organization could offer that CMS take plans offered by the organization into consideration the appropriate level through the annual Call Letter process (§§ 422.100(f)(2), 422.510(a)(4)(xiv), and/or HPMS memoranda. CMS within an organizational structure to 422.2264, and 422.2260(e)). establish the limit (for example, parent, network adequacy requirements apply Comment: Several commenters had legal entity, or contract organization), to all Part C provider networks to ensure concern that eliminating the meaningful mergers and acquisitions, and that CMS adequate network provider access for difference requirement would promote treat full-provider networks separately enrollees. With regard to concerns about ‘‘gaming’’ among plan sponsors (for from more limited provider networks. risk segmentation, CMS believes risk example, offering a large number of plan segmentation is not beneficial to MA options in a service area) which may Response: As discussed in the organizations or enrollees who want to challenge or complicate beneficiary proposed rule, CMS is concerned the maintain stable benefits and premiums, meaningful difference requirement may but if an organization wanted to 24 Jacobson, G., Swoope, C., Perry, M., Slosar, M. force MA organizations to design benefit purposely create risk segmentation How are seniors choosing and changing health packages to meet CMS standards rather within its plan offerings, it could do so insurance plans? Kaiser Family Foundation. 2014. than address beneficiary needs. CMS with or without the meaningful Atherly, A., Dowd, B., Feldman, R. The Effect of has been made aware of these concerns Benefits, Premiums, and Health Risk on Health Plan difference evaluation. The agency will Choice in the Medicare Program. Health Services through comments submitted in continue to monitor and address Research. 2004. Retrieved from https:// response to recent Call Letters and the potential concerns as part of our onlinelibrary.wiley.com/doi/full/10.1111/j.1475- Request for Information (April 2017), existing authority to review and approve 6773.2004.00261.x. that highlighted how MA organizations McCormack LA, Garfinkel SA, Hibbard JH, bids. We expect eliminating the Norton EC, Bayen UJ. Health plan decision making may be forced to meet arbitrary limits meaningful difference requirement will with new medicare information materials. Health between their plans to comply with improve plan choices for beneficiaries Services Research. 2001;36(3):531–554. CMS meaningful difference standards. by driving provider network and benefit Abaluck, Jason, and Jonathan Gruber. 2011. Based on this information CMS does not package innovation and affordable ‘‘Choice Inconsistencies among the Elderly: believe formal surveys are necessary to Evidence from Plan Choice in the Medicare Part D health care coverage. MA organizations Program.’’ American Economic Review, 101(4): determine the unintended consequences also consider beneficiary choice anxiety 1180–1210. of the meaningful difference evaluation. when developing their own portfolio of Uhrig, J., Harris-Kojetin, L., Bann, C., Kuo, T. Do Our proposal to eliminate the plan offerings, so that sales and broker Content and Format Affect Older Consumers’ Use meaningful difference requirement of Comparative Information in a Medicare Health personnel and marketing materials can Plan Choice? Results from a Controlled Experiment. aimed to improve competition, highlight key differences between plan 2006. Retrieved from http://journals.sagepub.com/ innovation, available benefit offerings, offerings and support informed choice. doi/pdf/10.1177/1077558706293636. and provide beneficiaries with

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affordable plans that are tailored for believe that the tools and information Comment: A commenter requested their unique health care needs and CMS provides for beneficiaries to make clarification on how this proposal, in financial situation. The number of MA decisions (for example, Medicare Plan conjunction with others, affects plan bids may increase because of a Finder, Medicare and You Handbook, expectations for state Medicaid agencies variety of factors, that are not related to 1–800–MEDICARE), in addition to our and SNPs. the elimination of the meaningful enforcement of communication and Response: CMS does not anticipate difference requirement, such as marketing requirements, aim to mitigate that eliminating the meaningful payments, bidding and service area any potential choice overload. We are difference requirement, in conjunction strategies, serving unique populations, not pursuing adjustments to the with other proposals, would affect state and in response to other program meaningful difference requirement (for Medicaid agencies. To the extent that constraints or flexibilities. CMS expects example, waivers) because the use of a clarification of state Medicaid or SNP that eliminating the meaningful waiver or justification process issues is required as a result of the difference requirement will improve introduces subjectivity into the benefit regulation changes in this final rule, plan choice for beneficiaries by driving review and we believe the goal of CMS would communicate this guidance provider network and benefit package increasing flexibility is better served by through the annual Call Letter process, innovation and affordable health care eliminating the requirement. With this HPMS memoranda, and Medicare coverage. CMS believes that eliminating final rule, organizations will have more Managed Care Manual updates. In the current meaningful difference flexibility to design MA plans in a addition, the CMS Medicare-Medicaid requirement will allow MA manner that is more focused on Coordination Office (MMCO) may provide assistance for states and D– organizations to put the beneficiary at beneficiary needs. Finally, we do not SNPs. The Center for Medicare is the center of benefit design as MA intend to establish a specific number of working collaboratively with MMCO in organizations will not be pressured to plans that any one organization could the regulations drafting process and make benefit changes to comply with an offer. The MA program has a different implementation steps related to this arbitrary requirement that may market structure than standalone PDPs, rule. Separately, MMCO is re-examining ultimately result in higher premiums that is, PDPs serve entire regions while the potential need for resources related and/or cost sharing for beneficiaries. MA organizations may serve different service areas based on county. The same to implementing the provisions of This will result in MA organizations section 50311 of the Bipartisan Budget being able to offer a portfolio of plan MA organization may have multiple plans but those plans may only overlap Act of 2018. options with clear differences between Comment: Several commenters benefits, providers, and premiums that in a limited number of counties. Depending on the market structure (for requested that CMS issue guidance are more easily understood by regarding the distinctions in plan example, makeup of providers and beneficiaries. In order to capture options that would be permissible and consumers) it may be helpful for MA differences in provider networks, more operational guidance on the organizations to provide offerings from tailored benefit and cost sharing implementation of this proposal in the multiple plan types so that beneficiaries designs, or other innovations, the annual Call Letter to support CY 2019 have valuable options. In addition, it evaluation process would have to use bid development and submission. more varied and complex assumptions may be helpful for MA organizations to Response: MA organizations can use to identify plans that are not offer SNP plans to meet the needs of the information contained in this final meaningfully different from one different beneficiary populations. CMS rule about the elimination of the another. CMS believes that such an will monitor and address potential meaningful difference requirements and evaluation could result in more concerns as part of our existing CMS expectations to prepare CY 2019 complicated and potentially confusing authority to review and approve bids. bid submissions. CMS intends to benefit designs and would require Comment: A few commenters continue using the annual Call Letter investment of greater administrative requested that CMS conduct an process in future years for releasing resources for MA organizations and evaluation to estimate whether draft versions of bid-related guidance CMS, while not producing results that eliminating the meaningful difference for comment and to provide additional are useful to beneficiaries. CMS expects requirement would create choice guidance regarding general concerns we that eliminating the meaningful anxiety among beneficiaries and its may have with organizations’ portfolio difference requirement will improve the potential effect on future enrollment. A of plan offerings. In addition, we will plan options available for beneficiaries. few commenters also questioned if CMS provide information about potential As it is unknown how many had presented sufficient reasons to concerns regarding activities that are organizations will choose to add plan justify eliminating the meaningful potentially discriminatory or potentially options as a result of this provision, we difference requirement. misleading or confusing to Medicare are unable to estimate the impact to Response: In the proposed rule (82 FR beneficiaries. beneficiaries should this lead to more 56363 through 56365) and in the Comment: Several commenters noted competition. CMS expects increased responses in this section, we have concern about resources to support competition will lead to potentially discussed our supporting rationale to beneficiaries choose a health plan and lower premiums and/or cost-sharing for eliminate the meaningful difference navigate their benefits (for example, 1– Medicare beneficiaries. CMS does not requirement. After carefully considering 800–MEDICARE, MPF, SHIP counselors, anticipate beneficiaries will need the commenters’ concerns, we believe and the Medicare Ombudsman program) additional time to compare differences our proposal will result in improved and supported improvements to MPF between plans related to the elimination options—both in terms of innovative that allow beneficiaries to more easily of the meaningful difference plans and affordability—for narrow down their choices based on requirement. This particular change is beneficiaries and that existing personalized information (for example, expected to help MA organizations safeguards, along with beneficiary more filters and pre-selection criteria to differentiate plan offerings more decision making education and tools, identify important plan characteristics effectively so that beneficiaries can will be successful in managing that limit plan options to evaluate). make decisions more efficiently. We beneficiary choice anxiety concerns. Several commenters offered to provide

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input to MPF changes, while others communications materials (for example, procedures whereby an individual encouraged CMS to establish a group of summary of benefits). currently enrolled in a non-MA health representatives (for example, MA We received over 65 comments plan offered by an MA organization at organizations, advocacy organizations, pertaining to the proposal; the great the time of his or her Initial Coverage provider groups, and other stakeholders) majority reflected mixed support for Election Period is deemed to have to help develop MPF improvements, eliminating the meaningful difference elected an MA plan offered by the health plan decision-making education requirement. After careful consideration organization if he or she does not elect materials, and other information to of all of the comments we received, we to receive Medicare coverage in another improve the health plan selection are finalizing the elimination of the way. We proposed new regulation text process and overall experience for meaningful difference requirement from to establish limits and requirements for beneficiaries. Some comments indicated §§ 422.254 and 422.256 as proposed. these types of default enrollments to that changes to the MPF should occur Under our existing authority at address our administrative experience prior to eliminating the meaningful § 422.2268, CMS will monitor to ensure with and concerns raised about these difference evaluation. Commenters also organizations are not engaging in types of default enrollments under our had an interest in CMS establishing activities that are discriminatory or existing practice. Based on our communications and marketing potentially misleading or confusing to experience with the seamless guidance so that MA organizations can Medicare beneficiaries. CMS will conversion process thus far, we describe how an organization’s plan communicate and work with proposed to codify at § 422.66(c)(2) offerings are different in situations organizations that appear to offer a large requirements for seamless default where multiple plan options are number of similar plans in the same enrollments upon initial eligibility for compared (for example, providing county, raising and discussing with Medicare. As proposed, such default additional information in the Summary such MA organizations any concerns. enrollments would be into dual eligible of Benefits). In addition, other CMS plan checks would include plans special needs plans (D–SNPs) and comments noted the need for CMS to offered under each contract, unique would be subject to five substantive solicit input from multiple stakeholders plan type, and county. Plan types conditions: (1) The state has approved to improve communication materials currently include: (1) HMO and HMO– use of this default enrollment process (for example, ANOC and EOC). POS not offering all Parts A and B and provided Medicare eligibility services out-of-network, (2) HMO POS information to the MA organization; (2) Response: These recommendations offering all Parts A and B services out- are not strictly within the scope of this CMS has approved the MA organization of-network, (3) LPPO, (4) RPPO, (5) to use the default enrollment process final rule provision. We do however PFFS, and (6) unique SNP types (that is, appreciate the many comments and before any enrollments are processed; different chronic diseases, institutional (3) the individual is enrolled in an suggestions related to improving the categories, and dual-eligible sub-types). health plan decision making process affiliated Medicaid managed care plan From a beneficiary’s perspective, CMS and is dually eligible for Medicare and and overall experience for beneficiaries. would expect plans within the same We agree with the need for clear and Medicaid; (4) the MA organization contract, plan type, and county to be provides a notice that meets CMS complete information and intend to distinguishable by beneficiaries using continue improving the MPF to make it requirements to the individual; and (5) such factors as the inclusion or the individual does not opt out of the as user friendly as possible. We are exclusion of Part D coverage, provider sharing these comments and suggestions default enrollment. We proposed that network, plan premium, Part B coverage under these types of default with the CMS Office of premium buy-down, estimated out-of- Communications. Additionally, we enrollments begin on the first of the pocket costs, and benefit design so that month that the individual’s Part A and would encourage third party MA organizations can market their organizations that support beneficiaries Part B eligibility is effective. We also plans clearly. CMS intends to issue proposed changes to §§ 422.66(d)(1) and in their decision-making to take guidance through the annual Call Letter advantage of existing resources 1–800– (d)(5) and 422.68 that coordinate with process and HPMS memoranda to help the proposal for § 422.66. MEDICARE, MPF, SHIP counselors, and organizations design plan options that the Medicare Ombudsman program. As noted in the proposed rule, we avoid potential beneficiary confusion initially addressed default enrollment CMS will take commenter suggestions prior to bid submission. under careful consideration and will upon conversion to Medicare in a 2005 continue to include stakeholders and 7. Coordination of Enrollment and rulemaking (70 FR 4606 through 4607) 25 beneficiaries in the planning, Disenrollment Through MA and released subregulatory guidance preparation, testing, and execution Organizations and Effective Dates of to provide an optional enrollment process for MPF; CMS subjects some Coverage and Change of Coverage mechanism in 2006. This mechanism model enrollee communication (§§ 422.66 and 422.68) permitted MA organizations to develop materials to periodic consumer testing In addition to general authority for the processes and, with CMS approval, and also considers comments submitted Secretary to establish the process provide seamless continuation of from MA organizations and stakeholders through which MA plan election is coverage by way of enrollment in an MA on an ongoing basis. In addition, CMS made by Medicare beneficiaries, section plan for newly MA eligible individuals will look for ways to incorporate the 1851(c)(3)(A)(ii) of the Act authorizes who are currently enrolled in other suggestions from commenters about the Secretary to implement default health plans offered by the MA how the health plan selection process enrollment rules for the Medicare organization (such as commercial or can be simplified for beneficiaries Advantage (MA) program. This default Medicaid plans) at the time of the through existing and possibly new enrollment is in addition to the individuals’ initial eligibility for Medicare materials. MA organizations statutory direction that beneficiaries Medicare. The guidance emphasized have and are encouraged to use existing who do not elect an MA plan are 25 https://www.cms.gov/Medicare/Eligibility-and- flexibilities to highlight differences defaulted to original (fee-for-service) Enrollment/MedicareMangCareEligEnrol/ between their own plan offerings for Medicare. Section 1851(c)(3)(A)(ii) Downloads/CY_2018_MA_Enrollment_and_ beneficiaries in marketing and states that the Secretary may establish Disenrollment_Guidance_6-15-17.pdf.

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that approved MA organizations not in 2018 will become a random and provided states with additional limit seamless continuation of coverage unique number instead of the Social flexibility and control. to situations in which an enrollee Security Number-based identifier used To ensure individuals are aware of the becomes eligible for Medicare by virtue today. As discussed in more detail default MA enrollment and of the of age, and directed MA organizations to below, we anticipate that the switch changes to their Medicare and Medicaid implement seamless conversions to from the SSN-based identifier will coverage, we also proposed, at include all newly eligible Medicare exacerbate this difficulty. § 422.66(c)(2)(i)(C) and (c)(2)(iv), a beneficiaries, including those whose We noted in the proposed rule how requirement for MA organizations to Medicare eligibility is based on organizations operating Medicaid issue a notice no fewer than 60 days disability. From its inception, the managed care plans are better able to before the default enrollment effective guidance required that individuals meet these requirements when states date to the enrollee. The notice 28 must receive advance notice of the proposed provide data, including the individual’s include clear information on the D– MA enrollment and have the ability to Medicare number, to identify SNP, as well as instructions to the ‘‘opt out’’ of such an enrollment prior to individuals about to become Medicare individual on how to opt out (or the effective date of coverage. This eligible; MA organizations with state decline) the default enrollment and how guidance has been in practice for the contracts to offer D–SNPs will be able to to enroll in Original Medicare or a past decade, but we encountered obtain (under their agreements with different MA plan. complaints and heard concerns about state Medicaid agencies) the data We also proposed, in paragraph the practice. necessary to process and submit default (c)(2)(i)(E) and (2)(ii), that MA The Advance Notice of enrollments to CMS without needing to organizations must obtain approval from Methodological Changes for Calendar collect information from the Medicare CMS before implementing default Year (CY) 2016 for Medicare Advantage beneficiaries. Therefore, we proposed to enrollment. We explained that under (MA) Capitation Rates, Part C and Part revise § 422.66 to permit default our proposal in paragraph (c)(2)(i)(B), D Payment Policies and 2016 Call Letter enrollment only for Medicaid managed CMS approval would be granted only if discussed the opportunity to integrate care enrollees who are newly eligible for the applicable state approves the default Medicare and Medicaid benefits via Medicare and who are enrolled into a enrollment through its agreement with seamless continuation of coverage into D–SNP administered by an MA the MA organization. We also noted that D–SNPs, and we received positive organization with the same parent MA organizations would be required to organization as the organization that comments from state Medicaid agencies implement default enrollment in a non- operates the Medicaid managed care supporting this enrollment mechanism discriminatory manner, consistent with plan in which the individual remains and requesting clarification of the their obligations under § 422.110; that enrolled. At § 422.66(c)(2)(i)(B), we also approval process. We also received is, MA organizations could not select for proposed to limit these default comments from beneficiary advocates default enrollment only certain enrollments to situations where the state asking for additional consumer members of the affiliated Medicaid plan has actively facilitated and approved the protections (for example, requiring who were identified as eligible for MA organization’s use of this written beneficiary confirmation and a default enrollment. Lastly, we proposed enrollment process and articulates this special enrollment period for those authority for CMS to suspend or rescind in the agreement with the MA enrolled using this optional approval at any time it determined that organization offering the D–SNP and by mechanism). the MA organization is not in 26 providing necessary identifying On October 21, 2016, in response to compliance with the requirements. We inquiries regarding this enrollment information to the MA organization. The proposal was designed to support requested comment on whether this mechanism, its use by MA authority to rescind approval should be organizations, and the beneficiary state efforts to increase enrollment of dually eligible individuals into fully broader. We also explained that we protections currently in place, we continued to consider whether a time announced a temporary suspension of integrated systems of care There is evidence 27 that such systems improve limit on the approval (such as 2 to 5 acceptance of new proposals for years) would be appropriate so that seamless continuation of coverage. We health outcomes so supporting efforts to increase use those systems is consistent CMS would have to revisit the processes discovered, based on our subsequent with overall CMS policy. Further, we and procedures used by an MA discussions with beneficiary advocates believe then, and now, that the proposal organization in order to assure that the and MA organizations approved for this regulation requirements are still being enrollment mechanism, that MA 27 There is a growing evidence that integrated care followed. We were particularly organizations find it difficult to comply and financing models can improve beneficiary interested in comment on this point in with our current guidance and approval experience and quality of care, including: conjunction with our alternative • parameters, especially the requirement Health Management Associates, Value proposal (discussed later in this section) to identify commercial members who Assessment of the Senior Care Options (SCO) Program, July 21, 2015, available at: http:// to codify the existing parameters for this are approaching Medicare eligibility www.mahp.com/unify-files/HMAFinalSCO type of seamless conversion default based on disability when the other plan WhitePaper_2015_07_21.pdf; enrollment such that all MA offered by the MA organization is a • MedPAC chapter ‘‘Care coordination programs organizations would be able to use this commercial insurance plan. MA for dual-eligible beneficiaries,’’ June 2012, available at: http://www.medpac.gov/docs/default-source/ default enrollment process for newly organizations also outlined challenges reports/chapter-3-appendixes-care-coordination- eligible and newly enrolled Medicare in confirming entitlement to Medicare programs-for-dual-eligible-beneficiaries-june-2012- beneficiaries in the MA organization’s Parts A and B within necessary report-.pdf?sfvrsn=0. non-Medicare coverage. timeframes and obtaining the • Anderson, Wayne L., Zhanlian Fen, and Sharon K. Long, RTI International and Urban Institute, individual’s Medicare number—which Minnesota Managed Care Longitudinal Data 28 Enrollment requirements and burden are Analysis, prepared for the U.S. Department of currently approved by OMB under control number 26 https://www.cms.gov/Medicare/Eligibility-and- Health and Human Services Assistant Secretary for 0938–0753 (CMS–R–267). Since this rule will not Enrollment/MedicareMangCareEligEnrol/ Planning and Evaluation (ASPE), March 2016, impose any new or revised requirements/burden, Downloads/HPMS_Memo_Seamless_ available at: https://aspe.hhs.gov/report/minnesota- we are not making any changes to that control Moratorium.pdf. managed-care-longitudinal-data-analysis. number.

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Under our proposal, default requires MA organizations to accept continued to consider retaining enrollment of individuals at the time of enrollment requests from an individual processes similar to the pre-moratorium their conversion to Medicare would be who is enrolled in a non-Medicare seamless conversion process. That more limited than the default health plan offered by the MA seamless conversion mechanism is enrollments Congress authorized the organization during the month outlined currently in section 40.1.4 of Secretary to permit in section immediately preceding the month in Chapter 2 of the Medicare Managed Care 1851(c)(3)(A)(ii) of the Act. However, which he or she is entitled to both Part Manual and had been in practice we also proposed some flexibility for A and Part B and who meets MA through October 2016. As an alternative MA organizations that wish to offer eligibility requirements. We are we considered proposing regulations to seamless continuation of coverage to concerned that in some instances, this codify that guidance as follows— their non-Medicare members regulation has been interpreted as • Articulating the requirements for an (commercial, Medicaid or otherwise) meaning that the enrollment request MA organization’s proposal to use the who are gaining Medicare eligibility. We must be filed during the month before seamless conversion mechanism, further proposed to amend Medicare entitlement occurs. To clarify including identifying eligible § 422.66(d)(5) and to establish, through the requirement and be more consistent individuals in advance of Medicare subregulatory guidance, a new and with section 1851(c)(3)(A)(ii), we eligibility; • simplified positive (that is, ‘‘opt in’’) proposed to amend § 422.66(d)(1) to add Establishing timeframes for election process that would be available text clarifying that seamless processing and the effective date of the continuation of coverage is available to enrollment; and to all MA organizations for their • commercial, Medicaid or other non- an individual who requests enrollment Requiring notification to Medicare plan members. To reflect this during his or her Initial Coverage individuals at least 60 days prior to the proposal for a simplified election Election Period. We also proposed a conversion of their right to opt-out or process, we proposed to add text in revision to § 422.68(a) to ensure that decline the enrollment. § 422.66(d)(5) authorizing a simplified ICEP elections made during or after the In considering this alternative, we election for purposes of converting month of entitlement to both Part A and contemplated additional beneficiary existing non-Medicare coverage to MA Part B are effective the first day of the protections, including the issuance of an coverage offered by the same calendar month following the month in additional notice to ensure that organization. This new simplified which the election is made. This individuals understood the implication enrollment process aimed to lessen proposed revision would codify of taking no action when notified of the burden for MA organizations, make subregulatory guidance that MA default enrollment. While this enrollment easier for the newly-eligible organizations have been following since alternative would lead to increased use beneficiary to complete, and provide 2006. This proposal is also consistent of the seamless conversion enrollment opportunity for beneficiary choice, so with the proposal at § 422.66(c)(2)(iii) mechanism than what had been used in that beneficiaries could remain with the regarding the effective date of coverage the past, we expressed concern that the organization that offers their non- for default enrollments into D–SNPs. operational challenges, particularly in Medicare coverage or select another MA We also solicited comment on these relation to the new Medicare plan that meets their individual needs related proposals. Beneficiary Identification number, with respect to provider network, In conclusion, we proposed to add could be significant for MA regulation text at § 422.66(c)(2)(i) prescription drug formularies, and cost organizations to overcome at this time. through (iv) to set limits and We also explained how we considered and benefit structures. We explained requirements for a default enrollment of proposing regulations to limit the use of that our new election process would the type authorized under section default enrollment to only beneficiaries provide a longer period of time for MA 1851(c)(3)(A)(ii). We proposed a who are eligible for Medicare based on organizations to accept enrollment clarifying amendment to § 422.66(d)(1) age. While this alternative would requests than the time period in which regarding when seamless continuation simplify an MA organization’s ability to MA organizations would be required to coverage can be elected and revisions to identify eligible individuals, we noted effectuate default enrollments, as § 422.66(d)(5) to reflect our proposal for concerns about disparate treatment organizations would be able to accept a new and simplified positive election among newly eligible beneficiaries simplified enrollments throughout the process that will be available to all MA based on their reason for obtaining individual’s Initial Coverage Election organizations and their members who Medicare entitlement. Period (ICEP), provided he or she enroll in an MA plan offered by the We invited comments on our proposal enrolled in both Medicare Parts A and same entity that offers the individual’s and the alternate approaches we B when first eligible. We proposed to pre-Medicare coverage. Lastly, we identified, including the following: use existing authority to create this new proposed revisions to § 422.68(a) to • Codify the existing parameters for enrollment mechanism, which would be ensure that ICEP elections made during this type of seamless conversion default available to MA organizations in the or after the month of entitlement to both enrollment such that all MA 2019 contract year. We solicited Part A and Part B are effective the first organizations would be able to use this comments on the proposed changes to day of the calendar month following the default enrollment process for newly § 422.66(d)(5) and the form and manner month in which the election is made. eligible and newly enrolled Medicare of the simplified enrollments. We solicited comments on all these beneficiaries already covered by the MA In addition to these proposals and proposals. organization’s non-Medicare coverage. solicitations for comment related to In addition, we presented an • Codify the existing parameters for default and seamless enrollments for alternative for consideration and this type of seamless conversion default newly eligible Medicare beneficiaries, comment. Because we recognized that enrollment, as described previously, but we proposed amendments to our proposal narrowed the scope of allow that use of default enrollment to §§ 422.66(d)(1) and 422.68 that are also default enrollments compared to what be limited to only the aged population. related to MA enrollment. Currently, as CMS approved under section We also asked for solutions to address described in the 2005 final rule (70 FR 1851(c)(3)(A) of the Act in the past, we the concerns we identified in the 4606 through 4607), § 422.66(d)(1) discussed in the proposed rule that we proposed rule, particularly related to

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how MA organizations could identify identify non-MA members when those we ensure that beneficiaries who do not commercial members who are members approach Medicare eligibility speak English as a primary language approaching Medicare eligibility based and for CMS to convey this information receive outreach in their language, on disability, as well as how plans to plans well in advance of the Medicare preferably by both mail and telephone. could confirm MA eligibility and eligibility date. In light of these Response: We appreciate these process enrollments without access to comments, CMS may consider comments and agree that clear the individual’s Medicare number. expanding default enrollment to occur communication with individuals We received the following comments from commercial or other coverage identified for default enrollment is an and our responses follow: arrangements in future rulemaking. We important protection, especially with Comment: We received significant are not finalizing the alternate proposal regard to the potential impact of MA support for our proposal to permit on which we solicited comment. plan enrollment on an individual’s default MA enrollments, especially for Comment: A commenter asked that access to care. We note that existing dually-eligible beneficiaries who are we expand default enrollment to those law, such as Title VI of the Civil Rights newly eligible for Medicare. Most enrolled in other ‘‘state innovated Act of 1964 (applicable to MA commenters supported the proposal to models’’ and delivery systems other organizations in connection with permit only D–SNPs to receive than Medicaid managed care, such as Medicare coverage) and 42 CFR 438.10 defaulted enrollments for dually-eligible ACOs. The same commenter asked that (applicable to Medicaid managed care beneficiaries. Some commenters who we allow the default enrollment plans) address requirements for supported our proposal also supported provisions to be applied to individuals providing access to enrollees who have the alternative we noted for enrolled in coverage other than limited English proficiency (LEP). consideration that would permit default comprehensive Medicaid managed care, Guidance on the Civil Rights Act of enrollment of newly Medicare-eligible including prepaid inpatient health 1964 and authorities that are not limited individuals enrolled in a non-Medicare plans, prepaid ambulatory health plans, to Medicare or Medicare is issued by the health plan offered by the same and primary care case management. HHS Office for Civil Rights (OCR). We organization. Another commenter asked that we refer the commenter to section II.B.5 of Response: We appreciate the consider expanding our proposal for this final rule on marketing and widespread support we received for the default enrollment and/or changing the communications requirements. We proposal. In our view, this proposal and current parameters for passive believe, therefore, that revisions to our our final rule support state efforts to enrollment to allow a State to enroll any proposed rule are not necessary. increase enrollment of dually eligible dually-eligible individual (whether in a Comment: Several commenters stated individuals in fully integrated systems Medicaid managed care plan or in a that the network for the MA plan should of care. Medicaid Fee-for-Service program) into be substantially identical and should We appreciate the responses to our a D–SNP at any time. not be substantially narrower than the solicitation of feedback on expanding Response: We appreciate the network of the Medicaid plan from default enrollment to include comments. As proposed, default which default enrollment would occur. individuals enrolled in commercial enrollment would be subject to several Response: Although we did not health plans offered by an MA substantive conditions, one of which include specific provider network organization. As noted in the proposed required that anyone being considered criteria in our proposal for default MA rule (82 FR 56366) and above, our for default enrollment be enrolled in a enrollment, we note that CMS currently experience with the current seamless Medicaid managed care plan affiliated has in place network adequacy conversion enrollment mechanism with the MA organization. Our proposal requirements that would apply to any makes it clear that organizations was specific to allowing default MA plan into which default enrollment attempting to seamlessly convert enrollment of individuals enrolled in occurs. States also have the opportunity individuals from commercial coverage comprehensive Medicaid managed care to use their State Medicaid agency (that is, private coverage and plans—rather than limited-benefit plans contracts with D–SNPs to create Marketplace coverage) are, for the most or case management arrangements—into additional provider network continuity part, unable to comply with our current D–SNPs when these Medicaid managed requirements. Therefore, we do not guidance and approval parameters, care plan enrollees first become eligible believe that additional criteria are especially the expectation that for Medicare. We believe that our warranted. organizations have the means to identify overall goals of encouraging integrated Comment: Several of the commenters their commercial members who are care are best met by limiting the default who opposed our proposal for default approaching Medicare eligibility based enrollment to the context of enrollment asked that in the event that on disability. Given these challenges, comprehensive Medicaid managed care our proposal for default enrollment is we did not specifically propose to plans at this point and may revisit an finalized, we consider additional codify default enrollment from expansion of this regulation in future beneficiary protections, such as a commercial coverage. We also solicited rulemaking. We plan to further clarify minimum star rating for the MA plan feedback on how MA organizations allowable scenarios in subsequent into which default enrollment would might overcome the challenges in guidance. However, given the occur and the exclusion of MA plans confirming entitlement to Medicare parameters of section 1851(c)(3)(A)(ii) of that have been assessed a civil monetary Parts A and B within necessary the Act, we are unable to finalize a penalty or have been sanctioned within timeframes and obtaining the regulation that so substantially expands the previous 18 months. Another individual’s Medicare number, given the population of beneficiaries subject commenter expressed concern about the that in 2018 this will become a random to this default enrollment to include potential for individuals to be default and unique number instead of a Social Medicaid beneficiaries who are not enrolled into an MA plan with a low Security Number-based identifier. We enrolled in a health plan offered by an star rating when there are MA plans received only a few responses to our MA organization. with higher star ratings offered by other solicitation of ideas on how to resolve Comment: Several commenters who organizations in the same area. These these issues; commenters generally support our proposal for default commenters note that organizations deferred to CMS to find a way to enrollment recommend that, if finalized, with high star ratings that do not offer

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a Medicaid plan would not be permitted requirements or § 422.66(c)(2) or other beneficiary who wishes to join an MA to conduct default enrollment. MA program standards. plan offered by the same MA Response: We appreciate the Comment: A commenter suggested organization that offers his or her non- comments we received regarding the that we share with states the criteria we Medicare coverage at the time of his or significance of the compliance history of will use to review plan proposals to her initial Medicare eligibility. The an MA organization that wishes to offer default enrollment, adding that simplified enrollment mechanism aims conduct default MA enrollment and the this may promote uniformity with to lessen the amount of information that suggestion of a minimum star rating. We implementation across the various an MA organization needs to collect agree with these commenters that states. from the beneficiary and to use standards governing the quality of the Response: The requirements for information the MA organization MA D–SNP are appropriate to adopt as default enrollment are outlined in this already has. MA organizations that do well. We believe that default enrollment regulation. In addition, we will consider not already have an existing should not be permitted into an MA additional guidance, which is available relationship with an individual must plan offered by an MA organization to states, industry, advocates, and the collect all the necessary information in with a low star rating and/or recent general public, as necessary. which to determine eligibility and issues of significant noncompliance Comment: Most commenters process the enrollment request under with our regulatory requirements such expressed support for our proposal to § 422.60. permit simplified elections for seamless that CMS has imposed a suspension on We appreciate the feedback to finalize continuation of commercial coverage new enrollments. Since default MA use of a simplified enrollment into a MA plan offered by the same enrollment is based on an opt-out, mechanism authorized under organization. A commenter expressed rather than opt-in, approach, we believe § 422.66(d)(5) as amended in this final opposition to the offering of a simplified it is important to ensure that individuals rule. We will permit individuals who (opt-in) enrollment mechanism to are not enrolled by default into MA are in their ICEP and enrolled in any anyone enrolled in a Medicaid managed plans offered by poor performing type of non-Medicare plan to use the care plan. Another commenter asked organizations. Therefore, we are simplified (opt-in) enrollment that we consider making the simplified finalizing the regulation with additional mechanism to request enrollment in any (opt-in) enrollment mechanism type of MA plan offered by the same paragraphs ((c)(2)(i)(F) and (G)) that available to all beneficiaries, including limit default enrollment authority to those who are not in their ICEP and MA organization that offers the non- MA plans that have an overall rating of those who are not enrolled in a non- Medicare coverage. 3 Stars (or are low enrollment or new Medicare plan offered by the same Comment: A few commenters contracts) and that are not under a organization. responded to our solicitation of prohibition on new enrollments. Response: We appreciate the support feedback on limiting default enrollment Comment: Most commenters for our proposal to promote beneficiary to only the aged. Most of these expressed support for limiting CMS choice and simplify the enrollment commenters opposed this limitation; a approval of an organization’s request to process for all MA organizations that commenter supported it. Those who conduct default enrollment to a specific offer non-Medicare coverage. However, oppose limiting default enrollment to time frame. Those who mentioned a we disagree with the suggestion to only the aged believe that allowing specific time frame suggested a period prohibit use of the simplified default enrollment to be offered only to of 2 to 5 years. A commenter suggested enrollment mechanism by those those whose Medicare eligibility is that CMS conduct a review after initial enrolled in Medicaid managed care based on age, instead of to all approval only if there is an indication plans. In our view, an eligible beneficiaries, would be discriminatory of disruption in care. individual always has the option to on its face because the exclusion is Response: CMS oversight of plans’ make an active choice into an MA plan based on having a disability or ESRD. implementation of the default that meets their needs when in an Another commenter believes that states enrollment process is an important election period. Further, as not all and plans should be allowed to beneficiary protection. We agree with individuals in Medicaid managed care determine whether including all the suggestions of a 5 year timeframe, as plans will be automatically enrolled individuals approaching Medicare it provides a reasonable amount of time into a D–SNP (such as those individuals eligibility is feasible and, if not feasible, for MA organizations to implement and enrolled in Medicaid managed care include only those whose Medicare then assess the approved process, limits plans whose parent organizations have eligibility is based on age. administrative burden for MA opted not to use the default enrollment Response: We thank the commenters organizations to request continued mechanism or those individuals whose and agree that it would be inappropriate approval, and provides them the Medicaid managed care enrollment is in to exclude individuals whose Medicare opportunity to update their processes as a Medicaid prepaid health plan that eligibility is based on disability from operational enhancement or new covers a limited scope of benefits), the default enrollment. We believe that an technologies emerge. However, in our simplified enrollment mechanism will individual’s eligibility to be included in view, should beneficiary complaints or lessen burdens on the enrollee and MA default enrollment should be based on allegations of noncompliance come to organizations that offer such plans. We his or her projected Medicare eligibility our attention, we need to be able to believe that a simplified election in general and not on the specific reason conduct a review of an organization’s process for beneficiaries who wish to for Medicare eligibility. We are, default enrollment process prior to the convert from their non-Medicare therefore, finalizing this aspect of our expiration of the five year period. coverage to MA coverage offered by the proposal as described in the notice of Therefore, we will include in the final same entity will facilitate a more proposed rulemaking and are not rule an approval time period of 5 years efficient enrollment process overall. including any authority to limit default with a provision that permits CMS to As described in the proposed rule, enrollment (under paragraph (c)) or suspend or rescind approval if CMS this mechanism will be available to any seamless conversions (under paragraph determines that the MA organization is MA organization that chooses to offer it. (d)) to beneficiaries whose eligibility is not in compliance with the It will be potentially available to any based on age.

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Comment: In the event that our default MA enrollment process, as describing the default enrollment and proposal for default enrollment is proposed and as finalized in this rule, the ability to opt-out: finalized, several commenters who does not involve beneficiary choice. The (A) Information on the differences in opposed our proposal for default notice requirements in the final rule premium, benefits and cost sharing enrollment ask that default-enrolled will provide the beneficiary a least a 2 between the individual’s current beneficiaries be provided transition month period in which to review his or Medicaid managed care plan and the coverage, allowing use of an off- her Medicare options and make an dual eligible MA special needs plan and formulary drug, and allowing a informed choice. Further, the new MA the process for accessing care under the beneficiary to maintain an out-of- Open Enrollment Period, discussed at MA plan; network provider for 12 months, similar section II.B.1 of this final rule, would be (B) The individual’s ability to decline to the Medicare-Medicaid financial available to any beneficiary who was the enrollment, up to and including the alignment demonstration. default enrolled in an MA plan pursuant day prior to the enrollment effective Response: We appreciate these to § 422.66(c)(2). Upon an individual’s date, and either enroll in Original comments and note that several of the new enrollment in an MA plan during Medicare or choose another MA plan; concerns expressed are addressed in the individual’s ICEP, he or she would and other areas of current regulation and have 3 months, under the MA Open (C) A general description of guidance. With regard to formulary Enrollment Period discussed in alternative Medicare health and drug concerns, we note that all plans offering § 422.62(a)(5), to make a change to coverage options available to an Part D coverage must meet CMS’ another MA plan or select Original individual in his or her Initial Coverage formulary adequacy requirements and, Medicare for health coverage. Election Period. In addition, we are including in the in addition, must offer a transition Additionally, as individuals eligible for regulation that this information and the period upon a member’s enrollment in default enrollment would only be those notice about the default enrollment is in a new plan. Specifically, under dually-eligible, they would also be addition to any mandatory disclosures § 423.120(b)(3), new enrollees must be eligible to use their quarterly required under § 422.111. provided a temporary supply of non- opportunity under the duals SEP, as formulary Part D drugs, as well as Part Comment: Several commenters who outlined in II.A.10 of this final rule, to opposed our proposal for default D drugs with utilization management make a Part D election, as well as any restrictions, and can work with their enrollment expressed support for our other election periods for which they proposal to develop a simplified (opt-in) new plan and provider to switch to a may qualify, to make a change. In this different formulary drug or request an enrollment mechanism, as long as context, a Part D election would include differences between an individual’s exception during their first 90 days of enrollment into an MA plan that enrollment in the new MA plan. States current and new plan are clearly includes a Part D benefit. We believe communicated and that he or she is may also use their State Medicaid that there are adequate protections in Agency contracts with D–SNPs to create made aware of all options available to place, as finalized with these newly Medicare-eligible individuals. additional continuity requirements. amendments to § 422.66(c)(2) and With regard to the commenters’ These commenters note that an elsewhere in this final rule, for individual’s initial eligibility for suggestion that we require MA beneficiary choice in connection with organizations to allow new members to Medicare is a critical decision point and the initial election period when that information on the full range of receive care from out-of-network someone is first entitled to or eligible for providers for 12 months, similar to the Medicare coverage options is important Medicare. Medicare-Medicaid financial alignment to help ensure that those approaching demonstration, we note that a 6 month The regulation we proposed requires Medicare eligibility are aware of the continuity of care period is more the MA organization conducting default resources available to them and of any common for demonstration plans. In enrollment to provide notice that time-limited enrollment opportunities, addition, we note that this period can be describes the costs and benefits of the such as the option to obtain Medigap on offered by demonstration plans due to MA plan into which the default a guaranteed issue basis. the demonstration authority itself; we enrollment would occur, as well as the Response: With respect to the new do not have similar authority to impose process for accessing care under the simplified (opt-in) election mechanism a similar requirement on MA plan. We agree with the commenters that would be available to all MA organizations that choose to implement that information on the differences organizations for MA enrollments of the default enrollment process. between an individual’s current non- their commercial, Medicaid or other Comment: The few commenters who Medicare coverage and the new MA non-Medicare members, we note that opposed default enrollment cite as the plan, including a statement as to MA organizations that choose to basis for their position the lack of whether the individual’s current implement this optional election beneficiary choice and the potential for primary care provider will continue to mechanism will be required to follow disruption in care resulting from default be available to the individual upon existing rules governing mandatory enrollment into a plan with different enrollment in the MA plan, should be disclosures (for example, § 422.111), benefits, cost-sharing, provider network included in the advance notification of communications and marketing that are and formulary. default enrollment. We also agree that applicable to other beneficiary-initiated Response: In response to these information on other types of Medicare enrollment requests. Required comments, we note that an important plans should be included in the notice disclosures include a description of the feature of this enrollment process is to ensure an individual who is notified MA plan benefits, including applicable clear and timely advance notice to the of default enrollment has sufficient conditions and limitations, premiums individual regarding default MA information and can make an informed and cost-sharing (such as copayments, enrollment and the opportunity to choice with regard to the coverage deductibles, and coinsurance), any other decline the enrollment up to and option that best meets his or her needs. conditions associated with accessing including the day prior to the Therefore, we are finalizing additional benefits and for purposes of enrollment effective date. We, therefore, paragraphs, at (c)(2)(iv), that specific comparison, a description of the disagree with these commenters that the information be included in the notice benefits offered under original

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Medicare. Also included under eligible beneficiaries by a single access benefits and would be financially § 422.111 is the requirement to disclose managed care organization. liable for healthcare services received the number, mix, and distribution Response: We thank the commenters from providers not contracted with the (addresses) of providers from whom for their feedback and agree that MA plan. To ensure that individuals enrollees may reasonably be expected to allowing default enrollment from receive timely advance notification of obtain services. We will provide Medicaid managed care plans into FIDE the default enrollment, we are declining additional information on this optional SNPs is consistent with the proposed the commenter’s suggestion. We note enrollment mechanism in subregulatory rule. FIDE SNPs are a specific type of that individuals who are enrolled into a guidance. approved MA–PD dual eligible special MA plan through default enrollment Given these substantial existing needs plan. We will finalize revised text continue to have a three-month disclosure requirements that will be to clarify that FIDE SNPs are permitted opportunity to change their enrollment applicable to the new simplified (opt-in) to use the default enrollment using the MA Open Enrollment Period, election mechanism, as well as our mechanism, subject to the other as outlined in § 422.62(a)(5). Further, an ongoing public outreach and education requirements in the rule. individual who chooses to opt out of activities for individuals new to Comment: A commenter stated that default enrollment into an MA plan is Medicare, we do not believe that Congress should revisit default still able to make an election during his additional notice or disclosure enrollment in traditional Medicare. This or her Initial Coverage Election Period, requirements are warranted. commenter believes that to the extent which begins 3 months before and lasts Comment: A few commenters asked that MA quality is superior, enrollment 3 months after the month of initial that we reduce the requirement to should default to the highest quality Medicare eligibility. identify newly-eligible Medicare option, rather than to traditional Comment: A commenter suggested beneficiaries from 90 to 60 days. Medicare. that default enrollment not be allowed Response: We believe the Response: As acknowledged by the where Medicare-Medicaid financial commenters’ reference to a 90 day commenter, this comment is outside of alignment demonstration plans are requirement for advance notification of the scope of this regulation and our available. newly-eligible Medicare beneficiaries is authority under section 1851. CMS’s Response: We are committed to based on the current subregulatory authority is circumscribed by the partnership with state Medicaid guidance applicable to the seamless Medicare statute, particularly section agencies to pursue integrated care conversion enrollment mechanism. This 1851(c)(3)(A)(ii) of the Act with regard approaches that work for each state. We guidance will be revised as a result of to default enrollments. believe that the proposed regulatory this final rule to account for default Comment: A commenter suggests that language requiring state approval for enrollment and the new simplified (opt- plans conducting default enrollment be default enrollment into D–SNPs in) enrollment mechanism. The rule we allowed to send the notification of provides an appropriate safeguard that are finalizing requires notice to the default enrollment up to 90 days after ensures any default enrollments are affected beneficiary at least 60 days in an individual’s initial Medicare consistent with the state’s Medicare- advance of the enrollment effective date eligibility, adding that this would Medicaid integration goals. (the month in which the individual is increase enrollment into integrated Comment: A commenter who opposes first entitled to both Part A and Part B). plans. default enrollment into D–SNPs stated This reflects a change from the current Response: We appreciate the that it will lead to reduced competition seamless conversion process, which suggestion; however we disagree with and fewer D–SNP offerings for requires identification of beneficiaries permitting notification of default beneficiaries, resulting in higher costs that will be seamlessly enrolled 90 days enrollment after enrollment or, as and fewer benefits over time. in advance. While we believe that implied by the commenter, effectuating Response: We appreciate the timely identification of individuals the default enrollment up to 90 days comment but disagree with the approaching Medicare eligibility is an after the initial date of Medicare commenter’s assessment and conclusion important beneficiary protection that eligibility. As described in our proposal, regarding the impact of default MA helps to ensure that plans are able to states have the information to identify enrollment on competition in the provide timely advance notification and newly eligible Medicare beneficiaries market and the number of D–SNP submission of enrollment transactions before the actual first date of Medicare offerings. As default enrollment to CMS, we also believe that for default eligibility; therefore, they have the accounts only for those newly eligible enrollment this shorter timeframe does information necessary to provide to for Medicare, it is our view that D–SNPs not have an adverse beneficiary impact. their contracted MA organizations so provide a valuable service to all MA plans that are authorized to use this that the integrated coverage can begin at beneficiaries—those currently and default enrollment process must the earliest possible date—the date the newly in the Medicare program. identify all eligible enrollees in time to individual first has both Medicare Parts After review of the comments, and as provide the required advance A and B. As such, the effective date for discussed earlier, we are finalizing the notification to individuals eligible for default enrollment will always coincide proposed changes to §§ 422.66(c) and default enrollment no fewer than 60 with the date of an individual’s 422.68(d)(1) and (5) with the following days before the default enrollment entitlement to and eligibility for modifications: effective date. Medicare Parts A and B, which would • Paragraph 422.66(c)(2)(i) will be Comment: Several commenters not allow the commenter’s suggested revised to clarify that we will allow suggested that CMS consider allowing change. We note as well that the default enrollment into a FIDE–SNP default enrollment from Medicaid commenter’s suggestion would result in administered by an MA organization managed care plans into fully integrated notification of the default enrollment under the same parent organization as dual eligible special needs plans (FIDE well after the enrollment effective date, the organization that operates the SNPs), which are a type of special needs resulting in a period of time during Medicaid managed care plan in which plan designed to promote the full which the individual is not aware of his the individual remains enrolled. integration and coordination of or her enrollment in an MA plan, does • Paragraph 422.66(c)(2)(i) will be Medicaid and Medicare benefits for dual not have the information necessary to revised to require a minimum star rating

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on the contract receiving default In the proposed rule, we proposed a • Receiving MA plans must have enrollments for an MA organization to limited expansion of CMS’ regulatory appropriate limits on premium and cost- be approved for default enrollment. We authority to initiate passive enrollment sharing for beneficiaries. are revising the paragraph to require for certain dually eligible beneficiaries We solicited comments on our that, for an organization to be approved who are currently enrolled in an proposal to identify plans for receiving for default enrollment, it must have an integrated D–SNP into another passive enrollments, particularly on the overall quality rating, from the most integrated D–SNP in instances where minimum quality standards relevant to recently issued ratings, under the rating integrated care coverage would dually eligible beneficiaries. We also system described in §§ 422.160 through otherwise be disrupted, such as during solicited comments on whether to limit 422.166, of at least 3 stars or is a low a state re-procurement of Medicaid passive enrollment authority to enrollment contract or new MA plan as managed care contracts that results in circumstances that would not raise total defined in § 422.252. In addition, the current Medicaid managed care plans cost to the Medicare and Medicaid MA organization must not be under an not being renewed, or when programs. Additionally, we requested enrollment suspension. beneficiaries are enrolled in an feedback on how to calculate the • Paragraph 422.66(c)(2)(ii) will be integrated D–SNP that non-renews its projected impact on Medicare and revised to include an approval period MA contract at the end of the contract Medicaid costs from exercise of this not to exceed 5 years, subject to CMS year. The intent of CMS’ proposal was authority. authority to rescind or suspend to improve care coordination and In the proposed rule, we noted that approval if the plan is non-compliant. we had also considered proposing new • minimize disruption in care by Paragraph 422.66(c)(2)(iv) will be promoting enrollment in integrated care (or additional) beneficiary notification revised to require that the notice issued arrangements for dually eligible requirements for passive enrollments by the MA organization include beneficiaries currently enrolled in an that occur under proposed paragraph information on the differences in integrated D–SNP. (g)(1)(iii), including the provision of two premium, benefits and cost sharing notifications to enrollees prior to the between the individual’s current Specifically, we proposed authorizing effective date. Citing the existing Medicaid managed care plan and the CMS to passively enroll certain dually beneficiary notifications that are dual eligible MA special needs plan and eligible individuals currently enrolled currently required under Medicare the process for accessing care under the in an integrated D–SNP into another regulations and concerns regarding the MA plan; an explanation of the integrated D–SNP, after consulting with quantity of notifications sent to individual’s ability to decline the the state Medicaid agency that contracts beneficiaries, we did not propose to enrollment, up to and including the day with the D–SNP or other integrated modify the existing notification prior to the enrollment effective date, managed care plan, when CMS requirements under paragraph (g)(4) of and either enroll in Original Medicare determines that the passive enrollment the proposed rule. However, we or choose another MA plan; and a will promote continuity of care and solicited comment on alternatives general description of alternative integrated care under § 422.60(g)(1)(iii). regarding beneficiary notices, including Medicare health and drug coverage We also proposed, under § 422.60(g)(2), comments about the content and timing options available to an individual in his a number of requirements an MA plan of such notices. or her Initial Coverage Election Period. would have to meet in order to qualify We received the following comments • Paragraph 422.66(c)(2)(iv) will be to receive passive enrollments under and our responses follow. revised to clarify that the mandatory paragraph (g)(1)(iii). These proposed Comment: Many commenters notice is in addition to the information requirements are detailed below. expressed support for CMS’ proposal for and documents required to be provided • MA plans receiving the passive a limited expansion of the current to new enrollees under § 422.111. enrollments must be highly integrated passive enrollment authority in order to D–SNPs, thereby restricting passive promote continued enrollment of dually 8. Passive Enrollment Flexibilities To eligible beneficiaries in integrated D– Protect Continuity of Integrated Care for enrollment to those MA plans that operate as a FIDE SNP or meet the SNPs, preserve and promote care Dually Eligible Beneficiaries integration, and limit disruptions in (§ 422.60(g)) integration standard for a highly- integrated D–SNP, as defined in § 422.2 care under certain circumstances. Beneficiaries who are dually eligible and described in § 422.102(e), Several commenters supported CMS’ for both Medicare and Medicaid respectively. goal of care continuity while expressing typically face significant challenges in their belief that the best way to • In an effort to promote continuity of navigating the two programs, which empower beneficiaries is through care, receiving MA plans must have include separate or overlapping benefits mechanisms where beneficiaries opt in substantially similar provider and and administrative processes. to integrated care. A commenter facility networks and Medicare- and Fragmentation between the two requested that CMS consider how Medicaid-covered benefits as the programs can result in a lack of passive enrollment of beneficiaries from integrated MA plan (or plans) from coordination for care delivery, an existing integrated D–SNP into which beneficiaries are passively potentially resulting in unnecessary, another integrated D–SNP could create enrolled. duplicative, or missed services. One disruptions in care. A few commenters • method for overcoming this challenge is D–SNP contracts must have a opposed our passive enrollment through integrated care, which provides minimum overall MA Star Rating of at proposal due to concerns that passive dually eligible beneficiaries with the least 3 stars for the year prior to receipt enrollment limits beneficiary choice and full array of Medicaid and Medicare of passive enrollment or be a low erodes the role of competition in the benefits for which they are eligible enrollment or new MA contract (which marketplace. A commenter suggested through a single delivery system, do not have a Star Rating because of the that a better alternative for beneficiaries thereby improving quality of care, insufficient data available). in integrated D–SNPs that are non- beneficiary satisfaction, and care • Receiving MA plans must not have renewing is for them to revert to FFS coordination, and reducing any prohibition on new enrollment Medicare. Another commenter noted administrative burden. imposed by CMS. that passive enrollment in other

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circumstances has proven to be too we note that we are making a technical We may re-examine this issue as we confusing for dually eligible revision to paragraph (g)(1)(iii) to clarify gain experience, but we have concluded beneficiaries. that a plan must meet all the that it is more prudent to focus this form Response: We appreciate the support requirements under paragraph (g)(2) to of passive enrollment on a narrow set of by most commenters of our goals of be eligible to receive passive circumstances that offer the highest promoting continuity and quality of care enrollment. levels of integration between Medicare for dually eligible beneficiaries Comment: A commenter stated that and Medicaid. This will allow us to currently enrolled in integrated D–SNPs any beneficiary who has chosen FFS better monitor implementation and will in situations where they would Medicare should not be passively promote integration, which has been otherwise experience an involuntary enrolled. Several commenters suggested associated with better outcomes.29 We disruption in either Medicare or that passive enrollment be extended to also note that our proposed criteria are Medicaid coverage. As we stated in the existing and new dually eligible minimum standards only; states can proposed rule (82 FR 56369–56370), we beneficiaries in FFS Medicare and establish additional criteria to anticipate using this new authority stand-alone Part D plans. A few determine which D–SNPs may be exclusively in limited situations related commenters recommended passively eligible for passive enrollment. As such, to market disruptions related to D–SNP enrolling dually eligible beneficiaries we are finalizing the scope of the non-renewal or changes in state into a D–SNP when states enroll proposed passive enrollment authority Medicaid managed care organization beneficiaries into a mandatory Medicaid for dually eligible beneficiaries enrolled long-term services and supports (LTSS) procurements; therefore, we anticipate in an integrated D–SNP, without program. that this authority, as finalized, will modification. Response: While we appreciate Comment: Several commenters have no significant impact on commenters’ support for coordinated encouraged CMS to consider further competition in the Medicare Advantage care options for individuals who are not expanding our proposed passive marketplace. We also proposed that D– currently enrolled in an MA plan, we enrollment authority to transition SNPs meet certain requirements related note that our intent in proposing an enrollees of non-renewing Medicare- to integration, quality, performance, and expansion of CMS’ passive enrollment Medicaid Plans (MMPs) into an provider network and benefits authority was to promote continuity of integrated D–SNP. comparability relative to the enrollees’ integrated care for those beneficiaries Response: We clarify that under the previous coverage. We believe these enrolled in an integrated D–SNP but Financial Alignment Initiative capitated safeguards will ensure continuity of care who would experience an involuntary model demonstrations, MA and limit any disruption associated with disruption in their Medicare or regulations—including those governing a plan change for affected enrollees. In Medicaid coverage in the absence of passive enrollments—apply to MMPs addition, we believe the beneficiary passive enrollment into a comparable unless waived. As has been the case to notice requirements for passively integrated D–SNP. This authority could date under the demonstrations, we will enrolled individuals described in not be used to transition enrollees continue to use our demonstration § 422.60(g)(4) ensure that beneficiaries currently in FFS Medicare to an MA authority to waive applicable MA will receive appropriate advance notice plan. regulatory requirements in three-way regarding the costs and benefits of their Comment: Some commenters agreed contracts as necessary, and in new coverage, the process for accessing that passive enrollment eligibility partnership with each state, to achieve care under the new plan, and an should be limited to highly integrated each individual demonstration’s explanation of the beneficiary’s ability D–SNPs. A commenter recommended objectives. to decline the enrollment or choose limiting eligibility for passive Comment: Several commenters another plan. As described elsewhere in enrollment to integrated D–SNPs with supported the requirement for this final rule, we are strengthening the the experience and size to meet the consultation with the state Medicaid notice requirements associated with unique needs of the dual eligible agency that contracts with an eligible D– passive enrollment under this new population. A few commenters SNP, as proposed in § 422.60(g)(1)(iii). limited expansion of CMS’ passive expressed concern that the scope of our Some commenters noted that this enrollment authority. Finally, we note proposal was too limited because only consultation would ensure both the that all individuals enrolled into an Fully Integrated Dual Eligible (FIDE) proper utilization of CMS’ passive integrated D–SNP under CMS’ passive SNPs and other MA plans that meet the enrollment authority and consistency enrollment authority will have a special integration standard for a highly- election period (SEP) under integrated D–SNP, as defined in § 422.2 29 There is a growing evidence that integrated care § 422.60(g)(5), which as finalized in this and described in § 422.102(e), and financing models can improve beneficiary rule refers to the new SEP established in respectively, would be qualified to experience and quality of care, including: • Health Management Associates, Value this final rule at § 423.38(c)(10). This receive the passive enrollments. These Assessment of the Senior Care Options (SCO) SEP will allow individuals to opt out of commenters noted the limited number Program, July 21, 2015, available at: http:// the passive enrollment within 3 months of highly integrated D–SNPs and FIDE www.mahp.com/unify-files/HMAFinalSCO _ _ _ of notification of a CMS or state- SNPs currently in the market. A few WhitePaper 2015 07 21.pdf. • MedPAC chapter ‘‘Care coordination programs initiated enrollment action or that commenters recommended extending for dual-eligible beneficiaries,’’ June 2012, available enrollment action’s effective date eligibility to include all D–SNPs that at: http://www.medpac.gov/docs/default-source/ (whichever is later). This SEP is in meet minimum quality standards and reports/chapter-3-appendixes-care-coordination- addition to any other election periods can demonstrate appropriate levels of programs-for-dual-eligible-beneficiaries-june-2012- for which they qualify. During the SEP, report-.pdf?sfvrsn=0. integrated benefits. Another commenter • Anderson, Wayne L., Zhanlian Fen, and Sharon a beneficiary would be able choose FFS recommended that CMS allow states the K. Long, RTI International and Urban Institute, Medicare or other coverage based on flexibility to determine which D–SNPs Minnesota Managed Care Longitudinal Data their personal preferences. Therefore, are eligible to participate in passive Analysis, prepared for the U.S. Department of Health and Human Services Assistant Secretary for we are finalizing the proposed limited enrollment. Planning and Evaluation (ASPE), March 2016, expansion of CMS’ passive enrollment Response: We appreciate the available at: https://aspe.hhs.gov/report/minnesota- authority at § 422.60(g)(1)(iii). However, commenters’ perspectives on this issue. managed-care-longitudinal-data-analysis.

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with states’ integration goals and MA plans, affected D–SNPs will submit providers and prescription drugs priorities. A commenter noted that this enrollment transactions to CMS’ MARx associated with each individual consultation would result in a more system. beneficiary. Several commenters also seamless process for states, integrated Comment: Several commenters recommended that, in our analysis of D–SNPs, and dually eligible supported our proposed requirement in benefits comparability, CMS consider beneficiaries. A few commenters noted § 422.60(g)(2)(ii) that a receiving the comparability of the receiving D– that passive enrollment should occur at integrated D–SNP have substantially SNP’s formulary. state discretion and pursuant to the similar provider and facility networks to Response: We agree that intelligent State Medicaid Agency Contract with the other MA integrated D–SNP plan (or assignment processes would be helpful the D–SNP required under § 422.107. plans) from which the passively for ensuring care continuity and Response: We appreciate the support enrolled beneficiaries are enrolled. A minimizing enrollee disruption. We will for the proposed requirement that CMS few commenters suggested that CMS consider the availability of intelligent consult with state Medicaid agencies to limit the application of provider assignment processes when effectuating make a determination that D–SNPs meet network and benefit similarity in order passive enrollments under this authority the passive enrollment eligibility not to further narrow the scope of and will also consider intelligent criteria and that the use of passive permissible passive enrollments into D– assignment options in the future. enrollment will promote integrated care SNPs. However, we note that all plans offering and continuity of care for full-benefit Response: We appreciate the support Part D coverage must meet CMS’ dual eligible beneficiaries currently of our proposed requirement for formulary adequacy requirements and, enrolled in an integrated D–SNP. We are provider network comparability as a in addition, must offer a transition committed to working with states to minimum requirement for an integrated period upon a member’s enrollment in ensure that any passive enrollments D–SNP’s eligibility for passive a new plan. Specifically, under under this authority meet CMS enrollment. We disagree with the § 423.120(b)(3), new enrollees must be requirements as well as state priorities. commenters’ suggestion that we limit provided a temporary supply of non- Comment: A commenter requested our eligibility analysis on provider formulary Part D drugs, as well as Part that CMS clearly communicate the network comparability given our D drugs with utilization management criteria for an integrated D–SNP to be emphasis on continuity of care in the restrictions, and can work with their eligible to accept passive enrollees in application of this limited expansion of new plan and provider to switch to a subregulatory guidance. CMS’ passive enrollment authority. We different formulary drug or request an Response: We anticipate issuing believe that this comparability analysis exception during their first 90 days of subregulatory guidance about the will minimize the number of enrollees enrollment in their new plan. criteria for the passive enrollment whose provider relationships are Comment: A commenter expressed authority finalized in this rule. We disrupted as a result of passive concern that passive enrollment could believe that the amendments to enrollment and will encourage retention further limit enrollee choice in states in § 422.60(g) as finalized here are following enrollees’ transition to a new which biologic medications are sufficiently clear, particularly in light of integrated D–SNP. We are therefore reimbursed at low rates under Medicaid. the detailed discussion in the proposed finalizing the requirements for assessing Response: We appreciate the rule and these various responses to network comparability as a condition commenter’s concern about access to comment, that implementation in for eligibility for passive enrollment medically necessary drugs. We note that CY2019 will not be confusing for D– under § 422.60(g)(1)(iii) as proposed. Medicare covers nearly all prescription SNPs that are qualified to receive Comment: Several commenters drugs for dually eligible individuals enrollments. requested clarification on how CMS will under Parts A, B, and D. Medicaid Comment: A commenter expressed determine that the receiving integrated coverage of drugs for dually eligible concern that passive enrollment D–SNP has substantially similar individuals is generally limited to over- authority would be delegated to states. provider and facility networks and the-counter drugs and products and Another commenter recommended that Medicare- and Medicaid-covered prescription drugs that are otherwise CMS provide more clarification on benefits as the D–SNP from which the excluded from the definition of a Part D whether CMS or state Medicaid agencies beneficiaries were passively enrolled. drug. For dually eligible beneficiaries, would be managing passive enrollment Response: We appreciate the the drugs referenced by this commenter into integrated D–SNPs under our commenters’ request for clarification would be covered under Medicare Part proposal, as well as on the and anticipate issuing clarifications B rather than Medicaid. implementation process for such through subregulatory guidance. The Comment: Several commenters passive enrollments. subregulatory guidance will articulate recommended a transition period during Response: When circumstances arise the process and timing for the losing which passively enrolled beneficiaries in which passive enrollment into an and receiving D–SNPs to submit can see current providers that are not in integrated D–SNP could potentially be networks through the CMS Health Plan their new plan’s network. A few applied, CMS will consult with the Management System. CMS will also commenters also suggested that care applicable state Medicaid agency, review plan benefit packages submitted plans and authorized services be consistent with § 422.60(g)(1)(iii) as by the impacted D–SNPs as well as continued for a period of time following finalized. We anticipate that such engage the State Medicaid agency to passive enrollment. consultation would include ensure covered services are similar to Response: We appreciate the collaboration between CMS and the services currently being received by commenters’ suggestion that we state Medicaid agency on issues such as impacted dual eligible beneficiaries. incorporate continuity of care identifying plans that meet the Comment: In addition to our proposed requirements into our proposed passive requirements in § 422.60(g)(2), decisions network comparability requirement, enrollment processes. We believe our about enrollee assignment, and several commenters recommended the finalization of the requirement for communications with impacted plans. use of an ‘‘intelligent assignment’’ substantially similar provider and We clarify that, as is the case today with process for passively enrolling facility networks under § 422.60(g)(2)(ii) respect to other passive enrollments into beneficiaries into a D–SNP based on the will facilitate continuity of care in most

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cases. In addition, as previously limitations commenters identified with recommended using measures discussed, the Part D transition the MA Star Ratings, especially with developed by the multi-stakeholder requirements provide continuity of respect to assessing the quality of Core Quality Measures Collaborative. prescription drug benefits during a Medicaid services provided under an Another commenter suggested beneficiary’s first 90 days of coverage in integrated D–SNP, we believe the MA evaluating an integrated D–SNP’s a new plan, including in cases where Star Ratings system is CMS’ most behavioral health services by number of passive enrollment has been effectuated. effective and methodologically sound days on waiting list and availability of We encourage states to consider using tool for measuring plan performance a behavioral health expert. This their State Medicaid Agency Contracts and quality and ensuring that passive commenter also suggested several with D–SNPs as a vehicle for requiring enrollments are limited to MA plans methods for assessing LTSS. that any passive enrollments into that have demonstrated a commitment Response: We appreciate the integrated D–SNPs apply transition to quality. With regard to the additional information these rules that align with those applicable to methodological concerns related to the commenters provided regarding Medicaid managed care organizations impact of enrollees’ socioeconomic accreditation and measures relevant to under § 438.62(b). As previously noted, status on MA contract performance, we dually eligible beneficiaries. Since the we are finalizing our provider and direct the commenter’s attention to the number of plans eligible to receive benefits comparability requirements at discussion in this final rule about the passive enrollment under our proposed § 422.60(g)(2)(ii) without further MA and Part D Quality Rating System limited expansion of passive enrollment modification. about adjustments to the ratings to authority is projected to be small, we Comment: Several commenters address those and similar concerns in believe it is important to consider responded to our request for comment section II.A.11.t. We note that the minimizing burden to eligible plans and on CMS’ proposal that an integrated D– additional required consultation with ensuring that there are an adequate SNP meet certain quality criteria to states in § 422.60(g)(1)(iii) as part of the number of plans to receive enrollments. qualify for passive enrollment, process of determining that an MA Star Ratings are based on currently particularly with respect to the integrated D–SNP meets the criteria for reported plan data and do not impose proposed requirement that a D–SNP receipt of passive enrollment will additional reporting or specific have an overall quality rating of at least provide valuable information regarding accreditation requirements on integrated 3 stars based on the MA Star Ratings the performance and quality of the D–SNPs. As stated previously, we are system. Several commenters expressed organization’s Medicaid product. We are finalizing the quality requirements for support for our proposed application of therefore finalizing the quality receipt of passive enrollment under a minimum overall MA Star Rating of at requirements under § 422.60(g)(2)(iii) § 422.60(g)(1)(iii) as proposed. least 3 stars. A commenter noted that with a clarification that the most Comment: We received no comments CMS’ consultation with the state recently issued overall MA Star Rating supporting a limitation of our proposed Medicaid agency would ensure that an is the applicable rating for determining expansion of CMS’ passive enrollment integrated D–SNP’s Medicaid eligibility to receive passive enrollment. authority to circumstances that would performance is considered in addition We note as well that new and low not raise total cost to the Medicare and to the Medicare performance captured enrollment plans are generally not by the MA Star Ratings. Several Medicaid programs. A few commenters assigned an overall Star Rating because stated they would not support a cost- commenters recommended raising the of the lack of data from a prior minimum required MA Star Rating effectiveness test as a standalone performance period (new plans) or level. A commenter noted concerns with requirement for determining a D–SNP’s insufficient number of enrollees for the MA Star Ratings as a basis for our eligibility to receive passive enrollments reliable sampling (low enrollment); proposed quality requirement because under our proposed rule. In addition, therefore, the regulation text as star ratings may be affected more by the several commenters expressed concerns proposed and as finalized, permits new percentage of dually eligible members about establishing such a limitation for and low enrollment plans that meet the enrolled in an MA plan than other a variety of reasons. A commenter stated other requirements to also receive these factors and suggested requiring state that a cost-effectiveness test would limit passive enrollments. However, we will approval instead of a minimum MA Star CMS’ ability to align enrollment and consider revisiting the minimum MA Rating. Some commenters expressed preserve continuity of care. Another concern that use of MA Star Ratings Star Rating level in future rulemaking commenter believed that this approach does not capture plans’ performance once we gain additional experience with did not consider long-term savings related to services covered under implementing passive enrollments into resulting from better integration. A few Medicaid or other factors affecting plan integrated D–SNPs. commenters also noted that the added capacity to ensure access to care for Comment: Several commenters made cost and administrative burden involved passively enrolled individuals. additional recommendations for specific in identifying these circumstances and Response: We appreciate commenters’ minimum quality measures and other measuring the cost-effectiveness of support for establishing minimum criteria relevant to dually eligible passive enrollment would potentially quality criteria as part of our assessment beneficiaries that CMS should consider offset any cost-savings. Another of an integrated D–SNP’s eligibility for as part of our determination of commenter believed that choosing passive enrollment under this provision. integrated D–SNPs’ eligibility for integrated D–SNPs for passive We call attention to our revision to passive enrollment under proposed enrollment based on an artificial cost § 422.60(g)(2)(iii), clarifying that the § 422.60(g)(1)(iii). A few commenters estimate would be inconsistent with the minimum star rating of at least 3 stars recommended that CMS require MA bid process and good faith for a D–SNP to be eligible to receive integrated D–SNPs to have additional contracting efforts. passive enrollment from the most accreditation, such as the National Response: We thank commenters for recently issued MA Star Rating for the Committee for Quality Assurance their comments on this issue. We are D–SNP under the rating system (NCQA) Medicaid plan accreditation not adding a cost-effectiveness test for described in §§ 422.160 through and long-term services and supports passive enrollments under paragraph 422.166. While we acknowledge the (LTSS) accreditation. A commenter (g)(1)(iii) in this final rule.

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Comment: In response to our request new paragraph (g)(4)(ii) to require that options. A commenter recommended for comments on beneficiary notices for plans receiving passive enrollments that notices be designed to ensure passive enrollments that would occur under paragraph (g)(1)(iii) send two informed consent by affected enrollees. under proposed paragraph (g)(1)(iii), a notices to enrollees that describe the Response: We appreciate the few commenters supported maintaining costs and benefits of the plan and the suggestions commenters provided about the current requirement that receiving process for accessing care under the the content of beneficiary notices for plans send one enrollee notice plan and clearly explain the passive enrollment under paragraph requirement when passive enrollment is beneficiary’s ability to decline the (g)(1)(iii). We note that CMS currently applied, arguing that states or receiving enrollment or choose another plan. In requires notices sent to passively plans could voluntarily choose to add addition, we are adding new paragraph enrolled individuals to clearly explain more notifications as necessary, and that (ii)(A) to specify that the first notice the beneficiary’s ability to decline the additional notices added to plan provided under paragraph (ii) must be enrollment or choose another plan. We burden. A commenter noted that, provided, in a form and manner are therefore finalizing the requirements because the Medicaid Managed Care determined by CMS, no fewer than 60 related to notice content without Rule under § 438.54(c)(3) requires the days prior to the enrollment effective modification at § 422.60(g)(4)(i) and (ii), State to notice beneficiaries regarding date. We are also adding a new as described elsewhere in this preamble. passive enrollment into a Medicaid paragraph (ii)(B) to specify that the We agree with commenters who managed care plan but does not specify second notice must be provided—again, emphasized the importance of providing the number of notices required, a in a form and manner determined by additional information and counseling requirement of one notice under our CMS—no fewer than 30 days prior to to inform beneficiary choice. As we proposed passive authority resulted in the enrollment effective date. move forward with implementation of better alignment between Medicare and We clarify that for passive this limited expansion of CMS’ passive Medicaid requirements. However, many enrollments under paragraphs (g)(1)(i) enrollment authority, we will consider commenters recommended a more and (ii), only one notice will be developing a notice template that robust noticing process, including required. This requirement is now includes information about the increasing the number of required reflected in new paragraph (4)(i), which availability of resources for additional notices to two for these passive also specifies that the notice must information and choice counseling in enrollments. Some commenters also describe the costs and benefits of the the impacted service area, including recommended that impacted plans plan and the process for accessing care SHIP programs, as well as 1–800– provide the notices in beneficiaries’ under the plan, as well as the Medicare and Medicare Plan Finder. We primary language and identify for each beneficiary’s ability to decline will consider opportunities for enrollee any providers or prescription enrollment or choose another plan, and consumer testing notice language, drugs not included under their new be provided prior to the enrollment though we note that each instance of plan. A few commenters recommended effective date (or as soon as possible passive enrollment under this authority additional telephonic outreach for after the effective date if prior notice is will be unique and require tailoring to beneficiaries whose notices are returned not practical). the specific circumstances. As noted by the postal service as undeliverable We appreciate commenters’ previously, we believe that the addition and for those whose primary language is suggestions about the importance of of a second notice will help increase not English. telephonic outreach and will encourage beneficiaries’ awareness of the change to Response: We agree with most affected plans to conduct this additional their coverage and ensure individuals commenters on this issue that, on telephonic outreach. We will also have the information to make decisions balance, two notices may be more encourage the D–SNPs losing members about whether to remain in the new beneficial than one notice when to passive enrollment into another plan integrated D–SNP or select other enrollees are being passively enrolled to share information about their coverage that better serves their needs. from one integrated D–SNP into another enrollees’ language preferences to Comment: A few commenters under paragraph (g)(1)(iii). A second facilitate the provision of information in recommended any beneficiary who is notice provides an additional non-English languages and alternate unable to be contacted should not be opportunity for the receiving D–SNP to formats as applicable. As we gain passively enrolled and should instead connect with new members and to additional experience using this passive be defaulted into FFS Medicare. ensure they receive information about enrollment authority, we will consider Response: We do not agree with these their benefits, rights, and options. We the development of additional guidance commenters. The individuals impacted believe the benefits from an additional or further rulemaking about beneficiary by our proposal are those already notice outweigh the additional burden. notice requirements as necessary. enrolled in an integrated D–SNP and In contrast, passive enrollments Comment: We received a number of who, absent our application of CMS’ effectuated under paragraphs (g)(1)(i) comments about the content of passive enrollment authority, would and (ii)—in other words, when an beneficiary notices sent to passively lose access to their current integrated immediate termination as provided in enrolled individuals. Some commenters care. Dually eligible individuals will § 422.510(b)(2)(i)(B) occurs or when recommended that notices used as part have various SEPs available, including CMS determines a plan poses a of this process be consumer tested. the Part D SEP for dual and other LIS- potential risk of harm to enrollees—are Several commenters recommended that eligible beneficiaries discussed in typically performed under time notices include alternative options for section II.A.10 of this final rule and the constraints which may make the Medicare coverage, such as available new SEP at § 423.38(c)(10) discussed in provision of two notices impracticable. PACE organizations. A few commenters section II.A.10 of this final rule that We are therefore finalizing the notice suggested that the notices include allows individuals who have been auto- requirements associated with passive information on the Special Election enrolled, facilitated enrolled, passively enrollments under paragraph (g)(1)(iii) Period (SEP) and opt-out process. A few enrolled, or reassigned into a plan by to require two notices and to establish commenters also recommended that CMS an opportunity to change plans. parameters around the timing of such beneficiaries have access to individual These SEPs will allow any individual notices. Accordingly, we are adding counseling regarding their benefit who does not wish to retain coverage

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under his or her new integrated D–SNP confusion and unintended (g)(1)(iii) send two notices to enrollees to make a different election, including misalignments between Medicare and that describe the costs and benefits of opting for coverage in FFS Medicare. Medicaid. As noted previously in this the plan and the process for accessing We also note that the addition of the preamble, we are finalizing care under the plan and clearly explain SEP at § 423.38(c)(10) to this final rule § 422.60(g)(5) with modifications to the beneficiary’s ability to decline the renders the SEP described in current replace the language describing the SEP enrollment or choose another plan. In § 422.60(g)(5) duplicative because it for passively enrolled individuals with addition, we are adding new paragraph applies to all individuals who have been a cross-reference to the new SEP (ii)(A) to specify that the first notice enrolled in a plan as a result of a CMS- described at § 423.38(c)(10). This SEP provided under paragraph (ii) must be or state-initiated enrollment action, will allow individuals to opt out of the provided, in a form and manner including passive enrollment under passive enrollment within 3 months of determined by CMS, no fewer than 60 § 422.60(g). To avoid operational notification of a CMS or state-initiated days prior to the enrollment effective complexity, we are therefore finalizing enrollment action or that enrollment date. We are also adding a new this provision by replacing the language action’s effective date (whichever is paragraph (ii)(B) to specify that the describing the SEP for passively later). We believe this change will better second notice must be provided, in a enrolled individuals at § 422.60(g)(5) align the length of the SEP for form and manner determined by CMS, with a cross-reference to the new SEP individuals who are passively enrolled no fewer than 30 days prior to the described at § 423.38(c)(10). under § 422.60(g) with the Medicaid enrollment effective date. New Comment: A commenter suggested managed care disenrollment period paragraph (g)(4)(i) will retain the that CMS provide additional under § 438.56. original requirement that one notice be opportunities for states to fully integrate Comment: A commenter encouraged provided to passively enrolled Medicaid and Medicare noticing and CMS to monitor any negative and individuals under paragraphs (g)(1)(i) beneficiary communications materials unintended consequences of our use of and (ii). for integrated products. passive enrollment after implementation • We are modifying § 422.60(g)(5) by Response: We appreciate the support of our proposed expanded authority. replacing the current language for further integration of Medicare and Response: We appreciate the describing the SEP for passively Medicaid benefits information for commenters’ concerns and clarify that enrolled individuals at § 422.60(g)(5) integrated D–SNPs and note that CMS we intend to use all currently available with a cross-reference to the new SEP has made progress toward this goal in mechanisms to monitor any passive described at § 423.38(c)(10), which collaboration with some state partners. enrollments into integrated D–SNPs, provides a 3-month SEP when an However, this comment is outside the including grievances and complaints enrollee has been auto-enrolled, scope of this regulation. reported to impacted plans and to 1– facilitated enrolled, passively enrolled, Comment: Several commenters 800–Medicare. We are committed to or reassigned into a Part D plan as a requested clarification on how the SEP making all necessary adjustments as we result of a CMS or state-initiated related to our proposed passive gain experience with the application of enrollment action. We note that all D– enrollment provision would be passive enrollment in the circumstances SNPs are also Part D plans as they are impacted by, or would interact with, the provided for in this final rule, including required to provide the Part D proposal to limit the Part D SEP for dual future rulemaking as necessary. prescription drug benefit pursuant to and other LIS-eligible beneficiaries. After consideration of the comments § 422.2 (definition of specialized MA Response: As previously discussed, we received, we are finalizing our plans for special needs individuals). dually eligible beneficiaries will have proposal regarding the expansion of access to other SEPs, including the Part CMS’ regulatory authority to initiate 9. Part D Tiering Exceptions (§§ 423.560, D SEP for dual and other LIS-eligible passive enrollment for certain dually 423.578(a) and (c)) beneficiaries and the new SEP finalized eligible beneficiaries who are currently a. Background in this rule at § 423.38(c)(10) that allows enrolled in an integrated D–SNP into individuals who have been auto- another integrated D–SNP at § 422.60(g) Section 1860D–4(g)(2) of the Act enrolled, facilitated enrolled, passively with some modifications. Specifically, specifies that a beneficiary enrolled in a enrolled, or reassigned into a plan by we are making the following Part D plan offering prescription drug CMS or a state an opportunity to change modifications: benefits for Part D drugs through the use plans. • We are making a technical revision of a tiered formulary may request an Comment: A couple of commenters to paragraph (g)(1)(iii) to clarify that a exception to the plan sponsor’s tiered noted a lack of alignment between the plan must meet all the requirements cost-sharing structure. The statute length of the SEP for passive enrollees established in paragraph (g)(2) to be requires such plan sponsors to have a under § 422.62(b)(4)—that is, 60 days— eligible to receive passive enrollment. process in place for making and the 90-day disenrollment period • We are revising paragraph (g)(2)(iii) determinations on such requests, afforded to enrollees passively enrolled to require a minimum Star Rating that consistent with guidelines established into a Medicaid managed care applies for a plan to be eligible to by the Secretary. The requirements for organization under § 438.56. receive passive enrollment. For a plan to tiering exceptions, set forth at Response: The commenters are correct be eligible to receive passive § 423.578(a), require plan sponsors to that the length of the SEP for passive enrollment, it must have an overall establish and maintain reasonable and enrollees, as described in the proposal, quality rating, from the most recently complete exceptions procedures that and that of the Medicaid managed care issued ratings, under the rating system permit enrollees, under certain disenrollment period are not the same. described in §§ 422.160 through circumstances, to obtain a drug in a In certain integrated care programs, the 422.166, of at least 3 stars or is a low higher cost-sharing tier at the more combination of changes to the SEP for enrollment contract or new MA plan as favorable cost-sharing applicable to dual eligible beneficiaries (discussed in defined in § 422.252. alternative drugs on a lower cost-sharing section II.A.10.of this final rule) and the • We are adding new paragraph tier of the plan sponsor’s formulary. 2-month period for the SEP in proposed (g)(4)(ii) to require that plans receiving Such an exception is granted when the § 422.60(g)(5) could lead to beneficiary passive enrollments under paragraph plan sponsor determines that the non-

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preferred drug is medically necessary enrollee cannot demonstrate that the guidance to plan sponsors related to the based on the prescriber’s supporting requested drug is medically necessary, a review of tiering exception requests, statement. tiering exception cannot be obtained. including examples using various As we stated in the proposed rule, we We address comments about specific formulary structures that illustrate the believe that changes in the prescription aspects of the tiering exceptions steps of the process, and guidance to drug marketplace necessitate revisions proposal in relevant sections below. determine the lowest applicable tier and to existing regulations to ensure that Comment: Several commenters appropriate alternative drugs. A tiering exceptions are adjudicated by requested that CMS ensure beneficiaries commenter expressed concern that the plan sponsors in the manner the statute are educated about the availability of proposed rule conflicts with current contemplates, and are understood by tiering exceptions. Some commenters guidance in Chapter 18 of the Medicare beneficiaries. Therefore, we proposed expressed a belief that there is little Prescription Drug Benefit Manual. various changes to §§ 423.560, information available to beneficiaries Response: We appreciate the 423.578(a) and 423.578(c) to revise and about tiering exceptions, and that it is commenters’ suggestions for additional clarify requirements for how tiering difficult to apply to individual guidance to ensure that plan sponsors exceptions are to be adjudicated and situations. Comments offered several understand the revised policy and effectuated (82 FR 56371). suggestions, including improving properly process tiering exception We received the following general existing educational publications and requests. CMS manual guidance will be comments on this proposal and our information provided through 1–800– updated to reflect the changes made responses follow: MEDICARE, providing information in through this final rule. With respect to Comment: We received many plain language, and developing notices the comment about the existing version comments on the proposal. While most that provide information at the of Chapter 18, we note that existing comments received were generally pharmacy counter. Some commenters guidance reflects existing regulations supportive of our efforts to update and stated that CMS should require plan and policy. improve tiering exceptions policy, there sponsors to improve information Comment: A commenter asserted that was mixed support for and opposition provided in their member materials, and utilization management tools, such as to specific aspects of what we proposed. noted that plans and pharmacies have a the use of tiered cost-sharing to Many commenters who supported our responsibility for educating encourage use of lower-cost drugs, put overall proposal noted that beneficiaries beneficiaries about the availability of unnecessary burden on prescribers and have difficulty understanding the tiering exceptions. cause access delays for beneficiaries. existing policy, and stated that there is Response: We agree that information The commenter stated that exception a need for a more simplified process. A about the availability of tiering requests usually require prescribers to commenter who opposed revising our exceptions must be provided to submit a written statement supporting existing policy for tiering exceptions beneficiaries by CMS and their Part D the exception request, and noted that stated that plans and enrollees already plan sponsor. We note that such prescribers are not compensated for understand the current policy and there information is already contained in time spent preparing these statements or will be little positive outcome. Another several CMS publications, including obtaining utilization management commenter agreed that tiering Medicare & You (CMS pub. 10050), information for the specific plans used exceptions are an important beneficiary Medicare Appeals (CMS pub. 11525), by their patients. This commenter also protection, but stated a belief that they Your Guide to Medicare Prescription suggested that if there was greater undermine plan sponsors’ ability to Drug Coverage (CMS pub. 11109) and transparency on which medications are manage their formularies, which are Medicare Rights and Protections (CMS subject to utilization management tools, already reviewed by CMS for clinical pub. 11534), as well as documents that it would reduce the administrative accuracy. This commenter also stated plans are required to provide to burden placed on physicians. that tiering exceptions provide no enrollees, including the Evidence of Response: We thank the commenter incentive for an enrollee to try a less Coverage, Part D formulary, and Annual for sharing their concerns. Because expensive drug found on a lower tier if Notice of Change. Information about the section 1860D–4(g)(2) of the Act they are able to get a more expensive availability of tiering exceptions is also specifies that a tiering exception could drug at a lower cost. included in the standardized pharmacy be granted ‘‘if the prescribing physician Response: We thank the commenters notice (CMS–10147) provided to determines that the preferred drug for who supported our proposal for their affected enrollees at the point of sale treatment of the same condition either support. We agree that this policy area when a claim is rejected by their Part D would not be as effective for the has been confusing for beneficiaries and plan sponsor, and in the standardized individual or would have adverse one of our goals in making changes is Part D denial notice (CMS–10146), effects for the individual or both,’’ we to make it more understandable. We which is provided to enrollees when do not believe CMS has authority to believe that the proposed revisions will their plan makes an adverse coverage require plans to provide tiering streamline and clarify the requirements determination. Such information is also exceptions in the absence of such a for tiering exceptions, as well as help found on Medicare.gov. CMS will statement from the prescriber. Under ensure that enrollees have appropriate continue to review plan documents and existing § 423.568(a), plans are required access to medically necessary drugs. beneficiary publications to identify to accept oral requests for benefits at the We disagree with the comment that potential areas for improvement, and coverage determination level, including tiering exceptions provide no incentive update the documents mentioned above exception requests, and CMS for enrollees to try lower-cost drugs. On as needed based on this final rule, encourages plans to accept oral the contrary, § 1860D–4(g)(2) stipulates including consideration of how to prescriber supporting statements for that, in order for a tiering exception to clarify when a tiering exception may be exception requests when appropriate. be approved, the enrollee’s prescriber available. Comment: A commenter must determine that the preferred drug Comment: Several commenters recommended that SNPs, MMPs, and for treatment of the same condition has recommended that CMS ensure defined standard benefit plans be been or would be less effective or have consistent understanding of tiering exempt from the tiering exceptions adverse effects for that individual. If the exceptions policy by providing specific process. This commenter also asked that

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CMS explain how tiering exceptions are § 423.578(a)(6) by adding new drug or biological product to the lowest applied to Low Income Subsidy (LIS) paragraphs (i) and (ii), which would cost sharing tier containing alternatives beneficiaries. permit plans to limit the availability of of the same drug type. Plans will be Response: We appreciate the tiering exceptions for the following drug required to grant a tiering exception for commenter’s recommendation. In types to a preferred tier that contains the a higher cost generic or authorized accordance with § 423.578(a), the same type of alternative drug(s) for generic drug to the cost sharing exceptions process applies to Part D treating the enrollee’s condition: associated with the lowest tier plans that provide prescription drug • Brand name drugs for which an containing generic and/or authorized benefits through the use of a tiered application is approved under section generic alternatives when the medical formulary. Given the fixed copays for 505(c) of the Federal Food, Drug, and necessity criteria are met. LIS beneficiaries, that are based on Cosmetic Act (21 U.S.C. 355(c)), Finally, we proposed to revise and whether the drug is a brand or generic including an application referred to in redesignate existing § 423.578(a)(7) as product pursuant to section 505(b)(2) of the Federal Food, new § 423.578(a)(6)(iii), to specify that, § 423.782(a)(2)(iii)(A), tiering exceptions Drug, and Cosmetic Act (21 U.S.C. ‘‘If a Part D plan sponsor maintains a do not apply. Regardless of whether the 355(b)(2)); and specialty tier, as defined in § 423.560, beneficiary meets the medical necessity • Biological products, including the sponsor may design its exception criteria for the drug in the higher tier, biosimilar and interchangeable process so that Part D drugs and it would not change the brand vs. biological products, licensed under biological products on the specialty tier generic nature of the requested drug, so section 351 the Public Health Service are not eligible for a tiering exception.’’ the cost-sharing would remain fixed. Act. We also proposed to add the following With the proposed revisions, definition to Subpart M at § 423.560: b. Limitations on Tiering Exceptions approved tiering exceptions for brand Specialty tier means a formulary cost- We proposed to revise § 423.578(a)(2) name drugs would generally be assigned sharing tier dedicated to very high cost to read as follows: ‘‘Part D plan sponsors to the lowest applicable cost-sharing Part D drugs and biological products must establish criteria that provide for associated with brand name that exceed a cost threshold established a tiering exception consistent with alternatives, and approved tiering by the Secretary. paragraphs § 423.578(a)(3) through (a)(6) exceptions for biological products The proposed changes retain the of this section.’’ This adds a cross- would generally be assigned to the existing regulatory policy that permits reference to revised paragraph (a)(6), lowest applicable cost-sharing Part D plan sponsors to disallow tiering which revises allowable limitations plan associated with biological alternatives. exceptions for any drug that is on the sponsors are permitted to establish in As discussed above, cost sharing for plan’s specialty tier. While we did not their tiering exceptions procedures. approved tiering exceptions for non- propose to specify it in regulation text, At § 423.578(a)(6), we proposed to preferred generic drugs would be we stated in the preamble to the revise the regulations to specify how a assigned to the lowest applicable cost- proposed rule (82 FR 56372) that, if the Part D plan sponsor may limit tiering sharing associated with alternative specialty tier has cost sharing more exceptions. The proposed revision drug(s) that could be either brand name preferable than another tier, then a drug strikes the existing regulation text or generic drugs. placed on such other non-preferred tier which permits plans to disallow tiering We proposed at § 423.578(a)(6)(i) to is eligible for a tiering exception to the exceptions for any non-preferred drug to codify that plans are not required to cost sharing applicable to the specialty cost-sharing associated with a dedicated offer tiering exceptions for brand name tier if an applicable alternative drug is generic tier. We proposed to replace it drugs or biological products at a cost- on the specialty tier and the other with new regulation text at sharing level of alternative drug(s) for requirements of § 423.578(a) are met. In § 423.578(a)(6) specifying that a Part D treating the enrollee’s condition where other words, while plans are not plan sponsor will not be required to the alternatives include only the required to allow tiering exceptions for offer a tiering exception for a brand following drug types: drugs on the specialty tier to a more name drug or biological product to a • Generic drugs for which an preferable cost-sharing tier, the specialty preferred cost-sharing level that applies application is approved under section tier is not exempt from being considered only to generic alternatives. Under our 505(j) of the Federal Food, Drug, and a preferred tier for purposes of tiering proposal, plans would be required to Cosmetic Act (21 U.S.C. 355(j)), or exceptions. approve tiering exceptions for non- • Authorized generic drugs as defined We received the following comments preferred generic drugs when the plan in section 505(t)(3) of the Federal Food, and our responses follow: determines that the enrollee cannot take Drug, and Cosmetic Act (21 U.S.C. Comment: We received many the preferred generic alternative(s), 355(t)(3)). comments on this aspect of our including when the preferred generic We proposed to codify existing CMS proposal. Most commenters were alternative(s) are on dedicated generic policy treating authorized generics as supportive of the proposal to remove the tier(s) and when the lower tier(s) generics for purposes of tiering generic tier exclusion and replace it contain a mix of brand and generic exceptions because the process used by with limitations that apply to brand alternatives. In other words, plans CMS to collect Part D plan formulary name drugs and biological products. would no longer be permitted to data does not allow us to clearly Some commenters opposed our exclude a tier containing alternative identify whether a plan sponsor proposal to remove the generic tier drug(s) with more favorable cost-sharing includes coverage of authorized generic exclusion, stating that this would from their tiering exceptions procedures National Drug Codes (NDCs). Under this discourage plans from offering $0 altogether just because that lower-cost regulatory proposal, a plan sponsor copayment tiers and increase costs for tier includes only generic drugs. could not completely exclude a lower enrollees. Others opposed the proposal We proposed to revise existing tiering tier containing only generic and to allow plans to limit tiering exceptions exceptions policy for brand name and authorized generic drugs from its tiering for brand name drugs only when brand generic drugs, and proposed a new exception procedures; rather, the plan alternatives are on a lower tier, noting policy for requests involving biological sponsor would be permitted to limit that allowing plans to limit tiering products. First, we proposed to revise tiering exceptions for a particular brand exceptions for brand drugs to the lowest

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cost-sharing associated with brand such exceptions be available in all or therapeutically equivalent, even alternatives does not provide sufficient circumstances. though they may treat the same relief for enrollees with a medical need Comment: Several commenters condition. for a brand drug because they cannot supported our proposal to treat Commenters who opposed this take a lower cost generic. Commenters authorized generic drugs in the same limitation on tiering exceptions noted expressed concern that this would manner as generic drugs for tiering that vulnerable beneficiaries who need eliminate beneficiaries’ ability to seek exceptions. to access specialty tier drugs often do tiering exceptions in many cases, and Response: We thank the commenters not have alternative options on more also stated that nothing in the statute for their support. preferred tiers and can accrue very high permits these limitations. Comment: We received some out of pocket costs. A few noted that Response: We thank commenters who comments requesting that CMS specify cost-prohibitive out of pocket expenses supported the proposed changes for that multi-source drugs and other drugs can lead to decreased adherence to drug their support. As we stated in the that do not meet the definition of a therapies and put patients at risk. Some proposed rule, we believe a policy that generic or authorized generic drug, but commenters questioned CMS’ authority allows beneficiaries with a medical that a plan may place on a generic- to allow plans to exclude specialty tier need for a non-preferred product to seek labeled tier, also be treated as generic drugs from the tiering exceptions and obtain more favorable cost-sharing drugs for purposes of tiering exceptions. process because the statute gives through the tiering exceptions process Response: We disagree with these beneficiaries the right to request a must be balanced by reasonable comments. As discussed above, we are tiering exception for any non-preferred limitations to ensure that all enrollees revising the tiering exceptions drug when the formulary contains a have access to medically necessary regulations to specify that authorized preferred drug for the same condition drugs at the most favorable cost-sharing generic drugs be treated as generic that has lower cost sharing. A terms possible. drugs. We recognize that other drugs commenter stated that prohibiting We disagree with the commenters may be treated in a similar manner to tiering exceptions for specialty tier opposed to our proposal to require plans generic drugs, including being placed drugs discriminates against beneficiaries to include dedicated generic tiers in on generic-labeled drug tiers; however, who need them. their tiering exceptions procedures. As we believe further expansion of what Response: We appreciate the we discussed in the preamble to the drugs are treated as generics would comments expressing concern about proposed rule (82 FR 56371), most Part introduce additional complexity to a beneficiary access to very high cost D formularies now include multiple process that beneficiaries and plans drugs. While CMS is aware that access generic tiers, as well as multiple higher- already have difficulty understanding. to needed drug therapies can be cost tiers that contain a mix of brand For example, whether a brand drug is a impacted by the out of pocket expenses and generic drugs. To encourage the use ‘‘multi-source’’ drug is dependent on associated with these drugs, we do not of generic drugs, we proposed to revise multiple factors and may change over believe that requiring plans to offer the existing regulatory policy to permit time. An authorized generic is tiering exceptions for specialty tier tiering exceptions into dedicated determined at the time of FDA approval drugs will result in the desired effect. In generic tiers, but allow plans to limit and does not change as long as the drug order for a drug to be placed on the those exceptions to requests involving is marketed under that approval, specialty tier, the plan’s negotiated price non-preferred generic drugs. Because regardless of how many other for the drug must exceed a monthly approval of a tiering exception interchangeable drugs may be threshold established by the Secretary continues to require that the enrollee introduced to or leave the market. ($670 for 2018). Along with the demonstrate a medical need for the non- Because tier placement of the same drug protection against tiering exceptions for preferred drug, and because plans will can vary widely across Part D plans, we specialty tier drugs that is afforded to not be required to permit exceptions for believe that applying rules based on plans, CMS also requires plans to limit brand name drugs or biological products FDA approval type is the best way to enrollee cost sharing for the specialty to the cost-sharing associated with limit confusion and create a consistent tier to 25 percent coinsurance (up to 33 dedicated generic tiers, we do not policy. Additionally, we believe that an percent if the plan waives all or part of believe this change will result in enrollee who cannot take a brand drug the Part D deductible), which aligns changes to plan benefit design. on a lower-cost tier, regardless of the with the statutorily defined maximum We disagree with the comments tier label, should be able to obtain the cost sharing for the defined standard asserting that the statute does not permit brand drug on a higher-cost tier at the benefit at section 1860D–2(b)(2)(A). tiering exceptions for non-preferred more favorable cost-sharing of the brand When high cost drugs are placed on the brand name drugs to be limited to the drug on the lower-cost tier. specialty tier instead of a Non-Preferred cost sharing associated with preferred Comment: We received many Brand or Non-Preferred Drug tier, which brand name drugs. Section 1860D– comments related to our proposal to can have up to 50 percent coinsurance, 4(g)(2) of the Act specifies that Part D retain the current regulatory policy the cost to enrollees who would not plan sponsors offering a tiered drug allowing plans to exclude specialty tier qualify for a tiering exception is often benefit must have a process for tiering drugs from their tiering exceptions considerably lower than if the same exceptions, consistent with guidelines process. Commenters were divided on drug were placed on one of these other established by the Secretary for making whether they supported or opposed this non-preferred tiers. Additionally, many such determinations, where ‘‘a proposal. Some commenters asked CMS specialty tier drugs, particularly nonpreferred drug could be covered to confirm that drugs on the specialty biological products, often do not have under the terms applicable for preferred tier will continue to be exempt from viable alternatives on lower-cost tiers. drugs’’ (emphasis added). While we tiering exceptions. The statutory basis for approval of a agree that the statutory language does Commenters who supported our tiering exception request is the presence not specifically refer to brand name and proposal stated that tiering exceptions of an alternative drug(s) on a lower cost- generic drugs, it clearly gives CMS should not be allowed for specialty tier sharing tier of the plan’s formulary; authority to establish guidelines for plan drugs because alternative drugs on therefore, even if a plan sponsor procedures, and does not require that lower tiers are not typically appropriate permitted tiering exceptions for

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specialty tier drugs, such requests others, they can do so within existing considers safety and efficacy when would not be approvable if the plan’s formulary benefit designs. As such, we determining inclusion of a drug on a formulary did not include any are not making additional changes in formulary, including tier placement. alternative drugs on a lower tier. this policy area before having an Comment: We received a comment We disagree with the comments opportunity to consider the effects of requesting that CMS clarify non- positing that allowing plans to exclude the changes in this rule. CMS will formulary drugs approved for a the specialty tier from their tiering continue to disallow plan benefit formulary exception continue to be exceptions procedures is inconsistent packages with more than one specialty ineligible for tiering exceptions. with the statute. As discussed above in tier. Another commenter suggested that CMS this section, section 1860D–4(g)(2) of Comment: We received some consider ways to make it easier for the Act gives CMS authority to establish comments requesting that CMS clarify individuals applying for a formulary guidelines for Part D plan sponsors’ whether select care/select diabetic or exception to also apply for a tiering tiering exceptions procedures, and does other $0 copayment tiers can be exception, if applicable. not require such exceptions to be excluded from a plan’s tiering Response: We appreciate the available in all circumstances. For the exceptions procedures. These commenter’s request for clarification. reasons stated earlier, we believe that commenters supported a policy that We did not propose to revise the our current policy of allowing plans to would permit such an exclusion, stating existing requirement set forth at exclude specialty tier drugs from their that requiring tiering exceptions to $0 or § 423.578(c)(4)(iii) which establishes tiering exceptions procedures, coupled very low cost tiers would discourage that an enrollee may not request a with the maximum allowable plans from offering them and increase tiering exception for a non-formulary coinsurance of 25 percent to 33 percent overall beneficiary out of pocket costs. drug approved under the formulary for the specialty tier, affords the most Response: We appreciate the exceptions rules at § 423.578(b). Under beneficiaries the most protection from commenter’s requests for clarification. the proposed changes to tiering high out-of-pocket expenses associated As discussed above, we proposed to exceptions rules, which we are with very high cost drugs. revise the existing regulatory text that finalizing as proposed, an enrollee may Comment: A few commenters permits plans to exclude generic tiers not obtain a tiering exception for an suggested that CMS permit plan from their tiering exceptions approved non-formulary drug. We note sponsors to designate two specialty tiers procedures. We did not propose to that, if an enrollee obtains an exception on their formularies—a non-preferred permit plans to exclude any formulary to a utilization management specialty tier, as well as a preferred tiers other than the specialty tier, and do requirement such as step therapy or a specialty tier that would have lower cost not agree that such an exclusion is quantity limit, such enrollee may also sharing. These commenters expressed a advisable. As we stated in the proposed request a tiering exception, pursuant to belief that permitting plans to have two rule, we believe that tiering exceptions § 423.578(a) and (c). The model Part D specialty tiers would encourage are an important enrollee protection and coverage determination request form, increased competition among specialty must not be restricted to such a degree. developed by CMS with stakeholder drugs, giving plans greater leverage in Under the proposed rule, which we are feedback, permits an enrollee or their price negotiations, resulting in more finalizing without modification, plans prescriber, on the enrollee’s behalf, to affordable access for Part D enrollees can establish tiering exceptions request a tiering exception along with, and lower costs for the program. The procedures where they do not have to for example, prior authorization. The commenters also noted that permitting offer such exceptions for brand name form includes check boxes for various two specialty tiers could encourage drugs or biological products to more types of requests, including an enrollees to try preferred specialty preferred cost-sharing tiers that do not exception to cost-sharing. products and could reduce the need for contain an alternative brand name or Comment: We received some enrollees to seek coverage through the biological product, respectively. We comments opposed to requiring plans to non-formulary exceptions process. believe that permitting additional consider tiering exceptions for non- Response: While we appreciate these restrictions that make certain low-cost preferred drugs to specialty tier cost- comments, we disagree with the tiers wholly inaccessible to beneficiaries sharing when the specialty tier cost- suggestion to permit Part D plans to with a medical need for a non-preferred sharing is more favorable for the have a preferred and a non-preferred drug would be inappropriate. enrollee. Some of these commenters specialty tier. As discussed above, CMS Comment: A commenter urged CMS stated that such a policy would be limits specialty tier cost sharing to the to monitor Part D plan formularies to confusing for enrollees because the statutorily mandated amount for the ensure that plans do not change their specialty tier is often a higher-numbered defined standard Part D benefit. While formularies in an effort to decrease tier (for example, tier 5 on a 5-tier we did not propose to allow plans to opportunities for tiering exceptions. formulary). Commenters also stated that establish multiple specialty tiers, we are Another commenter suggested that CMS it would be overly burdensome for plans making significant changes to existing consider requiring plan sponsors to to administer such a policy, particularly tiering exceptions policy through this establish evidence-based formularies if the exception request is for a drug on final rule, including removal of the that tie enrollee cost-sharing to the a copayment tier to a coinsurance tier generic tier exclusion and addition of appropriateness of medications based (for example, tier 4—Non Preferred Drug the brand-to-brand limitation discussed on safety and efficacy. has a $100 copayment and tier 5— above in subsection b. Additionally, Response: All Part D plan formularies Specialty has a 25 percent coinsurance). while the plan’s cost for a drug must must be approved by CMS as part of the These commenters opined that allowing exceed a CMS-specified monthly cost bid review process described at a drug with a copayment to be approved threshold in order to be placed on the § 423.272. Under § 423.120(b)(1), to a coinsurance tier would bypass specialty tier, CMS does not require all formularies must be developed and formulary design and require extensive drugs exceeding that threshold be reviewed by a pharmacy and price review and calculation to placed on the specialty tier. In other therapeutic committee that makes determine which tier is more favorable. words, if plans wish to encourage the clinical decisions based on scientific A commenter asked CMS to clarify use of certain specialty drugs over evidence and standards of practice and whether plans would be permitted to

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retain specialty tier supply limits such make up that tier. Additionally, preamble that we interpret this language as a 30 day supply, even if the enrollee consistent with § 30.2.7 of Chapter 6 of to refer to the condition as it affects the wishes to obtain a 90 day supply and a the Medicare Prescription Drug Benefit enrollee—that is, taking into tiering exception is approved. Manual, CMS reviews formularies for consideration the individual’s overall Response: We appreciate the the placement of drugs in non-preferred clinical condition, including the comments received on this aspect of the tiers in the absence of therapeutically presence of comorbidities and known proposal. We are persuaded by the similar drugs in preferred tiers. relevant characteristics of the enrollee comments received that requiring plans Comment: A few commenters stated and/or the drug regimen, which can to consider tiering exceptions into the that CMS should increase the $670 factor into which drugs are appropriate specialty tier would be confusing and specialty tier cost threshold to reduce alternative therapies for that enrollee. difficult for plans to implement, and are the number of drugs that qualify and, We received the following comments not finalizing this aspect of the therefore, reduce out of pocket spending on this section and our responses proposal. While we believe many of the for beneficiaries. follow: concerns expressed by commenters Response: As we did not propose to Comment: We received several would be addressed by clarifying that change the specialty tier threshold in comments related to how to determine such a policy would only apply if the this rule, we decline to adopt this which drugs should be considered requested drug meets the specialty tier recommendation. alternatives for treating the enrollee’s cost threshold, we recognize it would After consideration of the comments health condition. Some of these still be difficult to explain to enrollees, received, we believe our proposed commenters were supportive of the who probably would have no revisions to § 423.578(a)(6) regarding the additional information we provided in knowledge as to whether any given drug limitations plans are permitted to the preamble to the proposed rule about would meet the specialty tier cost establish for tiering exceptions strike an how to determine alternative drugs. threshold and would be very unlikely to appropriate balance between allowing Most of the commenters stated that a request such an exception. As noted plans to manage their formularies and more specific regulatory definition of above, we did not propose regulation ensuring enrollee access to this statutory alternative drug is needed. Some text for such a requirement, and protection. These revisions prohibit commenters recommended that the therefore, while we are not finalizing it, plans from excluding generic drug tiers definition specify that alternative drugs we are also not making any changes to from their tiering exceptions must be one or more of the following: the proposed regulation text. procedures, and permit plans to limit supported in drug compendia or Comment: A few commenters stated tiering exceptions for brand name drugs treatment guidelines for use in the same that CMS should conduct an analysis of to the lowest applicable cost sharing place in therapy, FDA-approved for the Part D plan formularies to ensure plans associated with preferred brand name same indication as the requested drug, are not discriminating against alternatives, and tiering exceptions for in the same therapeutic class and/or beneficiaries by always placing certain biological products to the lowest category as the requested drug, use the classes of drugs on specialty tiers. A applicable cost sharing associated with same route of administration as the commenter asserted that, without preferred biological product requested drug, and/or have the same standardized tiering in Part D, nothing alternatives. We are finalizing the mechanism of action as the requested prevents plans from putting high cost proposed revisions to § 423.578(a)(6) drug. brand name drugs on specialty tiers to and the proposed definition of specialty Several commenters provided various avoid having to offer tiering exceptions. tier at § 423.560 without modification, hypothetical scenarios using specific The commenter stated that CMS should noting the clarification discussed above diagnoses and drugs and asked that establish additional requirements for that plans are not required to treat the CMS clarify whether a tiering exception tiered formularies, such as requiring specialty tier as a preferred cost-sharing would be allowed under our that all generic drugs be placed on tier tier for purposes of tiering exceptions. interpretation. A commenter asked CMS 1 or tier 2. Another commenter CMS continues to explore ways to to provide examples that include how to recommended that CMS continue to ensure Part D enrollees are able to determine what an appropriate explore improvements to benefit design access very high cost, medically alternative drug is. Another commenter and meaningful exceptions to high cost- necessary prescription drugs. stated that plan sponsors will continue sharing. to inaccurately apply rules for tiering Response: Pursuant to existing Part D d. Alternative Drugs for Treatment of exceptions because CMS does not define policy and the proposed definition of the Enrollee’s Condition what a preferred alternative drug is. A specialty tier, it is a tier dedicated to We noted in the proposed rule that we few commenters stated that CMS’ very high cost drugs, which are often have received comments from plan proposed interpretation of ‘‘same brand name drugs or biological sponsors and PBMs requesting that CMS condition’’ will limit exception requests products. As noted in a previous provide additional guidance on how to and negatively impact beneficiaries. A response, pursuant to § 423.120(b)(1), determine what constitutes an few commenters stated that this formularies must be developed and alternative drug for purposes of tiering interpretation has no statutory basis, reviewed by a pharmacy and exceptions, including establishment of and one of the commenters asserted that therapeutic committee that makes additional limitations on when such our clarification basing what constitutes clinical decisions based on scientific exceptions are approvable. The statutory an alternative drug on the individual evidence and standards of practice, and language for tiering and formulary characteristics and condition of the considers safety and efficacy when exceptions at sections 1860D–4(g)(2) enrollee would make it easy for plans to determining inclusion of a drug on a and 1860D–4(h)(2) of the Act, claim there are no alternatives for formulary, including that drug’s tier respectively, specifically refers to a treating that enrollee and therefore no placement. While CMS does not preferred or formulary drug ‘‘for tiering exception would be allowed. prohibit plan sponsors from having a treatment of the same condition.’’ While Response: The statutory language mix of both brand and generic drugs on our proposal did not include regulation noted above related to approval of a each tier, it is our expectation that a tier text specific to the meaning of an tiering exception request broadly refers label be representative of the drugs that alternative drug, we clarified in the to preferred drugs ‘‘for treatment of the

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same condition.’’ We believe that most necessity. Additionally, § 423.566(d) indication or does not meet the of the criteria suggested by commenters requires that, before issuing an adverse definition of a Part D drug. would be more restrictive than the coverage determination based on lack of After consideration of the comments statute allows if plans were required to medical necessity, including exception received on this section, we are apply such criteria to all tiering requests, it must be reviewed by a finalizing our proposal without exception situations, and we therefore physician or appropriate health care modification, and have chosen not to disagree that such criteria should be professional. These policies requiring further specify how to determine what specified in regulation. For example, if clinician involvement in the an alternative drug for treating the the mechanism of action or route of establishment and application of plan enrollee’s condition is. administration of a plan’s preferred coverage rules contemplate that those e. Approval of Tiering Exception alternative drug would cause adverse individuals apply reasonable clinical Requests effects for a particular enrollee versus judgment, based on sound medical and the non-preferred drug for treating the scientific evidence and acceptable We proposed to revise § 423.578(c)(3) same condition, this could be the basis standards of practice, in adjudicating by renumbering the provision and for that enrollee to seek a tiering exception requests, including adding a new paragraph (ii) to codify exception for the non-preferred drug. consideration of alternative drugs on the our current policy that cost sharing for Also, CMS does not specify the plan’s formulary. an approved tiering exception request is classification system that must be used While we agree that in certain assigned at the lowest applicable tier on Part D plan formularies; therefore, situations and with certain medical when preferred alternatives sit on establishing a requirement that conditions, what is reasonably multiple lower tiers. Under our alternative drugs must be in the same considered an alternative drug may be proposal, assignment of cost sharing for therapeutic class would introduce limited in ways suggested by an approved tiering exception must be inconsistency because what one plan commenters, we disagree that such at the most favorable cost-sharing tier considers the same drug class may be designations should be codified in containing alternative drugs, unless different than another plan for the same regulation to apply to all tiering such alternative drugs are not applicable drugs. The changes to the tiering exceptions for the reasons previously pursuant to limitations set forth under exception regulations that we are stated, and because we do not see a proposed § 423.578(a)(6). finalizing in this rule do not require good reason to codify these types of We received the following comments plans to consider a drug for which the clinical considerations only for tiering and our responses follow: enrollee’s condition is not a medically exceptions, when we have not proposed Comment: We received several accepted indication to be an alternative to do so for other types of coverage comments related to this aspect of our drug for purposes of a tiering exception determinations. We also believe these proposal. Commenters were divided, request. Because payment under Part D clarifications provide sufficient with some supporting our proposal and cannot be made for any drug that does guidance for plans to determine what others opposed. Commenters in support not meet the definition of a Part D drug drugs should be considered alternatives of the proposal to require approval at for the prescribed indication, such drug for treating the enrollee’s condition, and the lowest applicable tier stated that this could not reasonably be considered an will ensure that plans do not apply policy allows beneficiaries who cannot alternative drug for treatment of the unreasonable clinical or policy take less expensive drugs to obtain enrollee’s condition. standards to their interpretation of the needed drugs at an affordable price. In response to comments suggesting meaning of alternative drug so as to Some commenters noted that they that our interpretation of ‘‘for treatment inappropriately refuse to allow tiering supported this aspect of the proposal of the same condition’’ is inconsistent exceptions. Therefore, we are not because we also proposed to allow plans with the statute, we disagree. As we adding a definition of alternative drug to limit tiering exceptions for brand noted in the proposed rule, we interpret in this final rule. name drugs to the lowest tier containing this language to refer to the condition as As discussed earlier in this preamble, alternative brand name drugs. A few it affects the enrollee. Given the CMS will update any existing agency commenters expressed a belief that this language in section 1860D–4(g)(2) of the guidance related to tiering exceptions as policy would be easy for beneficiaries to Act states that an exception could be needed to ensure that it comports with understand. covered if the prescribing physician the requirements of this final rule. Commenters who opposed our determines that the preferred drug Comment: A commenter asked CMS proposal stated that requiring approval would not be as effective ‘‘for the to clarify whether a tiering exception to the lowest applicable tier interferes individual’’ or would have adverse should be approved when the requested with plans’ ability to manage their effects ‘‘for the individual,’’ we believe drug is not being prescribed for a formularies. A few commenters it is appropriate to interpret the medically accepted indication, or does expressed a belief that our proposal is standard for the ‘‘same condition’’ to be not otherwise meet the definition of a not consistent with the statute, which referring to the individual. Part D drug. states that the requested drug could be While we are not making any changes Response: Pursuant to the existing covered at terms applicable to preferred to the regulations with respect to regulation at § 423.578(e), which we did drugs but does not specify that it be the defining alternative drugs, we wish to not propose to revise, enrollees are not terms applicable to the most preferred note that plan medical directors are permitted to use the exceptions process alternatives. A commenter stated that required to be involved in the to obtain coverage for a drug that is not § 1860D–4(g)(2) does not specifically development and oversight of policies being prescribed to treat a medically refer to a right to obtain a drug at the and procedures for processing exception accepted indication as defined in lowest cost-sharing tier. Another requests, including criteria for section 1860D–2(e)(4) of the Act, or does commenter stated that requiring plans to determining alternative drugs, as part of not otherwise meet the definition of a provide high cost drugs at the lowest their responsibility under Part D drug at § 423.100. Thus, a plan tier instead of the next lower tier § 423.562(a)(5) to ensure the clinical cannot approve a tiering exception increases premiums for all beneficiaries accuracy of all coverage determinations request if the requested drug is not and provides only slightly lower cost- and redeterminations involving medical being used to treat a medically accepted sharing for a few individuals.

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Response: We thank commenters who supporting statement ‘‘demonstrate the MA–PD plans and related products than were supportive of our proposal for medical necessity of the drug’’ to align for standalone enrollees of PDPs. At the their support. We agree that our policy with the existing language for formulary outset of the Part D program, when drug of approval to the lowest applicable tier exceptions at § 423.578(b)(6). The coverage for dually eligible beneficiaries containing alternatives provides the requirement that the supporting was transitioned from Medicaid to most relief for beneficiaries with a statement address the enrollee’s medical Medicare, there were concerns about medical need for a non-preferred drug. need for the requested drug is already how CMS would effectively identify, We disagree that our proposal is explained in the introductory text of educate, and enroll dually eligible inconsistent with the statute. Section § 423.578(a). beneficiaries. While processes (for 1860D–4(g)(2) provides that if a plan • Redesignate paragraphs example, auto-enrollment, sponsor uses formulary tiers and offers § 423.578(c)(3)(i) through (iii) as reassignment) were established to lower cost sharing for ‘‘preferred drugs’’ paragraphs § 423.578(c)(3)(i)(A) through facilitate coverage, the continuous SEP (plural) included in the formulary, an (C), respectively. This proposed change served as a fail-safe to ensure that the enrollee may request an exception to the will improve consistency between the beneficiary was always in a position to tiered cost-sharing structure, and under regulation text for tiering and formulary make a choice that best served their such an exception, a non-preferred drug exceptions. healthcare needs. Unintended could be covered ‘‘under the terms We received no comments on the consequences have resulted from this applicable for preferred drugs’’ (plural) proposed technical changes and flexibility, including, as noted by the if the prescriber determines that ‘‘the corrections and are finalizing them Medicare Payment Advisory preferred drug’’ (singular) for the same without modification. Commission (MedPAC 30), opportunities condition would not be as effective or After consideration of all comments for marketing abuses. would have adverse effects, or both. The received on the tiering exceptions Among the key obstacles the statute clearly contemplates that while proposal, we are finalizing the proposed continuous SEP (and resulting plan there can be multiple drugs that are regulation text without modification. As movement) can present are— preferred drugs relative to the requested discussed above, CMS will review • Interfering with the coordination of drug, and the prescribing physician can agency guidance and beneficiary care among the providers, health plans, determine that ‘‘the’’ preferred drug communications and revise as needed to and states; would not be as effective or would have be consistent with this final rule. • Hindering the ability for adverse effects. We believe it is 10. Establishing Limitations for the Part beneficiaries to benefit from case reasonable to interpret this provision to D Special Election Period (SEP) for management and disease management; permit an enrollee to seek a tiering • Dually Eligible Beneficiaries (§ 423.38) Inefficient use of the effort and exception under which he or she would resources needed to conduct enrollee pay the cost sharing applicable to the As discussed in section II.A.1 of this needs assessments and developing plans most preferred drug among one or more final rule, the MMA added section of care for services covered by Medicare preferred drugs. 1860D–1(b)(3)(D) to the Act to establish and Medicaid; After consideration of the comments a special election period (SEP) for full- • Limiting a plan’s opportunity for received, we are finalizing without benefit dual eligible (FBDE) continuous coordinated treatment of modification our proposal at beneficiaries under Part D. This SEP, chronic conditions; and § 423.578(c)(3), which specifies that codified at § 423.38(c)(4), was later • Diminishing incentives for plans to cost-sharing for approved tiering extended to all other subsidy-eligible innovate and invest in serving exceptions is assigned at the lowest beneficiaries by regulation (75 FR potentially high-cost members. applicable tier when preferred 19720). The SEP allows eligible To support plan sponsors’ efforts to alternatives sit on multiple lower tiers. beneficiaries to make Part D enrollment administer benefits to beneficiaries, changes (that is, enroll in, disenroll including coordination of Medicare and f. Additional Technical Changes and from, or change Part D plans, including Medicaid benefits, and maximize care Corrections Medicare Advantage Prescription Drug management and positive health Finally, we proposed various (MA–PD) plans) once a month outcomes, we proposed to amend technical changes and corrections to throughout the year, unlike other Part D § 423.38(c)(4) to make the SEP for FBDE improve the clarity of the tiering enrollees who generally may switch and other subsidy-eligible individuals exceptions regulations and consistency plans only during the annual enrollment available only in certain circumstances. with the regulations for formulary period (AEP) each fall. Specifically, we proposed to revise to exceptions. Specifically, we proposed With over 10 years of programmatic § 423.38(c) to specify that the SEP is the following: experience, we have observed certain available only as follows: • Revise the introductory text of enrollment trends in terms of FBDE and • In new paragraph (c)(4)(i), eligible § 423.578(a) to clarify that a ‘‘requested’’ other LIS beneficiaries: beneficiaries (that is, those who are dual • non-preferred drug for treatment of an Most LIS beneficiaries do not make or other LIS-eligible and do not meet the enrollee’s health condition may be an active choice to join a PDP. definition of at-risk beneficiary or eligible for an exception. • Once in a plan, whether it was a • potential at-risk beneficiary under Revise § 423.578(a)(1) to include CMS-initiated enrollment or a choice proposed § 423.100) would be able to ‘‘tiering’’ when referring to the they made on their own, most LIS use the SEP once per calendar year. exceptions procedures described in this beneficiaries do not make changes • In new paragraph (c)(4)(iii), eligible subparagraph. during the year. • • beneficiaries who have been assigned to Revise § 423.578(a)(4) by making A small subset (0.8 percent) of LIS a plan by CMS or a State would be able ‘‘conditions’’ singular and by adding beneficiaries use the SEP to actively to use the SEP before that election ‘‘(s)’’ to ‘‘drug’’ to account for situations enroll in a plan of their choice and then becomes effective (that is, opt out and when there are multiple alternative disenroll within 2 months. drugs. In addition, the application of the • 30 Medicare Payment Advisory Commission, Revise § 423.578(a)(5) by removing continuous SEP carries different service ‘‘Report to Congress: Medicare Payment Policy,’’ the text specifying that the prescriber’s delivery implications for enrollees of March 2008.

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enroll in a different plan) or within 2 layered SEPs were unnecessary when would be effective on January 1. In months of their enrollment in that plan. the existing ongoing SEP has worked addition to this change, the exception • In new paragraph (c)(9), dual and well and has proved to be simpler to outlined at § 423.38(c)(4)(ii) related to other LIS-eligible beneficiaries who communicate and understand. CMS and State-initiated elections will have a change in their Medicaid or LIS- Many commenters also said that the not be finalized as proposed. (Instead, as eligible status would have an SEP to proposal would have an even greater discussed below, CMS will be using its make an election within 2 months of the impact given the proposed changes authority under § 423.38(c)(8)(ii) to change, or of being notified of such related to midyear formulary changes. establish a coordinating SEP for those change, whichever is later. This SEP Commenters noted that since plans have who are enrolled into a plan by CMS or would be available to beneficiaries who the ability to change formularies or a State at new § 423.38(c)(10). experience a change in Medicaid or LIS provider networks during the year, the We believe that limiting use of the status regardless of whether they have ongoing dual SEP is a vital beneficiary dual SEP, but in a less restrictive been identified as potential at-risk protection. manner, strikes the appropriate balance beneficiaries or at-risk beneficiaries Lastly, commenters said that the of our stated goals and the concerns under proposed § 423.100. proposed dual SEP limitation could, in raised by commenters, for the reasons • In addition, we also proposed to actuality, hamper CMS’ stated goal of that follow. We consider this approach remove the phrase ‘‘at any time’’ in the bringing Medicare and Medicaid into to be less confusing for both plan introductory language of § 423.38(c) for better alignment because it could sponsors and beneficiaries than our the sake of clarity. inadvertently discourage dual eligible proposal because it provides a date- We considered multiple alternatives beneficiaries from enrolling in based parameter that is easier to related to the SEP proposal. In the integrated products. Commenters noted comprehend without the additional proposed rule, we described and asked that because beneficiaries are often layers of exceptions. By still allowing for comments on two alternatives: hesitant to change plans, they may opt multiple changes throughout the year, Limit of two or three uses of the SEP to stay in their current plan instead of dual and other LIS-eligible beneficiaries per year. We considered applying a trying an integrated option. In other will maintain additional flexibilities not simple numerical limit to the number of cases, commenters expressed concern afforded to other Part D-eligible times the LIS SEP could be used by any that beneficiaries who are assigned into beneficiaries, but there may be times beneficiary within each calendar year. a plan by CMS or a State may panic and when these individuals cannot change We specifically considered limits of disenroll immediately if they believe plans and have that choice effective the either two or three uses of the SEP per pressured to make an immediate next month either because they already year. decision. Commenters said that the made an election during that calendar Limits on midyear MA–PD plan ongoing SEP gives beneficiaries the quarter (during the first nine months of switching. We also considered an option comfort and time to make a deliberate the year) or because they are making an that would prohibit SEP use into non- and educated choice. election during the AEP. We believe that integrated MA–PD plans, but allow Response: We thank the commenters having certain periods when individuals continuous use of the dual SEP to allow for their thoughtful feedback. We are must maintain enrollment in a eligible beneficiaries to enroll into FIDE mindful of the unique health care particular plan will increase SNPs or comparably integrated products challenges that dual and other LIS- opportunities for coordination of care for dually eligible beneficiaries or eligible beneficiaries may face. The and case management. Even though standalone PDPs. goals of the proposal were to improve these periods of required continuity of We received the following comments administration of benefits and enrollment will be shorter than what and our responses follow: coordination of care and we believed was proposed, we believe it still Comment: Some commenters that this could best be accomplished matches our stated goals and addresses supported the proposal and agreed that through continuity of enrollment. While the concerns expressed by commenters. continuity of enrollment could we acknowledge that many commenters While we believe this limitation is an maximize coordination of care and prefer the ongoing nature of the existing appropriate control to put in place, we positive health outcomes. However, the dual SEP, we still believe that adopting also believe that it will not impact the majority of commenters opposed the some limitations is an appropriate step vast majority of individuals eligible for proposal based on a variety of factors. toward encouraging care coordination, the dual SEP. As discussed in the Most of these commenters expressed achieving positive health outcomes, and proposed rule, 2016 data demonstrated concerns about the impact on the dual- discouraging extraneous beneficiary that most beneficiaries do not use the eligible population which, they noted, movement during the plan year. dual SEP and, of those who do use it, not only has limited financial resources, In response to comments, we are the majority (74.5 percent) only used it but also higher rates of disability, higher modifying our approach. In lieu of the once. Analysis of 2017 data continues to rates of cognitive impairment, and lower proposed dual SEP limitation that show that beneficiaries who use the SEP health literacy. These circumstances, would only allow a onetime use per use it only one time (85.5 percent). Of commenters noted, often contribute to year with certain exceptions, we are those who use it two times, the average more complex and changing health instead revising the dual SEP so that it time between elections is 3.4 months, needs and difficulties with medication is similar to the ‘‘two or three uses per which is roughly the duration of a adherence. Citing these circumstances, year’’ alternative discussed in the calendar quarter. many commenters believed these proposed rule. Specifically, the dual Given this flexibility, we believe that beneficiaries needed the flexibility to SEP is being amended so that it can be dual and other LIS-eligible beneficiaries change their healthcare coverage at any used once per calendar quarter during will have the freedom to choose a plan time during the year. the first nine months of the year (that is, that works for their evolving health care Commenters also believed that the one election during each of the needs during the year. For those that proposal was too complex and would be following time periods: January–March, have an opportunity to enroll in an difficult for beneficiaries to understand April–June, July–September). During the integrated product, they will be able to and for plans to administer. They noted last quarter of the year, a beneficiary can do so and know that if it does not suit that limited and, in some cases, multi- use the AEP to make an election that their needs, they can choose another

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plan in the near future. The same logic those who would be impacted by a the exceptions suggested by the can be applied to those who want to change to the dual SEP. Given that the commenters. Dual or other LIS-eligible explore other plan options during the majority of commenters preferred more beneficiaries who fall into any of these year due to formulary, provider flexibility than what we proposed, we categories would still be able to use the network, or health status changes. We are opting to finalize a limitation that is dual SEP. The only way that they may note, though, that as discussed earlier, along the lines of the ‘‘two or three uses be limited is if they had already made individuals who have been identified as per year’’ alternative described in the a recent election into a plan. If that were an at-risk beneficiary or potential at-risk proposed rule. the case, they may have to wait several beneficiary under § 423.100 will not be We contemplated allowing multiple months to make another change. (A able to use the dual SEP. As discussed uses per year at any time, but thought more detailed discussion of different in section II.A.1, we are specifying at that an approach that allowed for election periods and when they are § 423.38(c)(4) that this particular quarterly elections (that is, the dual SEP considered ‘‘used’’ and effective can be limitation applies once the beneficiary in coordination with the AEP) was found below.) Again, we do not see the has been notified that he or she has been preferable because it would be easier to frequency of movement that would lead identified as a potential at-risk keep track of and for beneficiaries to us to believe that this will be an issue beneficiary or at-risk beneficiary, and understand. With a multiple-use-per- for the vast majority of LIS-eligible the limitation will continue until such year-at-any-time policy, if a beneficiary beneficiaries. identification has been terminated makes several elections in the beginning We would note that in addition to the consistent with § 423.153(f). of the year, as they approach the end of dual SEP, there are already a number of Comment: Many commenters the year it may be hard to remember protections in place for all beneficiaries recommended a wide range of how many elections they have made or who have Part D coverage and are modifications or alternatives to the dual whether any more are available. With an unable to change plans. For example, SEP limitation outlined in the proposed approach that allows for quarterly beneficiaries can request transition rule. Suggestions included the elections, however, they only need to fills—prescription drugs that are not on following: remember if they made an election in a plan’s formulary or that are on a plan’s • Allow beneficiaries to disenroll to the last few months. If they have not, it formulary but require prior FFS at any time. is likely that they are eligible for a authorization or step therapy under a • Instead of limiting the use of the quarterly dual SEP use or the AEP. A plan’s utilization management rules— dual SEP, require a minimum quarterly approach also mitigates during the first 90 days of enrollment in enrollment duration in a plan. a new plan as provided under • scenarios where a beneficiary makes Limit to onetime use per year, multiple elections in the first half of the § 423.120(b)(3). In addition, without exceptions, to mitigate year and is then locked into a plan for beneficiaries can request a formulary or administrative burden. tiering exception to obtain a drug that is • the latter half of the year. Delay any sort of SEP limitation Comment: In addition to the not on their plan’s formulary or to and, instead, contemplate for future modifications/alternatives discussed obtain a drug at a lower cost-sharing rulemaking. above, a number of commenters tier. Some commenters—both those who believed that if limitations were While we understand that supported and opposed the concept of established for the dual SEP, CMS commenters believe that the ability to a limitation to the dual SEP—expressed should consider additional exceptions change plans at any time is an important a preference for one of the two for certain beneficiary groups or beneficiary protection, we believe it is alternatives discussed in the proposed conditions. Specifically, commenters worth re-stating that the changes rule. There were some who supported believed exceptions would serve as finalized at § 423.38(c)(4) will still the concept of expanding the onetime important beneficiary protections for the provide for multiple uses of the dual annual election to 2–3 uses per year following individuals/circumstances: SEP throughout the year and this is a because it provided more flexibility. • Those who have a new or existing flexibility that is not afforded to all Part Some commenters expressed support for disability. D enrollees. During other parts of the the more complex approach that would • Those with a new or altered disease year, dual and other LIS-eligible have allowed limited use of the dual state or diagnosis. individuals will still have access to the SEP for enrollment in integrated • American Indians and Alaska AEP in the fall or, if applicable, the products, standalone PDPs, and FFS, Natives who also receive services initial enrollment period (IEP) or the but not any non-integrated MA plans. through the Indian Health Service. new MA open enrollment period (OEP) Along these lines, there was varied • Enrollees whose prescription drugs discussed in section II.B.1. Beneficiaries feedback for dual SEP use for are not covered under their plan’s may also continue to be eligible for enrollment into integrated products. formulary or whose providers change other SEPs outlined in § 422.62(b) and Some said that it should be allowed as during the year. § 423.38(c), which includes a onetime exception, some said that it • Individuals whose caregiver circumstances like a change or should be an ongoing opportunity, arrangements change during the year. residence or other exceptional while others said that it should be the • Individuals who must comply with circumstances as determined by CMS. only allowable use of the dual SEP. A Medicaid open enrollment periods or In addition, we will be finalizing the commenter encouraged CMS to work those who meet the ‘‘for cause’’ SEP opportunity that was contemplated with States to define which plans would standards established for enrollees in in the proposed rule for beneficiaries be considered ‘‘integrated’’ and another Medicaid managed care plans. assigned to a plan by CMS or a State. commenter suggested that CMS • Those whose providers request an While this was proposed at new maintain and publicize a list of SEP on their behalf. § 423.38(c)(4)(iii) as an additional use of integrated plans. Response: We believe that by allowing the dual SEP, and would have been Response: We believe that the wide the dual SEP to be used quarterly during available before that election became array of feedback that commenters the first nine months of the year in effective or within 2 months of provided on the proposal represents the conjunction with the AEP at the end of enrollment in the plan, we will be complexity and varying interests of the year, we are mitigating the need for finalizing this as a new and separate

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SEP at § 423.38(c)(10). We believe that their SEP opportunities. That is, if a March and effective in April, we would establishing this as a separate SEP is State passively enrolls a dual-eligible consider the beneficiary as having used more straightforward because it makes beneficiary in April, the beneficiary their first quarter (Q1) dual SEP, even clear that this opportunity is separate would still have their second quarter though coverage would not be effective and in addition to the elections dual SEP, as well as the SEP associated until the second quarter of the calendar allowable under the revised dual SEP. specifically with the passive enrollment. year. If a dual or other LIS-eligible This new SEP will allow individuals Comment: Several commenters sought beneficiary makes an election during the who have been auto-enrolled, facilitated clarification on how the dual SEP AEP (October 15th through December enrolled, or reassigned into a plan by limitation would affect and interact 7th), coverage would be effective CMS, as well as those who have been with other election periods. January 1. subject to passive enrollment processes Commenters stated that it was unclear If, for example, a beneficiary is discussed in section II.A.8, an how the SEP changes in § 423.38 would reassigned into a new plan in the fall for opportunity to change plans. Unlike the relate to the AEP and OEP. A few coverage effective January 1, they would proposed SEP, this new SEP will be commenters sought verification that the be able to make an election under the available even if a beneficiary meets the SEPs for Program of All-inclusive Care AEP or the new CMS/State assignment definition of an at-risk beneficiary or for the Elderly (PACE) eligible SEP. If they opt out of the reassignment potential at-risk beneficiary. beneficiaries, institutionalized before it becomes effective and choose Beneficiaries would be able to use this individuals, and enrollments into 5-star to stay in their current plan, this would new CMS/State assignment SEP before plans would be unaffected. A be considered a cancellation and no that enrollment becomes effective (that commenter requested clarification election period is required. is, opt out and enroll in a different plan) whether the once-per-year SEP falls We recognize that when looking at all or within 3 months of the assignment outside of the AEP, or whether the SEP of the election periods and associated effective date, whichever is later. (Note also applies during this same AEP timeframes in whole, there are multiple that this SEP will not apply to timeframe. opportunities both within this SEP and individuals who have been subject to Response: As noted in the proposed other election periods for an individual default enrollment processes discussed rule and above, other election periods, to make a choice that best meets their in section II.A.7, as they will be able to including the AEP and the new OEP, are needs. We believe that enrollment is an use the new Open Enrollment Period still available to eligible individuals. individual-based exercise, and 1–800– (OEP) to make an election.) The established SEPs that allow MEDICARE, SHIPs, advocacy helplines, Comment: A commenter requested a beneficiaries to enroll in 5-star plans plans, and enrollment brokers, already mechanism for plan sponsors to and PACE, as well as the SEP that have processes in place to work with determine if the enrollment prior to the allows elections for those who move individual beneficiaries and determine enrollee’s SEP request was assigned by into, reside in, or move out of an the election periods for which they may the CMS or the State. Another institution, are unaffected. If used, they be eligible. Ultimately, as already commenter requested clarification that would not count as use of the dual SEP. outlined in Chapter 3 of the Prescription States may make passive enrollment If the beneficiary is eligible for multiple Drug Benefit Manual (section 30), it is decisions where otherwise permitted, election periods, plan sponsors (or other the plan sponsor’s responsibility to such as in Medicare-Medicaid Plans enrollment facilitators) may need to determine the enrollment period for (MMPs), regardless of whether an determine which election period the each enrollment/disenrollment request. individual has exhausted his or her SEP beneficiary would like to use, especially In some cases, plan sponsors may need options for the year. if the election periods would result in to contact the beneficiary directly to Response: CMS is exploring possible different enrollment effective dates. confirm the election period. mechanisms that would allow plan This is consistent with subregulatory Table 2 summarizes the election sponsors to determine if the enrollee’s guidance in Chapter 2 of the Medicare periods discussed above and the most recent enrollment transaction was Managed Care Manual (section 30.6), suggested hierarchy of election periods one that was initiated by CMS or the Chapter 3 of the Medicare Prescription (highest to lowest). Readers should note State. In the interim, plan sponsors Drug Manual (section 30.4), and current that it is not a comprehensive list of all should ask the enrollee if they received enrollment processing procedures for election periods and does not negate a a notice that indicates that they have any enrollment request received when plan sponsor’s responsibility to contact been assigned to a plan and have certain the individual is eligible for more than a beneficiary if they believe that SEP opportunities. one election period. multiple election periods may be If a beneficiary is assigned to a plan The dual SEP will be considered available. More detailed information by CMS or a State, the enrollment ‘‘used’’ based on the application date. If, will be provided in subregulatory change does not count against any of for example, an election is made in guidance.

TABLE 2—ELECTION PERIODS

Election period Available Considered ‘‘Used’’

Part D IEP ...... Based on when first eligible for Part D ...... Upon effective date. MA OEP (must meet OEP requirements) ...... Annually ...... Upon application date. SEP—5-Star plans ...... Ongoing ...... Available as long as election is in 5-Star plan. SEP—PACE ...... Ongoing for enrollment into PACE; two month Available as long as election is in PACE plan; window after disenrollment from PACE. upon application date for election subsequent to PACE disenrollment. SEP—Institutionalized ...... Ongoing if moving into/residing in facility; two Available while in facility; upon application month window after moving out of facility. date for election subsequent to moving out of facility.

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TABLE 2—ELECTION PERIODS—Continued

Election period Available Considered ‘‘Used’’

SEP—CMS/State Assignment ...... Within 3 months * of assignment or notification Upon application date. of assignment, whichever is later. SEP—Change in Dual/LIS Status ...... Within 3 months * of status change or notifica- Upon application date. tion of change, whichever is later. Dual SEP ...... Ongoing—One use per calendar quarter dur- Upon application date. ing the first nine months of the year. AEP ...... Annually ...... Multiple elections can be submitted during AEP, last rec’d will be considered the choice. * As discussed below, the finalized SEPs will allow for a 3-month opportunity to change plans, not the 2-month window noted in the proposed rule.

Comment: A few commenters eligible beneficiaries under Comment: A commenter noted that requested clarification on how plan § 423.773(c)(1). the Medicaid managed care rule at 42 sponsors would be able to determine if Response: The dual SEP, with the CFR 438.56(c)(2)(i) includes a 90-day a beneficiary has used their allowable parameters established in this rule, is period for plan changes following dual SEP election. Commenters asked available for full benefit dual eligible enrollment, and that dual/LIS SEPs whether this information would be individuals and other subsidy-eligible should align so as to avoid conflicts available in MARx or as a batch beneficiaries as defined at § 423.772. between Medicare and Medicaid rules. enrollment query (BEQ). Commenters Comment: A few commenters Response: We appreciate the also asked who is responsible for recommended that we modify the identification of the potential conflict. validating the SEP and noted that proposed SEP at § 423.38(c)(9) to allow We believe that because of the various beneficiaries may be frustrated if they for a three-month or unlimited window election periods that are available, are unaware that they have exhausted post LIS-change, not a 2-month window. including the new SEPs that are being their allowable use of the dual SEP and These commenters said that the finalized in this rule, there should not their enrollment is denied. A outreach and education time can be be a coordination issue with Medicaid commenter asked that plans not be lengthy and two months does not managed care rules. Specifically, a penalized for rejections related to the provide the beneficiary with enough beneficiary can still use the dual SEP dual SEP. time to make a fully-informed choice. In quarterly during the first nine months of addition, a commenter requested that the year, the new three-month SEP for Response: Plan sponsors continue to we clarify whether a change in co-pay change in Medicaid status, the new be responsible for determining the level only is considered a change in LIS- three-month CMS/State assignment SEP, eligibility and enrollment period for eligible status and would prompt and the AEP. enrollment/disenrollment requests. As eligibility for the dual SEP. Another Comments: A commenter noted earlier, plan sponsors and other commenter asked how the change in recommended that if the proposal was enrollment facilitators may need to ask status SEP would affect those going finalized, CMS should allow questions of the beneficiary to through the deeming process. beneficiaries the right to file an appeal determine if they are eligible for the Response: We appreciate this insight to switch plans in instances where their dual SEP or another election period. As from commenters and believe that a Part D plan has made a material change a part of this process, we assume that three-month window should give the (such as to its formulary or to its beneficiaries are informed about the beneficiary adequate time to understand pharmacy network) during the plan enrollment process and told that a their coverage changes and determine if year. submitted enrollment form does not it is in their best interest to change Response: Enrollment decisions are always guarantee enrollment in a plan. plans. Accordingly, we are revising not appealable and we do not believe it Further, the enrollment module in § 423.38(c)(9) to allow individuals to would be prudent to set up an MARx will be updated to no longer make an election within 3 months of a enrollment appeals process at this time. allow use of the dual SEP more than gain, loss, or change to Medicaid or LIS Given that dual and other LIS-eligible once per calendar quarter during the eligibility, or notification of such a beneficiaries will still be able to use the first nine months of the year. change, whichever is later. A change in dual SEP on a quarterly basis during the Enrollment transactions submitted for co-pay level, or any change, resulting first nine months of the year, we believe an individual who has already used from the deeming process, would be that there is a readily accessible remedy their quarterly opportunity will be considered a change in LIS eligibility. for this enrollment issue. The rejected, and sponsors would notify the As discussed previously, the SEP for beneficiary will still be able to change individual of the denial, as they do dual/LIS status change is separate from plans, but in the event that they have today. While the commenter did not the dual SEP. If, for example, a already used up their dual SEP election, specify which penalties they wanted Medicare beneficiary becomes eligible they may have to wait to make another waived, as stated earlier, the vast for Medicaid during the year, they change, unless they are eligible for one majority of beneficiaries do not use the would be able to use the dual/LIS status of the many other SEPs. Again, we dual SEP multiple times, let alone change SEP to change plans. In expect this circumstance to be within a 3-month period, so any rejected addition, because they are now a dually- extremely rare. transactions should be minimal. eligible beneficiary, they would also be Comment: A few commenters Comment: A commenter asked that able to make their allowable quarterly recommended that in addition to MA we confirm that the dual SEP applies to dual SEP election during the first nine and Part D plans, CMS apply the SEP individuals considered full-benefit dual months of the year. limitations to Medicare-Medicaid Plans

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(MMPs) as part of the Financial limitation applicable to at-risk performance data. We also post Alignment Initiative demonstration. beneficiaries and potential at-risk additional measures on the display Response: We clarify that under the beneficiaries (as defined under page 31 at www.cms.gov for Financial Alignment Initiative capitated § 423.100 and discussed in section informational purposes. The goals of the model demonstrations, MA II.A.1) is effective upon notification of Star Ratings are to display quality regulations—including those governing that status and ends upon termination of information on Medicare Plan Finder to SEPs—apply to MMPs unless waived. that status consistent with § 423.153(f). help beneficiaries, families, and As has been the case to date under the • New paragraph (c)(9), which caregivers make informed choices by demonstrations, we will continue to use provides dual and other LIS-eligible being able to consider a plan’s quality, our demonstration authority to waive beneficiaries who have a change in their cost, and coverage; to provide applicable MA regulatory requirements Medicaid or LIS-eligible status an SEP, information for public accountability; to in three-way contracts as necessary, and is modified to allow a 3-month window incentivize quality improvement; to in partnership with each state, to to make a change. provide information to oversee and achieve each individual demonstration’s • Proposed paragraph (c)(4)(iii) monitor quality; and to accurately objectives. allowing eligible beneficiaries who have measure and calculate scores and stars Comment: A commenter requested been assigned to a plan by CMS or a to reflect true performance. In addition, clarification regarding the federal vs. State use of the dual SEP before that CMS has made strides in recognizing state authority over the dual SEP. election becomes effective or within 2 the challenges of serving high risk, high Response: Other than state laws months of their enrollment in that plan needs populations while continuing the relating to state licensure and plan will not be finalized. Instead, a new focus on improving health care for these solvency the standards established CMS/State assignment SEP is important groups. under Part D supersede any state law or established at § 423.38(c)(10) to allow In this final rule, as part of the regulation with respect to Part D plans. individuals in a similar circumstance Administration’s efforts to improve Comment: Many commenters (that is, auto- or facilitated enrolled, transparency, we are codifying the provided valuable feedback related to reassigned, default or passively enrolled existing Star Ratings system for the MA our request for suggestions on how to by CMS or a state) an opportunity to and Part D programs with some changes. educate the affected population and change plans upon notification or As noted later in this section in more other stakeholders of changes to the within 3 months of the assignment detail, the changes we proposed and are dual SEP. Suggestions included the effective date, whichever is later. finalizing include more clearly following: Further detail on the SEP changes will delineating the rules for adding, • Development of more outreach be provided in subregulatory guidance. updating, and removing measures and materials, including non-English As suggested by a commenter, we will modifying how we calculate Star materials. monitor the impact of this change and Ratings for contracts that consolidate. • Direct notification to affected consider future modifications if there is As we explained in the proposed rule, individuals. evidence that beneficiaries are being codifying the Star Ratings methodology • Increased resources for SHIPs. harmed. will provide plans with more stability to • Coordination with the plan multi-year initiatives, because the Administration for Community Living 11. Medicare Advantage and Part D rulemaking process will create a longer and State ombudsmen. Prescription Drug Plan Quality Rating lead time for changes and MA • Television advertisements. System organizations and Part D sponsors will • Educational opportunities sales a. Introduction know the measures several years in agents, providers and community advance. We have received comments partners. We are committed to transforming the for the past several years from MA • Broader education about the dual health care delivery system—and the organizations and other stakeholders SEP in general. Medicare program—by putting a strong asking that CMS use Federal Register Response: We appreciate the feedback focus on person-centered care, in rulemaking for the Star Ratings system; provided by commenters and will keep accordance with the CMS Quality we discuss in section II.A.11.c. of this these suggestions in mind as we proceed Strategy, so each provider can direct final rule (regarding plans for the with implementation of the dual SEP their time and resources to each transition period before the codified limitation beginning in plan year 2019. beneficiary and improve their outcomes. rules are used) how section 1853(b) Comment: A commenter As part of this commitment, one of our authorizes CMS to establish and recommended changes to Medicaid most important strategic goals is to annually modify the Star Ratings system managed care disenrollment rules improve the quality of care for Medicare using the Advance Notice and Rate outlined at 42 CFR 438.56. beneficiaries. The Part C and D Star Announcement process because the Response: Medicaid disenrollment Ratings support the efforts of CMS to system is an integral part of the policies rules are outside the scope of proposals improve the level of accountability for governing Part C payment. We believe set forth in the proposed rule and, as the care provided by health and drug this is an appropriate time to codify the such, will not be considered for this plans, physicians, hospitals, and other methodology, because the rating system rulemaking. Medicare providers. We currently has been used for several years now and After review of the comments, and as publicly report the quality and is relatively mature so there is less need discussed above, we are finalizing the performance of health and drug plans for extensive changes every year; the proposed changes to § 423.38 with the on the Medicare Plan Finder tool on smaller degree of flexibility in having following modifications: www.medicare.gov in the form of codified regulations rather than using • Paragraph (c)(4) is revised to allow summary and overall ratings for the the process for adopting payment eligible beneficiaries (that is, those who contracts under which each MA plan methodology changes may be are dual or other LIS-eligible) use of the (including MA–PD plans) and Part D appropriate. Further, by adopting and dual SEP once per calendar quarter plan is offered, with drill downs to during the first nine months of the year. ratings for domains, ratings for 31 http://go.cms.gov/partcanddstarratings (under We are further specifying that the individual measures, and underlying the downloads).

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codifying the rules that govern the Star Health Outcomes Survey (HOS), CAHPS provide feedback on specific aspects of Ratings system, we are demonstrating a data, Part C and D Reporting care and performance that directly commitment to transparency and requirements and administrative data, impact outcomes, such as process predictability for the rules in the system and data from CMS contractors and measures and the beneficiary’s so as to foster investment. oversight activities to measure quality perspective. The ratings focus on and performance of contracts. We have b. Background aspects of care and performance that are been displaying plan quality within the control of the health plan We originally acted upon our information based on that and other and can spur quality improvement. The authority to disseminate information to data since 1998. data used in the ratings must be beneficiaries as the basis for developing Since 2007, we have published complete, accurate, reliable, and valid. and publicly posting the 5-star ratings annual performance ratings for stand- A delicate balance exists between system (sections 1851(d) and 1852(e) of alone Medicare PDPs. In 2008, we measuring numerous aspects of quality the Act). The MA statute explicitly introduced and displayed the Star and the need for a small data set that requires that information about plan Ratings for Medicare Advantage minimizes reporting burden for the quality and performance indicators be Organizations (MAOs) for both Part C industry. Also, the beneficiary (or his or provided to beneficiaries to help them only contracts (MA-only contracts) and her representative) must have enough make informed plan choices. These data Part C and D contracts (MA–PDs). Each information to make an informed are to include disenrollment rates, year since 2008, we have released the decision without feeling overwhelmed enrollee satisfaction, health outcomes, MA Star Ratings. An overall rating by the volume of data. and plan compliance with requirements. combining health and drug plan The Patient Protection and Affordable The Part D statute (at section 1860D– measures was added in 2011, and Care Act (Pub. L. 111–148), as amended 1(c)) imposes a parallel information differential weighting of measures (for by the Healthcare and Education dissemination requirement with respect example, outcomes being weighted 3 Reconciliation Act (Pub. L. 111–152), to Part D plans, and refers specifically times the value of process measures) provides for quality ratings, based on a to comparative information on began in 2012. The measurement of year 5-star rating system and the information consumer satisfaction survey results as to year improvement began in 2013, and collected under section 1852(e) of the well as quality and plan performance an adjustment (Categorical Adjustment Act, to be used in calculating payment indicators. Part D plans are also Index) was introduced in 2017 to to MA organizations beginning in 2012. required by regulation (§ 423.156) to address the within-contract disparity in Specifically, sections 1853(o) and make Consumer Assessment of performance revealed in our research 1854(b)(1)(C) of the Act were added and Healthcare Providers and Systems among beneficiaries that are dual amended to provide, respectively, for an (CAHPS) survey data available to CMS eligible, receive a low income subsidy, and are required to submit pricing and increase in the benchmark against and/or are disabled. which MA organizations bid and in the prescription drug event data under The MA and Part D Star Ratings portion of the savings between the bid statutes and regulations specific to those measure the quality of care and and benchmark available to the MA data. Regulations require plans to report experiences of beneficiaries enrolled in organization to use as a rebate. Under on quality improvement and quality MA and Part D contracts, with 5 stars as the Act, Part D plan sponsors are not assurance and to provide data which the highest rating and 1 star as the eligible for quality based payments or CMS can use to help beneficiaries lowest rating. The Star Ratings provide rebates. We finalized a rule on April 15, compare plans (§§ 422.152 (b)(3) and ratings at various levels of a hierarchical 2011 to implement these provisions and 423.153(c)(5)). In addition we may structure based on contract type, and all to use the existing Star Ratings system require plans to report statistics and ratings are determined using the other information in specific categories that had been in place since 2007 and measure-level Star Ratings. Contingent 32 (§§ 422.516 and 423.514). on the contract type, ratings may be 2008. (76 FR 21485–21490). In Currently, for similar reasons of provided and include overall, summary addition, the Star Ratings measures are providing information to beneficiaries to (Part C and D), and domain Star Ratings. tied in many ways to responsibilities assist them in plan enrollment Information about the measures, the and obligations of MA organizations and decisions, we also review and rate hierarchical structure of the ratings, and Part D sponsors under their contracts section 1876 cost plans on many of the the methodology to generate the Star with CMS. We believe that continued same measures and publish the results. Ratings is detailed in the annually poor performance on the measures and We also proposed to continue to include updated Medicare Part C and D Star overall and summary ratings indicates 1876 cost contracts in the MA and Part Ratings Technical Notes, referred to as systemic and wide-spread problems in D Star Rating system to provide Technical Notes, available at http:// an MA plan or Part D plan. In April comparative information to Medicare go.cms.gov/partcanddstarratings. 2012, we finalized regulations to use beneficiaries making plan choices. We The MA and Part D Star Ratings consistently low summary Star proposed specific text, to be codified at system is designed to provide Ratings—meaning 3 years of summary § 417.472(k), requiring that 1876 cost information to the beneficiary that is a Star Ratings below 3 stars—as the basis contracts to agree to be rated under the true reflection of the plan’s quality and for a contract termination for Part C and quality rating system specified at encompasses multiple dimensions of Part D plans. (§§ 422.510(a)(14) and subpart D of part 422. Cost contracts are high quality care. The information 423.509(a)(13)). Those regulations also required by regulation (§ 417.472(j)) included in the ratings is selected based further reflect the role the Star Ratings to make CAHPS survey data available to on its relevance and importance such have had in CMS’ oversight, evaluation, CMS. As is the case today, no Quality that the ratings can meet the needs of and monitoring of MA and Part D plans Bonus Payments (QBP) will be beneficiaries using them to inform plan to ensure compliance with the associated with the ratings for 1876 cost choice. While encouraging improved contracts. health outcomes of beneficiaries in an 32 The ratings were first used as part of the QBP Demonstration for 2012 through 2014 and then used In line with §§ 422.152 and 423.153, efficient, person centered, equitable, for payment purposes as specified in sections CMS uses the Healthcare Effectiveness and high quality manner is one of the 1853(o) and 1854(b)(1)(C) of the Act and the Data and Information Set (HEDIS), primary goals of the ratings, they also regulation at 42 CFR 422.258(d)(7).

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respective program requirements and those topics, and have considered them topics. In the sections that follow, the provision of quality care and health in adopting this final rule, as noted in which are arranged by topic area, we coverage to Medicare beneficiaries. the responses below, and will consider summarize the comments we received The true potential of the use of the them for future rulemaking. We on the background section and policies, MA and Part D Star Ratings system to specifically asked for feedback on the proposals and solicitations summarized reach our goals and to serve as a catalyst following topics: there and provide our responses to the for change can only be realized by • Additional opportunities to comments. (In each section in II.B.11.c working in tandem with our many improve measures so that they further through w, we summarize the proposals stakeholders, including beneficiaries, reflect the quality of health outcomes from the corresponding section of the plans, and advocates. The following under the rated plans. proposed rule, the applicable guiding principles have been used • Whether CMS’ current process for comments, and our responses.) historically in making enhancements establishing the cut points for Star Comment: Most commenters and updates to the MA and Part D Star Rating can be simplified, and if the supported both the principles and the Ratings: relative performance as reflected by the decision to codify the methodology for • Ratings align with the current CMS existing methodology to establish cut the Part C and D Star Ratings. Of the Quality Strategy. points accurately reflects plan quality. commenters who supported those • Measures developed by consensus- • How CMS should measure overall aspects of our overall proposal, a few based organizations are used as much as improvement across the Star Ratings suggested adding principles, such as the possible. measures. In the proposed rule, we measure data should be timely and that • Ratings are a true reflection of plan specifically requested input on distinctions between measure-level Star quality and enrollee experience; the additional improvement adjustments Ratings (cut points) should be methodology minimizes risk of that could be implemented, and the meaningful. misclassification. effect that these adjustment could have Response: CMS appreciates the • Ratings are stable over time. on new entrants (here meaning new MA support to codify the methodology for • Ratings treat contracts fairly and organizations and/or new plans offered the Part C and D Star Ratings. We will equally. by existing MA organizations). codify the methodology in this final rule • Measures are selected to reflect the • Additional adjustments to the Star as outlined in this preamble, and will prevalence of conditions and the Ratings measures or methodology that consider the additional principles raised importance of health outcomes in the could further account for unique by the commenters for adoption in the Medicare population. geographic and provider market future as we continue to refine the • Data are complete, accurate, and characteristics that affect performance principles in consultation with experts reliable. (for example, rural geographies or and stakeholders through the regulatory • Improvement on measures is under monopolistic provider geographies), and process. the control of the health or drug plan. the operational difficulties that plans Comment: Several commenters • Utility of ratings is considered for a could experience if such adjustments requested CMS to continue updating the wide range of purposes and goals. were adopted. methodology though the Call Letter ++ Accountability to the public. • In order to further encourage plan instead though regulation. Commenters ++ Enrollment choice for participation and new market entrants, were concerned that the regulatory beneficiaries. whether CMS should consider process would lead to CMS not being ++ Driving quality improvement for implementing a demonstration to test able to act quickly when there are plans and providers. alternative approaches for putting new public health or patient safety concerns • Ratings minimize unintended entrants (that is, new MA organizations) or when treatment guidelines are consequences. on a level playing field with renewing changed. Commenters also cited other • Process of developing methodology plans from a Star Ratings perspective for concerns, including introducing a is transparent and allows for multi- a pre-determined period of time. burdensome regulatory process that stakeholder input. • Adding measures that evaluate delays the implementation of essential We used these goals to guide our quality from the perspective of adopting measures which can improve the quality proposal and intend to use them to new technology (for example, the of care for patients with chronic illness, guide how we interpret and apply the percent of beneficiaries enrolled as reasons to not to finalize this final regulations. For each provision we through online brokers or increasing proposal but to continue using the Call proposed, we solicited comment on implementation of the use of Letter process to modify the Star Ratings whether our specific proposed telemedicine) or improving the ease, methodology. They also noted that there regulation text best serves these guiding simplicity, and satisfaction of the are already multiple opportunities for principles. We also solicited comment beneficiary experience in a plan. comment on new measures; thus, the on whether additional or other • Including survey measures of regulatory process does not create principles are better suited for these physicians’ experiences. (Currently, we additional transparency. A few roles in measuring and communicating measure beneficiaries’ experiences with commenters supported the general effort quality in the MA and Part D programs their health and drug plans through the to put the Star Ratings principles and in a comparative manner. CAHPS survey.) Physicians also interact process into regulation, but encouraged As we continue to consider making with health and drug plans on a daily CMS to adopt a few exceptions (such as changes to the MA and Part D programs basis on behalf of their patients. We allowing new measures (but not in order to increase plan participation noted in the proposed rule that we are measures with substantive changes) to and improve benefit offerings to considering developing a survey tool for enter Star Ratings through the Call enrollees, we also solicited feedback collecting standardized information on Letter process). from stakeholders on how well the physicians’ experiences with health and Response: CMS understands the existing stars measures create drug plans and their services. commenters’ concerns about how the meaningful quality improvement CMS appreciates the feedback we regulatory process may, in some cases, incentives and differentiate plans based received on our proposals and on the prevent CMS from quickly changing or on quality. We solicited comments on solicitations for comment on the various adopting measures. However, given the

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level of support for the proposal and the because such adoption may not always comment about telemedicine and need to provide the industry with longer be in the best interest of the patient or CAHPS; we recognize telemedicine is an lead times for new measures, we will enrollee. A few commenters did not evolving area and may propose changes finalize the proposal to implement support such measurement because to CAHPS survey questions in the future substantive changes through regulation adoption of technology is hard to after discussions with the Agency for and use the Call Letter to make non- measure well and may not lead to Healthcare Research and Quality. substantive changes, suggest and solicit greater member satisfaction or correlate Comment: A commenter specifically feedback on new measures that will be with other measures of plan requested CMS provide certified proposed in regulation, and address performance. Those commenters software for measures not developed by emergent public health or patient safety discouraged such a focus, believing that external stewards, such as the concerns by retiring existing measures beneficiaries will vary in their interest Medication Therapy Management as needed or introducing new measures in whether plans and providers adopt (MTM) and SNP Care Management for the display page that will be new technologies, so measures of such measures. proposed for Star Ratings as adoption many not inform plan choice. Response: These measures are based appropriate. We also address comments A few commenters also feared that on data reported to CMS through the on our proposals related to the type of measures of adoption of technology may Part C and D Reporting Requirements. updates and changes that we proposed end up reflecting geographic differences CMS is not clear how providing to adopt without rulemaking, pursuant and the socioeconomic status of certified software for these measures to specific rules proposed for §§ 422.164 members enrolled in the plan rather will facilitate the submission of these and 423.184, in section II.A.11.h. than the quality or performance of the measures. CMS also notes that the MTM Comment: A commenter requested plan itself. With respect to CMS’ measure is developed by an external that measure changes take 3 years to proposal to possibly add new measures steward (PQA). implement in the Star Ratings and that that address the issue of new technology Comments: Many commenters five years should elapse before those in the future, such as telemedicine, a indicated the need for greater alignment with providers (physicians, hospitals, changes could impact payment. commenter pointed out that ‘‘Use of medical groups, accountable care Response: We thank the commenter new technologies’’ is not clearly defined organizations, and plans) to make the for the suggestion, but are finalizing the and can span a number of technologies quality measures more consistent, both timeframes proposed in the proposed implemented across plans but not in a to reduce burden and duplication and to rule because the majority of commenters uniform manner or across all service more effectively incentivize behavior. supported the proposed timeframes. areas. A commenter recommended that For example, a few commenters urged Some of the commenters did raise CMS continue to look at the use of measures aligned with the Merit- concerns about extending the incorporation of new technologies into timeframes for implementing and based Incentive Payment System (MIPS) Star Ratings measures but withhold any updating measures. Changing the program. proposals for CY 2019 and CY 2020 timeframes for measures updates to at Response: CMS thanks the multiple until more formal proposals can be put least 3 years will significantly slow the commenters for these suggestions and forth for notice and comment prior to implementation of substantive and non- appreciate the concern about burden adoption. A commenter specifically substantive changes, in particular, when and duplication, as well as the potential urged measures of e-prescribing and e- the changes are non-substantive. value of consistently reinforcing the Comment: A commenter encouraged prior authorization in Star Ratings. same message. CMS is continuing to CMS to adopt financial incentives for Another commenter urged CMS to work with measure developers to stand-alone prescription drug plans explicitly capture in CAHPS composites increase consistency in measurement based on Part D Star Ratings. (that is, the combination of two or more across settings. Response: CMS thanks the commenter survey items into a measure) the use of Comment: Several commenters for the suggestion, but CMS cannot telemedicine, as current survey wording encouraged CMS to develop measures adopt such financial incentives without may not do so. related to how well the care that is statutory authority. The Quality Bonus Response: CMS appreciates comments received by beneficiaries reflects the Payment (QBP) program for MA plans is received on adding measures that beneficiaries’ concerns, values, and statutory and the statute does not allow evaluate quality from the perspective of goals. CMS to pay QBPs to stand-alone adopting new technology and will Response: CMS is tracking work by prescription drug plans. continue to monitor developments in measure developers in this area and Comment: We solicited comments on this area for future consideration. thanks the commenters for the potentially adding measures in the Although we are not finalizing the suggestion. future that evaluate quality from the adoption of such a measure in this rule, Comment: Many commenters perspective of adopting new technology. we will continue to investigate how best supported CMS continuing to develop Many commenters supported adding a to address incorporating new and implement new measure concepts measure related to the use of technologies into the Star Ratings beyond those in current or currently technology, but multiple commenters measures. We note that for HEDIS 2019, anticipated measure sets. Among the cautioned that CMS rely on and use NCQA is examining the addition of most common suggestions were evidence that technology impacts health telehealth services in existing HEDIS outcome measures, especially new outcomes or improves the experiences measures where appropriate. NCQA’s patient-reported outcome measures, of beneficiaries in order to adopt proposed method would use specific quality of life, and functional status specific measures of that type. A codes and code modifiers to clearly measures (including Healthy Days at number of commenters cautioned CMS define which telehealth services would Home). Several commenters also to move carefully and slowly on be allowed for each specific measure. encouraged measuring care for cancer, promoting technology due to the Proposed changes to incorporate prevention of diabetes and other chronic potential for unintended consequences. telehealth services will be posted for the conditions, long-term management of A few commenters did not support HEDIS 2019 public comment period in chronic obstructive pulmonary disease measuring the adoption of technology, February. We appreciate receiving the (COPD), as well as advanced care

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planning, advanced directives and sharing them with the measure beneficiaries, and that, although the palliative care. A few other commenters developers. We will also study the value timelines for publishing the Medicare & highlighted concerns about measure and feasibility of deriving additional You handbook do not allow for gaps, such as for pain management, metrics (such as additional patient- including the overall Star Rating in the autoimmune disorders, mental illness, reported outcome measures) from initial release that occurs in the fall, the dementia/cognitive impairment, existing data collection efforts, like overall Star Ratings are included in anticoagulation drug safety, and HOS. updated versions of the handbook that measures specific to patients with Comment: Several commenters urged are released after the initial release and multiple co-morbidities, especially co- the development of geographic and/or publication. morbid diabetes and cardiovascular provider market characteristic adjusters Comment: We received one comment disease. A few commenters referred to in order to normalize variations outside that PBMs and Part D plan sponsors NQF-endorsed measures used in other plans’ control. Some stated such have delegated their responsibilities for programs, such as change in functional adjustments would specifically prevent the Star Ratings program to network status after spine or hip replacement measure bias against state-contracted pharmacies without providing the surgery. A commenter encouraged CMS SNPs. pharmacies with additional to utilize a comprehensive measure of Response: CMS appreciates this compensation. adult vaccination, while another comment and will take it into Response: CMS appreciates these encouraged adoption of a vaccine cost- consideration. As we consider comments, but due to the non- sharing measure. A commenter urged adjustments to the Star Ratings interference clause, CMS is prevented CMS to develop more medication measures, we need to ensure that the from interfering in contract adherence and appropriate use adjustments do not mask true arrangements between sponsors, measures and to assign a high weight in differences in the quality of care across pharmacies and other providers. CMS the Star Ratings program. Another the country. has indicated to measure stewards and commenter suggested that any future Comment: A few commenters other stakeholders that if such transition of care measures include requested information about a Star pharmacy performance metrics are used detailed information on all drug Ratings policy for natural disasters. as a condition of pharmacy network therapies prescribed and broader Response: CMS provided a detailed status, measure specifications should be sharing of discharge information. proposal concerning treatment of Star appropriately scaled, for example, In addition, a few commenters urged Ratings measures for contracts affected ensure adequate sample size, and that CMS to provide quality and by disasters in the 2019 draft Call Letter incentives to achieve performance performance information about that would apply to the 2019 and 2020 should be appropriately allocated. physicians within plans or to measure Star Ratings. We plan to propose Comment: We received several plans on the engagement of their codifying this policy through future comments recommending beneficiaries network of physicians in value-based rulemaking for performance periods designated for lock-in be excluded from purchasing designs (that is, payment after 2019 and ratings after the 2021 Star certain Star Ratings measures. designs that reward or increase Ratings. Response: Thank you for the payments based on quality or capitated Comment: Several commenters comment. Our Star Ratings proposal did payments to physicians/practitioners, questioned whether the Star Ratings not address this topic, and we plan to medical groups and ACOs). regulations apply to PACE take these comments under advisement. Several comments highlighted organizations. For more information about CARA, promoting and measuring network Response: The MA Star Ratings please see section B. adequacy and potential delays in care or regulations do not apply to PACE Comment: CMS had solicited medication related to this, and a few organizations but to the extent that a feedback on the potential development encouraged CMS to reward plans that PACE organization offers a plan of a physician survey to gather maintain adequate networks with including qualified prescription drug information for Star Ratings measures. increased Star Ratings. A number of coverage, it is a Part D sponsor and The majority of commenters opposed commenters urged CMS to measure therefore subject to the Part D the development of a physician survey access to medical specialists and regulations. This would include the Part due to the increased financial and subspecialists, such as Mohs surgeons, D Star Ratings regulations adopted in administrative burden it would entail cataract surgeons, and ophthalmologists, this final rule as 42 CFR 423.182– for both plans and health care while a couple of commenters 423.186. We have not produced Star providers/physicians who would be supported the assessment of pharmacy Ratings for PACE organizations to date surveyed. Other commenters raised networks broken down by specialty and are exploring the PACE waiver concerns about the ability of physicians drug access. The two comments about authority to continue to exclude PACE to differentiate across plans when networks of physician and surgeon organizations from this requirement. physicians interact with multiple plans. specialists urged CMS to leverage extant Comment: Several commenters made Multiple commenters were concerned measurement with the MIPS and suggestions for possible Medicare Plan that a physician could not accurately Quality Payment Program (QPP) to also Finder enhancements, including adding complete a survey on this topic since help measure plan network adequacy. A the capability to compare plans by physicians often do not personally commenter urged CMS to look beyond population type as well as mobile know the plan in which a beneficiary is simple numbers of physicians and enhancements. A commenter suggested enrolled. Some commenters noted that specialists, since contracting and including the overall Star Ratings in the it may be difficult to determine who affiliation in medical groups and ACOs Medicare & You handbook. within a provider’s practice should may effectively limit the access patients Response: We appreciate these complete the survey. Other concerns have to the full network. comments, but believe they are outside raised include small sample sizes, Response: CMS appreciates the the scope of the proposed rule. subjectivity of responses, and potential breadth of suggestions for new measures However, we note that CMS is currently for incomplete data. and will take these under consideration, exploring options for improving the Response: CMS appreciates the input including internal discussion and Plan Finder experience for Medicare provided by commenters regarding the

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burden and multiple challenges in the MA and Part D programs in sections statute identifies specific notice and developing a survey to evaluate II.B.11.c through w. comment timeframes, but that process physician experience interacting with does not require publication in the c. Basis, Purpose and Applicability of both Medicare health and drug plans. Federal Register. We have used the the Medicare Advantage and We are not finalizing any aspect of the draft and final Call Letter, which are Prescription Drug Plan Quality Rating physician survey in this rule, but will attachments to the Advance Notice and System take these comments into consideration final Rate Announcement as we continue to explore the feasibility We proposed to codify regulation text, respectively,33 to propose for comment and the value to the Star Ratings at §§ 422.160 and 423.180, that and finalize changes to the quality Star program in collecting feedback through identifies the statutory authority, Ratings system since the ratings became a physician survey. purpose, and applicability of the Star a component of the payment Comment: A handful of commenters Ratings system regulations that we methodology for MA and MA–PD plans. were concerned about the proposed to add under part 422 subpart (76 FR 21487 through 89). Because the administration of a physician survey in D and part 423 subpart D. Under our Star Ratings system has been integrated integrated plans where the physician is proposal, we are continuing to apply the into the payment methodology since the employed by the plan which may bias existing purposes of the quality rating 2012 contract year (as a mechanism the survey results. system, which are to provide used to determine how much a plan is Response: We acknowledge that comparative information to Medicare paid, and not the mechanism by which responses may not be unbiased in beneficiaries pursuant to sections [or a rule about when] a plan is paid), situations when the physician is 1851(d) and 1860D–1(c) of the Act, the Star Ratings are part of the process employed by the plan. CMS will take identify and apply the payment for setting benchmarks and capitation this into account as we consider consequences for MA plans under rates under section 1853 of the Act, and whether to develop a physician/ sections 1853(o) and 1854(b)(1)(C) of the the process for announcing changes to clinician survey in the future. Act, and evaluate and oversee overall the Star Ratings system falls within the Comment: Among the commenters and specific performance by MA and scope of section 1853(b) of the Act. supporting the development of a Part D plans. To reflect how the Part D Although not expressly required by physician survey, commenters noted ratings are used for MA–PD plan QBP section 1853(b) of the Act, CMS has that the physician is in close contact status and rebate retention allowances, historically solicited comment on with plans on behalf of their patients so we also proposed specific text, to be significant changes to the ratings system this would complement the existing codified at § 423.180(b)(2), noting that using a Request for Comment process CAHPS survey for enrollees. A couple of the Part D Star Rating will be used for before the Advance Notice and draft commenters noted that a physician those purposes. Call Letter are released; this Request for survey would be a way to measure We proposed, broadly stated, to Comment 34 provides MAOs, Part D network adequacy, appeals, benefit limit codify the current quality Star Ratings sponsors, and other stakeholders an exceptions, and grievances. A few system uses, methodology, measures, opportunity to request changes to and commenters recommended that CMS and data collection beginning with the raise concerns about the Star Ratings measurement periods in calendar year consider a broader survey of clinician methodology and measures before CMS 2019. We proposed some changes, such experiences, including nurses, finalizes its proposal for the Advance as how we handle consolidations from therapists, care coordinators, and Notice. We intend to continue the the current Star Ratings program, but pharmacists from a variety of settings. A current process at least until the 2019 overall the proposal was to continue the commenter requested that a physician measurement period that we proposed Star Ratings system as it has been survey be voluntary. as the first measurement period under developed and has stabilized. Under the Response: CMS appreciates the these new regulations, but we may proposal, data would be collected and support for the development of a discontinue that process at a later date performance measured using these physician survey and will solicit as the Advance Notice/Call Letter proposed rules and regulations for the feedback from the industry on process and rulemaking process may additional topics to be included on the 2019 measurement period; the associated quality Star Ratings will be provide sufficient opportunity for survey if we move forward with the public input. In addition, CMS issues development in the future. We believe used to assign QBP ratings for the 2022 35 payment year and released prior to the annually the Technical Notes that obtaining feedback from physicians is describe in detail how the methodology important; however, we will consider annual election period held in late 2020 for the 2021 contract year. Because of is applied from the changes in policy all of the comments provided before we adopted through the Advance Notice make a determination about proceeding the timing of the release and use in conjunction with the annual and Rate Announcement process. We with developmental work. intend to continue the practice of Comment: A commenter suggested the coordinated election period, these publishing the Technical Notes during development of a general physician would be the ‘‘2021 Star Ratings.’’ the preview periods. Our proposed rule survey regarding experiences with We proposed that the current quality included continued use of the draft and managed care compared to fee-for- Star Ratings system and procedures for final Call Letters as a means to provide service to understand the larger revising it remain in place for the 2019 subregulatory application), healthcare landscape, while another and 2020 Star Ratings. Section 1853(b) commenter suggested obtaining of the Act authorizes an advance notice 33 Advance Notices and Rate Announcements are feedback through other avenues outside and rate announcement to announce posted each year on the CMS website at: https:// of the Star Ratings program. and solicit comment for proposed www.cms.gov/Medicare/Health-Plans/Medicare Response: CMS appreciates these changes to the MA payment AdvtgSpecRateStats/Announcements-and- suggestions but they are out of scope for methodology, which CMS has Documents.html. 34 the potential development of surveys for interpreted to include the Part C and D Requests for Comment are posted at http:// go.cms.gov/partcanddstarratings under the the purpose of Star Ratings. Star Ratings program because of the downloads. We specifically address adoption of payment consequences of Star Ratings 35 http://go.cms.gov/partcanddstarratings (under the Star Ratings System regulations for under section 1853(o) of the Act. The the downloads) for the Technical Notes.

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interpretation, and guidance of the final • Categorical Adjustment Index (CAI) • HEDIS is the Healthcare version of these proposed regulations means the factor that is added to or Effectiveness Data and Information Set where necessary. Our proposed subtracted from an overall or summary which is a widely used set of regulation text does not detail these Star Rating (or both) to adjust for the performance measures in the managed plans for the RFC and Technical Notes average within-contract (or within-plan care industry, developed and because we believe such regulation text as applicable) disparity in performance maintained by the National Committee will be unnecessary. We proposed to associated with the percentages of for Quality Assurance (NCQA). HEDIS codify the first performance period beneficiaries who are dually eligible for data include clinical measures assessing (2019) and first payment year (2022) to Medicare and enrolled in Medicaid, the effectiveness of care, access/ which our proposed regulations will beneficiaries who receive a Low Income availability measures, and service use apply at § 422.160(c) and § 423.180(c). Subsidy or have disability status in that measures. We received no comments on our contract (or plan as applicable). • Highest rating means the overall proposed basis, purpose, and • Clustering refers to a variety of rating for MA–PDs, the Part C summary applicability regulations. For the techniques used to partition data into rating for MA-only contracts, and the reasons outlined in the proposed rule distinct groups such that the Part D summary rating for PDPs. and summarized here, we are finalizing observations within a group are as • Highly-rated contract means a the regulation text proposed at similar as possible to each other, and as contract that has 4 or more stars for their §§ 422.160 and 423.180 with one dissimilar as possible to observations in highest rating when calculated without significant modification regarding the any other group. Clustering of the the improvement measures and with all applicability of the regulations measure-specific scores means that gaps applicable adjustments (CAI and the governing the Star Ratings of a surviving that exist within the distribution of the reward factor). contract in a contract consolidation. In scores are identified to create groups • HOS means the Medicare Health light of the passage of section 53112 of (clusters) that are then used to identify Outcomes Survey which is the first the Bipartisan Budget Act of 2018 (Pub. the four cut points resulting in the patient reported outcomes measure that L. 115–123), the consolidation policy creation of five levels (one for each Star was used in Medicare managed care. described at §§ 422.162(b)(3) and Rating), such that the scores in the same The goal of the Medicare HOS program 423.182(b)(3) will be implemented for Star Rating level are as similar as is to gather valid, reliable, and clinically the 2020 QBP ratings and 2020 Star possible and the scores in different Star meaningful health status data in the Ratings. We will finalize additional text Rating levels are as different as possible. Medicare Advantage (MA) program for at §§ 422.160(c), 422.162(b)(3)(v), Technically, the variance in measure use in quality improvement activities, 423.180(c) and 423.182(b)(3)(iii) to scores is separated into within-cluster pay for performance, program oversight, apply the regulations that govern the and between-cluster sum of squares public reporting, and improving health. calculation of Star Ratings for surviving components. The clusters reflect the All managed care organizations with groupings of numeric value scores that contracts when the contract MA contracts must participate. consolidation is approved on or after minimize the variance of scores within • Low Income Subsidy (LIS) means January 1, 2019, consistent with the the clusters. The Star Ratings levels are the subsidy that a beneficiary receives to ACCESS Act provision. assigned to the clusters that minimize help pay for prescription drug coverage the within-cluster sum of squares. The d. Definitions (see § 423.34 for definition of a low- cut points for star assignments are income subsidy eligible individual). We proposed the following derived from the range of measure • Measurement period means the definitions for the respective subparts in scores per cluster, and the star levels period for which data are collected for part 422 and part 423 in paragraph (a) associated with each cluster are a measure or the performance period of §§ 422.162 and 423.182 respectively. determined by ordering the means of the • CAHPS refers to a comprehensive that a measures covers. clusters. • and evolving family of surveys that ask • Consolidation means when an MA Measure score means the numeric consumers and patients to evaluate the organization/Part D sponsor that has at value of the measure or an assigned interpersonal aspects of health care. ‘missing data’ message. least two contracts for health and/or • CAHPS surveys probe those aspects of drug services of the same plan type Measure star means the measure’s care for which consumers and patients under the same parent organization in a numeric value is converted to a Star are the best or only source of year combines multiple contracts into a Rating. It is displayed to the nearest information, as well as those that whole star, using a 1–5 star scale. single contract for the start of the • consumers and patients have identified subsequent contract year. Overall Rating means a global rating as being important. CAHPS initially • Consumed contract means a that summarizes the quality and stood for the Consumer Assessment of contract that will no longer exist after a performance for the types of services Health Plans Study, but as the products contract year’s end as a result of a offered across all unique Part C and Part have evolved beyond health plans the consolidation. D measures. acronym now stands for Consumer • Display page means the CMS • Part C Summary Rating means a Assessment of Healthcare Providers and website on which certain measures and global rating that summarizes the health Systems. scores are publicly available for plan quality and performance on Part C • Case-mix adjustment means an informational purposes; the measures measures. adjustment to the measure score made that are presented on the display page • Part D Summary Rating means a prior to the score being converted into are not used in assigning Part C and D global rating of the prescription drug a Star Rating to take into account certain Star Ratings. plan quality and performance on Part D enrollee characteristics that are not • Domain rating means the rating that measures. under the control of the plan. For groups measures together by dimensions • Plan Benefit Package (PBP) means a example age, education, chronic of care. set of benefits for a defined MA or PDP medical conditions, and functional • Dual Eligible (DE) means a service area. The PBP is submitted by health status that may be related to the beneficiary who is enrolled in both PDP sponsors and MA organizations to enrollee’s survey responses. Medicare and Medicaid. CMS for benefit analysis, bidding,

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marketing, and beneficiary and Care for Older Adults—Pain decrease our ability to measure true communication purposes. Assessment. The SNP-specific measures performance at the plan level and add • Reliability means a measure of the are rolled up to the contract level by complexities to the rating system. We fraction of the variation among the using an enrollment-weighted mean of solicited comments on balancing the observed measure values that is due to the SNP PBP scores. Although we improved precision associated with real differences in quality (‘‘signal’’) discussed and solicited comment on the plan level reporting (relative to contract rather than random variation (‘‘noise’’); feasibility and burden of collecting data level reporting) with the negative it is reflected on a scale from 0 (all at the PBP (plan) level and the consequences associated with an differences in plan performance reliability of ratings at the plan level, we increase in the number of plans without measure scores are due to measurement proposed to continue the practice of adequate sample sizes for at least some error) to 1 (the difference in plan calculating the Star Ratings at the measures; we asked for comments about performance scores is attributable to real contract level and that all PBPs under this for D–SNPs and for all plans as we differences in performance). the contract would have the same continue to consider whether rating at • Reward factor means a rating- overall and/or summary ratings at the plan level is feasible or appropriate. specific factor added to the contract’s paragraph (b)(1) of §§ 422.162 and In particular, we solicited feedback on summary or overall (or both) rating if a 423.182. the best balance and whether changing contract has both high and stable However, beneficiaries select a plan, the level at which ratings are calculated relative performance. rather than a contract, so we discussed and reported better serves beneficiaries • Statistical significance assesses how and our goals for the Star Ratings likely differences observed in in the proposed rule how we considered whether data should be collected and system. performance are due to random chance We also indicated that we were measures scored at the plan level. We alone under the assumption that plans exploring whether some measure data have explored the feasibility of are actually performing the same. could be reported at a higher level separately reporting quality data for Although not part of the proposed (parent organization versus contract) to individual D–SNP PBPs, instead of the regulatory definition, we clarify that ease and simplify reporting while current reporting level. For example, in CMS uses statistical tests (for example, continuing to remain useful (for order for CAHPS measures to be reliably t-test) to determine if a contract’s example, call center measures as we scored, the number of respondents must measure value is statistically different anticipate that parent organizations use (greater than or less than depending on be at least 11 people and reliability must a consolidated call center to serve all the test) from the national mean for that be at least 0.60. In the proposed rule, we contracts and plans) for the Star Ratings. measure, or whether conversely, the summarized our findings. Our current Further, we said we are exploring if observed differences from the national analyses show that, at the PBP level, contract market area reporting is feasible mean could have arisen by chance. CAHPS measures could be reliably when a contract covers a large • Surviving contract means the reported for only about one-third of D– geographic area. For example, when contact that will still exist under a SNP PBPs due to sample size issues, HEDIS reporting began in 1997, there consolidation, and all of the and HEDIS measures could be reliably were contract-specific market areas that beneficiaries enrolled in the consumed reported for only about one-quarter of evolved into reporting by market area contract(s) are moved to the surviving D–SNP PBPs. If reporting were done at for five states with large Medicare contracts. the plan level, a significant number of populations.36 We are planning to • Traditional rounding rules mean D–SNP plans will not be rated and in continue work in this area to determine that the last digit in a value will be lieu of a Star Rating, Medicare Plan the best reporting level for each measure rounded. If rounding to a whole Finder will display that the plan is ‘‘too that most accurately reflects number, look at the digit in the first small to be rated.’’ However, when performance and minimizes to the decimal place. If the digit in the first enough data are available, plan level extent possible plan reporting burden. decimal place is 0, 1, 2, 3 or 4, then the quality reporting will reflect the quality As we consider alternative reporting value should be rounded down by of care provided to enrollees in that units, we solicited comments and deleting the digit in the first decimal plan. Plan-level quality reporting will suggestions about requiring reporting at place. If the digit in the first decimal also give states that contract with D– different levels (for example, parent place is 5 or greater, then the value SNPs plan-specific information on their organization, contract, plan, or should be rounded up by 1 and the digit performance and provide the public geographic area) by measure. In in the first decimal place deleted. with data specific to the quality of care addition, section 50311(d) of the We received no comments on the for dual eligible (DE) beneficiaries Bipartisan Budget Act of 2018 after proposed definitions in paragraph (a) of enrolled in these plans. For all plans as publication of the proposed rule, §§ 422.162 and 423.182 and are well as D–SNPs, reporting at the plan amended section 1853 to require the therefore finalizing without level will significantly increase plan Secretary to determine the feasibility of modification. burden for data reporting and will have quality measurement at the plan level to be balanced against the availability of e. Contract Ratings for all MA plans. CMS will use the additional clinical information available feedback received from the proposed Star Ratings and data reporting are at at the plan level. Plan-level ratings will rule as we consider reporting options in the contract level for most measures. also potentially increase the ratings of the future and continue to evaluate this Currently, data for measures are higher-performing plans when they are issue consistent with the Bipartisan collected at the contract level including in contracts that have a mix of high and Budget Act provision. data from all plan benefit packages low performing plans. Similarly, plan- We proposed to continue calculating (PBPs) under the contract, except for the level ratings will also potentially the same overall and/or summary Star following Special Needs Plan (SNP)- decrease the ratings of lower-performing Ratings for all PBPs offered under an specific measures which are collected at plans that are currently in contracts MA-only, MA–PD, or PDP contract and the PBP level: Care for Older Adults— with a mix of high and low performing Medication Review, Care for Older plans. Measurement reliability issues 36 The following states were divided into multiple Adults—Functional Status Assessment, due to small sample sizes will also market areas: CA, FL, NY, OH, and TX.

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to codify this policy in regulation text medication-related measures at the 1853 to require the Secretary to at §§ 422.162(b) and 423.182(b). We also Formulary ID level. determine the feasibility of quality proposed a cost plan regulation at Response: We agree that ideally for measurement at the plan level for all § 417.472(k) to require cost contracts to consumer choice, plan-level reporting or MA plans. CMS plans to obtain be subject to the part 422 and part 423 Formulary ID level reporting for Part D additional feedback from stakeholders Medicare Advantage and Part D plans would be preferable, because it on this issue given the challenges of Prescription Drug Program Quality provides more detailed and targeted developing options that would be Rating System. Specifically, we data. However, we need to consider the feasible for both the industry and CMS. proposed, at paragraph (b)(1) that CMS operational and methodological CMS’ contractor for the Star Ratings will calculate overall and summary challenges of reporting at the plan level, program is planning to convene a ratings at the contract level and including the ability to accurately Technical Expert Panel following the proposed regulation text that cross- measure performance at that level. publication of the final rule and this is references other proposed regulations Comment: A commenter stated that one of the issues the panel will address. regarding the calculation of measure plan-level reporting would be open to This panel will periodically meet to scoring and rating, and domain, potential gaming by contracts provide feedback on different critical summary and overall ratings. Further, constructing the plan-level geographic Star Ratings issues. Information from we proposed to codify, at (b)(2) of each areas to maximize Star Ratings for the the Technical Expert Panel will be section, that data from all PBPs offered greatest number of enrollees. The publicly shared. under a contract will continue to be commenter suggested that contracts Comment: A commenter expressed used to calculate the ratings for the would consider how well each plan was concern about pursuing market area contract. For SNP specific measures performing in the Star Ratings program reporting as such reporting could result collected at the PBP level, we proposed to determine the geographic area of each in limiting the health care options for that the contract level score will be an plan. higher-need populations. enrollment-weighted mean of the PBP Response: We appreciate this Response: CMS appreciates this comment and will take it into account scores using enrollment in each PBP as comment and does not want to limit as we consider this issue in the future. reported as part of the measure options for higher-need populations. We Comment: A commenter noted that will take the comment into specification, which is consistent with plan-level reporting would stifle current practice. The proposed text is consideration as we continue to innovation and discourage plans from consider options for different levels of explicit that domain and measure serving difficult areas. This would limit ratings, other than the SNP-specific reporting. the ability of contracts to implement Comment: A handful of commenters measures, are based on data from all innovative models in one plan prior to recommended adjusting the Star Ratings PBPs under the contract. expanding. to account for variables that contribute We received the following comments Response: We appreciate this to underperformance in certain related to our proposals, and our comment since we clearly do not want geographic areas, network responses follow: our Star Ratings policies to stifle characteristics and patient Comment: Most commenters opposed innovation. We will take this comment characteristics by applying, for example, moving to plan-level reporting and into consideration as we continue to the case-mix adjustment process expressed overwhelming support for consider options for different levels of currently used for the CAHPS measures. retaining the current contact-level reporting. Response: CMS appreciates this measurement. Commenters raised Comment: A handful of commenters comment and will take it into account concerns about the additional expressed interest in measurement at as we continue to consider options for complexity, administrative burden and the local health services area, including different levels of reporting. As we reporting requirements of plan-level by state. Many of these commenters contemplate case-mix adjustment, we reporting. Additionally, commenters noted that it will be challenging to move need to ensure that we are not adjusting reiterated our concerns regarding the to reporting at the local geographic area. away true differences in the quality of reliability of the scores at the plan level, Issues to be considered include how to care across contracts in different as well as the inability to report some handle contracts that serve major geographic areas or with different measure due to inadequate sample sizes. metropolitan areas that cross state lines. network structures. A commenter urged CMS to continue A couple of commenters suggested that Comment: A commenter raised reporting Star Ratings at the contract CMS consider creating additional concerns of the possibility for gaming in level for PDPs. contract numbers or market-level connection with separate ratings for Response: CMS appreciates designations for a contract. A new contracts. If CMS is to proceed, the commenters’ support for contract-level commenter recommended that CMS commenter would like to see reporting and acknowledge the discontinue the moratorium that does simulations of the ratings. complexities of moving to plan-level not allow for existing H numbers to be Response: CMS appreciates this reporting given the challenges of split to allow more meaningful comment and clearly does not want to accurately measuring quality with measurement. implement changes that would smaller groups and sample sizes and the Response: CMS is committed to encourage gaming of the Star Ratings additional administrative burden that examining the feasibility of alternative system. We will take this comment into would be placed on contracts. levels of reporting, including by consideration as we continue to analyze Comment: A handful of commenters geographic area. The suggestions different ways to rate contracts. supported plan-level reporting also provided by commenters through the Comment: A commenter raised a recognized it may not be practical for all proposed rule will be taken into question about a potential error on page quality measures. Some of the consideration as alternatives are 82 FR 56380 in the sentence that reads commenters noted the utility for explored. Additionally, section 50311(d) ‘‘For SNP specific measures collected at beneficiaries who choose among plans. of the Bipartisan Budget Act of 2018 the PBP level, we propose that the A commenter suggested CMS require (P.L. 115–123) enacted after publication contract level score would be an Part D plans to report certain of the proposed rule, amended section enrollment-weighted mean of the PBP

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scores using enrollment in each PBP as Response: CMS thanks this of the QBPs that are made to MAOs due reported as part of the measure commenter for their support for our to the large enrollment increase in the specification, which is consistent with current policy of calculating SNP higher rated, surviving contract. We are current practice.’’ The commenter noted measures. worried that this practice results in that the current practice weights the Comment: A handful of commenters masking low quality plans under higher PBP scores by eligible population. recommended that CMS not make any rated surviving contracts. This does not Response: The text from the proposed changes in the unit for reporting until provide beneficiaries with accurate and rule is correct. The eligible population additional analyses are completed that reliable information for enrollment and the enrollment reported as part of ensures that any changes are fair and decisions, and it does not truly reward the measure specification are the same. equitable to all sponsors. A commenter higher quality contracts. We proposed to Comment: A handful of commenters suggests an industry-wide workgroup to modify the calculation of Star Ratings from sponsoring organizations suggested discuss potential changes to reporting for surviving contracts that have separate reporting by Dual SNPs and levels and operational challenges. consolidated to address these concerns. Response: We acknowledge these non-Dual SNPs, and rolling up all Dual Instead of assigning the surviving comments and agree that we need to do SNP PBPs and non-Dual SNP PBPs contract the Star Rating that the contract separately within a contract. A couple of more analysis and obtain additional feedback from sponsors before we make would have earned without regard to commenters noted that moving to plan whether a consolidation took place, we level reporting for all SNPs is complex any changes in the level of reporting. We support the desire to make sure that proposed to assign and display on MPF with many pros and cons so they Star Ratings based on the enrollment- recommended that CMS continue any changes are fair and equitable to all sponsoring organizations. As noted in a weighted mean of the measure scores of contract-level reporting until all of the the surviving and consumed contract(s) consequences can be fully evaluated. previous response, CMS’ contractor for the Star Ratings program is planning to so that the ratings reflect the Response: CMS appreciates these convene a Technical Expert Panel performance of all contracts (surviving comments, including the issues raised following the publication of the final and consumed) involved in the by commenters regarding the rule and this is one of the issues the consolidation. Under our proposal, the complexities of moving to plan/PBP- panel will address. calculation of the measure, domain, level reporting by SNPs and non-SNPs. For the reasons indicated in the summary, and overall ratings will be Given that some contracts just have SNP proposed rule and our responses to the based on these enrollment-weighted PBPs and other contracts offer both SNP related comments, we are finalizing the mean scores. We estimated that the and non-SNP plans, CMS needs to provisions as proposed in paragraphs number of contracts impacted by the evaluate how this would impact (b)(1) and (2) of §§ 422.162 and 423.182 proposal would be small relative to all reporting of measures and calculations. and § 417.472(k) without substantive contracts that qualify for QBPs. During We agree that all of the benefits and modification. However, we realized that the period from 1/1/2015 through disadvantages need to be weighed paragraphs (b)(1) as proposed did not 1/1/2017 annual consolidations for MA before a final decision is made about specify that summary ratings also how to proceed and CMS is committed contracts ranged from a low of 7 in 2015 include the reward factor and the to a high of 19 in 2016 out of to continuing to obtain feedback from Categorical Adjustment Index as the industry on changes to the level of approximately 500 MA contracts. As described in §§ 422.166(f) and proposed in §§ 422.162(b)(3)(i)–(iii) and reporting. CMS continues to evaluate 423.186(f); we are finalizing additional this issue. Additionally, in light of the 423.182(b)(3)(i)–(iii), CMS will use text to clarify that in paragraphs (b)(1). enrollment-weighted means of the passage of the Bipartisan Budget Act of In addition, we are slightly revising the 2018, CMS is required to examine the measure scores of the consumed and last two sentences of paragraphs (b)(2) surviving contracts to calculate ratings feasibility of plan-level reporting for of the same regulation sections to clarify both SNP and non-SNP plans. Any for the first and second plan years that the rule for including plan-level following the contract consolidations. related changes would be proposed only measures is applicable to the SNP- We believe that use of enrollment- through future rulemaking. specific measures that are reported only weighted means will provide a more Comment: A couple of commenters at the plan level. supported the idea of reporting the call accurate snapshot of the performance of center and appeals measures at the f. Contract Consolidations the underlying plans in the new parent organization level since in most We proposed a change in how consolidated contract, such that both cases these functions are organized at contract-level Star Ratings are assigned information to beneficiaries and QBPs the parent organization level, while a in the case of contract consolidations. are not somehow inaccurate or couple of commenters did not like We noted in the proposed rule how we misleading. We also proposed, however, having different levels of reporting for have historically permitted MAOs and that the process of weighting the different measures, arguing that it Part D sponsors to consolidate contracts enrollment of each contract and would create more complexity in the when a contract novation occurs to applying this general rule will vary Star Rating program. better align business practices. As noted depending on the specific types of Response: CMS appreciates the in MedPAC’s March 2016 Report to measures involved in order to take into suggestions received from commenters Congress (http://www.medpac.gov/docs/ account the measurement period and and will continue to look at the default-source/reports/march-2016- data collection processes of certain advantages of moving to a different level report-to-the-congress-medicare- measures. Our proposal was to treat of reporting for these and other payment-policy.pdf), there has been a ratings for determining Quality Bonus measures. Any related changes would continued increase in the number of Payment (QBP) status for MA contracts be proposed through future rulemaking. enrollees being moved from lower Star differently than displayed Star Ratings Comment: A commenter supports Rating contracts that do not receive a for the first year following the CMS’ current process for rolling up SNP QBP to higher Star Rating contracts that consolidation for consolidations that plan-benefit package level information do receive a QBP as part of contract involve the same parent organization to the contract level. consolidations, which increases the size and plans of the same plan type.

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We proposed to codify our new policy HEDIS and HOS already combine data will be based on the 2019 Star Ratings at §§ 422.162(b)(3) and 423.182(b)(3). from the surviving and consumed (which are released in October 2018) First, we proposed generally, at contract(s) following the consolidation, and calculated using the weighted mean paragraph (b)(3)(i) of each regulation, so we did not propose any modification of the November 2018 enrollment of the that CMS will assign Star Ratings for or averaging of these measure scores. surviving and consumed contracts. consolidated contracts using the For example, for HEDIS if an Because the same parent organization is provisions of paragraph (b)(3). We organization consolidates one or more involved in these situations, we believe proposed in § 422.162(b)(3) both a contracts during the change over from that many administrative processes and specific rule to address the QBP rating measurement to reporting year, then procedures are identical in the Medicare for the first year after the consolidation only the surviving contract is required health plans offered by the sponsoring and a rule for subsequent years. As Part to report audited summary contract- organization, and using a weighted D plan sponsors are not eligible for level data but it must include data on all mean of what will have been their QBP QBPs, § 423.182(b)(3) was proposed members from all contracts involved. ratings accurately reflects their without the QBP aspect. We proposed in • We proposed to require that the performance for payment purposes. In § 422.162(b)(3)(iv) and CAHPS survey sample (that would be subsequent years after the first year § 423.182(b)(3)(ii) the process for selected following the consolidation) following the consolidation, QBPs status assigning Star Ratings for posting on the would include enrollees in the sample will be determined based on the Medicare Plan Finder for the first 2 universe from which the sample is consolidated entity’s Star Rating posted years following the consolidation. drawn from both the surviving and on MPF. Under our proposal, the For the first contract year following a consumed contracts. If there are two measure, domain, summary, and (in the consolidation, we proposed to use the contracts (that is, Contract A is the case of MA–PD plans) the overall Star enrollment-weighted means as surviving contract and Contract B is the Ratings posted on Medicare Plan Finder calculated below to set Star Ratings for consumed contract) that consolidate, for the second year following MPF publication: and Contract A has 5,000 enrollees consolidation would be based on the • The Star Ratings measure scores for eligible for the survey and Contract B enrollment-weighted measure scores so the consolidated entity’s first plan year has 1,000 eligible for the survey, the would include data from all contracts will be based on enrollment-weighted universe from which the sample will be involved. Consequently, we stated that measure scores using the July selected will be 6,000. we believed the ratings used for QBP enrollment of the measurement period CMS proposed that these rules would status determinations would reflect the of the consumed and surviving contracts be used to calculate the measure scores care provided by both the surviving and for all measures, except the survey- in the first and second year after consumed contracts. based and call center measures. consolidation; following those two In conclusion, we proposed a new set • The survey-based measures (that is, years, CMS proposed to use the other of rules regarding the calculation of Star CAHPS, HOS, and HEDIS measures rules proposed in §§ 422.166 and Ratings for consolidated contracts to be collected through CAHPS or HOS 423.186 to calculate the measure, codified at paragraphs (b)(3) of surveys) will use enrollment of the domain, summary, and overall Star §§ 422.162 and 423.182. We solicited surviving and consumed contracts at the Ratings for the consolidated contract. In comment on this proposal and whether time the sample is pulled for the rating the third year after consolidation and our separate treatment of different year. For example, for a contract subsequent years, the performance measure types during the first and consolidation that is effective January 1, period for all the measures will be after second year adequately addresses the 2021 the CAHPS sample for the 2021 the consolidation, so our proposal differences in how data are collected Star Ratings will be pulled in January limited the special rules for calculating (and submitted) for those measures 2020 so enrollment in January 2020 will post-consolidation the Star Ratings to during the different periods. We also be used. The call center measures will the Ratings issued the first 2 years after solicited feedback on whether use mean enrollment during the study consolidation. sponsoring organizations believe that period. We stated that we believed that When consolidations involve two or the special rule for consolidations these proposals for survey-based more contracts for health and/or drug involving the same parent organization measures are more nuanced and account services of the same plan type under the and same plan types adequately for how the data underlying those same parent organization combining addresses how those situations are measures are gathered and that the into a single contract at the start of a different from cases where an MA enrollment-weighted means better contract year, we proposed to calculate organization buys or sells a plan or reflect the true underlying performance the QBP rating for that first year contract from or to a different entity and of both the surviving and consumed following the consolidation using the whether these rules should be extended contracts. enrollment-weighted mean, using to situations where there are different For the second year following the traditional rounding rules, of what parent organizations involved. For consolidation, for all MA and Part D would have been the QBP ratings of the commenters that support the latter, we Sponsors, we proposed to calculate the surviving and consumed contracts using also requested comment on how CMS Star Ratings will be calculated as the contract enrollment in November of should determine that the same follows: the year the Star Ratings were released. administrative processes are used and • The enrollment-weighted measure In November of each year following the whether attestations from sponsoring scores using the July enrollment of the release of the ratings on Medicare Plan organizations or evidence from prior measurement period of the consumed Finder, the preliminary QBP ratings are audits should be required to support and surviving contracts will be used for displayed in the Health Plan such determinations. all measures except HEDIS, CAHPS, and Management System (HPMS) for the Following publication of our HOS. year following the Star Ratings year. For proposed rule, Congress enacted the • We proposed that HEDIS and HOS example, if the first year the Bipartisan Budget Act of 2018. Section measure data will be used as reported in consolidated entity is in operation is 53112 of the Act amended section the second year after consolidation. The plan year 2020, the 2020 QBP rating 1853(o) to require an adjustment to the current reporting requirements for displayed in HPMS in November 2018 Star Ratings, quality bonus under

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section 1853(o) and rebate allocation Commenters recognized that quality QBP ratings of all contracts involved in under section 1854 based on the quality reporting at the local market area is a the consolidation which are already rating to ‘‘prevent the artificial sizeable change and would not be rounded. inflation’’ of Star Ratings after feasible for a number of years. Comment: A commenter asked CMS consolidation. That required adjustment Response: CMS appreciates the to consider a grace period that would applies for consolidations approved on commenters’ support for revising how neither reward nor disadvantage the or after January 1, 2019. The statutory Star Ratings and QBP ratings are surviving contract as a result of change requires the adjustment be calculated when two or more contracts acquiring a poor performing contract. applied when a single MA organization consolidate. We believe that the Response: Under our current policy, a consolidates contracts and reflect an Bipartisan Budget Act indicates that sponsor can gain financially by enrollment-weighted average of scores Congress is similarly concerned about consolidating enrollees from a poor- or ratings for the underlying contracts. these issues and our proposal to address performing contract into a contract that We believe that our proposal is them. We also agree with commenters receives a QBP and thereby receive generally consistent with the new that local market area reporting would bonus payments that it would not have statutory requirement, with minor be preferable in cases when the been entitled to receive had the exceptions. The proposal would not contracts are geographically dispersed. consolidation not occurred. The revised have applied until a later period, but, as Although moving to local market area methodology for calculating Star Ratings noted in section II.A.11.c of this final reporting has many challenges, CMS is and QBPs for the surviving contract rule, we will finalize these provisions to committed to work with stakeholders to takes into consideration the be applicable beginning with the 2020 examine the feasibility of local market performance of all contracts involved; QBPs and 2020 Star Ratings produced in area reporting. Any potential changes thus, it is a more accurate measure of fall 2019 to be consistent with the that would change the consolidation performance. We do not believe that a statute. Our proposal was for policy in the direction of local market more accurate reflection of performance consolidations involving a single parent area reporting would be proposed in can be fairly termed a ‘‘reward’’ or a organization while the statute focused future rulemaking. ‘‘disadvantage’’ of contract Comment: A commenter on consolidations involving a single MA consolidation. recommended that CMS issue contract organization; applying the proposed Comment: A handful of commenters numbers at the state level and then base policy to consolidations at the level of expressed concern regarding the Star Ratings at the state level to avoid the parent organization instead of the consolidation policy stating that they consolidations across disperse specific MA organization captures more thought the calculations were too consolidations. We read the Bipartisan geographic areas. Response: State-based contract complex. A commenter stated it would Budget Act as setting a floor rather than limit the beneficiary options to enroll in a ceiling on our authority to establish numbers would be administratively burdensome for both contracts and plans with richer benefits since there and set the rules governing the Stars would not be the same incentives to Rating system. In addition, our proposal CMS, would significantly increase consolidate lower performing contracts also was more specific as to how reporting burden of contracts, and into higher performing ones receiving enrollment-weighted ratings at the would create measurement challenges QBPs. measure and contract level would be since many contracts at the state level Response: Most of the calculations for used following the consolidation. We will not have a sufficient number of the revised consolidation policy will be believe the additional detail in our enrollees by state to calculate reliably proposal is explicitly authorized as the the quality measures that are part of the handled by CMS, though contracts will statutory change leaves it to the Part C and D Star Ratings program. have an opportunity to review the Secretary to identify the specific Contracts that serve disperse geographic calculations as part of the normal Star appropriate adjustments. areas often have the majority of their Rating review process. The We received the following comments enrollees in one or two states with consolidation policy should not make it on our proposals and solicitations for smaller enrollment in other states. more difficult for contracts to produce feedback, and our responses follow: Comment: A commenter suggested the data that are needed for the Star Comment: Commenters expressed using the unrounded final summary Ratings program. The premise behind overwhelming support for our rules mean rather than the rounded final Star all of the calculations is to combine the outlined at §§ 422.162(b)(3) and Rating. already gathered (or currently gathered) 423.182(b)(3) to calculate contract-level Response: CMS is assuming this data from all contracts involved in the Star Ratings in the case of contract commenter is referring to the QBP rating consolidation using an enrollment- consolidations. Commenters stated that for the first year of the consolidation. weighted average. This policy should this would be a more accurate picture of For all other years, the QBP rating of the not create a situation which limits the performance of the underlying contract would be based on the Star options for beneficiaries to enroll in contracts. Commenters noted that this Ratings posted on Medicare Plan Finder; plans with richer benefits. As always, would help eliminate the gaming that therefore for the second year following beneficiaries may is able to choose in can occur when consolidations of a consolidation, the same rules for their service area any plan that best multiple contracts in distinct geographic calculating the Star Ratings for QBP and meets their needs. If a beneficiary areas result in artificial increases the for MPF posting would apply (that is, decides to remain in a contract that Star Ratings and Quality Bonus Payment §§ 422.162(b)(3)(iii)). The preliminary consolidates, the ratings for that (QBP) ratings. A number of commenters QBP rating is produced and posted in contract will now more accurately suggested that this approach was fair HPMS in November of each year for the reflect performance of that contract. and equitable to all stakeholders. Some bids that will be submitted the Comment: A commenter suggested commenters supported this change as a following year. The QBP appeals that CMS post by year end in HPMS a short-term solution, but they wanted process is based on these ratings posted worksheet with the exact enrollment CMS to consider how in the future the in November. In April prior to the bids and overall Star Rating values which ratings could more accurately reflect the being due, CMS would update the QBP CMS intends to use for determining care provided at the local market area. rating using an enrollment-weighted QBP ratings for consolidated contracts.

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Response: In November of each year, similar contract documents and The revised consolidation policy would CMS posts in HPMS the preliminary approvals from CMS. Where one entity be applicable for the Rating for any QBP ratings for the bids that will be is buying all or part of the business of surviving contract after a consolidation submitted the following year. This starts another entity, we did not propose and that is approved on or after January 1, the QBP appeals process. In April of do not intend to apply the consolidation 2019. Although the statute related to each year prior to bids being submitted, policy finalized in this rule. In consolidations is specific to MA ratings, CMS posts in HPMS the final QBP novations, the structure of each of the we are finalizing the same policy for rating following the appeals process. In individual contracts being purchased Part D ratings on the same timeframe to November of each year or at year end, does not change and the contracts still have consistent methodology across Part CMS would not be aware of future provide the same services within the C and D for beneficiaries choosing a consolidations that would be same service area before and after the contract. announced near the time of the bid so novation is completed, only the g. Data Sources would be unable to post a combined company that owns the business and is rating for the consolidated contracts at the MA organization under the contract Under 1852(e) of the Act, MA this time. As long as CMS is aware of has changed. The Star Rating for each organizations are required to collect, the consolidation by April at the time of individual contract transfers with the analyze, and report data that permit the HPMS posting, the combined rating contract and remains intact until the measurement of health outcomes and for the consolidated contracts would be next rating cycle. Novations can occur at other indices of quality. The Star posted at that time. A parent any point during the calendar year. Ratings system is based on information organization would have sufficient A consolidation by contrast is when collected consistent with section information to calculate the enrollment two or more contracts owned by the 1852(e) of the Act. Section 1852(e)(3)(B) weighted QBP rating of a consolidated same parent organization are combined of the Act prohibits the collection of contract using the preliminary QBP into a single contract. The overall data on quality, outcomes, and ratings posted in HPMS in November of service area of the two contracts are beneficiary satisfaction other than the each year. combined, the contract number of the types of data that were collected by the Comment: A handful of commenters consumed contract(s) is retired and the Secretary as of November 1, 2003; there requested that CMS clarify the timing of contract number of the surviving is a limited exception for SNPs to this provision. These commenters contract now provides all of the services collect, analyze, and report data that expressed a preference for it not to begin in the combined service area. To permit the measurement of health until the 2021 Star Ratings and 2022 consolidate contracts, all of the outcomes and other indicia of quality. QBPs. contracts must be owned by the same The statute does not require that only Response: The proposed rule stated parent organization. Consolidations can the same data be collected, but that we that all of the changes related to Star only occur at the change from one year do not change or expand the type of Ratings would go into effect for to another year and must be submitted data collected until after submission of performance periods in 2019 (thus, for and approved by CMS by a specific a Report to Congress (prepared in the 2021 Star Ratings and 2022 QBPs). deadline in the annual contracting consultation with MA organizations and However, in light of the passage of the process. If one parent organization buys accrediting bodies) that explains the Bipartisan Budget Act provision which another contract owned by a different reason for the change(s). We clarify here requires enrollment-weighted parent organization, the sponsor could that the types of data included under adjustments to the Star Ratings for consolidate multiple contracts using the the Star Ratings system are consistent contract consolidations approved on or rules outlined in this rule the year after with the types of data collected as of after 1/1/19, we are finalizing the the novation takes place. With a November 1, 2003. Since 1997, regulation text on this policy to be consolidation, the rule finalized here for Medicare managed care organizations applicable to consolidations that occur the calculation of the Star Rating of the have been required to annually report on or after the same date. The final surviving contract would apply. quality of care performance measures regulations at §§ 422.162(b)(3) and Comment: A commenter wanted CMS through HEDIS. We have also been 423.182(b)(3) will apply to the star to propose other alternatives and offer conducting the CAHPS survey since ratings of surviving contracts from additional opportunities to comment, 1997 to measure beneficiaries’ contract consolidations that are but no additional detail was provided experiences with their health plans. approved on or after January 1, 2019. on suggested alternatives. HOS began in 1998 to capture changes Thus, the policy will be implemented Response: CMS appreciates the in the physical and mental health of MA for the 2020 Star Ratings and the 2020 request for other alternatives. enrollees. To some extent, these surveys QBPs. We note that while the statute is Commenters to the proposed rule did have been revised and updated over specific to MA ratings, we are finalizing not suggest other ways to handle time, but the same types of data— the same policy for Part D Ratings on contracts that consolidate and expressed clinical measures, beneficiary the same timeframe to have consistent overwhelming support for this policy. experiences, and changes in physical methodology across Part C and D for CMS will continue to consider if there and mental health, respectively—have beneficiaries choosing a contract. is a better way to account for differences remained the focus of these surveys. In Comment: A few commenters were in performance across geographic areas addition, there are several measures in interested in a similar policy for and will provide opportunities to the Stars Ratings System that are based consolidations between different parent engage stakeholders and obtain on performance that address telephone organizations. additional input. customer service, members’ complaints, Response: We treat the purchase of a For the reasons set forth in the disenrollment rates, and appeals; contract, multiple contracts or all of the proposed rule and our responses to the however these additional measures are contracts offered by a parent related comments summarized earlier, not collected directly from the organization by different parent we are finalizing the provisions as sponsoring organizations for the organization is known as a novation, not proposed at §§ 422.162(b)(3) and primary purpose of quality a consolidation, even though the 423.182(b)(3), except for modifying the measurement so they are not consolidation will generally also require timeframe applying these new rules. information collections governed by

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section 1852(e). These additional a regulatory provision at services and the Star Ratings will not measures are calculated from §§ 422.162(c)(2) and 423.182(c)(2) that reflect these issues. information that CMS has gathered as requires MA organizations and Part D Response: We appreciate the part of the administration of the plan sponsors to submit unbiased, commenters’ feedback and concerns Medicare program, such as information accurate, and complete quality data as received on the use of audits, on appeals forwarded to the described in paragraph (c)(1) of each compliance actions, and enforcement Independent Review Entity under section. Our authority to collect quality actions in the Star Ratings. In the subparts M, enrollment, and compliance data is clear under the statute and proposed rule, the Beneficiary Access and enforcement actions. existing regulations, such as section and Performance Problems measure was The Part D program was implemented 1852(e)(3)(A) and 1860D–4(d) and not proposed for the 2021 Star Ratings in 2006, and while there is no parallel §§ 422.12(b)(2) and 423.156. We even though some stakeholders strongly provision regarding applicable Part D proposed the paragraph (c)(2) regulation support including some recognition in sources of data, we have used similar text to ensure that the quality ratings the Star Ratings program when serious datasets, for example CAHPS survey system regulations include a regulation or repeat deficiencies are uncovered in data, for beneficiaries’ experiences with on this point for readers and to avoid audits or other means. These prescription drug plans. Section 1860D– confusion in the future about the stakeholders argue that such 4(d) of the Act specifically directs the authority to collect this data. In deficiencies directly impact beneficiary administration and collection of data addition, it is important that the data access to needed services and drugs and from consumer surveys in a manner underlying the ratings are unbiased, therefore should be part of the Star similar to those conducted in the MA accurate, and complete so that the Ratings program. We will continue to program. All of these measures reflect ratings themselves are reliable. This consider the comments as we continue structure, process, and outcome indices regulation text will clearly establish the our dialogue with stakeholders on this of quality that form the measurement set sponsoring organization’s responsibility issue and any future changes will be under Star Ratings. Since 2007, we have to submit data that can be reliably used proposed in future rulemaking. publicly reported a number of measures to calculate ratings and measure plan For the reasons set forth in the related to the drug benefit as part of the performance. proposed rule and our responses to the related comments, we are finalizing the Star Ratings. For MA organizations that We received the following comments provisions regarding the data sources for offer prescription drug coverage, we use on this proposal, and our responses measures and ratings as proposed in the same Part D measures focusing on follow: administration of the drug benefit as is §§ 422.162(c) and 423.182(c) with two Comment: A few commenters used for stand-alone PDPs. Similar to modifications. In § 422.162(c)(1), we are supported codifying language to clearly MA measures of quality relative to finalizing additional text to clarify that establish the sponsoring organization’s health services, the Part D measures CMS administrative data will be used in responsibility to submit data that can be focus on customer service and the scoring for measures; the new text reliably used to calculate ratings and beneficiary experiences, effectiveness, aligns the Part C regulation with the measure plan performance. and access to care relative to the drug parallel Part D regulation. As noted in benefit. We believe that the Part D Star Response: CMS appreciates the proposed rule (82 FR 56382), some Ratings are consistent with the stakeholders’ support of our effort to measures are based on data that CMS (or limitation expressed in section 1852(e) codify language to ensure that that the a contractor) has related to performance of the Act even though the limitation data submitted are accurate and reliable. by sponsoring organizations and we are does not apply to our collection of Part We are finalizing the language as including a reference to CMS D quality data from Part D sponsors. proposed. administrative data consistent with that We intend to continue to base the Comment: Responses were mixed on longstanding policy. In addition, in types of information collected in the whether audit data should be used in § 423.182(c)(2), we are finalizing Part C Star Ratings on section 1852(e) of the Star Ratings. A couple of additional text to clarify that the the Act, and we proposed at commenters opposed including reported data permit measurement of § 422.162(c)(1) that the type of data used measures in the Star Ratings program health outcomes and other indices of for Star Ratings will be data consistent that rely on audit findings as a data quality, consistent with the scope of the with the section 1852(e) limits and data source. Other commenters stated given measures in the Star Ratings program. gathered from CMS administration of the Beneficiary Access and Performance h. Adding, Updating, and Removing the MA program. In addition, we Problems measure that previously Measures proposed in § 422.162(c)(1) and in included enforcement actions was § 423.182(c)(1) to include measures that moved out of the 2019 Star Ratings and We are committed to continuing to reflect structure, process, and outcome to the display page, they strongly urged improve the Part C and D Star Ratings indices of quality, including Part C CMS to re-incorporate audit system by focusing on improving measures that reflect the clinical care information, including information clinical and other outcomes. We provided, beneficiary experience, about enforcement actions, in Star anticipate that new measures will be changes in physical and mental health, Ratings. Those in favor of using audit developed and that existing measures and benefit administration, and Part D information noted that the key purposes will be updated over time. NCQA and measures that reflect beneficiary of Quality Rating System are to provide the Pharmacy Quality Alliance (PQA) experiences and benefit administration. comparative information to Medicare continually work to update measures as The measures encompass data beneficiaries, to base payment on clinical guidelines change and develop submitted directly by MA organizations quality, and to oversee the overall new measures focused on health and (MAOs) and Part D sponsors to CMS, performance of plans. These drug plans. To address these anticipated surveys of MA and Part D enrollees, commenters opposed CMS removal of changes, we proposed in §§ 422.164 and data collected by CMS contractors, and audit findings and enforcement actions 423.184 specific rules to govern the CMS administrative data. We also from the Star Ratings since deficiencies, addition, update, and removal of proposed, primarily so that the in particular repeat deficiencies, may measures. We also proposed to apply regulation text is complete on this point, impact beneficiary access to drugs and these rules to the measure set proposed

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in this rulemaking, to the extent that First, we proposed to codify, at Ratings, but that these are there are changes to the measure set §§ 422.164(a) and 423.184(a), regulation considerations that will guide us as we between the effective date of this final text stating the general rule that CMS develop such proposals. We also rule and the Star Ratings based on this would add, update, and remove proposed that CMS would develop its final rule (that is the ratings based on measures used to calculate Star Ratings own measures as well when appropriate the performance periods beginning on as provided in §§ 422.164 and 423.184. to measure and reflect performance in or after January 1, 2019). In each paragraph regarding addition, the Medicare program. For the 2021 Star As discussed in more detail in the updating, and removal of measures and Ratings, we proposed to have measures following paragraphs, we proposed the the use of improvement measures, we that encompass outcome, intermediate following general rules to govern also proposed to make certain of these outcome, patient/consumer experience, adding, updating, and removing changes without future rulemaking by access, process, and improvement measures: applying the standards and authority in measures. It is important to have a mix • For data quality issues identified the regulation text. CMS proposed to of different types of measures in the Star during the calculation of the Star solicit feedback of its application of Ratings program to understand how all Ratings for a given year, we proposed to such rules using the draft and final Call of the different facets of the provision of continue our current practice of Letter each year. In addition, CMS health and drug services interact. For removing the measure from the Star proposed in paragraph (a) of each example, process measures are Ratings. section to issue a complete list of the evidence-based best practices that lead • That new measures and substantive measure set for each year in the to clinical outcomes of interest. Process updates to existing measures would be Technical Notes or similar guidance measures are generally easier to collect, added to the Star Ratings system based document. while outcome measures are sometimes on future rulemaking but that prior to Second, we proposed, in paragraph more challenging requiring in some such a rulemaking, CMS would (b) of these sections, that CMS would cases medical record review and more announce new measures and review the quality of the data on which sophisticated risk-adjustment substantive updates to existing performance, scoring, and rating of methodologies. measures and solicit feedback using the measures is done each year. We Over time new measures would be process described for changes in and proposed to continue our current added and measures would be removed practice of reviewing data quality across adoption of payment and risk from the Star Ratings program to meet all measures, variation among adjustment policies in section 1853(b) of our policy goals. As new measures are organizations and sponsors, and the Act (that is the Call Letter added, we noted in the proposed rule measures’ accuracy, reliability, and attachment to the Advance Notice and that our general guidelines for deciding validity before making a final Rate Announcement). whether to propose new measures determination about inclusion of through future rulemaking would use • That existing measures (currently measures in the Star Ratings. We the following criteria: existing or existing after a future explained that this rule was designed to • Importance: The extent to which rulemaking) used for Star Ratings would ensure that Star Ratings measures the measure is important to making be updated (without rulemaking) with accurately measure true plan significant gains in health care regular updates from the measure performance. If a systemic data quality processes and experiences, access to stewards through the process described issue is identified during the calculation services and prescription medications, for changes in and adoption of payment of the Star Ratings, paragraph (b) would and improving health outcomes for MA and risk adjustment policies in section authorize CMS to remove the measure and Part D enrollees. 1853(b) of the Act when the changes are from that year’s rating. • Performance Gap: The extent to not substantive. Third, we proposed to address the • which the measure demonstrates That existing measures (currently addition of new measures in paragraph opportunities for performance existing or existing after a future (c). improvement based on variation in rulemaking) used for Star Ratings would In the proposed rule, we explained current health and drug plan be removed from use in the Star Ratings that our proposal regarding the addition performance. when there has been a change in clinical of measures was guided by the • Reliability and Validity: The extent guidelines associated with the measure principles we reiterated in this final rule to which the measure produces or reliability issues identified in in section II.A.11.b. Measures should be consistent (reliable) and credible (valid) advance of the measurement period; aligned with best practices among results. CMS would announce the removal payers and the needs of the end users, • Feasibility: The extent to which the using the process described for changes including beneficiaries. Our strategy is data related to the measure are readily in and adoption of payment and risk to continue to adopt measures when available or could be captured without adjustment policies in section 1853(b) of they are available, that are nationally undue burden and could be the Act. Removal might be permanent or endorsed, and in alignment with the implemented by the majority of MA and temporary, depending on the basis for private sector, as we do today through Part D contracts. the removal. the use of measures developed by • Alignment: The extent to which the We proposed specific rules for NCQA and the PQA, and the use of measure or measure concept is included updating and removal that would be measures that are endorsed by the in one or more existing federal, State, implemented through subregulatory National Quality Forum (NQF). We and/or private sector quality reporting action, so that rulemaking would not be proposed to codify that CMS would programs. necessary for certain updates or continue to review measures of this type As explained in the proposed rule, removals. CMS proposed to announce for adoption at §§ 422.164(c)(1) and CMS would balance these criteria as application of the regulation standards 423.184(c)(1). We do not intend this part of our decision-making process so in the Call Letter attachment to the standard to require that a measure be that each new measure proposed for Advance Notice and Rate adopted by an independent measure addition to the Star Ratings meets each Announcement process issued under steward or endorsed by NQF in order for criteria in some fashion or to some section 1853(b) of the Act. us to propose its use for the Star extent. We intend to apply these criteria

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to identify and adopt new measures for • Fall 2023: Publish new measure in to calculate and assign Star Ratings the Star Ratings, which would be done the 2024 Star Ratings (2022 without the updated measure being through future rulemaking and include measurement period). placed on the display page. Our explanations for how and why we • 2025: QBP status and rebate proposal was explained as consistent propose to add new measures. We also retention allowances are determined for with current practice. proposed to follow the process in our the 2025 payment year. In paragraphs (d)(1)(i)–(v) of proposed paragraphs (c)(2) through (4) Fourth, at §§ 422.164(d) and §§ 422.164 and (d)(1)(i)–(v) of 423.184, of §§ 422.164 and 423.184 when a new 423.184(d) we proposed to address we proposed to codify a non-exhaustive measure has been identified for updates to measures based on whether list of non-substantive updates inclusion in the Star Ratings. We an update is substantive or non- announced during or prior to the proposed to initially solicit feedback on substantive. Since quality measures are measurement period and how we will any potential new measures through the routinely updated (for example, when treat them under our proposal. The list Call Letter and to codify that as a clinical codes are updated), we includes updates in the following requirement at paragraph (c)(2) of each proposed to adopt rules for the circumstances: • section. incorporation of non-substantive If the change narrows the As new performance measures are updates to measures that are part of the denominator or population covered by developed and adopted, we proposed, at Star Ratings system without going the measure with no other changes, the §§ 422.164(c)(3) and (4) and through new rulemaking. As proposed updated measure would be used in the 423.184(c)(3) and (4), that they would in paragraphs (d)(1) of §§ 422.164 and Star Ratings program without initially be incorporated into the display 423.184, we would only incorporate interruption. For example, if an page for at least 2 years but that we updates without rulemaking for measure additional exclusion—such as excluding would keep a new measure on the specification changes that do not nursing home residents from the display page for a longer period if CMS substantively change the nature of the denominator—is added, the change will finds there are reliability or validity measure. be considered non-substantive and will issues with the measure. As noted in the Substantive changes (for example, be incorporated automatically. In our Introduction, the rulemaking process major changes to methodology or view, changes to narrow the creates a longer lead time for changes, specifications) to existing measures denominator generally benefit Star in particular to add a new measure to would be proposed and finalized Ratings of sponsoring organizations and the Star Ratings or to make substantive through rulemaking. In paragraphs should be treated as non-substantive for (d)(2) of §§ 422.164 and 423.184, we that reason. changes to measures as discussed later • in this section. Here is an example proposed to initially solicit feedback on If the change does not meaningfully timeline for adding a new measure to whether to make the substantive impact the numerator or denominator of measure update through the Call Letter the measure, the measure would the Star Ratings. In this scenario, the prior to the measurement period for continue to be included in the Star new measure has already been which the update would be initially Ratings. For example, if additional developed by the NCQA and the PQA, applicable. For example, if the change codes are added that increase the and endorsed by the NQF. Otherwise, announced significantly expands the number of numerator hits for a measure that process may add an extra 3 to 5 denominator or population covered by during or before the measurement years to the timeline. • January 2019: Solicit feedback in the measure (for example, the age group period, such a change is not considered the draft 2020 Call Letter on whether to included in the measures is expanded), substantive because the sponsoring the measure would be moved to the add the new measure. organization generally benefits from that • April 2019: Summarize feedback in display page for at least 2 years and change. This type of administrative the 2020 Call Letter on adding the new proposed through rulemaking for change has no impact on the current measure. inclusion in Star Ratings. We noted in clinical practices of the plan or its • 2020/2021: Propose adding the new our proposal that this process for providers, and thus will not necessitate measure to the 2024 Star Ratings (2022 substantive updates would be similar to exclusion from the Star Ratings system the process proposed for adopting new of any measures updated in this way. measurement period) in a proposed • rule; finalize through rulemaking (for measures under proposed paragraph (c). The clinical codes for quality 1/1/2022 effective date). As appropriate, the legacy measure may measures (such as HEDIS measures) are • 2020: Performance period and remain in the Star Ratings while the routinely revised as the code sets are collection of data for the new measure updated measure is on the display page updated. For updates to address and collection of data for posting on the if, for example, the updated measure revisions to the clinical codes without 2022 display page. expands the population covered in the change in the intent of the measure and • 2021: Performance period and measure and the legacy measure the target population, the measure collection of data for the new measure remains relevant and measures a critical would remain in the Star Ratings and collection of data for posting on the topic for the Star Ratings. Adding the program and would not move to the 2023 display page. substantively updated measure to the display page. Examples of clinical codes • Fall 2021: Publish new measure on Star Ratings would be proposed through that might be updated or revised the 2022 display page (2020 rulemaking. without substantively changing the measurement period). We proposed to adopt rules to measure include: • January 1, 2022: Applicability date incorporate specification updates that ++ ICD–10–CM (‘‘ICD–10’’) code sets. of new measure for Star Ratings. are non-substantive in paragraph (d)(1). Annually, there are new ICD 10 coding • 2022: Performance period and Non-substantive updates that occur (or updates, which are effective from collection of data for the new measure are announced by the measure steward) October 1 through September 30th of and collection of data for inclusion in during or in advance of the any given year. the 2024 Star Ratings. measurement period would be ++ Current Procedural Terminology • Fall 2022: Publish new measure on incorporated into the measure and (CPT) codes. These codes are published the 2023 display page (2021 announced using the Call Letter. We and maintained by the American measurement period). proposed to use such updated measures Medical Association (AMA) to describe

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tests, surgeries, evaluations, and any that as clinical guidelines change, we Commenters also agreed with the other medical procedure performed by a would need the flexibility to remove proposed measure categories (the healthcare provider on a patient. measures from the Star Ratings that are measure categories used to assign ++ Healthcare Common Procedure not consistent with current guidelines. weights to measures as noted in Coding System (HCPCS) codes. These We proposed to announce such §§ 422.166(e) and 423.186(e)), though a codes cover items, supplies, and non- subregulatory removals through the Call few commenters asked CMS to include physician services not covered by CPT Letter so that removals for this reason more outcome measures. A few codes. are accomplished quickly and as soon as commenters also requested that ++ National Drug Code (NDC). The the disconnect with positive clinical measures be claims-based and not based PQA updates NDC lists biannually, outcomes is definitively identified. We on medical chart review. usually in January and July. noted that this proposal is consistent Response: CMS appreciates the • If the measure specification change with our current practice. For example, support for our criteria for selecting new is providing additional clarifications previously we retired the Glaucoma measures. CMS agrees with the desire to such as the following, the measure Screening measure for HEDIS 2015 after add more outcome measures to the Star would also not move to the display page the U.S. Preventive Services Task Force Ratings program and welcomes all since it does not change the intent of the concluded that the clinical evidence is suggestions (submitted through the measure but provides more information insufficient to assess the balance of annual Call Letter process) for outcome about how to meet the measure benefits and harms of screening for measures to include in the Star Ratings specifications: glaucoma in adults. program. We realize that medical chart ++ Adding additional tests that will In the proposed rule, we also review is burdensome and we are meet the numerator requirements. explained how we currently review continuing to look at ways to minimize ++ Clarifying documentation measures continually to ensure that the chart review measures. For example, requirements (for example, medical measure remains sufficiently reliable CMS is exploring whether using record documentation). such that it is appropriate to continue encounter data for quality measurement ++ Adding additional instructions to use of the measure in the Star Ratings. would minimize burden for plans while identify services or procedures that We proposed, at paragraph (e)(1)(ii), resulting in equally accurate and meet (or do not meet) the specifications authority to subregulatorily remove appropriate reflections of performance of the measure. measures that show low statistical and quality. • If the measure specification change reliability so as to move swiftly to Comment: The majority of is adding additional data sources, the ensure the validity and reliability of the commenters agreed with CMS’ proposal measure would also not move to the Star Ratings, even at the measure level. for selecting new measures, announcing display page because we believe such We explained that we would continue and soliciting feedback on new changes are merely to add alternative to analyze measures to determine if measures, finalizing new measures ways to collect the data to meet the measure scores are ‘‘topped out’’ (that through rulemaking, reporting new measure specifications without is, showing high performance across all measures on the display page for a changing the intent of the measure. contracts decreasing the variability minimum of 2 years prior to becoming We solicited comment on our across contracts and making the a Star Rating measure, and keeping new proposal to add non-substantive updates measure unreliable) so as to inform our measures on the display page if CMS to measures and using the updated decision that the measure has low finds reliability or validity issues with measure (replacing the legacy measure) reliability. Although some measures the measure specifications. Supporters to calculate Star Ratings. In particular, may show uniform high performance of these proposals noted that the we noted our interest in stakeholders’ across contracts and little variation introduction of new measures through views whether only non-substantive between them, we noted we seek rulemaking allows greater lead time for updates that have been adopted by a evidence of the stability of such high plans to incorporate new measures, measure steward after a consensus- performance, and we noted we want to supports stability in the Star Rating based or notice and comment process balance how critical the measures are to program, maximizes stakeholder input, should be added to the Star Ratings improving care, the importance of not and provides additional transparency in under this proposed authority. Further, creating incentives for a decline in the Star Ratings selection process. we solicited comment on whether there performance after the measures Commenters mentioned that increased are other examples or situations transition out of the Star Ratings, and lead time for the introduction of new involving non-substantive updates that the availability of alternative related measures is important especially in any should be explicitly addressed in the measures. If, for example, performance payment program. Commenters noted regulation text or if our proposal is in a given measure has just improved the need for plans to have sufficient sufficiently extensive. across all contracts, or if no other time to allocate resources, make changes In addition to updates and additions measures capture a key focus in Star to operations, adjust supporting of measures, we proposed rules to Ratings, a ‘‘topped out’’ measure with information systems, and plan any address the removal of measures from lower reliability may be retained in Star specialized educational materials and the Star Ratings to be codified in Ratings. Under our proposal to be events. A commenter suggested that §§ 422.164(e) and 423.184(e). In codified at paragraph (e)(2), we would new measures remain on the display paragraph (e)(1) of each section, we announce application of this rule page for 3 years which would allow proposed the two circumstances under through the Call Letter in advance of the plans to develop internal processes for which a measure will be removed measurement period. Below, we quality measurement and improvement, entirely from the calculation of the Star summarize the comments we received which the commenter suggests would Ratings. The first circumstance we on adding, updating, and removing lead to improved health outcomes for identified was a change or changes in measures, and provide our responses beneficiaries; another commenter clinical guidelines that mean that the and final decisions. expressed the opinion that reporting a measure specifications are no longer Comment: Commenters agreed with new measure on the display page for 2 believed to align with or promote the criteria CMS proposed to select new years is too long. Commenters who positive health outcomes. We explained measures for the Star Ratings program. expressed concern that the time on

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display was too long or suggested measurement accuracy and enhanced soon as possible on the display page exceptions to allow for shorter times on stability in the Star Ratings program. We will addresses these concerns. display both referred to the need to note that using rulemaking to adopt Comment: The majority of reflect changes in clinical standards and measures will bring the MA and Part D commenters agreed with the process for to respond to public health urgencies. quality ratings system in line with other updating existing measures. Response: CMS appreciates receiving quality ratings systems and quality data Response: We appreciate the support feedback on the proposed policy to collection programs that are used for for the process for updating existing introduce new measures into the Star Medicare payment. We understand the measures. Ratings program through rulemaking. desire to have measures that address Comment: Some commenters objected We acknowledge that there is some public health concerns adopted quickly to the proposal for updating measures desire and policy rationale to keep in the Star Ratings program. CMS is through rulemaking because of the delay measures on the display page for longer committed to implementing these types between the time measures are updated/ than 2 years, but CMS is trying to of measures as quickly as possible so approved and the time they are re- balance the need to introduce new they can at least be publicly reported on introduced into the Star Ratings measures in a timely manner with the display page prior to being a Star program. These commenters requested a giving sponsors sufficient lead time for Ratings measure. more expedited approach for updating the introduction of new measures. We Comment: A few commenters measures. Most commenters supported believe that a 2 year period provides the requested that new measures be fully CMS in its proposal to codify a non- appropriate balance. defined, tested, and validated by exhaustive list for identifying non- Comment: Some commenters opposed measure stewards prior to being substantive measure updates. Some the requirement to propose new considered for Star Ratings, even for commenters requested additional measures through rulemaking rather CMS developed measures. A commenter information on how the determination than continuing to announce new requested that CMS adopt only is made as to whether a change is measures through the Call Letter measures which have been NQF substantive versus non-substantive. A process. The commenters cited the long endorsed, publicly reported by NCQA few commenters wanted a more lag between the time measures are (or the measure steward) for at least one exhaustive list of what are considered developed/approved and the time they measurement period, and reported on non-substantive changes. are included in the Star Ratings, and the CMS display page for at least one Some commenters expressed the requested a more expedited approach measurement period. The commenter opinion that all measure updates, even for the inclusion of new measures. also recommended that CMS not report non-substantive changes, should be Commenters noted that adding more new (first year) measures on the display announced in advance of the lead time would stifle the adoption of page. measurement period. In addition, a few new quality measures aligned with the Response: CMS agrees that measures commenters expressed the opinion that latest innovative advances in medicine need to be fully defined, tested and all measure updates, whether and technology and, thus, prevent Star validated by measure stewards before substantive or non-substantive, should Rating measures from reflecting the used as the basis for Medicare payment. be subject to rulemaking. These latest treatment guidelines and current Placing new measures on the display commenters noted some of the same standards of care. Further, commenters page provides transparency about CMS’ concerns expressed for supporting the mentioned introducing new measures intention to use the measure in the addition of new measures through through rulemaking could unnecessarily future as part of Star Ratings and an rulemaking rather than through the Call delay implementation of measures opportunity for sponsors to see their Letter process. These concerns included needed to address clinical area gaps, scores and performance before the allowing plans greater lead time to preventable safety issues, emerging measure is used in the Star Ratings. The incorporate updates, have sufficient public health concerns, and the display measures are not assigned Star time to allocate resources to incorporate adoption of evidence-based measures. Ratings or used in the development of updates, make changes to operations, As a result, commenters believed CMS’ measure, domain, summary, or overall adjust supporting information systems, ability to incentivize improvements in Star Ratings, so there are no payment and plan any specialized educational the quality of care for Medicare consequences. Retaining new measures materials and events. A commenter, beneficiaries would decrease. A few on the display for two years gives CMS however, expressed the opinion that no commenters suggested that, if CMS does additional opportunities to identify any measure updates, substantive or non- implement the rulemaking process for data issues prior to the measures being substantive, should be required to go the introduction of new measures, CMS included in the Star Ratings program. through rulemaking, because this would should consider granting exceptions in CMS will use endorsed measures as lead to unnecessary gaps in circumstances in which there are urgent they are available. For some areas which measurement for critically important public health and patient safety issues CMS judges to be important for the Star issues. to be addressed through quality Ratings program, endorsed measures Response: CMS appreciates the measures. may not be available. CMS emphasizes comments we received on our proposal Response: CMS recognizes that that if reliability issues with a display for updating measures. Although there introducing new measures through measure are identified, the regulations is some disagreement among rulemaking will make the process longer proposed and finalized in this rule at commenters on whether and which than CMS’ former process of §§ 422.164(c)(4) and 423.184(c)(4) updates should go through rulemaking, introducing new measures through the prevent the measure from moving to a we believe our proposal balances the Call Letter, but we believe doing so Star Ratings measure. Although a commenters’ concerns by only requiring balances the need for expediency with number of commenters to the proposed substantive measure updates to go the need for greater transparency and rule were concerned about the through the rulemaking process. Non- stability for the ratings program. CMS rulemaking process preventing CMS substantive updates, such as coding also believes the rulemaking process from quickly responding to public updates, which are not significant adds an additional opportunity to fine health and patient safety issues, CMS changes to the measure specifications tune measures and thus ensure greater believes that reporting new measures as would continue to be announced

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through the Call Letter process. CMS in the Star Ratings during the period For the reasons set forth in the does not have authority to determine or when the related updated measure goes proposed rule and our responses to the direct when measure stewards update through rulemaking and is placed on the related comments summarized earlier, measure specifications. If non- display page for 2 years. We intend that we are finalizing the provisions related substantive measure specifications are a legacy measure may remain in the Star to the adoption, update, and removal of made during the measurement period, Ratings until the updated measure is measures as proposed at paragraphs (c), CMS believes it is of value to ready to move into Star Ratings only (d), and (e) of §§ 422.164 and 423.184 incorporate those measure specification when the area covered by the measure with a minor modification to add the updates in that year’s Star Ratings is critical to reflecting whether plans are phrase ‘‘nationally endorsed’’ to measures. Non-substantive updates are providing appropriate care or for a § 422.164(c)(1) so that the regulation most often minor code updates and are similar reason that the information text is identical to the parallel Part D not significant changes to the measure provided by the legacy measure is provision at § 423.184(c)(1). specifications. CMS proposed and is important to the Star Ratings. finalizing in this rule a comprehensive Comment: There was general i. Measure Set for Performance Periods list of measure changes it considers non- agreement among commenters with Beginning on or After January 1, 2019 substantive in §§ 422.164(d)(1) and CMS’ proposed process for removing We proposed the measures included 423.184(d)(1); we explained (above and measures from the Star Ratings program in the proposed rule) the basis for our in Table 2 to be collected for and for announcing the removal in performance periods beginning on or determination that these changes and advance of the measurement period. others like them should be implemented after January 1, 2019 for the 2021 Part However, some commenters did C and D Star Ratings. The CAHPS without delay or additional rulemaking. question the criteria for how CMS The list is not exhaustive because measure specification, including case- judges measures to be ‘topped out’ or additional situations or types of changes mix adjustment, is described in the have low statistical reliability. may also result in little or no change to Technical Notes and at ma- the results of measurement (or generally Response: CMS appreciates the pdpcahps.org. The HOS measure benefit sponsoring organizations) in a overall support for its proposal for specification, including case-mix similar way. We believe that the removing measures from the Star adjustment, is described at (http:// standard adopted here—that of non- Ratings program. Measure scores are hosonline.org/globalassets/hos-online/ substantive changes—is adequately determined to be ‘topped out’ when survey-results/hos_casemix_coefficient_ clear to provide notice to stakeholders they show high performance and little tables_c17.pdf). These specifications are and balance the competing policies variability across contracts, making the part of our proposal. identified by commenters. CMS measure statistically unreliable. As indicated in the proposed rule, encourages plans and other stakeholders However, although some measures may to provide suggestions for additional show uniform high performance across CMS will not codify a list of measures non-substantive measure updates to add contracts and little variation between and specifications in regulation text in to the current list through future them, CMS needs to balance these light of the regular updates and rulemaking. concerns with how critical the measures revisions contemplated by the rules we Comment: A few commenters are to improving care, the importance of have finalized at paragraphs (c), (d) and expressed disagreement with the not creating incentives for a decline in (e) of §§ 422.164 and 423.184. We proposal to continue collecting a legacy performance after the measures would, as finalized in §§ 422.164(a) and measure until an updated measure has transition out of the Star Ratings, and 423.184(a), issue annually the full list of been on display for 2 years. the availability of alternative related measures in the Technical Notes for Response: CMS appreciates comments measures which address the specific each year’s Star Ratings. on its proposal to keep legacy measures clinical concerns. BILLING CODE 4120–01–P

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VerDate Sep<11>2014 21:39 Apr 13, 2018 Jkt 244001 PO 00000 Frm 00100 Fmt 4701 Sfmt 4725 E:\FR\FM\16APR2.SGM 16APR2 daltland on DSKBBV9HB2PROD with RULES2 ER16AP18.001 Federal Register / Vol. 83, No. 73 / Monday, April 16, 2018 / Rules and Regulations 16539 Type) Plans Plans Plans MA-only MA-only MA-only MA-only MA-only Needs Needs Needs Reporting and and and and and Requirements (Contract MA-PD MA-PD MA-PD MA-PD MA-PD Special Special Special Star for Distribution Rating Significance Statistical Method Assigning Relative and Clustering Clustering Clustering Clustering Clustering Clustering Clustering Testing NQF Applicable Applicable Applicable Applicable Endorsement Not Not Not Not #0421 #0040 #0029 #0553 the the the the year year year year the the the the to to to to year year year year data data data data for for for for enrollees enrollees enrollees enrollees prior prior prior prior of of of of recent recent recent recent Period Ratings Ratings Ratings Ratings calendar calendar calendar calendar years years years years Measurement Most Most Most Most 2 2 2 2 Star Star Star Star The The The The submitted survey submitted survey submitted survey submitted survey Plan Source C Data CAHPS** Part Reporting HOS*** HOS*** HEDIS* HEDIS* HEDIS* HEDIS/HOS*** and Weight Measure Category Measure Measure Measure Measure Measure Measure Measure Measure Process Process Process Process Process Process Outcome Outcome Weightof1 Weightof3 Weightof3 Weightof1 Weightof1 Weightof1 Weightof1 Weightof1 (Long (Long (Long and and and and and Domain Staying Staying Staying Staying Staying Screenings, Screenings, Screenings, Screenings, Screenings, Chronic Conditions Chronic Conditions Chronic Conditions Managing Managing Managing Healthy: Healthy: Healthy: Healthy: Healthy: Vaccines Vaccines Vaccines Vaccines Vaccines Tests Tests Tests Tests Tests Term) Term) Term) in or or and body 2 Plan Plan level 18-74 aged aged aged list who better start, the older older risk season. doctor's an years. same one one or after to their a activity. 2 flu whose and and enrollees and Needs Needs conducted months Special physical mental was the had to assessment. practitioner least least had members members members members members health 12 same and after Description medication advice at at a was who years years (HRA). a influenza (SNP) record. (BMI) prior maintain physical review expected whose whose who the plan plan plan plan Special Special plan eligible past visit status of 66 66 an or or age of of of of of of of of pharmacist Plan the status was than of index older older older expected prescribing received received received received in medical or or or a Measure by received health better health increase medication presence Percent Percent Percent Percent Percent Percent Needs Percent Percent functional visit years. than the outpatient 65 65 65 exercise documented. assessment enrollees enrollees clinical mass who who who who vaccination years (ABA) Mental Care Review Status or or Health Activity Older Older Needs Flu (COA)- (COA)- BMI for for (SNP) Measure Improving Improving Special Care Care (PAO) Maintaining Physical Maintaining Monitoring Physical Plan Management Medication Health Functional Vaccine Annual Adult Assessment Adults Adults Assessment

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BILLING CODE 4120–01–C We summarize the comments respond to them by measure in Table 3C received on the proposed measures and for the Part C measures, for performance

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periods beginning on or after January 1, 2019.

TABLE 3C—PART C MEASURES

Measure

Breast Cancer Screening (BCS) ..... Comment: A commenter expressed concerns that due to physical and mental limitations, all permanently institutionalized beneficiaries, including those under age 65, should be excluded from the Breast Cancer Screening measure. This commenter suggested that rather than undergo a mammogram, an alternative screening option would be an Automated Breast Ultrasound (ABUS). Response: CMS appreciates this feedback. CMS has shared comments received on this measure with NCQA, the measure steward, for consideration when their advisory panels re-evaluate this measures, as part of the standard HEDIS process. Colorectal Cancer Screening (COL) Comment: CMS received no comments on this measure. Annual Flu Vaccine ...... Comment: CMS received a number of general comments on CAHPS measures. Response: CMS appreciates the feedback on the CAHPS measures. Since the comments on CAHPS measures were mostly not measure specific, please see the CAHPS summary of comments received as well as CMS responses following the Parts C and D Measure Tables. Comment: CMS received one comment that the annual flu vaccine measure should use claims data as they are more reliable. Another commenter stated that beneficiaries in Puerto Rico are reluctant to vac- cinate against the flu which unfairly impacts plans in Puerto Rico, and that asking beneficiaries to remember when they received a flu shot is a burden on them. Response: The flu item is a HEDIS measure collected through the CAHPS survey. Flu shot information is collected through a survey since there are a variety of places where people can get flu shots and the plan may not have a record of a flu shot in their administrative data depending on where the flu shot was received. We note that CMS applies standards of reliability to CAHPS results, directly and through significance testing. The item asks whether respondents received a flu shot since July in order to reflect the timeframe when beneficiaries typically receive flu shots. This is a process measure, and CMS does not adjust process measures for beneficiary refusals to avoid biasing the data. HOS Measures: Improving or Maintaining Phys- Comment: CMS received a number of general comments on HOS measures. ical Health. Response: CMS appreciates the feedback on the HOS measures. Since the comments on HOS measures were mostly not measure specific, please see the HOS summary of comments received as well as CMS responses following the Parts C and D Measure Tables. Improving or Maintaining Mental Comment: Several commenters suggested the HOS measures Improving or Maintaining Physical Health Health. and Improving or Maintaining Mental Health fail to consider the natural aging process or accommodate vulnerable beneficiaries and those with degenerative or progressive diseases. They pointed out that as time passes, patients are more prone to experience certain health deterioration and argued that changes in status—positive or negative—should not be attributed to the actions of the health plan. They again suggested that CMS drop the two year look-back design of the survey. Response: HOS yields two patient-reported outcome measures of change in global functioning, by using 2- year change in scores on the Physical Component Score (PCS) and the Mental Component Score (MCS), both of which come from the Veterans RAND 12-Item Health Survey (VR–12) portion of the larger survey. HOS assesses health outcomes for randomly selected beneficiaries from each health plan over a two-year period by using baseline measurement and a two-year follow up. In general, functional health status is expected to decline over time in older age groups, mental health status is not, and the presence of chronic conditions is associated with declines in both *.37 Longitudinal HOS outcomes (including death) are adjusted for baseline age and other well studied risk factors, including chronic conditions, baseline health status, and socio-demographic characteristics that include gender, race, ethnicity, income, education, marital status, Medicaid status, SSI eligibility, and homeowner status. Because each beneficiary’s follow up score is compared to their baseline score and adjusted for these risk factors, each beneficiary serves as his/her own control. CMS recognizes that Physical Component Summary (PCS) and Mental Component Summary (MCS) may decline over time and that health maintenance, rather than improvement, is a more realistic clinical goal for many older adults. Therefore, MA Organiza- tions are asked to improve or maintain the physical and mental health of their members. Change scores are constructed and the results compare actual to expected changes in physical and mental health. Monitoring Physical Activity (PAO) Comment: CMS received no comments on this measure. Adult BMI Assessment (ABA) ...... Comment: CMS received one comment suggesting the BMI measure be removed from the Star Ratings program due to the commenter believing the measure to be ‘topped out.’ A measure is considered ‘topped out’ when it shows high performance across all contracts decreasing the variability across contracts and making the measure unreliable. Response: CMS appreciates the feedback; however, from a review of the Star Ratings data for this measure, there are many contracts rated below 4 stars. There have been significant increases in ratings for this measure in recent years so CMS is carefully monitoring this measure to see if it should be proposed for retirement from the Star Ratings in the future. Special Needs Plan (SNP) Care Comment: A commenter recommended that the SNP Care Management measure be retired until clear Management. technical guidance on the measure specifications can be issued by the agency and if the measure is re- introduced, the cut points should be stratified based on SNP type (for example, C–SNP, D–SNP), since the commenter believes various SNP types have different outcomes on this measure.

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Measure

Response: There are no upcoming clarifications or changes to this measure specifications for the 2021 Star Ratings. Note that the SNP care management measure is collected at the PBP level and the requirement to complete a timely HRA for every plan member (which is the performance metric measured) applies to all SNP types. Sponsors are reminded that as part of the data validation process of plan-reported data, a reviewer must submit and review draft findings to the sponsor prior to submission via HPMS. Once data validation findings are submitted to HPMS, sponsors may formally submit their disagreement to CMS if necessary. Comment: A commenter suggested that some Star Rating measures are driven primarily by member outreach. As such, some plans with large dual-eligible populations are disproportionately negatively impacted by members who are more transient and with frequent address and phone number changes that directly result in fewer successful contacts and lower engagement. For outreach-driven measures, the commenter urges CMS to exclude members who were unreachable after a justifiable number of documented good faith attempts. Response: The requirement to complete a timely HRA for every plan member (which is the performance metric measured) applies to all SNP types and is regulatory. There are no upcoming specification changes that will affect this measure for the 2021 Star Ratings. Note that plans may report when members are unreachable after documented attempts and when members refuse to complete the HRA, but those data are not used in calculating this measure. SNP measures: Care for Older Adults (COA)— Comment: A commenter expressed concerns about the varying performance on SNP measures based on Medication Review, Care for the SNP type stating that the performance on these measures is heavily biased related to type of SNP Older Adults (COA)—Func- plan, rather than indicative of plan quality. tional Status Assessment, Care for Older Adults (COA)—Pain Assessment. Response: These measures are indicators of high quality care for all plans that focus on special needs populations. However, for HEDIS 2019, NCQA is considering modifications to these measures, to broaden the denominators to all patients with multiple chronic conditions. CMS will keep considerations in mind that measures not be primarily driven by plan type, rather than differences in quality of care. Osteoporosis Management in Comment: CMS received comments that there should be different exclusions for some health conditions Women who had a Fracture including osteoporosis because, for some patients, the treatments identified in the measure specification (OMW). (that is for compliance) are not medically appropriate. Commenters noted that many challenges exist in treating and screening certain health conditions for patients with advanced illness. A commenter suggested that the Star Ratings clinical metrics may not be sound for frail patients with advanced illness. Response: CMS appreciates receiving feedback on this measure. For HEDIS 2019, NCQA is examining potential cross-cutting exclusions for those with advanced illness from selected HEDIS® measures, including the Osteoporosis Management in Women Who Had a Fracture measure. Proposed changes to implement advanced illness exclusions will be posted for the HEDIS 2019 public comment period in Feb- ruary 2018. Please see additional comments related to Patients with Advanced Illness below. Diabetes Care (CDC)—Eye Exam Comment: CMS received no comments on this measure. Diabetes Care (CDC)— Kidney Dis- Comment: CMS received a few comments suggesting the Diabetes Care—Kidney Disease Monitoring ease Monitoring. measure be removed from the Star Ratings program due to the commenters belief the measure is ‘topped out.’ A measure is considered ‘topped out’ when it shows high performance across all contracts decreasing the variability across contracts and making the measure unreliable. Response: CMS appreciates the feedback, however, from a review of the Star Ratings for this measure, there are many plans rated below 4 stars. A. As noted above in this preamble, among other considerations, CMS wants to balance how critical measures are to improving care and the availability of alternative related measures. If, for example, no other measures captures a key focus in Star Ratings, a ‘topped out’ measure with lower reliability may be retained in Star Ratings. Currently, there are no alternative kidney disease monitoring measures appropriate for MA Star Ratings. Diabetes Care (CDC)—Blood Comment: CMS received no comments on this measure. Sugar Controlled. Controlling Blood Pressure (CBP) .. Comment: CMS received a recommendation that in alignment with current clinical practice guidelines, ambulatory and home blood pressure readings that are documented in the treating provider’s medical record be considered acceptable for the purposes of assessing the efficacy and appropriateness of a clinician’s treatment plan. Response: CMS appreciates feedback on this measure. NCQA is currently reevaluating the Controlling High Blood Pressure measure and proposing to allow for readings taken from remote monitoring devices that transmit results directly to the provider. Details on this potential change will be posted for the HEDIS 2019 public comment period in February 2018. Rheumatoid Arthritis Management Comment: CMS received comments that evidence of treatment for rheumatoid arthritis not limited to dis- (ART). ease-modifying anti-rheumatic drugs (DMARD) should be considered for compliance (that is, added to the numerator for the measure). Commenters noted that some patients have limited tolerance for DMARDs along with a much higher rate of serious adverse medication effects, particularly serious infec- tions.

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TABLE 3C—PART C MEASURES—Continued

Measure

Response: CMS appreciates receiving feedback on this measure. For HEDIS 2019, NCQA is examining potential cross-cutting exclusions for those with advanced illness from selected HEDIS® measures, including the Disease-Modifying Anti-Rheumatic Drug Therapy for Rheumatoid Arthritis measures. Pro- posed changes to implement advanced illness exclusions will be posted for the HEDIS 2019 public comment period in February 2018. Please see additional comments related to Patients with Advanced Illness below. We understand from public statements that NCQA plans to reevaluate the Rheumatoid Arthritis Management measure and review the evidence for rheumatoid arthritis treatment with their advisory panels. Reducing the Risk of Falling (FRM) Comment: CMS received no comments on this measure. Improving Bladder Control (MUI) .... Comment: CMS received no comments on this measure. Medication Reconciliation Post-Dis- Comment: CMS received no comments on this measure. charge (MRP). Plan All-Cause Readmissions Comment: A commenter suggested that in order to provide MA organizations with greater visibility into (PCR). plan performance, CMS should work with the NCQA to eliminate the calculation whereby a national average observed rate is multiplied by the observed to expected ratio of readmissions for Plan All-Cause Readmissions. A commenter noted that NCQA has announced in early 2018 substantive changes in the Plan All-Cause Readmissions measure. Response: CMS appreciated feedback on this measure. The calculation mentioned that uses the observed readmission rate divided by the expected readmission rate for a contract multiplied by the national average is the process to calculate the case-mix adjusted contract rate. A case-mix adjusted rate is used to ensure that the comparisons between contracts is fair and meaningful. It takes into account how sick patients were when they went into the hospital the first time. CMS will discuss with NCQA the need to better explain the calculations involved in the reporting of the measure. CMS decision: In that NCQA is planning to make significant changes to the Plan All-Cause Readmissions measure (changes to be published in 2018 and applied in measurement year 2019) CMS is not finalizing this as part of the measure set for the 2019 performance period and the 2021 Ratings. CMS is finalizing this as a display measure and consistent with § 422.164(d)(2) will include this measure on the display page for 2 years. Getting Needed Care ...... Comment: CMS received a number of general comments on CAHPS measures. Response: CMS appreciates the feedback on the CAHPS measures. Since the comments on CAHPS measures were mostly not measure specific, please see the CAHPS summary of comments received as well as CMS responses following the Parts C and D Measure Tables. Getting Appointments and Care Comment: CMS received many general and specific comments on CAHPS measures. Quickly. Response: CMS appreciates the feedback on the CAHPS measures. Since the comments on CAHPS measures were not always measure specific, please see the CAHPS summary of comments received as well as CMS responses following the Parts C and D Measure Tables. Comment: CMS received one comment that this composite is unfair to plans in Puerto Rico because beneficiaries in Puerto Rico are not necessarily used to having a specific appointment time. Response: We thank the commenter for this comment. We have conducted some exploratory work related to this topic and may propose changes in the future after consulting with AHRQ. Customer Service ...... Comment: CMS received a number of general comments on CAHPS measures. Response: CMS appreciates the feedback on the CAHPS measures. Since the comments on CAHPS measures were mostly not measure specific, please see the CAHPS summary of comments received as well as CMS responses following the Parts C and D Measure Tables. Rating of Health Care Quality ...... Comment: CMS received a number of general comments on CAHPS measures. Response: CMS appreciates the feedback on the CAHPS measures. Since the comments on CAHPS measures were mostly not measure specific, please see the CAHPS summary of comments received as well as CMS responses following the Parts C and D Measure Tables. Rating of Health Plan ...... Comment: CMS received a number of general comments on CAHPS measures. Response: CMS appreciates the feedback on the CAHPS measures. Since the comments on CAHPS measures were mostly not measure specific, please see the CAHPS summary of comments received as well as CMS responses following the Parts C and D Measure Tables. Care Coordination ...... Comment: CMS received many general and specific comments on CAHPS measures. Response: CMS appreciates the feedback on the CAHPS measures. Since the comments on CAHPS measures were not always measure specific, please see the CAHPS summary of comments received as well as CMS responses following the Parts C and D Measure Tables. Complaints about the Health Plan .. Comment: A commenter recommended creating an excluded category/sub-category for complaints related to CMS/SSA system/enrollment issues or limitations which would effectively remove complaints of that type from this measure. Response: Data exchanges between CMS and SSA occur regularly and mostly without incident. When issues occur, CMS often looks to plan sponsors to communicate accordingly to their members and utilize CMS resources, such as the MA–PD help desk, to help address their matter without referral to CMS and generation of complaints. CMS is not instituting such a category/sub-category at this time. Plan Sponsors should continue to work alongside their CMS caseworker as appropriate to provide assistance. Comment: A few commenters requested updates to the CMS CTM standard operating procedures (SOP). There was a request to provide instructions for plans to return issues (either as a CMS issue or as a closed complaint) determined by 1–800–Medicare to be errors. Another request was that complaints found to not be the fault of the plan be considered CMS issues, or reassigned to another entity.

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TABLE 3C—PART C MEASURES—Continued

Measure

Response: CMS regularly utilizes feedback from plans and other stakeholders to identify opportunities for continuous improvement of CMS resources such as 1–800–Medicare. Due to the volume of CTM complaints received annually, CMS cannot investigate for individual errors. CMS expects such matters to be rare, and any impact on plans to be evenly distributed. Plan Sponsors should not seek recategorization of marketing complaints because, as a result of plan investigation, they have determined the allegation is unfounded. However, if a marketing complaint has been misclassified, and the narrative reflects that the alleged misrepresentation occurred by a Call Center representative, SHIP, etc., then a Plan Request to make the complaint a ‘‘CMS Issue’’ is appropriate. CMS appreciates the feedback and will include additional language in the next version of the CTM Plan SOP. Comment: A commenter suggested that CMS create an excluded category intended for cases that are educational and/or are referrals to the contract. Response: It is not CMS’ intention for the CTM to communicate plan information or simply provide education. Comment: A commenter stated concerns that duplicate complaints count against plan sponsors. Response: CMS’ CTM SOP includes procedures for the removal of duplicate complaints with the same complaint identification numbers, so there is no impact on plan sponsors. CMS has taken numerous steps over the years to reduce the instances of this occurring and expect that plan sponsors have no- ticed significant improvement in this area. If a beneficiary’s issue persists or is not be resolved by a plan, multiple complaints may be entered into the CTM. These complaints are not duplicative, but reflect unre- solved or similar issues. CMS does not support removing such complaints. Inclusion of these complaints effectively rewards plan sponsors who are prompt with acknowledging and resolving complaints, and provide excellent customer service to beneficiaries. Comment: A commenter requested clear processes for when the assignment/reassignment date should be reset by CMS caseworkers, so that plan sponsors can better strategize their actions. Response: Assignment/reassignment date by CMS caseworkers is a topic outside the scope of this rule. Members Choosing to Leave the Comment: A couple of commenters suggested that the disenrollment rate does not reflect the plan’s quality Plan. and the beneficiary experience. They note that the disenrollment rate is impacted by the pricing and coverage strategies of the contract. Among those commenters dissatisfied with what the disenrollment rate reflects and does not reflect, a commenter suggested that this measure be moved to the display page. Response: CMS is statutorily required to report voluntary disenrollment rates as part of the Balanced Budget Act of 1997. Disenrollment rates are a strong measure of a beneficiary’s satisfaction with a contract. Beneficiaries who are interested in seeing why enrollees voluntarily leave a contract can obtain this information as a drill down to the disenrollment rates on Medicare Plan Finder. CMS respectfully disagrees that pricing strategies and the coverage provided by the contract should not be considered in assessing the quality and performance of contracts since they have a direct impact on access to services. Comment: A commenter suggests that CMS conduct additional analyses to see if the disenrollment rates should be adjusted by the proportion of SNP members. Response: CMS appreciates this comment and will analyze the data to see if any future changes are needed. Any potential changes would be subject to future rulemaking. The current Star Ratings adjustments for dual status are incorporated as part of the CAI. Health Plan Quality Improvement ... For the summary of comments received and CMS’ responses for this measure, please see section ‘j. Im- provement Measures’ of the Preamble. Plan Makes Timely Decisions about Comment: CMS received a comment opposing the inclusion of dismissals in the Plan Makes Timely Deci- Appeals. sions about Appeals measure. The commenter expressed concern that if the inclusion of dismissals is a positive factor in the measure, it would create incentives for the MA organization to increase the opportunities to enter dismissals. Response: CMS appreciates the comment about dismissals. To clarify, the measure for the 2021 Star Rat- ings includes cases dismissed by the IRE because the plan has subsequently approved coverage/payment. In prior years, we excluded all cases dismissed/withdrawn by the IRE from this measure. The inclusion of dismissals would only apply to cases dismissed by the IRE because the plan issued an untimely but favorable decision. In other words, plans may send late Part C appeals to the IRE while simultaneously (or shortly thereafter) approving the late cases which results in the case being dismissed by the IRE, thus masking that the plans’ decisions were untimely. Inclusion of cases where the plan has subsequently approved for coverage/payment that are dismissed or withdrawn at the IRE level could provide a more accurate assessment of plans’ timeliness in their Part C appeals processing. Without excluding this group of dismissals, a plans’ performance may be artificially improved as a result, especially if dismissals were directly related to the plans’ (untimely) approvals. If an MA plan fails to provide the appellant with a reconsidered determination within the required timeframes, this failure constitutes an affirmation of its adverse organization determination, and the plan must submit the case file to the IRE for review. This new measure would more accurately reflect that MA plans are not making timely decisions. CMS does not believe this would create the incentive described by the commenter. CMS acknowledges these comments and is actively evaluating these measures and the use of the IRE data as their data source for future enhancements. Comment: CMS received a comment recommending that this measure be weighted by membership by calculating the measure similarly to the Part D Auto-Forward measure to ensure plans of all sizes are measured equally. Response: The Part C and Part D appeals systems are different, they have different rules for how appeals are handled. There are no auto-forwards in Part C and the number of late appeals examines how well the contract is processing the appeals in a timely manner. Additionally each measure has different specifications.

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Measure

Reviewing Appeals Decisions ...... Please see response for Part D Appeals Upheld measure. Call Center—Foreign Language In- Comment: A few commenters recommended that CMS revise the measure’s sampling methodology for terpreter and TTY Availability. volume and for volume by language (including consideration of plans with larger enrollment sizes), or revise the foreign languages and testing frequency. An additional commenter recommended that CMS adjust the foreign languages tested to the languages actually spoken in that plan’s area, and mentioned that 99 percent of local residents speak Spanish in Puerto Rico. The commenter also suggested using a single, combined measure (or rate) for both Part C and D. Response: The Accuracy and Accessibility Study is performed to (1) ascertain the accuracy of responses to plan benefit questions provided by customer service representatives when calling the call center in addition to (2) testing the availability of interpreters for Limited English Proficient callers and (3) testing TTY functionality. A simple random sample method is used. To reduce the burden on a call center with multiple phone lines, we select samples across the call centers instead of the phone lines. The precision requirement of the sample size is calculated at the call center level and is based on the question response accuracy rates obtained from the accuracy survey, and the rate of completed calls made through Limited English Proficiency (LEP) accommodations and TTY services. This methodology was chosen by CMS, in part, because the accuracy of the information provided to a caller in response to specific benefits questions should not be impacted by enrollment size or physical call center location. If contract enrollment size is positively correlated with higher variability and wider margins of error in these key metrics of this study, CMS would expect to see contracts with higher enrollments having the key metrics closer to 50 percent than the contracts with lower enrollments. We have not observed that in the data and will therefore continue to use the methodology as designed. Call centers using more or fewer representatives are held to the same expectation that the information provided to callers is accurate. Foreign language testing was never intended to be proportionate to the demographics of any contract. Plan sponsors are required to provide an interpreter for any caller speaking a foreign language, and CMS seeks to ensure that more vulnerable populations have equal access to interpreters. Rather than test all foreign languages which would be overly burdensome and costly, CMS selects 6 foreign languages from among the top 10 most frequently spoken languages in the U.S., according to the Office for Civil Rights (which makes its selections from U.S. Census Data). The number of calls by foreign language is equally divided and randomly assigned to each call center across the biweekly calling schedule. The number received by the call center is dependent upon each call successfully reaching the call center (for example, disconnects in an IVR or other factors will impact the ability of the call to reach a representative). Internal analysis across all plans shows that the methodology is sound and CMS has confidence in the data. When testing in Puerto Rico, Spanish is the native language and English is treated as a foreign language. Because some of the accuracy calls are placed in the native language in addition to foreign language testing, Spanish calls are placed at a higher volume for plans in Puerto Rico. By design, the Accuracy and Accessibility Study schedules and places calls to phone numbers that may or may not be the same for Part C and Part D. Also, the study is conducted at the call center level (not the phone number level), and not all plans use the same call center for Part C as for Part D. Finally, the accuracy questions used in this study either relate to Part C benefit questions or to Part D benefit questions. Because the questions are different for each, CMS believes performance should be measured separately for the Part C and Part D programs. Statin Therapy for Patients with Comment: CMS received two comments seeking clarification regarding the categorization and weighting Cardiovascular Disease (SPC). discrepancies between the Part C and Part D statin measures. Two organizations recommended classifying both SPC and SUPD as process measures with a weight of one. Response: CMS appreciates the feedback. The Part C Statin Therapy for Patients with Cardiovascular Dis- ease (SPC) measure is the percent of plan members (males 21–75 years of age and females 40–75 years of age) who were identified as having clinical atherosclerotic cardiovascular disease (ASCVD) and were dispensed at least one high or moderate-intensity statin medication. This Part C measure focuses on patients who were dispensed one prescription and whether the patient filled the medication at least once. Therefore, it is a process measure. The Part D measure is the percent of the number of plan members 40–75 years old who were dispensed at least two diabetes medication fills and received a statin medication fill. Receiving multiple fills indicates the patient continues to take the medication and therefore suggests adherence. Continuing to take the prescribed medication is necessary to reach clinical/therapeutic goals. Thus, the Part D measure is an intermediate outcome measure. We believe that for these measures as proposed (and finalized in this rule) are properly categorized.

We summarize the comments respond to them by measure in Table 3D periods beginning on or after January 1, received on the proposed measures and for the Part C measures, for performance 2019.

TABLE 3D—PART D MEASURES

Measure

Call Center—Foreign Language In- Please see comments received and CMS’ responses for this measure in the above Part C Measures table terpreter and TTY Availability. for the measure Call Center—Foreign Language Interpreter and TTY Availability.

37 Ware JE, Kosinski M. SF–36 Physical and Users of Version 1, Second Edition. Lincoln, RI: Mental Health Summary Scales: A Manual for QualityMetric, Incorporated, 2001.

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Measure

Appeals Auto-Forward ...... Comment: CMS received one comment suggesting that CMS align the Part D Appeals Auto-Forward measure with the Part C Plan Makes Timely Decisions about Appeals measure. The commenter also complained that cases that can be approved, but because the approvals are untimely, the cases are forwarded to the IRE; the commenter said this can cause delays in patient care as the member, provider, and plan await the IRE’s decision. Response: CMS appreciates receiving comments on this measure. However, the Part C and Part D appeals systems are not interchangeable. Each appeal system has its own set of rules and procedures which mean that combining or aligning these measures is not appropriate. We direct the commenter to the appeal regulations at §§ 422.590 and 422.592 as compared to §§ 423.568(h). Further, we note that the MA and Part D plans have full control of the appeal prior to it having been sent to the IRE. In the example cited, if the plan had approved the original request from the member, the appeal would not have needed to be raised to the IRE level or incurred the additional waiting time. Appeals Upheld ...... Comment: CMS received a comment requesting that CMS adjust the Reviewing Appeals Decisions measure to remove from the measure denials due to lack of response from providers from the denominator and the numerator. The commenter also requested to align timeframes for the plan with the IRE stating that the IRE is generally held to the same adjudication timeframes as the plan but if additional information is needed from a prescriber, the IRE is allowed to extend the adjudication timeframe to obtain this information. The commenter further said that a plan is not afforded this time and must deny based on the information provided in order to prevent cases from being auto-forwarded to the IRE. Therefore, the commenter requested to measure fairness based on the information the plan had at the time of the plan’s decision. Plans should also not be penalized for appeals that were overturned when providers provided ‘‘new’’ information to the IRE, which was not originally submitted by the provider at the time of the plan’s original coverage determination or redetermination. A commenter from a plan noted that this measure did not reflect the commenter’s true plan performance. Additionally, this commenter noted several instances where cases were overturned by the IRE due to allowing non-Part D supported indications to be considered and disregarding the commenter’s CMS approved clinical policies. Due to these issues, the commenter proposed an alternative formula to capture Appeals Upheld data and measure plan performance in this area. Response: CMS appreciates the comment. Plans and sponsors must have procedures in place for requesting and obtaining information necessary for making timely and appropriate decisions. The IRE’s decision is based on the information gathered during its review process. Adjusting appeal timeframes is not within the scope of this proposal, however, we note that the IRE must issue a decision within the same appeals timeframe as the plan. Please refer to 42 CFR 423.600(d). The timeframes for the plan and the IRE are aligned. At this time, CMS will continue to include this measure in the Star Ratings CMS acknowledges these comments, and is actively evaluating these measures, and the use of the IRE data as their data source. For future enhancements. Complaints about the Drug Plan .... Please see comments received and CMS’ responses for this measure in the above Part C Measures table for the measure Complaints about the Health Plan. Members Choosing to Leave the Please see comments received and CMS’ responses for this measure in the above Part C Measures table Plan. for the measure Members Choosing to Leave the Plan. Drug Plan Quality Improvement ..... For the summary of comments received and CMS’ responses for this measure, please see section ‘j. Im- provement Measures’ of the Preamble. Rating of Drug Plan ...... Comment: CMS received a number of general comments on CAHPS measures. Response: CMS appreciates the feedback on the CAHPS measures. Since the comments on CAHPS measures were mostly not measure specific, please see the CAHPS summary of comments received as well as CMS responses following the Parts C and D Measure Tables. Comment: A commenter suggested we consider this measure ‘topped out.’ Response: We do not agree this measure is ‘topped out’’ since many contracts receive less than 4 stars. Previous analyses of CAHPS scores have suggested that seemingly small differences of 1 point on a 0– 100 scale are meaningful; differences of 3 points can be considered medium, and differences of 5 points can be considered large.38 For instance, a 3-point increase in some CAHPS measures has been associated with a 30 percent reduction in disenrollment from health plans, which suggests that even ‘‘medium’’ differences in CAHPS scores may indicate substantially different care experiences.39 Getting Needed Prescription Drugs Comment: CMS received a number of general comments on CAHPS measures. Response: CMS appreciates the feedback on the CAHPS measures. Since the comments on CAHPS measures were mostly not measure specific, please see the CAHPS summary of comments received as well as CMS responses following the Parts C and D Measure Tables. Comment: CMS received one comment that this composite penalizes Part D plans where patients do not prefer to fill prescriptions by mail. Response: CMS disagrees that this composite penalizes plans based on how beneficiaries choose to fill prescriptions; rather, the item focuses on ease of getting prescriptions filled when using the plan. The composite covers two topics: How often it was easy to use your plan to get the medicines your doctor prescribed (assessed by one item) and ease of filling prescriptions (assessed by combining two items about how often it was easy to use your plan to fill a prescription at your local pharmacy, and how often it was easy to use your plan to fill a prescription by mail). The combined pharmacy/mail score is aver- aged with the first item’s score to produce the composite score. This averaging weights mail and pharmacy according to how many respondents say they use each method, so mail would not count at all if no one in the plan uses mail. Comment: A commenter suggested we consider this measure ‘topped out.’

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Measure

Response: We do not agree this measure is ‘topped out’ since many contracts receive less than 4 stars. Previous analyses of CAHPS scores have suggested that seemingly small differences of 1 point on a 0– 100 scale are meaningful; differences of 3 points can be considered medium, and differences of 5 points can be considered large.40 For instance, a 3-point increase in some CAHPS measures has been associated with a 30 percent reduction in disenrollment from health plans, which suggests that even ‘‘medium’’ differences in CAHPS scores may indicate substantially different care experiences.41 MPF Price Accuracy ...... Comment: A commenter asked CMS to identify which of the two possible calculations will be included in the MPF Accuracy measure. The commenter noted that CMS had previously proposed to update the measure to include frequency and magnitude of prescription drug event (PDE) prices that exceed MPF information beginning with the 2016 data but reverted to the old measurement (only magnitude) with the 2018 Star Rating release. Response: The MPF Accuracy measure will only measure the magnitude of difference, as has been done in the past. CMS will continue to calculate each contract’s accuracy index which measures the amount that the PDE price is higher than the MPF price. CMS will consider for future rule-making, with stakeholder input, to include both frequency and magnitude of PDE prices that exceed MPF information in the Accuracy measure. Comment: A commenter suggested that this measure is ‘topped out’. A measure is considered ‘topped out’ when it shows high performance across all contracts decreasing the variability across contracts and making the measure unreliable. Response: As announced through the 2019 Call Letter, CMS is proposing enhancements to this measure for the CY2022 Ratings. The enhanced measure will first be put on display before being added into the Star Ratings program pursuant to the rules in § 423.184. Adherence Measures: Medication Adherence for Dia- Comment: A few commenters requested that CMS consider excluding beneficiary prescriptions from these betes Medications, Medica- measures or create a reporting mechanism that allows plans to identify prescriptions for removal that are tion Adherence for Hyper- documented as ‘‘discontinued’’ or prescriptions with therapy changes; the commenter stated that these tension, Medication Adher- changes would avoid the appearance that beneficiaries with discontinued medications are non-adherent. ence for Cholesterol (Statins). A commenter expressed concerns about the thresholds for the medication adherence for diabetes and cholesterol measures citing that they are reaching unsafe levels and do not reflect individual needs such as in the aging elderly population. They described several circumstances that can adversely affect adherence measures and suggest noncompliance, such as prescription data entry errors and changes in therapy due to clinical indicators. A commenter commended CMS on including adherence measures in the Star Ratings. Another commenter recommended that CMS weight MA–PD and PDP measures differently based on the plan’s ability to influence outcomes on a measure. It was recommended that CMS require beneficiaries to provide a contact phone number at the time of enrollment in order to assist plans in reaching members to impact adherence. Another commenter was concerned about the significant negative impact by LIS members on adherence measures. Response: We appreciate the feedback. CMS’ mission is to promote quality care for our beneficiaries. In our May 11, 2012 HPMS memo entitled ‘Prohibition on Submitting PDEs for non-Part D prescriptions’, we outlined our concerns related to beneficiary privacy protections and data validation for the submissions of non-Part D data. If Part D sponsors were to attempt to collect the data it is unclear how sponsors could implement sufficient internal controls to meet audit standards necessary to ensure the quality of the data. In addition, requiring physicians to attest to therapy changes or discontinuation of a prior prescription would be an added burden and counterproductive to CMS’ Patients over Paperwork initiative. In the case of changes in therapy (such as holding or discontinuing medication), we believe that the 80 percent compliance threshold incorporates these circumstances as the ideal compliance expectation is 100 percent. We will pass along these comments to the measure steward (PQA) but we are unable to use supplemental data to calculate the measures. Data entry error is also a concern of CMS. We believe that Part D sponsors have the ability to identify and correct many data errors at the point-of-sale and afterward. Similar to the CMS Part D Potential Exclu- sion Warning Report that identifies PDEs for adjustment or deletion, plan sponsors could use their POS edits systems to screen for data entry errors. For example, screening criteria based on a maximum or minimum daily dose or units per day could identify outliers. In the example above, if the term ‘‘3 days’’ was accidently entered instead of ‘‘30 days,’’ this could result in a daily dose that is significantly higher than the expected maximum daily dose and would be an outlier. The claim could be denied at the POS with a message of ‘potential data entry error’ notifying the pharmacist or technician the need to review and make a correction. In addition, CMS provides monthly lists to each plan sponsor of their members who are identified as non-compliant starting in April of each year, this procedure provides Part D plans ample time to review their data and submit corrections. Also, we disagree that stand-alone PDPs have very little influence on beneficiaries’ medication adherence. There are many strategies that can be used to improve a beneficiary’s medication adherence in addition to prescriber interventions, such as refill reminders, formulary and benefits design, and medication therapy management programs. Plan sponsors can also leverage network pharmacy relationships to address medication adherence issues, facilitate medication synchronization, or provide education and counseling. In the absence of a contact phone number for the beneficiary, it may be beneficial to use these interventions to reach the beneficiary at the place of dispensing. Furthermore, MA–PDs and PDPs are rated separately to account for delivery system differences. Lastly, as finalized in the 2019 Call Let- ter, adherence measures will now be included in the CAI to account for LIS beneficiaries.

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TABLE 3D—PART D MEASURES—Continued

Measure

MTM Program Completion Rate for Comment: A commented requested CMS move away from MTM process measures and include outcomes- CMR. based MTM measures in the Star Ratings program in the future. In the interim, it was recommended that CMS evaluate changes to the MTM Comprehensive Medication Review Completion Rate (CMR) measure methodology and that CMS partner with PQA to develop and understand the feasibility of implementing outcome and/or patient-experience based MTM measures. Response: The CMR completion rate measure is an initial measure of the delivery of MTM services, and we continue to look forward to the development and endorsement of outcomes-based MTM measures as potential companion measures to the current MTM Completion Rate CMR measure. We will consider new MTM measures when available. Past analyses did not find a correlation between a sponsor’s rate of MTM program eligibility and the CMR completion rate, but we will continue to monitor and work with the PQA to consider if any adjustments are needed to this measure’s specifications. Comment: A commenter opposed inclusion of the MTM CMR completion rate measure in the Star Ratings due to compliance issues. The commenter suggested allowing completion of CMRs with the beneficiary’s prescriber when unable to contact the beneficiary. Response: As outlined in 42 CFR 423.153(d)(vii)(B)(2), if a beneficiary is offered the annual comprehensive medication review and is unable to accept the offer to participate, the pharmacist or other qualified provider may perform the comprehensive medication review with the beneficiary’s prescriber, caregiver, or other authorized individual. Current guidance clarifies that while providers are required to offer a CMR to all beneficiaries enrolled in the MTM program, regardless of setting, in the event the beneficiary is cognitively impaired or otherwise unable to participate, we recommend that the pharmacist or qualified provider reach out to the beneficiary’s prescriber, caregiver, or other authorized individual, such as the resident’s health care proxy or legal guardian, to take part in the beneficiary’s CMR. This applies to beneficiaries in any setting and is not limited to beneficiaries in long term care (LTC). This does not apply to situations where the sponsor is simply unable to reach the beneficiary or there is no evidence of cognitive impairment. Therefore, we are unable to consider changes to the measure absent a change in regulation or guidance. Statin Use in Persons With Diabe- Comment: A few commenters supported CMS in including this SUPD measure in the Star Ratings. A com- tes (SUPD). menter noted support of the addition of a quality metric monitoring the use of statins in patients with diabetes, however, feels that CMS did not provide a thoughtful explanation for not selecting the Part C HEDIS measure of Statin Therapy in Patients with Diabetes (NCQA measure), which had also been under consideration. This measure includes more robust clinical considerations for patient eligibility and thus appropriateness of statin use. Response: CMS thanks commenters for feedback on this measure. Both the NCQA and PQA measures of statin therapy were proposed for inclusion in the Star Ratings, one for Part C and the other for Part D. As the Pharmacy Quality Alliance (PQA) is the developer of the Statin Use in Persons with Diabetes (SUPD) measure, CMS will share these comments with the PQA for their consideration. Comment: CMS received two comments seeking clarification regarding the categorization and weighting discrepancies between the Part C and Part D statin measures. Two organizations recommended classifying both SPC and SUPD as process measures with a weight of one. Response: Please refer to the Part C measure response for Statin Use for Patients with Cardiovascular Disease (SPC).

CAHPS: Summary of Additional subjective and not reliable. A few focus on how patients experienced key Comments Received and CMS’s commenters stated the CAHPS survey aspects of their care, not merely how Responses responses are not actionable. satisfied they were with their care. Response: CMS strongly disagrees that Comment: CMS received a few Patient experience encompasses the patient experience of care survey comments that CAHPS measures are range of interactions that patients have measures are not reliable. CAHPS and with the healthcare system, including other patient experience measures have 38 Paddison CAM, Elliott MN, Haviland AM, their care from health plans, and from Farley DO, Lyratzopoulos G, Hambarsoomian K, been endorsed as critical aspects of doctors, nurses, and staff in hospitals, Dembosky JW, Roland MO. (2013). ‘‘Experiences of healthcare by the Institute of Medicine physician practices, and other Care among Medicare Beneficiaries with ESRD: and the World Health Organization.42 43 healthcare facilities.44 While patient Medicare Consumer Assessment of Healthcare CAHPS surveys focus on aspects of Providers and Systems (CAHPS) Survey Results.’’ experience is an inherently important American Journal of Kidney Diseases 61(3): 440– healthcare quality that patients dimension of healthcare quality, it is 449. themselves say are important to them also the case that the preponderance of 39 Lied, T.R., S.H. Sheingold, B.E. Landon, J.A. and for which patients are the best and/ evidence shows that better patient Shaul, and P.D. Cleary. (2003). ‘‘Beneficiary or only source of information. Patient Reported Experience and Voluntary Disenrollment experience is associated with better in Medicare Managed Care.’’ Health Care Financing experience surveys such as CAHPS patient adherence to recommended Review 25(1): 55–66. treatment, better clinical processes, 40 Paddison CAM, Elliott MN, Haviland AM, Reported Experience and Voluntary Disenrollment better hospital patient safety culture, Farley DO, Lyratzopoulos G, Hambarsoomian K, in Medicare Managed Care.’’ Health Care Financing better clinical outcomes, reduced Dembosky JW, Roland MO. (2013). ‘‘Experiences of Review 25(1): 55–66. Care among Medicare Beneficiaries with ESRD: 42 Institute of Medicine. Crossing The Quality unnecessary healthcare use, and fewer Medicare Consumer Assessment of Healthcare Chasm: A New Health System for the 21st Century. Providers and Systems (CAHPS) Survey Results.’’ Washington DC: National Academy Press; 2001. 44 Agency for Healthcare Research and Quality. American Journal of Kidney Diseases 61(3): 440– 43 Smith, P.C. (Ed.). (2009). Performance What Is Patient Experience?. Content last reviewed 449. measurement for health system improvement: March 2017. Agency for Healthcare Research and 41 Lied, T.R., S.H. Sheingold, B.E. Landon, J.A. experiences, challenges and prospects. Cambridge Quality, Rockville, MD. http://www.ahrq.gov/ Shaul, and P.D. Cleary. (2003). ‘‘Beneficiary University Press. cahps/about-cahps/patient-experience/index.html.

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inpatient complications.45 46 Therefore, responses are also case-mix adjusted to Moreover, research specific to patient while we acknowledge that the CAHPS account for certain respondent experience, CAHPS, and MA and PDP survey captures individuals’ characteristics not under the control of CAHPS surveys finds no evidence perspectives on their experiences of the health or drug plan such as age, nonresponse bias affects comparison of care, it is anchored in measureable education, dual eligible status and other case-mix adjusted scores between aspects of care and so can be measured variables. We note that plans do have contracts or other similar reporting reliably. some control over plan-design features units.50 51 52 53 54 Additionally, CAHPS surveys follow such as cost and coverage as well as Comment: A commenter requested scientific principles in survey design provider behavior, so it would not be more insight into statistical components and development and have been appropriate to adjust for these. such as case-mix adjustment, statistical rigorously developed and tested to CMS currently provides translations significance, and reliability, and another assess the experiences of Medicare of the MA and PDP CAHPS Survey in requested that CMS provide all case-mix beneficiaries. The surveys are designed Spanish, Chinese, and Vietnamese, and adjustment flags to the survey vendors to reliably assess the experiences of a we are developing a Korean translation. to facilitate an additional validation. large sample of patients and use All translations are the product of Response: CMS provides a detailed standardized questions and data translation and review by native explanation of the CAHPS methodology collection protocols to ensure that speakers of the target languages and including case-mix adjustment in the information can be compared across have had multiple rounds of qualitative annual Star Ratings Technical Notes, in health care settings. The contract-level testing with Medicare beneficiaries with CAHPS plan reports provided to each reliability of 2017 MA and PDP CAHPS characteristics similar to the MA and contract each year, and on the MA and measures meet high standards, with the PDP CAHPS population. By providing PDP CAHPS web page (https://www.ma- median reliability of publicly-reported survey translations, CMS promotes pdpcahps.org). CMS also provides MA CAHPS measures exceeding 0.72 for standardization by assuring that survey vendors all of the necessary data all measures and exceeding 0.90 for a questions are presented similarly to to perform case-mix adjustment majority of measures, with 0.70 being a beneficiaries across and within validation. Plans are welcome to contact conventional standard for reliability. languages, which also promotes [email protected] with specific Finally, there are criteria for sample size comparability of the results across questions about MA and PDP CAHPS. eligibility that must be met for contracts vendors and contracts. The survey Comment: A commenter requested to be included in data collection, and administration protocol for MA and PDP that plans be able to add their own CMS also offers contracts the option of CAHPS does not permit ‘‘live,’’ questions to the surveys to validate and augmenting their CAHPS sample sizes if ‘‘individual,’’ or ‘‘real-time’’ translation clarify responses. Response: CMS allows plans to add a they wish to obtain more precise overall of the survey by an interpreter, as such limited number of items to the MA and results and/or perform subgroup an approach does not promote PDP CAHPS survey that do not affect analyses with larger samples. comparability of data and there is no responses to the survey or pose undue Comment: Several commenters stated mechanism for assuring the accuracy burden to the beneficiary. These rules that CAHPS scores may be influenced and consistency of the translation. If are to ensure the highest possible by factors outside the plan’s control, plans need additional translations they response rate as well as comparability of such as cost and coverage, provider should contact us at MP-CAHPS@ the data across contracts. behavior, cultural differences including cms.hhs.gov. The MA and PDP CAHPS language, and timing of the survey. A protocol does allow for the use of proxy HOS: Summary of Additional few suggested that beneficiaries who are respondents in cases where a Comments Received and CMS’s frail, have cognitive impairments, or respondent is unable to complete the Responses survey. who have low socio-economic status Comment: CMS received several may not be able to respond to survey Comment: A commenter stated that the CAHPS survey is long, and a couple comments on the HOS measures. Some items accurately. A commenter commenters supported patient reported requested allowing proxy methods. commenters expressed concern about low response rates. Response: For MA and PDP CAHPS, 50 Response: CMS shortened the MA Klein, D.J., Elliott, M.N., Haviland, A.M., CMS uses mixed-mode data collection Saliba, D., Burkhart, Q., Edwards, C., & Zaslavsky, CAHPS survey in 2017 by removing to increase the likelihood of survey A.M. (2011). Understanding nonresponse to the questions and measures not used in Star participation and 2007 Medicare CAHPS survey. The Gerontologist, 51(6), 843–855. 47 48 Ratings, and we also improved phone representativeness. Survey 51 contact information. As a result of Saunders C.L., Elliott M.N., Lyratzopoulos G., CMS’s continuing efforts to improve Abel G.A. (2016) ‘‘Do differential response rates to 45 Price, R.A., Elliott, M.N., Zaslavsky, A.M., patient surveys between organisations lead to unfair Hays, R.D., Lehrman, W.G., Rybowski, L., & Cleary, response rates, overall MA and PDP performance comparisons? Evidence from the P.D. (2014). Examining the role of patient CAHPS response rates increased from English Cancer Patient Experience Survey’’ Medical experience surveys in measuring health care 2016 to 2017, despite national trends of Care 54(1): 45–54. quality. Medical Care Research and Review, 71(5), declining response rates for most other 52 Bone A., McGrath-Lone L., Day S., et al. 522–554. Inequalities in the care experiences of patients with 46 Price, R.A., Elliott, M.N., Cleary, P.D., surveys. Further, meta-analyses of cancer: Analysis of data from the National Cancer Zaslavsky, A.M., & Hays, R.D. (2015). Should health surveys that follow the rigorous Patient Experience Survey 2011–2012. BMJ Open. care providers be accountable for patients’ care probability sampling and survey 2014;4:e004567. experiences?. Journal of general internal medicine, approaches used by MA and PDP 53 El Turabi A., Abel G.A., Roland M., et al. 30(2), 253–256. Variation in reported experience of involvement in 47 CAHPS find little relationship between Fowler Jr, F.J., Gallagher, P.M., Stringfellow, 49 cancer treatment decision making: Evidence from V.L., Zaslavsky, A.M., Thompson, J.W., & Cleary, response rates and nonresponse bias. the National Cancer Patient Experience Survey. Br P.D. (2002). Using telephone interviews to reduce J Cancer. 2013;109:780–787. nonresponse bias to mail surveys of health plan survey scores. Health services research, 44(2p1), 54 Lyratzopoulos G., Neal R.D., Barbiere J.M., et al. members. Medical care, 190–200. 501–518. Variation in number of general practitioner 48 Elliott, M.N., Zaslavsky, A.M., Goldstein, E., 49 Groves, R.M., & Peytcheva, E. (2008). The consultations before hospital referral for cancer: Lehrman, W., Hambarsoomians, K., Beckett, M.K., impact of nonresponse rates on nonresponse bias: findings from the 2010 National Cancer Patient & Giordano, L. (2009). Effects of survey mode, a meta-analysis. Public opinion quarterly, 72(2), Experience Survey in England. Lancet Oncol. patient mix, and nonresponse on CAHPS® hospital 167–189. 2012;13:353–365.

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outcome measures. Several commenters, period is challenging to beneficiaries. A instrument adaptation for languages in however, suggested that the HOS has commenter suggested that keeping the addition to English, Spanish, or drawbacks in design, methodology, identity of sample respondents Chinese. administration, and reporting that confidential limits opportunities for Response: CMS responds to requests disproportionately affect SNP improvement activities, and another for translations of the survey into other populations and fail to accommodate suggested the resulting data may be too languages from vendors, who in turn diverse populations and the most old to be actionable. A few commenters reflect the requests of plans. CMS vulnerable beneficiaries. Some recommended the elimination of HOS currently provides translations of the commenters stated that the longitudinal measures because the measures are too HOS in Spanish and Chinese, and a two year look-back design of the HOS is generic for Star Ratings and the Russian translation will be available in especially challenging in populations information from the surveys is not 2019. All translated versions are the with high rates of degenerative or actionable. product of translation and review by progressive conditions coupled with Response: The Health Outcome native speakers of these languages and pervasive low socioeconomic status and Survey (HOS) yields two patient- are subject to multiple rounds of high social risk factors. Commenters reported outcome measures of change in qualitative testing with Medicare suggested that CMS should change global functioning, by using 2-year beneficiaries with characteristics similar sampling methodology to require larger change in scores on the Physical to the HOS population. As a result, the sample sizes or allow plans to request Component Score (PCS) and the Mental adoption of a translated survey tool oversampling of typically under- Component Score (MCS), both of which takes a significant amount of time. By represented groups. In addition, some come from the Veterans RAND 12-Item providing survey translations, CMS commenters would like to discontinue Health Survey (VR–12) portion of the promotes standardization and assures the use of proxies for self-report as, the larger survey. These measures are of that questions are presented similarly to commenters argue, there is strong unique and high value, as demonstrated beneficiaries across and within evidence indicating proxies’ responses by their higher weight in calculating the languages, which also promotes are not equivalent to beneficiaries’ Overall Star Ratings. Critics of the HOS comparability of the results across responses. often point out the 3 years between HOS vendors and contracts. The survey Response: CMS is supportive of baseline data collection and health administration protocol for HOS does increasing sample sizes and is not plans receiving member-level results, not permit ‘‘live,’’ ‘‘individual,’’ or opposed to oversampling to ensure a which include the identities of ‘‘real-time’’ translation of the survey by representative sample but to date has respondents. Contributing to the interpreters because such an approach received no HOS oversampling requests perceived ‘‘lag’’ is the longitudinal does not promote comparability of data from any plans. We are currently component of the HOS; beneficiaries and there is no mechanism for assuring reexamining the HOS with a focus on who complete the baseline HOS must be the accuracy and consistency of the diverse, dual-eligible populations and resurveyed two years later to generate translation. However, the HOS protocol will explore the feasibility of increasing data for the HOS ‘‘outcome’’ measures. does allow for the use of proxy the required sample size. CMS already HOS data are hardly ‘‘old.’’ In fact, HOS respondents in cases where a adjusts the HOS data to control for baseline results are distributed nine beneficiary is unable to complete the many beneficiary characteristics not months after data collection ends, and survey. under the control of the plan, including performance measurement reports and Comment: A commenter reported that age, gender, race, ethnicity, income, beneficiary-level data are distributed they have observed that plans with education, marital status, Medicaid about one year after follow-up data lower membership generally have status, SSI eligibility, homeowner collection ends. Further, CMS contends higher scores on HOS measures than status, chronic conditions, and baseline that a majority of plans improve or plans with higher enrollment. health status. CMS does not plan to maintain the physical and/or mental Response: We appreciate the discontinue the HOS proxy response health of their membership over time. comment. CMS is not aware of any option. Because the HOS has both mail That is, the measure requires time to formal studies that have been done to and telephone components, it is likely capture change and in fact does capture address the hypothesized link between that some mail questionnaires would be positive change or maintenance of contract size and performance on completed by proxies whether global functioning for the majority of longitudinal measures. permitted or not. CMS considers it plans’ members. The Physical Patients With Advanced Illness: preferable to collect information about Component Score (PCS) and the Mental Comments Received and CMS’s whether the beneficiary or a proxy Component Score (MCS), as derived Responses answered the survey than to assume the from the VR–12, have been validated in beneficiary answered the questions. multiple studies of VA and elderly Comment: CMS received several Every attempt is made to obtain a populations. The appendix of each comments concerning the exclusion response from the beneficiary before a contract’s annual performance from measures of patients with proxy response is allowed. Also, when measurement report explains how the advanced illness and in palliative care; a proxy was used at baseline and the measures are calculated and adjusted to those who have refused treatment, beneficiary remains unable to complete minimize bias in results. CMS assessment, or recommended the follow up survey, attempts are made encourages all plans to familiarize screenings; and those who are unable to to re-contact the same proxy in order to themselves with the methods described achieve the desired clinical threshold reduce variability in responses. Finally, in the reports and to utilize the despite having reached the maximum frailer members, including the most background materials available on the medical therapy and self-care practices vulnerable beneficiaries, who are unable HOS website that validate the Improving available for the condition. Commenters to complete the survey independently or Maintaining Physical Health and recommended that exclusions or are excluded from the HOS if a proxy Improving or Maintaining Mental Health adjustments to measures be made for response option is not available. measures. these patients, or that alternate metrics Comment: Several commenters Comment: Commenters also suggested be developed for these patients, since mentioned the two year look-back that CMS provide HOS translation and for many of them comfort or improving

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quality of life is a greater part of care changes to implement advanced illness period), domain assignment, measure than curative treatments. In particular, exclusions will be posted for the HEDIS category, data source for the measures, some commenters identified specific 2019 public comment period in and statistical method for assigning Star HEDIS and HOS measures which should February 2018. CMS currently has no Ratings (based on §§ 422.166(a) and be excluded or modified for patients plans to exclude members with serious 423.186(a)) as listed in the proposed with advanced illness: Rheumatoid illness from the HOS. table. However, we note that our Arthritis, Statin Use, Improving or finalization of the proposed measures Additional Comments and Responses Maintaining Physical Health, and does not include the weight of each Improving or Maintaining Mental Comment: CMS received one category as presented in the proposed Health. Commenters note that there are suggestion that CMS create a new, fixed table. For discussion of CMS’s final many challenges treating and screening identification code for each measure decision to change the weight of certain health conditions for patients that would be consistent year-over-year. measures in the Patients’ Experience with advanced illness. A commenter Response: The measure codes are not and Complaints category and in the suggested that the seriously ill published publicly for beneficiaries. Measures Capturing Access category population be excluded from preventive CMS publishes a Star Ratings measure from a weight of 1.5 to a weight of 2, and HOS measures, as feasible. While history in the Technical Notes each year see section ‘q. Measure Weights’ of this commenters agreed that MA plans that cross references the measure codes. preamble. See also §§ 422.166(e) and should advance preventive care and Plans are welcome to use their own 423.186(e) of this regulation for final maintain or improve physical health for internal coding systems. measure weight assignments. Finally, the majority of their enrollees, they Comment: A commenter suggested we note that the summary of comments argued that there will always be a subset that CMS make PDEs available for received and CMS’s responses for the of enrollees facing serious illness and members in drug assistance programs. Health Plan Quality Improvement and continued decline. Commenters Response: CMS thanks the commenter the Drug Plan Quality Improvement encouraged CMS to work with measure for this suggestion. However, this measures are presented in the next stewards such as NCQA and explore suggestion is outside the scope of the section (‘j. Improvement Measures’) of other options that can exclude the proposed rule. This comment will be this preamble. shared with others in CMS who will be seriously ill population from such j. Improvement Measures measures. Commenters suggested that interested in the suggestion. Comment: A commenter suggested In the 2013 Part C and D Star Ratings, the exclusion of the seriously ill that CMS exclude beneficiaries’ Part D we implemented the Part C and D population from these measures will trial medication use from the measures. improvement measures (CY2013 Rate protect against discriminatory Response: CMS believes this request Announcement, https://www.cms.gov/ enrollment, and will not unfairly is specific to the adherence measures. Medicare/Health-Plans/MedicareAdvtg evaluate plans that support this The adherence measures require at least SpecRateStats/Downloads/ population in making diagnostic and two fills on different dates for any drug Announcement2013.pdf). The treatment decisions based on the within the drug class for inclusion in improvement measures address the patient’s preferences. Finally, some the measure. The two claim requirement overall improvement or decline in commenters suggested that patients essentially excludes many trial individual measure scores from the with advanced illness who have refused prescription periods where the prior to the current year. We proposed services and treatments should also be beneficiary failed the initial drug and is to continue the current methodology excluded from measure calculations. switched to a different drug class. Since detailed in the Technical Notes for They stated a patient’s goal for comfort the adherence measures are for chronic calculating the improvement measures rather than further treatment should be conditions, CMS expects that the and to codify it at §§ 422.164(f) and primary. A commenter suggested that beneficiary would continue on one drug 423.184(f). For a measure to be included the under 65 population residing in within the drug class in the measure. in the improvement calculation, the nursing homes should be excluded from Identifying trial periods using PDEs measure must have numeric value measures for many of the same reasons outside this definition would be scores in both the current and prior year they wanted those with advanced difficult to determine and accepting and not have had a substantive illness excluded—advanced sickness, other source data would be prohibited specification change during those years. nearing the end of life, refusing as previously stated. In addition, the improvement measure treatment, and sometimes a patient’s would not include any data on measures choice on comfort not care. Summary of Changes that are already focused on Response: CMS appreciates feedback For the reasons set forth in the improvement (for example, HOS on the noted measure adjustments and proposed rule and our responses to the measures focused on improving or exclusions. For HEDIS 2019, NCQA is related comments summarized earlier, maintaining physical or mental health). examining potential cross-cutting CMS is finalizing the Part C and Part D The Part C improvement measure exclusions for those with advanced performance measures for the includes only Part C measure scores, illness from selected HEDIS measures performance periods beginning on or and the Part D improvement measure that may not be clinically appropriate after January 1, 2019 with one includes only Part D measure scores. We for these individuals. NCQA is modification. In that NCQA is planning proposed to codify these criteria at considering various advanced illness to make substantive changes to the Plan paragraph (f)(1)(i) through (iii) of conditions and service use (for example, All-Cause Readmissions measure that §§ 422.164 and 423.184. We proposed to indications of frailty, receipt of would affect measurement year 2019, annually identify the subset of measures palliative care or nursing care services) CMS is not finalizing this as a measure to be included in the improvement for potential exclusion. We anticipate in the 2021 and 2022 Star Ratings but measures through the Call Letter, that NCQA will consider these will move this measure to the display similar to our proposal for regular comments as their advisory panels re- page for two years. CMS’s finalization of updates and removal of measures. evaluate measures as part of the the proposed measures does include the Under our proposal, once the measures standard HEDIS process. Proposed specifications (metric and performance to be used for the improvement

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measures are identified, CMS would scores below zero will be clustered to determining which measures are determine which contracts have determine the cut points for 1 and 2 included, the conversion to a Star sufficient data for purposes of applying stars. Although the preamble of the Rating, and the hold harmless provision and scoring the improvement proposed rule indicated this level of for individual measures that are used for measure(s). We again proposed to follow detail, our proposed regulation text, at the determination of the improvement current practices: The improvement proposed paragraphs (f)(4)(v) and (vi) of measure score. measure score would be calculated only §§ 422.164 and 423.184, did not. In We received the following comments for contracts that have numeric measure paragraph (4)(v), we referred only to on our proposals, and our responses scores for both years for at least half of ‘‘hierarchical clustering algorithms’’ follow: the measures identified for use in the without specifying the detailed Comment: The overwhelming improvement measure. We proposed treatment for scores of greater than, majority of commenters supported the this standard for determining contracts equal to, or less than zero; in paragraph concept of the improvement measures. eligible for an improvement measure at (4)(vi), we cross-referenced the text Response: CMS appreciates the paragraph (f)(2). proposed at §§ 422.166(a)(2) and overwhelming support for the We proposed at §§ 422.164(f)(3) and 423.186(a)(2), which did include the underlying rationale of the (4) and 423.184(f)(3) and (4) the process specific text specifying the detailed improvement measures. for calculating the improvement treatment for scores of greater than, Comment: A commenter opposed the measure score(s) and a special rule for equal to, or less than zero in connection codification of the improvement any identified improvement measure for with the ratings for the improvement measures and urged CMS to discontinue a contract that received a measure-level measures. While our proposed its use in the Star Ratings program. The Star Rating of 5 in each of the 2 years regulation text was ultimately commenter believes that the examined, but whose associated consistent, it included cross-references improvement measures are unnecessary, measure score indicates a statistically not explained in the preamble. distort the signal provided by the Star significant decline in performance over We also proposed that the Part D Ratings, blur the distinction between the time period. improvement measure cut points for high performing contracts and other As proposed, the improvement MA–PDs and PDPs would be contracts, and can lead to measure would be calculated in a series determined using separate clustering misclassification. of distinct steps: algorithms. The Part D improvement Response: CMS believes that • The improvement change score (the measure cut points for MA–PDs and continuous improvement is an difference in the measure scores in the PDPs would be reported separately. important component of the Star Ratings 2-year period) will be determined for Finally, we proposed a special rule in program and necessary to achieve the each measure that has been identified as paragraph (f)(3) to hold harmless ultimate goal of providing the best care part of an improvement measure and for sponsoring organizations that have 5- to beneficiaries and realizing the most which a contract has a numeric score for star ratings for both years on a measure positive outcomes. The improvement each of the 2 years examined. used for the improvement measure measures provide a distinct aspect of • Each contract’s improvement calculation. This hold harmless performance and as implemented, change score will be categorized as a provision was added in 2014 to avoid provide a true reflection of this aspect significant change or not by employing the unintended consequence for of performance. CMS is cognizant of the a two-tailed t-test with a level of contracts that score 5 stars on a subset challenges of improvement for contracts significance of 0.05. of measures in each of the 2 years. For that have high performance; thus, CMS • The net improvement per measure any identified improvement measure for implemented the hold harmless category (outcome, access, patient which a contract received a rating of 5 provisions. One hold harmless experience, process) will be calculated stars in each of the years examined, but provision addresses high performance at by finding the difference between the for which the measure score the measure level, and the other weighted number of significantly demonstrates a statistically significant addresses high performance at the improved measures and significantly decline based on the results of the highest rating level. The hold harmless declined measures, using the measure significance testing (at a level of provisions coupled with the two-step weights associated with each measure significance of 0.05) on the change clustering for converting the category. score, the measure would be categorized improvement measure scores to • The improvement measure score as having no significant change. The measure-level Star Ratings safeguard will then be determined by calculating measure would be included in the count against possible misclassification. CMS the weighted sum of the net of measures used to determine appreciates the comments and will improvement per measure category eligibility for the improvement measure continue to look at ways to further divided by the weighted sum of the and in the denominator of the enhance the Star Ratings. number of eligible measures. improvement measure score. We Comment: Some commenters • The improvement measure scores explained in the proposed rule that the suggested excluding CAHPS and HOS will be converted to measure-level Star intent of the hold harmless provision for measures from the improvement Ratings by determining the cut points a contract that receives a measure rating measure because they believe the using hierarchical clustering algorithms. of 5 stars for each year is to prevent the measures are subjective in nature. A We proposed at §§ 422.166(a)(2)(iii) measure from lowering a contract’s commenter further justified the removal and 422.186(a)(2)(iii) that the improvement measure when the of the survey measures citing the improvement measure score cut points contract still demonstrates high challenges in sample selection that have would be determined using two separate performance. We proposed in section occurred in recent years that have led clustering algorithms. We explained in II.A.12.r another hold harmless some plans to appeal their results as not the preamble that improvement measure provision to be codified at statistically significant. scores of zero and above will use the §§ 422.166(g)(1) and 423.186(g)(1). Response: CMS reviews and selects clustering algorithm to determine the We requested comment on the the improvement measures annually cut points for the Star Rating levels of methodology for the improvement and publishes the list in the draft Call 3 and above. Improvement measure measures, including rules for Letter, we proposed to follow the same

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process going forward. For a measure to measure-level hold harmless provision methodology and believes it creates a be included in the improvement was designed to protect a contract from double-jeopardy situation because it calculation, the measure must have being adversely impacted by the includes both significance testing and numeric value scores in both the current improvement measure(s) without national performance. and prior year and not have had a discouraging continuous improvement. Response: The Star Ratings are substantive specification change during CMS believes that changing the hold designed to incentivize contracts to those years. In addition, the harmless to measures that receive at provide the best quality and care to improvement measure will not include least 4 stars each year would serve to beneficiaries. The methodology any data on measures that are already hamper advances and innovation in the employed to determine the focused on improvement (for example, care of all populations; in addition, it improvement measure-level Star Ratings HOS measures focused on improving or could serve to discourage continuous is designed to align with the underlying maintaining physical or mental health). improvement by suggesting that 4 principles of the Star Ratings CAHPS and HOS measures are patient stars—rather than 5—is the highest methodology. The use of statistical experience not patient satisfaction achievement on the measure. significance allows the changes of each surveys. The voice of the beneficiary is CMS is cognizant of the additional individual measure used for the a critical component of the information challenges of improvement for highly- determination of the improvement needed for the Star Ratings program to rated contracts; improvement is more measure score to be assessed for realize its goals. If an issue arises with difficult for a contract with high meaningful differences. The use of the any aspect of the standard protocol performance as compared to a lower- clustering algorithm to determine the regarding sampling in the Star Ratings rated contract that has more opportunity cut points and ultimately, the program, CMS carefully reviews any for improvement. The hold harmless assignment of the measure-level Star impact of the deviation and assesses the provision for a contract’s highest rating Ratings, allows a contract’s performance risk of unintended consequences on the provides the safeguard for contracts that to be assessed relative to all contracts integrity of the ratings. Further, CMS receive an overall or summary rating of that are required to report. The develops and tests analytical 4 stars or more without the use of the determination of the measure-level Star adjustments to mitigate and address all improvement measures and with all Ratings is done in a manner to minimize such concerns. Although there did exist applicable adjustments (CAI and the misclassification. The clustering for the minor deviations in the protocol for reward factor). A highly-rated contract improvement measures is done twice to sampling in the Star Ratings in the past, will have their final highest rating as the ensure that a contract with average or CMS is confident that the ratings were higher of either the rating calculated above average performance, not affected and the measures possessed including or excluding the improvement demonstrated by an improvement all attributes necessary to preserve and measures. measure score of zero or above, will maintain the high standards of the Star CMS believes there should be a receive a measure-level Star Ratings of Ratings program. differentiation in the hold harmless at least 3 stars. A contract whose Comment: Many commenters provisions to appropriately address the performance declined, demonstrated by supported an expansion of the measure- amount of information each provides, to an improvement measure score of less level hold harmless provision for a incentivize contracts to continuously than zero, will receive a measure-level contract that receives 4 or more stars in improve, and to provide adequate Star Rating less than 3 stars. Further, each of the two-years for a measure. safeguards for high achieving contracts. CMS designed the hold harmless Some commenters noted the lack of Comment: A few commenters provisions as a safeguard for contracts alignment between the highly-rated expressed explicit support for the maintaining high performance at the contracts’ hold harmless provision for current methodology for determining measure-level or at the contract’s the application of the improvement the improvement rating including the highest Star Rating to ensure that the measure(s) for the identification of a use of separate clustering algorithms to improvement measure-level Star Ratings contract’s highest rating at convert the improvement measure provide a true signal. § 422.166(g)(1) and § 423.186(g)(1) and scores to a measure-level Star Rating Comment: A commenter suggested the measure-level hold harmless and the separate clustering algorithms reducing the number of improvement provision at (§ 422.164(f)(3) and for the Part D summary rating for PDPs measures with a focus on newer § 423.184(f)(3). and MA–PDs. measures. Response: CMS appreciates the Response: CMS appreciates these Response: CMS appreciates this thoughtful consideration of the hold comments. comment. For a measure to be included harmless provisions for the Comment: A commenter suggested in the improvement calculation, the improvement measure methodology. As that CMS develop a measure to assess a measure must have numeric value noted, the hold harmless provision at decline in performance. scores in both the current and prior year the measure level applies a different Response: The current improvement and not have had a substantive threshold than the hold harmless measures capture both improvement specification change during those years. provision for a highly-rated contract’s and decline. The calculation for the In addition, the improvement measure highest rating. A measure, in general, improvement measure score and the will not include any data on measures assesses a single, distinct aspect of care associated methodology to convert the that are already focused on while an overall or summary rating improvement measures scores to improvement (for example, HOS provides a global indicator of quality of measure-level Star Ratings are designed measures focused on improving or care and performance. such that a contract that has below maintaining physical or mental health). At the basic building block of the average improvement, indicated by an CMS has focused on all measures that rating system, the measure, a measure- improvement measure score less than meet these criteria to create incentives level rating of 4 stars allows opportunity zero, will receive an improvement to improve care across a broad spectrum for improvement with a focus on a measure-level Star Rating less than 3 of measures. Limiting the set of singular concept. A measure-level Star stars. measures used to determine the Rating of 5 does not allow the same Comment: A commenter expressed improvement measure to strictly new degree of possible improvement. The concern with the improvement measures has the potential of limiting

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the focus of improvement activities by rating. The issue, the commenter topped out, CMS needs to balance these a contract. CMS is committed to believes, is attenuated by the sampling concerns with how critical the measures incentivizing contracts to provide the requirements for a subset of the are to improving care, the importance of best quality and care to beneficiaries. population, like the HOS measures. not creating incentives for a decline in Striving for continuous improvement Response: CMS appreciates these performance after the measures across all aspects of care would be comments. The contract must have a transition out of the Star Ratings, and compromised if the focus of minimum number of numeric scores the availability of alternative related improvement was restricted to newer and measures of a certain type to measures which address the specific measures only. reliably determine an improvement clinical concerns. MAOs and Part D Comment: A commenter suggested measure score. To date, we have not sponsors have control over all measures that CMS ensure that MA contracts that seen an issue with smaller contracts included in the Star Ratings’ program; are subject to the use of the obtaining an improvement measure thus, the measures selected for the improvement measures realize a benefit score. improvement measure(s) are all under from their inclusion. Comment: Some commenters the control of the contract. Response: CMS has developed a hold suggested increased transparency in the Comment: A commenter suggested harmless provision for a highly-rated determination of the improvement several adjustments to address their contract’s highest rating. All other measure because of the complexity of its belief that the improvements measure is contracts have the improvement determination. Other commenters based on the following perceived flawed measure(s) included in their rating. expressed the concern regarding their assumptions: all plans have the same CMS believes the information provided ability to predict the improvement opportunity to improve on both mature by the ratings must be a true reflection measure-level Star Ratings. Further, and new measures year after year; high- of the quality and experience of commenters requested clearer and low-performing plans have equal beneficiaries enrolled in the contract. explanations of the methodology. opportunity for improvement; and the Ensuring that MA contracts that are Response: The Star Ratings program is hold harmless provision protects plans. subject to the use of the improvement designed to incentivize contracts to The suggested adjustments included: measures realize a benefit from their provide the best care to their The use of a log scale for evaluating inclusion has the potential of distorting beneficiaries. The improvement performance instead of a linear scale; the signal and does not align with the measure employs two consecutive years weighting improvement achieved Star Ratings program’s guiding of data. To realize the goal of the best relative to current performance; and principles. care, contracts must continually seek adjusting the threshold for significant Comment: A commenter suggested ways to improve the care they provide. improvement. (The commenter removing the improvement measure in The improvement measures provides a suggested changing the level of the future to streamline and simplify the quantification of the improvement made significance to 0.025 as opposed to 0.05, Star Ratings program. in the two-year period. or in other words employing the Response: CMS disagrees with the CMS will apply the methodology threshold of 1.645 instead of 1.96 in the commenter. CMS recognizes the explained in the preamble and adopted testing for significance.) importance of acknowledging quality in the regulations at §§ 422.164(f) and Response: CMS appreciates the improvement in health and drug plans. 423.184(f). The improvement comments and the suggested The improvement measures provide an methodology is detailed in the annual enhancements for the improvement additional dimension to the Star Ratings Technical Notes available at http:// measure methodology. CMS remains program. At this time, there are no plans go.cms.gov/partcanddstarratings. CMS cognizant of the additional challenges to remove the measures from the Star is always willing to answer questions for improvement for contracts with high Ratings program as we are committed to related to the calculation of the Star performance on their highest rating and improving the quality of care and Ratings including the improvement at the individual measure level. CMS experiences for Medicare beneficiaries. measure methodology. Further, upon does not believe the underlying Comment: A commenter questioned request, CMS will provide a detailed assumptions for the methodology for the whether the measures Getting Needed calculation worksheet for a contract’s determination of the improvement Care and Customer Service are included improvement measures. Contracts measure-level Star Ratings is flawed. in the improvement measure set. should contact the Part C & D Star There is less room for improvement for Response: Annually, CMS reviews the Ratings Team at contracts that are highly-rated, thus Star Ratings measure set to identify the [email protected] for there is a hold harmless provision for a improvement measures. Both Getting answers to any questions related to the contract’s highest rating. In addition, Needed Care and Customer Service meet MA Star Ratings. there is less room for improvement for the inclusion criteria for an Comment: A commenter urged CMS a measure score if a contract is improvement measure and will be to review the rules guiding the selection performing at the highest rating, 5 stars, designated as improvements measures of the improvement measures to ensure for each of the two consecutive years in the 2021 Star Ratings program. A that each measure is under the control examined for the improvement score. specification change prompted a of the contract and that the measure is CMS implemented a hold harmless temporary exclusion of these measures not topped out. provision at the measure level to ensure from the improvement measure in the Response: CMS supports the request a contract receiving 5 stars for each year 2018 Star Ratings. for reviewing the measures designated of the two years examined would not be Comment: A commenter believes that for use in the improvement measures. subject to the possible categorization of there exists a potential disadvantage for CMS annually reviews the measures a significant decline for the measure. SNPs and Medicare/Medicaid plans due used in the Star Ratings and releases the At this time, CMS employs a level of to their propensity of having lower measures that will be used to determine significance of 0.05 for all significance enrollments which ultimately results in the improvement measures in the draft testing across the aspects of the fewer of these types of plans from Call Letter. Although some measures methodology. The use of a 0.05 level of meeting the requirements for the may show uniform high performance significance is typical for statistical calculation of an improvement measure across contracts suggesting that they are analyses. CMS will consider the

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suggestions as we enhance the Star increase in their rate of 2 percent (an Comment: A commenter suggested Ratings methodology to best address the increase to 62 percent) for a 5 percent using a logarithmic scale instead of a concerns of our stakeholders while reduction which would be classified as linear scale in the significance testing maintaining the integrity of the Star a meaningful reduction in their for classifying significant changes to the Ratings system. suboptimal rate (2/(100 ¥ 60) or 5 measure score to address the law of Comment: Some commenters percent). diminishing returns. suggested that the improvement Response: We will consider these Response: CMS appreciates the measures should consider measure-level comments for the future as we make careful consideration of the Star Ratings and the measure score in enhancements to this measure. improvement measure methodology. the hold harmless provision. Some Comment: A few commenters CMS is cognizant of the additional commenters provided examples of an recommended that CMS either adjust its challenges for both highly-rated increase in a measure-level Star Rating methodology and assign ‘‘not contracts and contracts that receive a 5 for a specific measure used in the applicable’’ when determining star measure-level rating for each of the improvement measure that was ‘‘Improvement, Decline, or No Change’’ two years examined used determining accompanied by a significant decrease for measures that increased in measure- the improvement measure. in the measure score. Commenters level Star Ratings in the year two of the Improvement is easier at the summary believe that such scenarios should be comparison or add these measures to levels for a contract that is not highly- part of the hold harmless provision or the ‘‘held harmless’’ provision for rated. Likewise, improvement for an considered counted as an not applicable measures. The commenters noted that individual measure is easier when there (NA) measure, those not factoring in the the current methodology for a measure is more room for improvement. determination of the improvement is based on measure scores as opposed The current hold harmless provisions measure score. to measure-level Star Ratings. were designed to address the concern Response: CMS will consider a Response: CMS appreciates this related to the concept of diminishing potential enhancement to the hold feedback. CMS will further consider the returns. The improvement measure harmless provision that considers both measure-level hold harmless provisions safeguards for contracts at the highest- the measure-level Star Rating and the to examine the influence of the measure rating level by contract-type and at the measure score. Any changes would be scores and measure-level Star Ratings measure-level determination of the proposed through future rulemaking. on the improvement measures. improvement scores allow a transparent Comment: Some commenters Comment: Some commenters method of addressing the challenges of suggested that a measure that receives 5 supported a revision to the hold improvement for high performing stars for each of the two years should be harmless measure provision for an contracts. a positive influence on the improvement improvement measure when a contract The suggested use of a logarithmic measure score and counted as a received 5-star ratings for each of the 2 scale instead of a linear scale will be significant improvement. years examined. Although the considered during our ongoing review Response: CMS appreciates this commenters believe that the current of the methodology. Any enhancements feedback. A measure used for the measure-level hold harmless does align to the methodology must be balanced by determination of the improvement with its intent to prevent an adverse the approachability of the methodology measure score that receives a measure- impact on a contract’s rating, a few to our stakeholders including the level Star Rating of 5 stars in each of the commenters suggested modifying the beneficiaries. two years examined would be subject to provision to allow a measure-level Star Comment: A commenter suggested the 5-star measure hold harmless rule Rating of 5 stars for each of the 2 years creating an improvement score for and would benefit from the 5-star examined to be counted as a significant measures that could potentially be part measure-level Star Rating in the improvement in the measure’s of the improvement measures, but only calculation of the summary or overall associated net improvement category. have one year’s worth of data. The rating. In addition, contracts do have the Other commenters suggested a hold commenter noted that improvement opportunity to earn a reward factor for harmless provision if mathematically it activities begin during the first year of high and stable relative performance is not possible to have a 5-star measure a measure being included in the Star across measures pursuant to score difference that would be classified Ratings program. The focus on a first §§ 422.166(f)(1) and 423.186(f)(1) as significant improvement. A year measure coupled with the discussed in section II.A.11.s of this commenter suggested another version of significant impact of the improvement final rule. a measure-level hold harmless in which measure on a contract’s rating according Comment: Some commenters an adjustment factor would be to the commenter justified first year recommended a predictable gold employed for contracts that had measures being included in the standard be established for determining incremental improvement at the improvement measure. meaningful improvement as a set measure-level score but who could not Response: CMS has designed the percentage reduction of a sub-optimal attain ‘‘Significant Improvement’’ due to improvement measures to assess the measure rate. The commenters believe performance requirements above 100 level of improvement from one year to this approach would result in a more percent (mathematically) and when the the next. tailored approach of meaningful current measure-level hold harmless improvement per contract and recognize provision would not be applied. Summary of Regulatory Changes the natural concept of diminishing Further, the commenter believes the For the reasons set forth in the returns. For example, if a 5 percent adjustment factor would acknowledge proposed rule and our responses to the reduction in the sub-optimal rate was the increased difficulty in moving from related comments summarized above, classified as meaningful, an increase of 2 to 3 versus 4 to 5. we are finalizing the improvement 1 percent for a contract whose rate was Response: CMS appreciates this measure provisions as proposed in 80 percent in year 1 would be a feedback. CMS will further consider §§ 422.164(f) and 423.184(f) with minor meaningful improvement (1/(100 ¥ 80) these suggestions for a future modifications. First, in the regulation or 5 percent) while a contract with a rate enhancement to the hold harmless text at §§ 422.164(f)(4)(vi) and of 60 percent in year 1 would need an provision at the measure-level. 423.184(f)(4)(vi), we have corrected the

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cross reference to §§ 422.166(a)(2)(i) have been identified that show we Star Ratings for appeal measures in both through (iii) and 422.186(a)(2)(i) cannot objectively evaluate a sponsor’s Part C and Part D. through (iii) for the clustering of the performance in an area. The data downgrade policy was improvement measure to clarify the As a standard practice, we check for adopted to address instances when the methodology for converting the flags that indicate bias or non-reporting, data that will be used for specific improvement measure scores to check for completeness, check for measures are not reliable for measuring measure-level Star Ratings. Second, we outliers, and compare measures to the performance due to their are also finalizing § 422.164(f)(4)(vi) previous year to identify significant incompleteness or biased/erroneous without the sentence that provided for changes which could be indicative of nature. For instances where the integrity separate measure thresholds for the Part data issues. CMS has developed and of the data is compromised because of D improvement score for MA–PDs and implemented Part C and Part D the action or inaction of the sponsoring PDPs in favor of revising the first Reporting Requirements Data Validation organization (or its subcontractors or sentence as follows: ‘‘The Part D standards to assure that data reported by agents), this policy reflects the improvement measure cut points for sponsoring organizations pursuant to underlying fault of the sponsoring MA–PDs will be determined using §§ 422.516 and 423.514 satisfy the organization for the lack of data for the separate clustering algorithms in regulatory obligation. Sponsor applicable measure. Without some accordance with §§ 422.166(a)(2)(i) organizations should refer to specific policy for reduction in the rating for through (iii) and 423.186(a)(2)(i) guidance and technical instructions these measures, sponsoring through (iii) of this chapter.’’ related to requirements in each of these organizations could ‘‘game’’ the Star areas. For example, information about Ratings and merely fail to submit data k. Data Integrity HEDIS measures and technical that illustrate poor performance. As The data underlying a measure score specifications is posted on: http:// stated in the proposed rule, we believe and rating must be complete, accurate, www.ncqa.org/HEDISQuality that removal of the measure from the and unbiased for it to be useful for the Measurement/HEDISMeasures.aspx. ratings calculation will unintentionally purposes we have proposed at Information about Data Validation of reward poor data compilation and §§ 422.160(b) and 423.180(b). As part of Reporting Requirements data is posted submission activities such that our only the current Star Ratings methodology, on: https://www.cms.gov/Medicare/ recourse is to reduce the rating to 1 star all measures and the associated data Prescription-Drug-Coverage/Prescription for affected measures. have multiple levels of quality DrugCovContra/PartCDDataValidation. For verification and validation of the assurance checks. Our longstanding html and https://www.cms.gov/ Part C and D appeals measures, we policy has been to reduce a contract’s Medicare/Prescription-Drug-Coverage/ proposed to use statistical criteria to measure rating if we determine that a PrescriptionDrugCovContra/ determine if and how a contract’s contract’s measure data are incomplete, RxContracting_ appeals measure-level Star Ratings inaccurate, or biased. Data validation is ReportingOversight.html. would be reduced for missing IRE data. a shared responsibility among CMS, We proposed, in paragraphs (g)(1)(i) We explained that the proposed criteria CMS data providers, contractors, and through (iii), rules for specific would allow us to use scaled reductions Part C and D sponsors. When applicable circumstances where we believe a for the appeals measures to account for (for example, data from the IRE, PDE, specific response is appropriate. First, the degree to which the data are call center), CMS expects sponsoring we proposed a continuation of a current missing. The completeness of the IRE organizations to routinely monitor their policy: To reduce HEDIS measures to 1 data is critical to allow fair and accurate data and immediately alert CMS if star when audited data are submitted to measurement of the appeals measures. errors or anomalies are identified so NCQA with an audit designation of All plans are responsible and held CMS can address these errors. ‘‘biased rate’’ or BR based on an accountable for ensuring high quality We proposed to codify at auditor’s review of the data if a plan and complete data to maintain the §§ 422.164(g) and 423.184(g) specific chooses to report; this proposal will also validity and reliability of the appeals rules for the reduction of measure apply when a plan chooses not to measures. ratings when CMS identifies submit and has an audit designation of In response to past stakeholder incomplete, inaccurate, or biased data ‘‘non-report’’ or NR. Second, we concerns about CMS’s prior practice of that have an impact on the accuracy, proposed to continue to reduce Part C reducing measure ratings to one star impartiality, or completeness of data and D Reporting Requirements data, that based on any finding of data inaccuracy, used for the impacted measures. Data is, data required pursuant to §§ 422.514 incompleteness, or bias, CMS initiated may be determined to be incomplete, and 423.516, to 1 star when a contract the Timeliness Monitoring Project, inaccurate, or biased based on a number did not score at least 95 percent on data TMP, in CY 2017.55 The first submission of reasons, including mishandling of validation for the applicable reporting for the TMP was for the measurement data, inappropriate processing, or section or was not compliant with data year 2016 related to Part C organization implementation of incorrect practices validation standards/sub-standards for determinations and reconsiderations that impacted specific measure(s). One data directly used to calculate the and Part D coverage determinations and example of such situations that give rise associated measure. In our view, data redeterminations. The timeframe for the to such determinations includes a that do not reach at least 95 percent on submitted data was dependent on the contract’s failure to adhere to HEDIS, the data validation standards are not enrollment of the contract, with smaller HOS, or CAHPS reporting requirements. sufficiently accurate, impartial, and Our modifications to measure-specific complete for use in the Star Ratings. We 55 This project was discussed in the November 28, ratings due to data integrity issues are explained in the preamble that as the 2016 HPMS memo, ‘‘Industry-wide Appeals Timeliness Monitoring.’’ https://www.cms.gov/ separate from any CMS compliance or sponsoring organization is responsible Medicare/Prescription-Drug-Coverage/Prescription enforcement actions related to a for these data and submits them to CMS, DrugCovGenIn/Downloads/Industry-wide- sponsor’s deficiencies. This policy and a negative inference is appropriate, to Timeliness-Monitoring.pdf. https://www.cms.gov/ these rating reductions are necessary to conclude that performance is likely Medicare/Prescription-Drug-Coverage/Prescription DrugCovGenIn/Downloads/Industry-wide-Appeals- avoid falsely assigning a high star to a poor. Third, we proposed a new specific Timeliness-Monitoring-Memo-November-28- contract, especially when deficiencies rule to implement scaled reductions in 2016.pdf.

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contracts submitting data from a 3- completeness reduction are receives a measure-level Star Rating of month period, medium-sized contracts independent of the data used for the 1 star for the appeals measure. submitting data from a two-month Part D IRE data completeness reduction. Under the proposed methodology, the period, and larger contracts submitting If a contract receives a reduction due to error rate for the Part C and Part D data from a one-month period.56 missing Part C IRE data, the reduction appeals measures using the TMP or We proposed to use TMP data and would be applied to both of the audit data and the projected number of other data sources whenever possible, contract’s Part C appeals measures. cases not forwarded to the IRE for a 3- such as information from audits, to Likewise, if a contract receives a month period is used to identify determine whether the data at the reduction due to missing Part D IRE contracts that may be subject to an Independent Review Entity (IRE) are data, the reduction would be applied to appeals-related IRE data completeness complete and to evaluate the level of both of the contract’s Part D appeals reduction. We proposed a minimum missing data. Given the financial and measures. We solicited comment on this error rate to establish a threshold for the marketing incentives associated with proposal and its scope; we were looking identification of contracts that may be higher performance in Star Ratings, in particular for comments related to subject to a reduction. The safeguards are needed to protect the Star how to use the process in this proposal establishment of the threshold focuses Ratings from actions that inflate to account for data integrity issues the possible reductions on contracts performance or mask deficiencies. discovered through means other than with error rates that have the greatest We proposed to reduce a contract’s the TMP and audits of sponsoring potential to distort the signal of the Part C or Part D appeal measures Star organizations. appeals measures. Since the timeframe Ratings for IRE data that are not for the TMP data is dependent on the CMS’s proposed scaled reduction complete or otherwise lack integrity enrollment of the contract, (with smaller methodology is a three-stage process based on the TMP or audit information. contracts submitting data from a 3- using the TMP or audit information to The reduction would be applied to the month period, medium-sized contracts determine: first, whether a contract may measure-level Star Ratings for the submitting data from a 2-month period, be subject to a potential reduction for applicable appeals measures. There are and larger contracts submitting data the Part C or Part D appeals measures; varying degrees of data issues and as from a one-month period), the use of a such, we proposed a methodology for second, the basis for the estimate of the projected number of cases over a 3- reductions that reflects the degree of the error rate; and finally, whether the month period allows a consistent time data accuracy issue for a contract estimated error rate is significantly period for the application of the criteria instead of a one-size fits all approach. greater than the cut points for the scaled proposed. The proposed methodology employs reductions of 1, 2, 3, or 4 stars. The calculated error rate formula scaled reductions, ranging from a 1-star Once the scaled reduction for a (Equation 1) for the Part C measures is reduction to a 4-star reduction; the most contract is determined using this determined by the quotient of the severe reduction for the degree of methodology, the reduction is applied number of cases not forwarded to the missing IRE data would be a 4-star to the contract’s associated appeals IRE and the total number of cases that reduction which will result in a measure-level Star Ratings. The should have been forwarded to the IRE. measure-level Star Rating of 1 star for minimum measure-level Star Rating is 1 The number of cases that should have the associated appeals measures (Part C star. If the difference between the been forwarded to the IRE is the sum of or Part D). The data source for the scaled associated appeals measure-level Star the number of cases in the IRE during reduction is the TMP or audit data, Rating (before the application of the TMP or audit data collection period and however the specific data used for the reduction) and the identified scaled the number of cases not forwarded to determination of a Part C IRE data reduction is less than one, the contract the IRE during the same period.

The calculated error rate formula determined by the quotient of the forwarded to the IRE and the total (Equation 2) for the Part D measures is number of untimely cases not auto- number of untimely cases.

Under the proposed methodology, the 250,000 that submitted data from a 1- not to be forwarded to the IRE based on projected number of cases not month period would have their number the TMP data multiplied by the constant forwarded to the IRE in a 3-month of cases found not to be forwarded to 1.5. Small contracts with mean period is calculated by multiplying the the IRE based on the TMP data enrollments less than 50,000 that number of cases found not to be multiplied by the constant 3.0. submitted data for a 3-month period forwarded to the IRE based on the TMP Contracts with mean enrollments of would have their number of cases found or audit data by a constant determined 50,000 but at most 250,000 that not to be forwarded to the IRE based on by the TMP time period. Contracts with submitted data from a 2-month period the TMP data multiplied by the constant mean annual enrollments greater than would have their number of cases found 1.0.

56 Contracts with a mean annual enrollment of enrollment of at least 50,000 but at most 250,000 than 250,000 are required to submit data for a one- less than 50,000 are required to submit data for a are required to submit data for a two-month time month period. three-month time period. Contracts with a mean period. Contracts with a mean enrollment greater

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We proposed that contract ratings be The requirement for a minimum conditions, a confidence interval subject to a possible reduction due to number of cases is needed to address estimate for the true error rate for the lack of IRE data completeness if both statistical concerns with precision and contract is calculated using a Score following conditions are met: small numbers. If a contract meets only Interval (Wilson Score Interval) at a • The calculated error rate is 20 one of the conditions, the contract confidence level of 95 percent. percent or more. would not be subject to reductions for The midpoint of the score interval • The projected number of cases not IRE data completeness issues. forwarded to the IRE is at least 10 in a If a contract is subject to a possible will be determined using Equation 3. 3-month period. reduction based on the aforementioned

The z score that corresponds to a level For the Part C appeals measures, the calculated using Equation 3 along with of statistical significance of 0.05, midpoint of the confidence interval is the calculated error rate from the TMP, commonly denoted as calculated using Equation 3 along with which is determined by Equation 2. The the calculated error rate from the TMP, total number of cases in Equation 3 is which is determined by Equation 1. The the total number of untimely cases for total number of cases in Equation 3 is the Part D appeals measures. but for ease of presentation represented the number of cases that should have Letting the calculated error rate be here as z. (The z value that will be used been in the IRE for the Part C TMP data. represented by pˆ and the total number for the purpose of the calculation of the For the Part D appeals measures, the of cases represented as n, Equation 3 interval is 1.959964.). midpoint of the confidence interval is can be streamlined as Equation 4:

The lower bound of the confidence interval estimate for the error rate is calculated using Equation 5 below:

For each contract subject to a possible statistically significantly greater than TABLE 4—APPEALS MEASURE STAR reduction, the lower bound of the more than one threshold. We proposed RATINGS REDUCTIONS BY THE IN- interval estimate of the error rate will be that the reduction be determined by the COMPLETE DATA ERROR RATE— compared to each of the thresholds in highest threshold that the contract’s Continued Table 4. If the contract’s calculated lower bound exceeds. For example, if lower bound is higher than the the lower bound for a contract is Proposed thresholds using threshold, the contract will receive the 64.560000 percent, the contract’s Reduction for the lower bound of incomplete reduction that corresponds to the estimated value is significantly greater confidence interval estimate IRE data highest threshold that is less than the than the thresholds of 20 percent, 40 of the error rate (%) (stars) lower bound. In other words, the percent, and 60 percent because the contract’s lower bound is being lower bound value 64.560000 percent is 40 ...... 2 employed to determine whether the greater than each of these thresholds. 60 ...... 3 contract’s error rate is significantly The lower bound for the contract’s 80 ...... 4 greater than the thresholds of 20 confidence interval is not greater than percent, 40 percent, 60 percent, and 80 80 percent. Therefore, in this example, We proposed regulation text at percent. The proposed scaled reductions the contract will be subject to the § 422.164(g)(1)(iii)(A) through (N) and are in Table 4, and were proposed in reduction that corresponds to the 60 § 423.184(g)(1)(iii)(A) through (K) to narrative form at paragraph (g)(1)(iii)(D) percent threshold, which is three stars. codify these parameters and formulas of both regulations. for the scaled reductions. We noted in We further proposed that the TABLE 4—APPEALS MEASURE STAR the proposed rule that the proposed text reductions due to IRE data completeness RATINGS REDUCTIONS BY THE IN- for the Part C regulation includes issues be applied after the calculation of COMPLETE DATA ERROR RATE specific paragraphs related to MA and the measure-level Star Rating for the MA–PD plans that are not included in appeals measures. The proposed Proposed thresholds using Reduction for the proposed text for the Part D reduction would be applied to the Part the lower bound of regulation but that the two are otherwise confidence interval estimate incomplete C appeals measures and/or the Part D of the error rate IRE data identical. appeals measures. (%) (stars) In addition, we proposed in We noted in the proposed rule that a §§ 422.164(g)(2) and 423.184(g)(2) to contract’s lower bound could be 20 ...... 1 authorize reductions in a Star Rating for

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a measure when there are other data Comment: Some commenters If further clarification is needed, accuracy concerns (that is, those not expressed support for the data integrity please feel free to contact the Part C&D specified in paragraph (g)(1)). We policies for non-appeals measures. A Data Quality Team at: PARTCDQA@ proposed an example in paragraph (g)(2) commenter supported the proposal to cms.hhs.gov of another circumstance where CMS reduce a contract’s measure-level Star Comment: Some commenter will be authorized to reduce ratings Rating to 1-star for measures related to expressed concern or opposed using based on a determination that Part C and D reporting requirements audit findings as a data source to performance data are incomplete, measures when the contract does not validate the appeals measures. inaccurate, or biased: the failure of a meet CMS expectations for data Response: The Timeliness Monitoring contract to adhere to the HEDIS, validation. Another commenter Project (TMP) data will be the primary CAHPS, or HOS reporting requirements. supported the reduction for HEDIS data used to validate the completeness We also proposed this other situation measures that received an audit for the Part C and D appeals measures. would result in a reduction of the designation of ‘‘Biased Rate.’’ Another However, CMS may also use audit data measure rating to 1 star. commenter supported the high standard to validate the appeals measures if We noted in the proposed rule that we of 95 percent on validation audits, but additional information is uncovered had taken several steps in past years to believed it is important to distinguish during the audit process that protect the integrity of the data we use between generally well-functioning demonstrates that the data for the to calculate Star Ratings. We welcomed plans that may have an occasional error appeals measures are not complete. comments about alternative methods for versus plans that have significant, Comment: A commenter requested identifying inaccurate or biased data systematic errors. clarification regarding the use of TMP and comments on the proposed policies Response: CMS appreciates the data that are submitted at the parent- for reducing stars for data accuracy and support of the data integrity policies. organization level. Specifically, the completeness issues and comments on The data integrity policies align with commenter was unsure if the reporting the proposed methodology for scaled our commitment to data quality and level would be at contract level or all reductions for the Part C and Part D preserves the integrity of the Star contracts under the parent organization appeals measures to address the degree Ratings. CMS believes the data integrity would receive the same scaled of missing IRE data. policies are designed to distinguish reduction. We received the following comments between occasional errors and Response: Although the data for the on our proposals and our responses systematic issues. For example, both the TMP are submitted by the parent follow: validation audits and scaled reduction organization, the observations are Comment: There was overwhelming methodology allow for the occasional recorded at the contract level. The TMP support for the use of scaled reductions error and target only those contracts that data for each parent organization are for the completeness of the IRE data for exceed a specified error rate. disaggregated to contract-level data. The the appeals measures. Some Comment: A commenter requested scaled reduction would be separately commenters explicitly stated that the clarification on how CMS plans to use and independently determined for each use of scaled reductions avoids the one- the Data Validation Audit. contract under a parent organization. If size-fits-all approach. Response: The Data Validation Audit a contract has no untimely cases or no Response: CMS appreciates the is one method to ensure the data used cases that should have been forwarded overwhelming support for the proposed for Star Ratings are accurate. The two to the IRE in the TMP timeframe, the scaled reduction methodology. Star Rating measures (SNP Care contract would not be subject to a Comment: Some commenters Management (Part C) and Medication possible IRE data completeness suggested other potential criteria for Therapy Management (MTM) Program reduction for the associated appeals consideration for the scaled reductions Completion Rate for Comprehensive measure. This analysis would be done methodology. A commenter suggested Medication Reviews (CMR) (Part D)) are on a contract-by-contract basis using CMS consider the volume of appeals based on Part C and D Reporting only data for the applicable contract. instead of plan size for determining the Requirements data and calculated using Comment: A commenter expressed reductions. Other commenters suggested data reported by plan sponsors and concern about the lack of a data-driven including enrollment as part of the rules validated via an independent data methodology used to determine data for the allowable excluded number of validation using CMS standards. Per the integrity issues. Further the commenter cases, using the timely percentages as Star Ratings Technical Notes, contracts asked for a data-driven, streamlined basis for scaled reduction, or using the that did not score at least 95 percent on approach that does not use audit data. errors relative to enrollment level as the data validation for these reporting Response: The Star Ratings program thresholds. sections and/or were not compliant with and its associated methodology Response: CMS appreciates the data validation standards/sub-standards generally employ a comprehensive, careful consideration of alternative for at least one of the data elements used scientific, data-driven approach. CMS options for the scaled reduction to calculate the measures are not rated has moved away from relying on audit methodology. A thorough examination in this measure, and the contract’s data for determining the completeness and identification of potential measure score is reduced to 1 star. CMS of the appeals measures with the unintended consequences must be done has relied on the Data Validation Audit introduction of the TMP data. However, for any possible modification to the Star to confirm the integrity of these plan- we are not adopting a rule to prohibit Ratings methodology. Additional reported data since these measures were use of audit data where such data are analysis will be done to further explore first added to the Star Ratings program. reliable and relevant to understanding relations among enrollment, appeals In the 2019 draft Call Letter CMS and determining whether the data used volume, untimely, and timely proposed to define a contract as being for a particular measure (even appeals percentages. CMS believes the proposed non-compliant if it either receives a measures) are erroneous, incomplete or methodology provides the best ‘‘No’’ or a 1, 2, or 3 on the 5-point Likert biased. foundation for scaled reductions and scale in the specific data element’s data Comment: Some commenters will consider these comments as we validation in order to align with changes requested additional information on the contemplate future enhancements. in the Data Validation Audit. timeline for contracts to submit

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information on scaled reductions along issues instead of using a measure-level Comment: A commenter suggested a with simulations to allow contracts to Star Rating of 1 distorts the signal of the hold harmless provision when there are better understand the impact of the true quality and performance of a data issues. The commenter provided scaled reduction methodology. Another contract and does not align with the the example of the measure of providing commenter requested that CMS share all intent of the data integrity policies. We translation services that was removed simulated data related to scaled therefore disagree with the commenter. from the Star Ratings in the past for reductions. Comment: Some commenters contracts that have worked hard to Response: CMS will issue a memo supported expanding polices to reduce perform well on a measure. each year outlining the timeframe Star Ratings when the data are not Response: CMS removes measures associated with the TMP data collection. reported or do not meet validation from the Star Ratings if a systematic The TMP data used for the Star Ratings requirements. A few commenters issues exists with data quality across all program will align with the suggested the use of scaled reductions (or a majority of) contracts as described measurement period of the Star Ratings for all measures in the Star Ratings in §§ 422.164(b) and 423.184(b). It is the year. program including HEDIS measures. policy of CMS not to assign measure- The first submission for the TMP Another commenter supported level Star Ratings if data issues are focused on the 2016 measurement year expanding the scaled reductions to present across the board that suggest for Part C organization determinations other measures with special that the measure results are not reliable. and reconsiderations and Part D consideration of organizations When systemic data issues are present coverage determinations and demonstrating commitment to for a measure, it is difficult to accurately redeterminations. CMS gained valuable compliance. determine performance across contracts. insight about the audit universes, and Response: CMS appreciates the The policy proposed for adding, the completeness of the IRE data. support of the data integrity policy and updating and removing measures is In December 2017, CMS provided will consider expanding the policies to presented in §§ 422.164 and §§ 423.184. each contract with the results of its TMP be as comprehensive as feasible. The removal of measures from the Star analysis. The Part C and D IRE data Currently, for most measures, including Ratings is detailed in in §§ 422.164(b) completeness percentage provided is HEDIS measures, we do not have and §§ 423.184(b). equivalent to the calculated error rate enough information to calculate scaled Comment: A few commenters discussed in the scaled reduction reductions. expressed concern that the CMS methodology section outlined in the Comment: Some commenters approach for data integrity issues for NPRM. A contract can simulate the expressed concern regarding the HEDIS measures is duplicative of the scaled reduction for the 2018 Star possible use of audit data. The HEDIS audit process. Ratings appeals measures by following commenters stated that using audit data Response: The data integrity policy the methodology for scaled reductions. results in artificially inflated ratings for for HEDIS measures uses the First, a contract can use the data contracts that are not audited compared information provided by the NCQA provided to determine whether it would to contracts that are audited. A compliance auditor, and thus aligns be subject to a possible reduction due to commenter stated the goals and analytic with their findings. lack of IRE data completeness based on approaches associated with an audit do Comment: A commenter stated that the calculated error rate and projected not align with those of the Star Ratings the reductions in the Star Ratings for number of cases not forwarded to the program. In addition, a commenter integrity blurs the distinction between IRE. (To determine the projected wanted any findings from enforcement quality measurement and compliance number of cases the factor based on the activities excluded from the Star Ratings and audit activities. Further, the enrollment needs to be multiplied by since not all contracts are audited each commenter stated that the focus of the the number of cases detailed on the year. A commenter requested ratings should be clinical quality and December report.) Next, if the contract information about how CMS would beneficiary satisfaction. Another is subject to a possible reduction, the ensure equity between audited and non- commenter expressed concern of the lower bound of the Wilson Score audited contracts. In addition, another continuation of the downgrade to 1-star interval is calculated using the formulas commenter asked for clarification of the for the HEDIS and measures related to in the NPRM along with the calculated ‘other data’ that may be used for the Part C&D reporting requirements. error rate. The lower bound can then be assessing data completeness. A Response: CMS considers data quality compared to the thresholds in Table 3 commenter encouraged CMS as paramount to accurate and reliable to identify the reduction to the immediately remove the impact of audit measurement. As such, CMS uses associated appeals measure-level Star findings on the Star Ratings for the multiple sources of information to Ratings. determination of 2019 QBPs. assess the multiple facets of data Comment: A commenter did not Response: CMS appreciates the quality. The Star Ratings were designed believe the exclusion of a measure comments. All contracts are required to to provide a true signal of the quality affected by data integrity issues is submit TMP data on an annual basis. and performance of a contract. Star sufficient to prevent gamesmanship. The TMP data are typically the same Ratings that are generated from data that Instead, the commenter suggested a data used for CMS program audits but lack quality or, in other words, flawed hybrid approach that the commenter are collected from all MA and Part D data—whether because of bias, believes is less punitive. This method sponsoring organizations which shall incompleteness, or inaccuracy—impact would exclude measures that received 4 ensure equity among all contracts. As the integrity of the ratings. Star Ratings or 5 stars and would levy an automatic part of the 2019 draft Call Letter, CMS that do not provide a true signal of the reduction to 1 star for data integrity proposed to remove the Beneficiary quality and performance of the issues for measures that received 3 or Access and Performance Problems Medicare health and drugs plans offered less stars. (BAPP) measure from the Star Ratings. under a contract threaten the core of the Response: The accuracy of the This proposal was finalized in the 2019 Star Ratings program. CMS is committed measure data is key to the Star Ratings Final Call Letter to remove the BAPP to maintaining the integrity of the methodology. Excluding a measure from measure from the Star Ratings program ratings. By taking steps to downgrade the Star Ratings due to data integrity effective for the 2019 Star Ratings. measure ratings when underlying data

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quality issues exists, CMS is preserving Comment: A few commenters necessary to collect data in order to the integrity of the Star Ratings and expressed concern about the perceived provide reliable Star Ratings and incentivizing sponsoring organizations punitive nature of the data integrity comparable information about plan to take steps to improve data integrity policies. A commenter suggested that quality and performance. CMS believes and eliminate problems. contracts should be rewarded if they that our rule, as proposed and finalized, Comment: Some commenters have near-perfect performance. For strikes the right balance in support of suggested modifications to other facets example, the commenter suggested that the underlying policies. of the data integrity policy. A contracts that receive a 5-Star Rating on For the reasons set forth in the commenter suggested that if an the Part D Appeals Timeliness measure proposed rule and our responses to the identified data issue did not harm and do not qualify for the Part D related comments summarized above, beneficiaries, plans should be able to Appeals Upheld measure because they we are finalizing data integrity resubmit the data with limited penalty. received less than 10 appeals, should provisions as proposed at §§ 422.164(g) Other commenters stated that CMS automatically receive a 5-Star Rating on and 423.184(g) without substantive should provide contracts the the Part D Appeals Upheld measure. modification. We are finalizing the opportunity to correct data errors Response: CMS believes the integrity following minor editorial changes to the without penalties. A commenter of the data is fundamental to the Star regulation text: (1) In § 422.164(g)(1)(ii) suggested that contracts should be Ratings program. CMS maintains high to add a reference to ‘‘substandards’’ as offered a preliminary review of their standards for data quality to ensure that well as standards that govern data data midway through the reporting year the Star Ratings are a true reflection of validation; (2) in § 422.164(g)(1)(iii) to to allow identification of any issues and the quality, performance and experience improve the flow of the last sentence in the chance to correct them before the of the beneficiaries enrolled in MA and the introductory paragraph and to end of the year. Another commenter Part D contracts. CMS employs a data- correct the verb tenses in paragraphs suggested that CMS take into account driven approach for determining the (A), (C) and (K); (3) in § 423.184(g)(1)(i) the necessary distinction between a measure-level Star Ratings. The data to identify the data that are subject to deliberate submission of inaccurate data integrity policies serve to preserve the data validation; (4) in § 423.184(g)(1)(ii) and the unintentional occurrence of integrity of the Star Ratings and to add the sentence proposed as minor errors and mistakes when encourage contracts and sponsors to paragraph (ii)(A) to the introductory addressing data integrity. In addition, strive for the highest data quality; they paragraph and redesignate the the commenter outlined an approach to are not designed or intended to be remaining paragraphs; and (5) in penalize plans based on beneficiary punitive. The measure level reductions redesignated § 423.184(g)(1)(ii)(A), (C), impact, nature of issue, health plan for data integrity concerns are not made and (F) to correct the verb tenses and to punish a sponsor but rather to reflect capitalization of ‘‘Star Ratings’’. Finally, activity, history of data integrity issues, that the data available are incomplete in § 423.184(g)(1)(ii) A–L we aligned the and timing that would be reviewed by and inaccurate. regulatory text with § 422.164(g)(1)(ii) a third party. In the commenter’s example, the A–N where appropriate. Response: CMS appreciates the contract did not meet the minimum § 422.164(g)(1)(ii) A–N has more careful consideration and suggestions number of cases reviewed by the IRE to provisions to account for the differences for potential revisions to the data be measured in the Appeals Upheld in calculations between Part C and D integrity policy. The data underlying a measure. This specification is necessary appeals measures. measure score and rating must be to ensure an adequate sample of cases complete, accurate, and unbiased to for which to evaluate the contract’s l. Measure-Level Star Ratings allow the Star Ratings to be a true original decisions. The contract’s TMP We proposed in §§ 422.166(a) and reflection of a contract’s quality and results regarding the completeness of 423.186(a) the methods for calculating performance. CMS’s longstanding policy the IRE data has no relevance on Star Ratings at the measure level. As has been to reduce a contract’s measure whether CMS can evaluate the contract part of the Part C and D Star Ratings rating if a contract’s measure data are in this measure. It remains that CMS system, Star Ratings are currently incomplete, inaccurate, or biased but, as cannot reliably calculate a percent of calculated at the measure level. To the proposal of scaled reductions cases upheld by the IRE if there are too separate a distribution of scores into indicates, CMS will consider and few IRE cases reviewed for the contract. distinct groups or star categories, a set implement alternatives and Comment: A commenter suggested the of values must be identified to separate improvements. We must, however, removal of the Part C and D appeals one group from another group. The set remain mindful of the timing and measures until CMS can adequately of values that break the distribution of resource considerations at play with the address the underlying data integrity the scores into non-overlapping groups annual release of Star Ratings. issues that are associated with the IRE is a set of cut points. We proposed to Data validation is a shared and contracts. continue to determine cut points by responsibility among CMS, CMS data Response: CMS is firmly committed to applying either clustering or a relative providers, contractors, and Part C and D the integrity of the Star Ratings systems. distribution and significance testing sponsors. CMS encourages organizations CMS believes that the data integrity methodology; we proposed to codify to routinely monitor their data and policy and the rating reductions are this policy in paragraphs (a)(1) of each immediately alert CMS if errors or necessary to avoid falsely assigning a section. We proposed in paragraphs anomalies are identified so CMS can high star to a contract, especially when (a)(2) and (a)(3) of each section that for address these errors. Contracts are deficiencies have been identified that non-CAHPS measures (including the afforded opportunities to review their show CMS cannot objectively evaluate a improvement measures, which were data before the Star Ratings are sponsor’s performance in an area. To specifically addressed in paragraphs calculated, during data collection and address challenges in validating the (a)(2)(iii), we would use a clustering during the Plan Preview periods for the appeals measures, CMS implemented methodology and that for CAHPS Star Ratings. CMS will continue to the collection of the TMP data. measures, we would use relative review the policies and solicit feedback Concerns and reviews to assure data distribution and significance testing. from stakeholders. integrity will remain for as long as Measure scores will be converted to a 5-

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star scale ranging from 1 to 5, with values for each cluster (identified by percentile distribution of scores with whole star increments. A rating of 5 cluster labels) is examined. We significance testing and measurement stars will indicate the highest Star proposed that this final range of values reliability standards in order to Rating possible, while a rating of 1 star and labels would be used to determine maximize the accuracy of star will be the lowest rating on the scale. the set of cut points for the Star Ratings assignments based on scores produced We proposed to use the two as follows: The measure score that from the CAHPS survey. For CAHPS methodologies described as follows to corresponds to the lower bound for the measures, contracts are first classified convert measure scores to measure-level measure-level ratings of 2 through 5 will into base groups by comparisons to Star Ratings. be included in the star-specific rating percentile cut points defined by the We proposed to use the clustering category for a measure for which a current-year distribution of case-mix method for all Star Ratings measures, higher score corresponds to better adjusted contract means. Percentile cut except for the CAHPS measures. For performance; for a measure for which a points are rounded to the nearest integer each individual measure, we would lower score is better, the process will be on the 0–100 reporting scale, and each determine the measure cut points using the same except that the upper bound base group includes those contracts all measure scores for all contracts within each cluster label will determine whose rounded mean score is at or required to report that do not have the set of cut points; the measure score above the lower limit and below the missing, flagged as biased, or erroneous that corresponds to the cut point for the upper limit. Then, the number of stars data. For the Part D measures, we ratings of 2 through 5 will be included assigned is determined by the base proposed to determine MA–PD and PDP in the star-specific rating category; and group assignment, the statistical cut points separately. The scores would in cases where multiple clusters have be grouped such that scores within the the same measure score value range, significance and direction of the same rating (that is 1 star, 2 stars, etc.) those clusters will be combined, leading difference of the contract mean from the are as similar as possible, and scores in to fewer than 5 clusters. Under our national mean, an indicator of the different ratings are as different as proposal to use clustering to set cut statistical reliability of the contract possible. The hierarchical clustering points, we stated that we would require score on a given measure (based on the algorithm and the associated tree and the same number of observations ratio of sampling variation for each cluster assignments using SAS (a (contracts) within each rating and contract mean to between-contract statistical software package) are instead will use a data-driven approach. variation), and the standard error of the currently used to determine the cut As proposed in paragraphs (a)(2)(iii) mean score. Table C4, which we points for the assignment of the of each section the improvement proposed to codify in narrative form at measure-level Star Ratings. We stated measures for Part C and Part D would §§ 422.166(a)(3) and 423.186(a)(3), that we would continue use of this be determined using the hierarchical details the CAHPS star assignment rules software, but that improvements in clustering algorithm twice, once for raw for each rating. We proposed that all statistical analysis would not result in scores of zero or greater and again for statistical tests, including comparisons rulemaking or changes in these eventual raw scores below for the identification involving standard error, would be rules providing for the use of a of the cut points that will allow the computed using unrounded scores. clustering methodology. We stated our conversion of the improvement measure We proposed that if the reliability of belief that the software used to apply scores to the star scale. The Part D a CAHPS measure score is very low for the clustering methodology is generally improvement measure score clustering a given contract, less than 0.60, the irrelevant. for MA–PDs and PDPs will be reported contract would not receive a Star Rating Conceptually, the clustering algorithm separately. Improvement scores of zero for that measure. For purposes of identifies natural gaps within the or greater would be assigned at least 3 distribution of the scores and creates stars for the improvement Star Rating, applying the criterion for 1 star on Table groups (clusters) that are then used to while improvement scores of less than 4, at item (c), low reliability scores are identify the cut points that result in the zero would be assigned either 1 or 2 defined as those with at least 11 creation of a pre-specified number of stars. For contracts with improvement respondents and reliability greater than categories. The Euclidean distance scores greater than or equal to zero, the or equal to 0.60 but less than 0.75 and between each pair of contracts’ measure clustering process will result in three also in the lowest 12 percent of scores serves as the input for the clusters with measure-level Star Ratings contracts ordered by reliability. The clustering algorithm. The hierarchical of 3, 4, or 5 with the lower bound of standard error is considered when the clustering algorithm begins with each each cluster serving as the cut point for measure score is below the 15th contract’s measure score being assigned the associated Star Rating. For those percentile (in base group 1), to its own cluster. Ward’s minimum contracts with improvement scores less significantly below average, and has low variance method is used to separate the than zero, the clustering algorithm will reliability: In this case, 1 star will be variance of the measure scores into result in two clusters with measure- assigned if and only if the measure score within-cluster and between-cluster sum level Star Ratings of 1 or 2.. is at least 1 standard error below the of squares components in order to We proposed in paragraphs (a)(3) of unrounded cut point between base determine which pairs of clusters to each section to use another method groups 1 and 2. Similarly, when the merge. For the majority of measures, the using percentile standing relative to the measure score is at or above the 80th final step in the algorithm is done a distribution of scores for other contracts, percentile (in base group 5), single time with five categories measurement reliability standards, and significantly above average, and has low specified for the assignment of statistical significance testing to reliability, 5 stars would be assigned if individual scores to cluster labels. The determine star assignments for the and only if the measure score is at least cluster labels are then ordered to create CAHPS measures. This method will 1 standard error above the unrounded the 1 to 5-star scale. The range of the combine evaluating the relative cut point between base groups 4 and 5.

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TABLE 5—CAHPS STAR ASSIGNMENT RULES

Star Criteria for assigning Star Ratings

1 ...... A contract is assigned one star if both criteria (a) and (b) are met plus at least one of criteria (c) and (d): (a) its average CAHPS measure score is lower than the 15th percentile; AND (b) its average CAHPS measure score is statistically significantly lower than the national average CAHPS measure score; (c) the reliability is not low; OR (d) its average CAHPS measure score is more than one standard error (SE) below the 15th percentile. 2 ...... A contract is assigned two stars if it does not meet the one-star criteria and meets at least one of these three criteria: (a) its average CAHPS measure score is lower than the 30th percentile and the measure does not have low reliability; OR (b) its average CAHPS measure score is lower than the 15th percentile and the measure has low reliability; OR (c) its average CAHPS measure score is statistically significantly lower than the national average CAHPS measure score and below the 60th percentile. 3 ...... A contract is assigned three stars if it meets at least one of these three criteria: (a) its average CAHPS measure score is at or above the 30th percentile and lower than the 60th percentile, AND it is not statistically significantly different from the national average CAHPS measure score; OR (b) its average CAHPS measure score is at or above the 15th percentile and lower than the 30th percentile, AND the reliability is low, AND the score is not statistically significantly lower than the national average CAHPS measure score; OR (c) its average CAHPS measure score is at or above the 60th percentile and lower than the 80th percentile, AND the reliability is low, AND the score is not statistically significantly higher than the national average CAHPS measure score. 4 ...... A contract is assigned four stars if it does not meet the 5-star criteria and meets at least one of these three criteria: (a) its average CAHPS measure score is at or above the 60th percentile and the measure does not have low reliability; OR (b) its average CAHPS measure score is at or above the 80th percentile and the measure has low reliability; OR (c) its average CAHPS measure score is statistically significantly higher than the national average CAHPS measure score and above the 30th percentile. 5 ...... A contract is assigned five stars if both criteria (a) and (b) are met plus at least one of criteria (c) and (d): (a) its average CAHPS measure score is at or above the 80th percentile; AND (b) its average CAHPS measure score is statistically significantly higher than the national average CAHPS measure score; (c) the reliability is not low; OR (d) its average CAHPS measure score is more than one SE above the 80th percentile.

We requested comments on our and setting caps on the degree to which converting the measure scores to proposed methods to determine cut a measure cut point could change from measure-level Star Ratings, which points. one year to the next. We solicited would be proposed in a future In the proposed rule, we also comments on these particular regulation. acknowledged our past practice of methodologies and recommendations Comment: The majority of publishing pre-determined 4-star for other ways to provide stability for commenters listed or identified several thresholds for certain measures. We cut points from year to year. desirable attributes for the cut points, asked commenters who supported the We received the following comments including having them be return of the pre-determined 4-star on our proposals and our responses predetermined and released before the thresholds to provide suggestions on follow: beginning of the measurement period, how to minimize the risk of Comment: There was widespread and increasing the stability and ‘‘misclassifying’’ a contract’s support for the use of the clustering predictability of them. A handful of performance. For example, algorithm to determine the cut points, commenters noted that the cut points misclassification occurs when scoring a although the overwhelming majority must represent meaningful differences ‘‘true’’ 4-star contract as a 3-star recommended some changes to how among the star categories. contract, or vice versa. The potential for CMS determines the cut points. Many commenters expressed concern misclassification is increased if the cut Response: CMS appreciates the about the influence of outliers on the points result in the creation of ‘‘cliffs’’ support of the use of the clustering cut points. Some of the suggestions for between adjacent categories within the algorithm for the determination of the decreasing the influence of outliers Star Ratings that could lead to the cut points. CMS carefully reviewed the included removing them from the potential of different ratings between feedback which reflects very diverse clustering algorithm, using a trimmed contracts with nearly identical Star and conflicting opinions on the data set, or raising the minimum Ratings that lie on the opposite sides of appropriate way to set cut points. CMS measure-level denominator threshold a fixed threshold. In addition, we ask is actively considering a wide range of from 30 to 100 to reduce the number of commenters that supported pre- options for modifying the approach for outliers based on small numbers. In determined thresholds ways in which determining cut points and needs to addition, many commenters that CMS can continue to create incentives fully simulate alternative options in expressed a preference for stability for quality improvement. We also order to avoid implementing an option supported a cap, a restriction on the solicited comments on alternative that could have unintended maximum movement for a measure’s cut recommendations for revising the cut consequences. Thus, we are finalizing points from one year to the next, to point methodology. We summarized the clustering algorithm for the achieve the desired characteristic. A examples of alternatives we were determination of cut points (for non- commenter suggested employing a cap considering: Methodologies that will CAHPS measures) as proposed while we similar to NCQA’s method which relies minimize year-to-year changes in the continue to simulate alternative options. on assigning a cap based on the cut points by setting the cut points so CMS will use the feedback from this maximum change in the relative they are a moving average of the cut NPRM to guide and examine options for distribution of the measure scores. The points from the 2 or 3 most recent years; an enhanced methodology for commenter believed this would allow

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CMS’s clustering methodology to move Comment: Some commenters stated alternatives to the current cut point cut points (for example, moving the 4 their support for transparency. Some methodology. Further, CMS is and 5 star cut points up) without commenters believe that increased identifying potential unintended extreme changes based on the transparency can be achieved by consequences and examining ways to movement of relatively few MA releasing all data for the Star Ratings mitigate any identified risk to the contracts. Another commenter who program. A commenter suggested that integrity of the Star Ratings program. supported stability stated that the CMS improve transparency in national CMS is finalizing the clustering thresholds from one year to the next performance reflected in display algorithm for the determination of cut should not be allowed to decrease. The measures by calculating and publishing points as proposed based on the positive majority of commenters who supported individual measure cut points for and useful aspects of that methodology caps did not provide a specific value or display measures instead of national and to allow us the time to fully methodology, but rather the advantages averages. Other commenters believe consider the options suggested by our that caps would allow. transparency would be achieved by the stakeholders for enhancements to make Some commenters suggested implementation of pre-determined it an even stronger methodology for averaging cut points over multiple years thresholds before the start of the converting the measure scores to for stability. Many commenters measurement period. measure-level Star Ratings. Any changes referenced CMS’s previous policy that Response: CMS appreciates these would be proposed in a future identified 4-star predetermined comments. CMS agrees with the regulation. thresholds for specific measures and commenters that transparency in the Comment: Some commenters supported their return. A few ratings system is important. Each year suggested alternative methodologies to commenters supported a weighted CMS releases public use files of the determine cut points. A commenter average based on several years of data to performance data underlying the Star suggested the use of a forced determine the cut points. A few Ratings, available at http://go.cms.gov/ distribution rather than clustering to commenters supported using a multiple- partcanddstarratings. In addition, the capture the true distribution of plan year trend to project measure cut points cut points for the specific Star Ratings’ performance; assigning cut points by in advance of the measurement period. year are available in the annual applying an adjustment factor to the Response: We appreciate the careful Technical Notes using the same link prior year’s results based on historical consideration of possible modifications used for the data sets. A Cut Point Trend performance; or calculating the average to the methodology used for document is updated and released change in the median from the prior 3 determining the cut points for the annually to provide a single source for years and apply that to determine the conversion of measure scores to the multiple years of Star Ratings cut current cut points. A few commenters measure-level Star Ratings scale. CMS is points. The Cut Point Trend document suggested using the industry average. A examining a number of potential is organized in a user-friendly format by commenter suggested using the industry options for determining cut points that measure and is available using the average as the basis of a 3-star rating. would capture the greatest number of aforementioned link. Response: CMS appreciates these desirable attributes that our stakeholder Display measures are collected comments. CMS believes that using a have identified (pre-determined, stable, through data sources such as Medicare data driven approach to determine cut predictable cut points with minimal (if Part C and Part D reporting points aligns with our policies and any) influence by outliers, restricted requirements, Part D Prescription Drug guiding principles. As part of our movement across years) while Event (PDE) data, Healthcare guiding principles, we want to develop maintaining the integrity of the Star Effectiveness Data and Information Set an enhanced methodology that ensures Ratings in order to propose a new or (HEDIS) information, and Consumer that the ratings are a true reflection of enhanced policy for establishing Assessment of Healthcare Providers and plan quality and minimizes the risk of measure-level ratings in the near future. Systems (CAHPS) surveys. The display misclassification. A forced distribution We believe that the number and scope measures are not included in carries a high risk of misclassification of alternatives require additional determination of the Star Ratings on because the cut points would not consideration and testing before we can Medicare Plan Finder and thus, are not maximize the differences of contracts finalize a different methodology for assigned Star Ratings. Display measures across star categories and minimize the setting cut points for non-CAHPS provide useful information about plan differences of contracts within the same measures. In the meantime, we believe quality that sponsors can take action star category. An average as the basis of that the clustering methodology upon in order to improve the quality of a 3-star rating would not accurately take presents a valid approach to accurately care provided to their members. To into account the skewed distribution of reflect the quality of care for MA and allow comparisons, national averages of many measures. CMS is examining a Part D sponsors, while creating the display measure scores are available number of potential options for incentives for continued quality in the annual MA Part C & D Measure determining cut points while improvement. The goal of clustering is Technical Notes. (The display measure maintaining the integrity of the Star to assign stars that maximize the data set and Technical Notes are posted Ratings, including examining whether differences across star categories and on the same site as the MA Star Ratings we can adjust prior performance results minimize the differences within star information.) to determine current cut points. CMS categories to minimize the risk of CMS is examining a number of will propose and solicit comment on an misclassification. The clustering potential options for determining cut enhanced cut point methodology in a methodology also accounts for changes points that would capture the greatest future regulation. in the distribution of scores over time. number of desirable attributes that the Comment: Some commenters stated We understand the desire to create more commenters have identified (pre- that the current clustering algorithm to stability in the assignment of cut points determined, stable, predictable cut identify the cut points for the Star and in performance expectations, but points with minimal (if any) influence Ratings’ measures does not always we want to ensure that any potential by outliers, restricted movement across accurately reflect the quality alternative methodologies do not create years) while maintaining the integrity of improvement that contacts have unintended consequences. the Star Ratings. CMS is simulating the achieved especially for measures scores

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with a limited range in their subtracted from a contract’s Overall Comment: CMS received a handful of distribution. Some commenters and/or Summary Star Ratings to adjust comments related to converting CAHPS explicitly stated their opposition to for the average within-contract disparity scores to stars. There was support for some of the proposed methodologies. A in performance associated with a the current methodology (which was commenter was against a moving contract’s percentages of beneficiaries proposed) although several commenters average approach amid concerns of the with Low Income Subsidy/Dual Eligible suggested the cut points are too narrow longevity of such a method. Another (LIS/DE) and disability status. These and a few would like to re-implement commenter did not support caps due to adjustments are performed both with pre-determined cut points for CAHPS. A the belief that caps would mask true and without the improvement measures commenter stated that the relative performance. Another commenter did included. The value of the CAI varies by distribution and significance testing not support weighted clustering. A a contract’s percentages of beneficiaries methodology in CAHPS is biased in a commenter suggested benchmarking with Low Income Subsidy/Dual Eligible negative direction and that these independent of clustering to determine (LIS/DE) and disability status. In adjustments do not appropriately the cut points; the commenter justified addition, CMS displays Part C and D address the variability in CAHPS survey the recommendation based on the belief performance data stratified by race and results. that increases in the average measure ethnicity at: https://www.cms.gov/ scores over time leads to decreased About-CMS/Agency-Information/OMH/ Response: We appreciate comments variability of plan performance and tight research-and-data/statistics-and-data/ received on the CAHPS methodology. clustering of plan performance which stratified-reporting.html. Three factors enter into CAHPS star results in insignificant percentile scores Comment: A commenter expressed assignment: The ranking of the contract having large impacts on the Star support of the identification of cut in relation to other contracts, a Ratings. points, as they can provide insight into statistical significance test that takes Response: CMS appreciates our performance throughout the year, into consideration the degree of stakeholder’s feedback and will use it to leading to greater quality improvements. certainty that the score is above or guide the development of an enhanced Response: CMS appreciates this below the national average, and methodology. So as not to implement a support of the identification and utility examination of measure reliability. The methodology that may inordinately of cut points. significance test is applied in the same increase the risk of misclassification, Comment: A commenter requested way in the positive and negative CMS will analyze and simulate the simulations on the proposed cut point directions and is not biased. CAHPS options to assess the impact of the methodologies. measures meet high standards of methodology on the Star Ratings. The Response: CMS remains committed to reliability and thus variability in the goal of clustering and the elimination of transparency. CMS regularly solicits and scores reflects variability in pre-determined 4-star thresholds for the values the feedback from our performance. This methodology stakeholders. The feedback received 2016 Star Ratings was to more improves the performance of the star guides the development of the policy accurately measure performance. system and ensures that 4 and 5 stars options. CMS will continue to remain The current methodology for are reserved for contracts with strong transparent in the development process converting measure scores to measure- evidence of high performance and that for an enhanced cut point methodology level Star Ratings for non-CAHPS 1 and 2 stars are reserved for contracts as we move forward to propose a measures identifies the gaps that exist with strong evidence of low modified, new, or different policy for within the distribution of scores based performance. We note that the base on the criterion for assigning the groups. the assignment of measure-level Star group is not an entitlement to a certain If the distribution is extremely restricted Ratings. Star Rating. such that 5 unique groups cannot be Comment: A commenter urged CMS formed, the output will result in 5 to re-evaluate the cut points to ensure Previous analyses of CAHPS scores groups that are not unique. In this rare the Star Ratings accurately reflect plan have suggested that seemingly small situation, there would be less than 5 star quality and are based on evidence. The differences of 1 point on a 0–100 scale categories and the ordered groups will commenter expressed concern about the are meaningful; differences of 3 points be assigned the higher ratings on the number of measures within the MA Star can be considered medium, and scale. Ratings program that are based on differences of 5 points can be Comment: A commenter expressed physician action and compliance. In considered large.57 For instance, a concern about determining cut points order for plans to comply with and earn 3-point increase in some CAHPS using all MA data because such an incentives from CMS, the commenter measures has been associated with a 30 approach fails to take into account the believes that plans must often set percent reduction in disenrollment from significant underlying differences in unrealistic targets within their health plans, which suggests that even enrollment of plans. The commenter physician contracts in order for the plan ‘‘medium’’ differences in CAHPS scores supported both stratified reporting and to score well due to the Star Ratings cut may indicate substantially different care the determination of cut points after points. The commenter believes that experiences.58 grouping plans into relevant cohorts there may be instances when (stratification at the contract level on compliance with a measure is contrary 57 Paddison CAM, Elliott MN, Haviland AM, key population characteristics, such as to appropriate care, and contracts may Farley DO, Lyratzopoulos G, Hambarsoomian K, proportion Dual/LIS/Disabled). be penalized. Dembosky JW, Roland MO. (2013). ‘‘Experiences of Response: CMS appreciates this Response: CMS appreciates this Care among Medicare Beneficiaries with ESRD: Medicare Consumer Assessment of Healthcare feedback. The Star Ratings system does comment. Plans should always set Providers and Systems (CAHPS) Survey Results.’’ not determine cut points for subsets of clinically appropriate targets for their American Journal of Kidney Diseases 61(3): 440– the population because it does not align physicians. There is no reason why the 449. with its underlying principles. current methodology for setting the cut 58 Lied, T.R., S.H. Sheingold, B.E. Landon, J.A. Shaul, and P.D. Cleary. (2003). ‘‘Beneficiary However, CMS has developed the points to assign ratings to raw Reported Experience and Voluntary Disenrollment Categorical Adjustment Index (CAI), performance scores would require a in Medicare Managed Care.’’ Health Care Financing which is a factor that is added to or physician to provide inappropriate care. Review 25(1): 55–66.

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Summary of Regulatory Changes direction in sections 1853(o) and TABLE 7—PART D DOMAINS For the reasons set forth in the 1854(b) of the Act to use a 5-star system. proposed rule and our responses to the These policies for the assignment of Domain stars will be codified with other rules related comments summarized above, Drug Plan Customer Service. we are finalizing the methodology to for the ratings at the domain, summary, and overall level. Domain ratings Member Complaints and Changes in the determine cut points as proposed in Drug Plan’s Performance. §§ 422.166(a) and 423.186(a). CMS is employ an unweighted mean of the Member Experience with the Drug Plan. committed to incorporating the feedback measure-level stars, while the Part C Drug Safety and Accuracy of Drug Pricing. received from commenters on the and D summary and overall ratings methodology for determining cut points employ a weighted mean of the Currently, Star Ratings for domains for non-CAHPS measures and will measure-level stars and up to two are calculated using the unweighted thoroughly analyze other potential adjustments. We proposed to codify mean of the Star Ratings of the included methodologies to ensure that these policies at paragraphs (b)(2), (c)(1) measures. They are displayed to the unintended consequences are avoided and (d)(1) of §§ 422.166 and 423.186. nearest whole star, using a 1–5 star and the cut points resulting from any We received the following overall scale. We proposed to continue this enhancements are consistent with comments on our proposal and our policy at paragraph (b)(2)(ii). We also principles and policy goals for the Star response follows: proposed that a contract must have stars Ratings system. Changes to the Comment: All commenters supported for at least 50 percent of the measures methodology for the determination of the existing hierarchical structure of the required to be reported for that domain cut points for non-CAHPS measures will Star Ratings program and its associated for that contract type to have that be proposed in a future rule. policies. domain rating calculated; we explained We are finalizing the methodology to this was necessary to have enough data determine cut points for CAHPS Response: CMS appreciates the to reflect the contract’s performance on measures in §§ 422.166(a)(3) and continued support of the existing the specific dimension. For example, if 423.186(a)(3) substantively as proposed. organization of the Star Ratings a contract is rated only on one measure We are finalizing the regulation text measures and the policies associated in Staying Healthy: Screenings, Tests with minor technical revisions to with it. CMS firmly believes the and Vaccines, that one measure will not improve readability. structure increases the utility and necessarily be representative of how the efficiency of the rating system and contract performs across the whole m. Hierarchical Structure of the Ratings appreciates the positive response to it. domain so we do not believe it is We proposed to continue our existing n. Domain Star Ratings appropriate to calculate and display a policy to use a hierarchical structure for domain rating. We proposed to continue the Star Ratings. Currently, and as Groups of measures that together this policy by providing, at paragraph proposed, the basic building block of represent a unique and important aspect (b)(2)(i), that a minimum number of the MA Star Ratings system is the of quality and performance are measures must be reported for a domain measure. Because the MA Star Ratings organized to form a domain. Domain rating to be calculated. system consists of a large collection of ratings summarize a plan’s performance We received the following comments measures across numerous quality on a specific dimension of care. on our proposal and our responses dimensions, the measures will be Currently the domains are used purely follow: organized in a hierarchical structure for purposes of displaying data on Comment: Commenters supported the that provides ratings at the measure, Medicare Plan Finder to organize the use of the current domains and the domain, Part C summary, Part D measures and help consumers interpret associated policies related to the summary, and overall levels. The the data. We proposed to continue this calculation of the Star Ratings for proposed regulations text at §§ 422.166 policy at §§ 422.166(b)(1)(i) and domains. and 423.186 are built on this structure 423.186(b)(1)(i). Response: CMS appreciates our and provides for calculating ratings at At present, there are nine domains— stakeholders’ support of the use of the each ‘‘level’’ of the system. The five for Part C measures for MA-only domains and associated policies related organization of the measures into larger and MA–PD plans and four for Part D to the domains. groups increases both the utility and measures for stand-alone PDP and MA– Comment: A commenter noted the efficiency of the rating system. At each PD plans. We proposed to continue to usefulness of the domains for displaying aggregated level, ratings are based on group measures for purposes of display the data on Medicare Plan Finder the measure-level stars. Ratings at the on Medicare Plan Finder and to (MPF). In addition, the commenter higher level are based on the measure- continue use of the same domains as in believed the domains helped consumers level Star Ratings, with whole star current practice in §§ 422.166(b)(1)(i) interpret the data on MPF. increments for domains and half-star and 423.196(b)(1)(i). The current Response: The domains were increments for summary and overall domains are listed in Tables 5 and 6. designed to summarize a plan’s ratings; a rating of 5 stars will indicate performance on a specific dimension of the highest Star Rating possible, while TABLE 6—PART C DOMAINS care. CMS appreciates the positive a rating of 1 star will be the lowest feedback related to domains and the rating on the scale. Half-star increments Domain agreement that they serve not only to are used in the summary and overall organize data on MPF, but also serve as ratings to allow for more variation at the Staying Healthy: Screenings, Tests and Vac- an aid to consumers’ interpretation of higher hierarchical levels of the ratings cines. the data displayed. system. We believe this greater variation Managing Chronic (Long Term) Conditions. and the broader range of ratings provide Member Experience with Health Plan. Summary of Regulatory Changes more useful information to beneficiaries Member Complaints and Changes in the For the reasons set forth in the Health Plan’s Performance. in making enrollment decisions while Health Plan Customer Service. proposed rule and our responses to the remaining consistent with the statutory related comments summarized above,

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we are finalizing the provisions summary rating type. We also proposed accurate reflection of the quality of the identifying the domains and for rating at (at paragraph (c)(2)(ii)) that the health plan or prescription drug plan. the domain level as proposed at improvement measures themselves are Summary of Regulatory Changes §§ 422.166(b) and 423.186(b) without not included in the count of minimum modification. number of measures for the Part C or For the reasons set forth in the proposed rule and our responses to the o. Part C and D Summary Ratings Part D summary ratings. Third, we proposed a paragraph (c)(3) in both related comments summarized above, In the current rating system the Part §§ 422.166 and 423.186 to provide that we are finalizing the provisions C summary rating provides a rating of the summary ratings are on a 1 to 5 star governing summary ratings as proposed the health plan quality and the Part D scale in half-star increments. Traditional at §§ 422.162(c) and 423.182(c) without summary rating provides a rating of the rounding rules would be employed to modification. prescription drug plan quality. We round the summary rating to the nearest p. Overall Rating proposed, at §§ 422.166(c) and half-star. We explained in connection The overall Star Rating is a global 423.186(c), to codify regulation text with this proposal how the policies rating that summarizes the plan’s governing the adoption of Part C proposed in §§ 422.166(h) and quality and performance for the types of summary ratings and Part D summary 423.186(h) regarding posting summary services offered by the plans under the ratings. An MA-only plan and a Part D ratings on MPF would apply. The rated contract. We proposed at stand-alone plan will receive a summary summary rating would be displayed in §§ 422.166(d) and 423.186(d) to codify rating only for, respectively, Part C HPMS and Medicare Plan Finder to the the standards for calculating and measures and Part D measures. nearest half star if a contract had not First, in paragraphs (c)(1) of each assigning overall Star Ratings for MA– met the measure requirement for PD contracts. The overall rating for an section, we proposed the overall calculating a summary rating, the formula for calculating the summary MA–PD contract is proposed to be display in HPMS (and on Medicare Plan ratings for Part C and Part D. Under calculated using a weighted mean of the Finder) for the applicable summary current policy, the summary rating for Part C and Part D measure level Star rating would be the flag, ‘‘Not enough an MA-only contract is calculated using Ratings, respectively, with an data available’’ or if the measurement a weighted mean of the Part C measure- adjustment to reward consistently high period is less than 1 year past the level Star Ratings with up to two performance described in paragraph contract’s effective date the flag would adjustments: The reward factor (if (f)(1) and the application of the CAI, be, ‘‘Plan too new to be measured.’’ applicable) and the Categorical pursuant to described in paragraph Adjustment Index (CAI). Similarly, the We solicited comments on the (f)(2). current summary rating for a PDP calculations for the Part C and D Consistent with current policy, we contract is calculated using a weighted summary ratings. We received the proposed at paragraph (d)(2) that an mean of the Part D measure-level Star following comments on our proposal MA–PD would have an overall rating Ratings with up to two adjustments: The and our responses follow: calculated only if the contract receives reward factor (if applicable) and the Comment: The majority of the both a Part C and Part D summary rating CAI. We proposed in §§ 422.166(c)(1) commenters supported the policies, and has scores for at least 50 percent of and 423.186(c)(1) that the Part C and methodology, and display of the the required measures for the contract Part D summary ratings would be summary ratings as proposed. type. As with the Part C and D summary calculated as the weighted mean of the Response: CMS appreciates the ratings, the Part C and D improvement measure-level Star Ratings with an ongoing support of the summary ratings. measures will not be included in the adjustment to reward consistently high Commenter: A commenter count for the minimum number of performance (reward factor) and the recommended a revision to the rule that measures for the overall rating. Any application of the CAI, pursuant to requires a contract to have numeric measure that shares the same data and paragraph (f) (where we proposed the scores for at least 50 percent of the is included in both the Part C and Part specifics for these adjustments) for Parts required measures for the summary- D summary ratings would be included C and D, respectively. specific rating to have a summary rating only once in the calculation for the Second, and also consistent with calculated. The commenter suggested a overall rating. For example, the current policy, we proposed an MA- change to the rule such that a summary measures ‘‘Members Choosing to Leave only contract and PDP would have a rating would be calculated if a contract the Plan’’ and ‘‘Complaints about the summary rating calculated only if the had at least half of the weighted value Plan’’ use the same data for both the contract meets the minimum number of of the full measure set for the summary- Part C and Part D measure for an MA– rated measures required for its specific rating. PD plan and under the proposal, would respective summary rating: A contract Response: CMS appreciates the be counted only once for the overall must have scores for at least 50 percent feedback for a possible revision to the rating. As with summary ratings, we of the measures required to be reported rule that determines whether a summary proposed that overall MA–PD ratings for the contract type to have the rating would be calculated. The Part C would use a 1 to 5 star scale in half-star summary rating calculated. We summary rating provides a rating of the increments; traditional rounding rules proposed to codify the necessary text as health plan quality and the Part D would be employed to round the overall paragraph (c)(2)(i) of §§ 422.166 and summary rating provides a rating of the rating to the nearest half-star. These 423.186 the same rules will be applied prescription drug plan quality. The policies are proposed as paragraphs to both the Part C and Part D summary summary ratings include information (d)(2)(i) through (iv). ratings for the minimum number of from multiple dimensions of quality and We also explained in the proposed rated measures. We proposed that these performance. CMS plans to evaluate the rule how the overall rating would be regulations would also apply to suggestion of using 50 percent of the posted in accordance with our general calculating the summary Part C and Part total weighted value of the measure set proposed policy at §§ 422.166(h) and D ratings of MA–PD plan; the MA–PD as the threshold for calculating 423.186(h), including the specific plan would have to meet the minimum summary ratings to examine whether messages for lack of ratings for certain number of rated measures for each such a change would still allow an reasons. Applying that rule, if an MA–

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PD contract has only one of the two Response: CMS values the support of Summary of Regulatory Changes required summary ratings, the overall the overall rating and its associated For the reasons set forth in the rating would not be calculated and the methodology. proposed rule and our responses to the display in HPMS would be the flag, Comment: A commenter suggested a related comments summarized above, ‘‘Not enough data available.’’ revision to the rule for calculating the we are finalizing the provisions for For QBP purposes, low enrollment overall rating for an MA–PD contract. overall ratings as proposed at contracts and new MA plans are defined As done currently and proposed, an §§ 422.162(d) and 423.182(d) without in § 422.252. Low enrollment contract MA–PD contract must have both (Part C modification. means a contract that could not and Part D) summary ratings and q. Measure Weights undertake Healthcare Effectiveness Data measure scores for at least 50 percent of and Information Set (HEDIS) and Health the required measures based on Prior to the 2012 Part C and D Plan Outcomes Survey (HOS) data contract-type (exclusive of the Ratings (now known as Star Ratings), all collections because of a lack of a improvement measures) to have an individual measures included in the sufficient number of enrollees to overall rating. The commenter suggested program were weighted equally, reliably measure the performance of the that an overall rating for an MA–PD suggesting equal importance. Based on health plan; new MA plan means an MA contract require measure scores that feedback from stakeholders, including contract offered by a parent organization total at least half of the weighted value health and drug plans and beneficiary that has not had another MA contract in of the full measure set. advocacy groups, we moved to provide the previous 3 years. Low enrollment Response: CMS appreciates the greater weight to clinical outcomes and contracts and new plans do not receive suggestion of alternative requirements lesser weight to process measures. an overall or summary rating because of for the calculation of an overall rating. Patient experience and access measures the lack of necessary data. However, Changing the requirement for the were also given greater weight than they are treated as qualifying plans for calculation of an overall rating to be process measures, but not as high as the purposes of QBPs. Section based on the majority of the total weight outcome measures. The differential of the Star Ratings measures has the 1853(o)(3)(A)(ii)(II) of the Act, as weighting was implemented to help potential of confusing the global nature implemented at § 422.258(d)(7), create further incentives to drive of the overall rating. There are provides that for 2013 and subsequent improvement in clinical outcomes, substantially more Part C measures in years, CMS shall develop a method for patient experience, and access. These the Star Ratings and the total weight of determining whether an MA plan with differential weights for measures were the Part C measures exceeds that of the low enrollment is a qualifying plan for implemented for the 2012 Ratings Part D measures. By requiring a contract purposes of receiving an increase in following a May 2011 Request for to have both a Part C and D summary payment under section 1853(o). This Comments and adopted in the CY2013 rating coupled with the requirement of determination is applied at the contract Rate Announcement and Final Call at least 50 percent of the measures, CMS level and thus determines whether a Letter. has minimized the potential for the contract (meaning all plans under that In the Contract Year 2012 Final Rule overall rating being determined contract) is a qualifying contract. The for Changes to the Medicare Advantage primarily by dimensions of health plan statute, at section 1853(o)(3)(A)(iii) of and the Medicare Prescription Drug quality instead of both health plan and the Act, provides for treatment of new Benefit Programs rule (79 FR 21486), we prescription drug plan quality. MA plans as qualifying plans eligible for stated that scoring methodologies a specific QBP. We therefore proposed, Comment: A commenter suggested the should also consider improvement as an at §§ 422.166(d)(3) and 423.186(d)(3), use of a percentile rank threshold for the independent goal. To this end, we that low enrollment contracts (as determination of a 5-star overall rating, implemented in the CY 2013 Rate defined in § 422.252 of this chapter) and thus allowing the recognition of top Announcement the Part C and D new MA plans (as defined in § 422.252 performers along with the ability to improvement measures that measure the of this chapter) do not receive an overall enroll members year-round. overall improvement or decline in and/or summary rating; they will be Response: While CMS thanks the individual measure scores from the treated as qualifying plans for the commenter for its suggestion, CMS prior to the current year. Given the purposes of QBPs as described in disagrees with using percentile ranking importance of recognizing quality § 422.258(d)(7) of this chapter. The QBP as a threshold for calculating overall improvement as an independent goal, levels for each rating area are ratings. One of the underlying design for the 2015 Star Ratings, we proposed announced through the process principles of the MA and Part D Star and subsequently finalized through the described for changes in and adoption Ratings is to incentivize plans to 2015 Rate Announcement and final Call of payment and risk adjustment policies provide the best health care possible to Letter an increase in the weight of the in section 1853(b) of the Act. We noted our beneficiaries. This underlying improvement measure from 3 times to 5 that this aspect of the proposal would principle is reflected in the manner that times that of a process measure, which merely codify existing policy and measure scores are converted to Star is weighted as 1. This weight aligns the practice. Ratings, as well as the aggregation of the Part C and D Star Ratings program with measure-level Star Ratings to an overall value-based purchasing programs in We received the following comments rating. (Measure-level Star Ratings are Medicare fee-for-service which take into on our proposal and our responses the basic building block, of the overall account improvement. follow: rating.) A percentile rank threshold We proposed in §§ 422.166(e) and Comment: Commenters supported the approach for the overall rating does not 423.186(e) to continue the current use of the overall rating as a global align with the principles of the Star weighting of measures in the Part C and rating that summarizes a contract’s Ratings methodology and would D Star Ratings program by assigning the quality and performance, as well as the arbitrarily apply a threshold that could highest weight (5) to improvement proposal to use the current policies for be perceived as a subjective value that measures, followed by outcome and calculating and publishing the overall would ultimately separate 5-star intermediate outcome measures (weight rating. contracts from all other contracts. of 3), then by patient experience/

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complaints and access measures (weight patients first, including their for weighting measure by category. We of 1.5), and finally process measures assessments of the care received by proposed that as new measures are (weight of 1). We also solicited feedback plans. We solicited comment on this added to the Part C and D Star Ratings, about increasing the weight of the point, particularly the potential change we would assign the measure category patient experience/complaints and in the weight of the patient experience/ based on these categories and the access measures and stated our interest complaints and access measures. regulation text proposed at §§ 422.166(e) in stakeholder feedback on this Table C7 includes the proposed and 423.186(e), subject to two potential change in order to reflect measure categories, the definitions of exceptions. For the first exception, we the measure categories, and the weights. better the importance of these issues in proposed to codify current policy in In calculating the summary and overall plan performance. If we were to increase paragraphs (e)(2) of each section and to ratings, a measure given a weight of 3 the weight, we asked for feedback about counts three times as much as a measure assign new measures to the Star Ratings increasing it from a weight of 1.5 to given a weight of 1. In section II.A.11. program a weight of 1 for their first year between 1.5 and 3, similar to outcome of the proposed rule, we proposed (as in the Star Ratings. In subsequent years measures. This increased weight would Table C2) the measure set and included the weight associated with the measure reflect CMS’s commitment to serve the category and weight for each weighting category would be used. This Medicare beneficiaries by putting measure, consistent with this proposal is consistent with current policy.

TABLE 8—PROPOSED MEASURE CATEGORIES, DEFINITIONS AND WEIGHTS

Measure category Definition Weight

Improvement ...... Part C and Part D improvement measures are derived through comparisons of a contract’s cur- 5 rent and prior year measure scores. Outcome and Intermediate Outcome measures reflect improvements in a beneficiary’s health and are central to assessing 3 Outcome. quality of care. Intermediate outcome measures reflect actions taken which can assist in improving a beneficiary’s health status. Controlling Blood Pressure is an example of an intermediate outcome measure where the related outcome of interest will be better health status for beneficiaries with hypertension. Patient Experience/Com- Patient experience measures reflect beneficiaries’ perspectives of the care and services they re- 1.5 plaints. ceived. Access ...... Access measures reflect processes and issues that could create barriers to receiving needed 1.5 care. Plan Makes Timely Decisions about Appeals is an example of an access measure. Process ...... Process measures capture the health care services provided to beneficiaries which can assist in 1 maintaining, monitoring, or improving their health status.

For the second exception, we We received the following comments commenter opposed the weight increase proposed (at §§ 422.166(e)(3) and on our proposal and our responses until we have better measures in these 423.186(e)(3)) again to codify current follow: areas. policy and to apply a special rule for Comment: Multiple commenters Response: We refer commenters to MA–PD and Part D contracts that have requested CMS not to increase the section II.A.11.i and Table C2A and the service areas that are wholly located in weight of patient experience/complaints narrative comment and responses that Puerto Rico. We recognize the and access measures from a weight of follow, which give background and additional challenge unique to Puerto 1.5 up to 3. Many of the commenters additional justification for CAHPS Rico related to the medication requested to maintain the current measures. While we acknowledge that adherence measures used in the Star weight; however, others requested that the CAHPS survey captures individuals’ Ratings program due to the lack of Low CMS decrease the weight of patient perspectives on their experiences of experience measures citing survey Income Subsidy (LIS). For the 2017 Star care, it is anchored in measureable reliability and sampling concerns with Ratings, we implemented a different aspects of care and so can be measured patient experience surveys. They stated reliably. In addition, CAHPS surveys weighting scheme for the Part D that patient-reported data are not as were developed with broad stakeholder medication adherence measures in the reliable as claims, prescription drug input, including a public solicitation of calculation of the overall and summary event data, medical charts, and other measures and a Technical Expert Panel, Star Ratings for contracts that solely data sources. They believe that these and the opportunity for anyone to serve a population of beneficiaries in measures are unfairly subjective and comment on the surveys through Puerto Rico. We proposed, at that more weight should be placed on multiple public comment periods §§ 422.166(e)(3) and 423.186(e)(3), to more reliable and objective measures through the Federal Register. CMS continue to reduce the weights for the like clinical and outcome measures. encourages all plans to familiarize adherence measures to 0 for the Many cited concerns with response themselves with the survey summary and overall rating calculations rates, sample size of patient experience methodology and to review the and maintain the weight of 3 for the surveys, and other factors in which the background materials available on the adherence measures for the plan has less control, as well as industry MA and PDP CAHPS website that improvement measure calculations for concerns around accuracy of survey validate the CAHPS measures. contracts with service areas that are responses and research suggesting a CMS has pledged to put patients first wholly located in Puerto Rico. We weak relationship between care received and to empower patients to work with requested comment on our proposed and survey responses. A commenter their doctors to make health care weighting strategy for Measure Weights supported increasing the weight of decisions that are best for them. An generally and for Puerto Rico, including access and patient experience measures increased weight for patient experience/ the weighting values themselves. that are not based on survey data. A complaints and access measures reflects

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CMS’s commitment to serve Medicare Therefore, we will finalize an increase that because the HOS measures are beneficiaries by including their in the weight for these two categories of patient-reported measures (in response assessments of the care received by measures from 1.5 to 2. Given the to survey questions) they are not true plans. In addition, CAHPS measures importance of hearing the voice of measures of health outcomes and and positive clinical outcomes have patients when evaluating the quality of should be weighted no higher than 1 or been shown to be related. While patient care provided, CMS intends to further 1.5. experience is an inherently important increase the weight of these measures in Response: We refer the commenter to dimension of healthcare quality, it is the future, so we welcome stakeholder Table C2 in section II.A.11., which gives also the case that the preponderance of feedback on how to improve the CAHPS background and additional justification evidence shows that better patient survey, including the topics it covers, for HOS measures. The HOS assesses experience is associated with better and suggestions for additional access health outcomes for randomly selected patient adherence to recommended measures or modifications to existing beneficiaries from each health plan over treatment, better clinical processes, ones. We expect this change to increase a two-year period by using baseline better hospital patient safety culture, the highest rating for approximately 8 measurement and a two-year follow up. better clinical outcomes, reduced percent of contracts and to have no CMS recognizes that the Physical unnecessary healthcare use, and fewer impact on the majority of other Component Score (PCS) and the Mental inpatient complications.59 60 A recent contracts, while also demonstrating Component (MCS) may decline over study found that higher quality for CMS’s commitment to evaluate the time and that health maintenance, patient experience had a statistically quality of care provided as experienced rather than improvement, is a more significant association with lower rates by beneficiaries. Please send feedback realistic clinical goal for many older of many in-hospital complications and about CAHPS to MP-CAHPS@ adults. MAOs are asked to improve or unplanned readmissions to the hospital cms.hhs.gov and feedback about access maintain the physical and mental health within 30 days. In other words, better measures to PartCandDStarRatings@ of their members. Change scores are patient experience according to the CMS cms.hhs.gov. constructed and the results compare hospital Star Ratings is associated with Comment: A handful of commenters actual to expected changes in physical favorable clinical outcomes.61 An strongly supported the proposed weight and mental health. Therefore, the increased weight also reflects the increase of patient experience/ Improving or Maintaining Physical and importance of these beneficiary- complaints and access measures. They Mental Health measures are not patient centered issues in plan performance. emphasized the importance of the experience measures because they Further, access to health services is a beneficiary and caregiver perspectives measure whether plan member’s critical issue in the healthcare sector and noted that the beneficiary’s voice is physical and mental health is the same and to Medicare beneficiaries. Lack of an important indicator for plan or better than expected after 2 years. access can result in unmet health needs, performance in key areas such as the While the data come from the HOS, they delays in receiving the appropriate care, ease of access to needed drugs and measure beneficiary outcomes and inability to access preventative services, treatments as well as plan therefore are appropriately classified as unreasonable financial burdens, and responsiveness to appeal requests. outcome measures with a weight of 3. preventable hospitalizations.62 For these Commenters said that by increasing the Additionally, the HOS was developed reasons, access measures, such as weights of these measures, CMS ensures and continues to be refined under the appeals measures and call center that beneficiaries are seeing Star Ratings guidance of a Technical Expert Panel measures, are crucial in the Star Ratings that reflect what they are likely to find comprised of individuals with specific system. Increasing the weight for these important about their plan selections. expertise in the health care industry and measures highlights the importance of These commenters also believed that outcomes measurement. HOS analysts capturing access to care within MA and assessments of quality and value by the apply the most recent advances in Part D plans. patient are currently under-valued in summarizing physical and mental To best meet the needs of our Part C and D. Therefore, they believed health outcomes results and appropriate beneficiaries, CMS believes that we patient experience/complaints and risk adjustment techniques. CMS also must listen to their perceptions of care, access measures should receive a higher solicits stakeholder input, including as well as ensure they have access to weight than the current 1.5. public solicitation of measures and the needed care. Commenters representing Response: CMS appreciates this opportunity for anyone to comment on beneficiaries strongly supported an feedback and agrees the voice of the the survey through multiple public increase in the weight of the patient beneficiary must be heard as part of comment periods through the Federal experience of care and access measures. evaluating the quality of health and Register. drug plans. Comment: A few commenters sought 59 Price, R.A., Elliott, M.N., Zaslavsky, A.M., Comment: CMS received several clarification on differences in the Hays, R.D., Lehrman, W.G., Rybowski, L., & Cleary, comments requesting to decrease and weights between the Part C and Part D P.D. (2014). Examining the role of patient reclassify HOS measures on Improving Statin measures. Two organizations experience surveys in measuring health care or Maintaining Physical and Mental recommended classifying both the Part quality. Medical Care Research and Review, 71(5), 522–554. Health to receive a patient experience C Statin Therapy for Patients with 60 Price, R.A., Elliott, M.N., Cleary, P.D., weight of 1.5 or process measure weight Cardiovascular Disease (SPC) and the Zaslavsky, A.M., & Hays, R.D. (2015). Should health of 1, as opposed to their current Part D Statin Use in Persons with care providers be accountable for patients’ care outcome weight of 3. Some commenters Diabetes (SUPD) measures as process experiences?. Journal of general internal medicine, 30(2), 253–256. believed there are methodological measures with a weight of 1. A 61 Trzeciak, Stephen et al. ‘‘Association Between limitations to the HOS, and they stated commenter supported the weight for the Medicare Star Ratings for Patient Experience and that it does not provide a reliable Statin measure developed by PQA. Medicare Spending per Beneficiary for US evaluation of the patient experience Response: CMS appreciates the Hospitals.’’ Journal of patient experience 4.1 (2017): because it relies on variables such as feedback and clarifies the weighting 17–21. PMC. Web. 2 Feb. 2018. 62 https://www.cms.gov/Medicare/Quality- memory and the patient’s physical and decision for each measure below. The Initiatives-Patient-Assessment-Instruments/MMS/ mental status at the time of survey Part C Statin Therapy for Patients with Downloads/Access-Measures.pdf. completion. We also received comments Cardiovascular Disease (SPC) measure is

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the percent of plan members (males 21– category in the Star Ratings, the Response: CMS appreciates the 75 years of age and females 40–75 years improvement measure is a single support of the proposed weighting for of age) who were identified as having measure that encompasses care across new measures. clinical atherosclerotic cardiovascular multiple dimensions. Comment: A commenter supported disease (ASCVD) and were dispensed at Comment: A commenter the weighting for the adherence least one high or moderate-intensity recommended that CMS weight MA–PD measures in Puerto Rico. statin medication. The Part C measure and PDP measures differently based on Response: CMS appreciates the support of the proposed Puerto Rico focuses on patients who were dispensed the plan’s ability to influence outcomes weights. one prescription and whether the on a measure, for example statin use in For the reasons set forth in the patient filled the medication at least persons with diabetes. PDPs should once. Therefore, it is a process measure proposed rule and our responses to the have less weight placed on measures related comments summarized above, and will receive a weight of 1. The Part that largely depend on provider D measure is the percent of the number we are finalizing the provisions behavior, which they have very little governing the weight of measures as of plan members 40–75 years old who ability to impact. were dispensed at least two diabetes proposed in §§ 422.166(e) and medication fills and received a statin Response: Currently the only Part D 423.186(e) with modification. CMS is medication fill. Receiving multiple fills outcome measures are adherence finalizing the weight of patient indicates the patient continues to take measures. CMS disagrees that stand- experience/complaints and access the medication and therefore suggests alone PDPs have very little influence on measures at 2 in paragraphs (e)(iii) and adherence. The Part D measure is not a beneficiaries’ medication adherence. (iv) given the importance of hearing the process measure. Continuing to take the There are many strategies that can be perspectives and voice of patients in prescribed medication is necessary to used to improve a beneficiary’s times of need. reach clinical/therapeutic goals. Thus, medication adherence in addition to prescriber interventions, such as refill r. Application of the Improvement the Part D measure is an intermediate Measure Scores outcome measure and will receive a reminders, formulary and benefits weight of 3. design, and medication therapy Consistent with current policy, we Comment: A couple of commenters management programs. Plan sponsors proposed at §§ 422.166(g) and requested a decrease in the can also leverage network pharmacy 423.186(g) a hold harmless provision for improvement measures from the current relationships to address medication the inclusion or exclusion of the weight of 5 to a weight of 3 (like adherence issues, facilitate medication improvement measure(s) for highly- outcome measures). They stated the synchronization, or provide education rated contracts’ highest ratings. We measures diminish the importance of and counseling. In the absence of a proposed, in paragraphs (g)(1)(i) through clinical measures and mislead Medicare contact phone number for the (iii), a series of rules that specify when beneficiaries about which are the beneficiary, it may be beneficial to use the improvement measure is included in highest quality health plans. these interventions to reach the calculating overall and summary Response: CMS recognizes the beneficiary at the place of dispensing. ratings. importance of acknowledging quality Furthermore, MA–PDs and PDPs are Under our proposal, MA–PDs would improvement in health and drug plans. rated separately to account for delivery have the hold harmless provisions for The decision to assign a weight of 5 for system differences. Lastly, adherence highly-rated contracts applied for the the improvement measures was measures will now be included in the overall rating. For an MA–PD that originally made to align the Part C and CAI to account for LIS beneficiaries receives an overall rating of 4 stars or D Star Ratings program with value- which we discuss in more detail in more without the use of the based purchasing programs in Medicare section II.A.11.t. improvement measures and with all fee-for-service which heavily weight Comment: A commenter applicable adjustments (CAI and the improvement. As part of the Part C and recommended decreasing the weighting reward factor), a comparison of the D Star Ratings program, we are of a topped out measure rather than rounded overall rating with and without committed to improving the quality of discontinuing the measure. the improvement measures would be care and experiences for Medicare done. The overall rating with the beneficiaries. Through assigning a Response: Measure scores are improvement measures used in the weight of 5 to improvement, CMS determined to be ‘topped out’ when comparison would include up to two encourages MA and Part D contracts to they show high performance and little adjustments, the reward factor (if focus on improving the quality of care variability across contracts, making the applicable) and the CAI. The overall provided. measure unreliable. CMS removes rating without the improvement With regard to overall ratings, measures that show low statistical measures used in the comparison would improvement measures contribute reliability so as to move swiftly to include up to two adjustments, the significantly less than outcome ensure the validity and reliability of the reward factor (if applicable) and the measures overall. For example for the Star Ratings, even at the measure level. CAI. The higher overall rating would be 2018 Star Ratings for an MA–PD that However, CMS will retain measures at used for the MA–PD contract’s overall does not include a SNP, the overall the same weight if for example, rating. For an MA–PD that has an contribution of the improvement performance in a given measure has just overall rating of 2 stars or less without measures to the overall rating is close to improved across all contracts, or if no the use of the improvement measure 14 percent, but the overall contribution other measures capture a key focus in and with all applicable adjustments of outcome and intermediate outcome Star Ratings. CMS will take this (CAI and the reward factor), we measures is 33 percent. comment into consideration as we make proposed the overall rating would CMS believes that continuous future enhancements in the Star Ratings exclude the improvement measures; for improvement is necessary to reach the program. all others, the overall rating would goal of providing the best care to our Comment: Multiple commenters include the improvement measure. beneficiaries. While the improvement supported assigning new measures a MA-only and PDPs would have the measures are weighted the most of any weight of 1 for the first year. hold harmless provisions for highly-

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rated contracts applied for the Part C intent of the Star Ratings program and Response: CMS appreciates the and D summary ratings, respectively. threatens its integrity. Low performing careful review of the proposed policy For an MA-only or PDP contract that contracts, including those at risk of related to the application of the receives a summary rating (with receiving a low performing icon, have improvement measure(s) for a contract’s applicable adjustments) of 4 stars or plenty of room for improvement and highest rating. After thoughtful more without the use of the should not need a hold harmless deliberation of the recommendation of improvement measure, a comparison of provision. our commenters, CMS has decided to the rounded summary rating with and Comment: A commenter expressed modify the proposed methodology for without the improvement measure support for all rules that guide the the application of the improvement would be done. The higher summary application of the improvement measures. The methodology will be rating would be used for the summary measure(s) in calculating overall and changed such that if the highest rating rating for the contract’s highest rating. summary ratings. for a contract is less than 4 stars without For MA-only and PDPs with a summary Response: CMS appreciates the the use of the improvement measure(s) rating (with applicable adjustments) of 2 support of the policies that guide the and with all applicable adjustments stars or less without the use of the application of the improvement (CAI and the reward factor), the rating improvement measure would exclude measure(s) in the Star Ratings. will be calculated with the the improvement measure. For all Comment: Overall, commenters improvement measure(s). The others, the summary rating would supported the use of the hold harmless modification of the application of the include the improvement measure. MA– provision for a highly-rated contract’s improvement measure(s) preserves the PDs would have their summary ratings highest rating. However, several safeguard for a highly-rated contract’s calculated with the use of the commenters advocated a modification to highest rating, but removes what could improvement measure regardless of the the hold harmless provision for highly- be perceived as a safeguard for contracts value of the summary rating. rated MA–PDs such that the overall with a highest rating of 2 stars or less. In addition, at paragraph (g)(2), we rating would be determined by the In other words, if an MA–PD has an also proposed text to clarify that highest rating among the overall rating overall rating of less than 4 stars summary ratings use only the calculated with including both without the use of the improvement improvement measure associated with improvement measures, excluding both measures and with all applicable the applicable Part C or D performance. improvement measures, using only the adjustments, the improvement measures We solicited comments on the hold Part C improvement measure, or using will be used in the calculation of the harmless improvement provision we only the Part D improvement measure. overall rating. If an MA-only contract proposed to continue to use, Response: CMS appreciates the has a Part C summary rating of less than particularly any clarifications in how support of a hold harmless provision for 4 stars without the use of the Part C and when it should be applied. a highly-rated contract’s highest rating. improvement measure and with all We received the following comments CMS is committed to providing a true applicable adjustments, the Part C on our proposal and our responses signal of the overall quality to improvement measure will be used in follow: beneficiaries who use Medicare Plan the determination of the contract’s Part Comment: A commenter Finder to aid in the selection of a plan C summary rating. If a PDP has a Part recommended the exclusion of the hold that is right for them. Eliminating the D summary rating of less than 4 stars harmless provision for a highly-rated use of one of the improvement measure without the use of the Part D contract if the contract would realize a ratings in calculating the overall rating improvement measure and with all decrease in their overall rating. In has the potential to distort the signal for applicable adjustments, the Part D addition, the commenter supported a beneficiaries. The overall rating is improvement measure will be used in hold harmless provision for plans that designed as a global rating of the quality the determination of the contract’s Part would be at risk of receiving a low of both the health plan and prescription D summary rating. (An MA–PD will performing icon due to application of drug plan benefits for an MA–PD. While have the Part C or Part D improvement the quality improvement measures. we do agree there is justification for a measure included in the calculation of Response: CMS currently and as hold harmless provision for a highly- the respective Part C and Part D proposed, has a safeguard for highly- rated MA–PD, CMS is committed to summary ratings, because the summary rated contracts. CMS applies the hold preserving the integrity of the rating ratings are not the highest rating for this harmless provision for a highly-rated system. Removing one facet of the rating type of contract.) The only modification contract’s highest rating. As proposed, a system (Part C or Part D improvement will be for contracts with a highest contract that receives 4 stars or more measure) while not the other, has the rating of 2 stars or less. After without the use of the improvement potential to undermine the primary consideration of the comments received, measures and with all applicable function of the rating system. Therefore, we believe it is reasonable to also adjustments (CAI and the reward factor) we are not finalizing the revisions include any applicable improvement will have their final overall rating as the requested by the commenter(s). measure(s) for contracts with a highest higher of either the rating calculated Comment: Some commenters did not rating of 2 stars or less so that the including or excluding the improvement support excluding the improvement highest rating reflects whether the measure(s). CMS believes the hold measure(s) from use in a contract’s overall quality is improving, staying the harmless provision is appropriate to highest rating (with applicable same, or declining. apply for highly-rated contracts since adjustments) if the contract received 2 they have less room for improvement stars or less without the use of the Summary of Regulatory Changes and, consequently, may have lower improvement measure. The commenters For the reasons set forth in the scores for the improvement measure(s). believed that limiting the measure to proposed rule and our responses to the CMS believes that the Star Ratings only plans with at least 2.5 stars goes related comments summarized above, should signal the true quality of the against the objective of the improvement we are finalizing the provisions contract. A hold harmless provision for measure in encouraging and rewarding addressing use of the improvement contracts that are in jeopardy of a low improvements in performance, measure in summary and overall ratings performing icon does not align with the particularly among lower-rated plans. as proposed at §§ 422.162(g) and

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423.182(g) with one substantive would be used to determine the values (Part C summary for MA–PDs and MA- modification. We are not finalizing what that correspond to the thresholds for the only, overall for MA–PDs, Part D was proposed for contracts with a 2-star reward factors for the summary and/or summary for MA–PDs, and Part D summary or overall rating (with overall Star Ratings for a contract. The summary for PDPs), and the manner in applicable adjustments). We are also determination of the reward factors which the highest rating for the contract finalizing a revision to the rule for would rely on the contract’s ranking of was determined—with or without the summary or overall ratings (with its weighted variance and weighted improvement measure(s). For an MA– applicable adjustments) of less than 4 mean of the measure-level stars to the PD’s Part C and D summary ratings, its stars to include as well contracts with summary or overall rating relative to the ranking is relative to all other contracts’ overall or summary ratings of 2 stars. distribution of all contracts’ weighted weighted variance for the rating type variance and weighted mean to the (Part C summary, Part D summary) with s. Reward Factor (Formerly Referred to summary and/or overall rating. Under as Integration Factor) the improvement measure. Similarly, a the proposal a contract’s weighted contract’s weighted mean would be In 2011, the integration factor was variance would be calculated using the categorized into one of three mutually added to the Star Ratings methodology quotient of the following two values: (1) exclusive categories, identified in Table to reward contracts that have The product of the number of applicable C8B, based on its weighted mean of all consistently high performance. The measures based on rating-type and the measure-level Star Ratings and its integration factor was later renamed the sum of the products of the weight of ranking relative to all other contracts’ reward factor. (The reference to either each applicable measure and its squared weighted means for the rating type (Part reward or integration factor refers to the deviation 63 and (2) the product of one C summary for MA–PDs and MA-only, same aspect of the Star Ratings.) This less than the number of applicable overall, Part D summary for MA–PDs, factor is calculated separately for the measures and the sum of the weights of and Part D summary for PDPs) and the Part C summary rating, Part D summary the applicable measures. A contract’s manner in which the highest rating for rating for MA–PDs, Part D summary weighted mean performance would be rating for PDPs, and the overall rating found by calculating the quotient of the the contract was determined—with or for MA–PDs. It is currently added to the following two values: (1) The sum of the without the improvement measure(s). summary (Part C or D) and overall rating products of the weight of a measure and For an MA–PD’s Part C and D summary of contracts that have both high and its associated measure-level Star Ratings ratings, its ranking would be relative to stable relative performance for the of the applicable measures for the all other contracts’ weighted means for associated summary or overall rating. rating-type and (2) the sum of the the rating type (Part C summary, Part D The contract’s performance is assessed weights of the applicable measures for summary) with the improvement using its weighted mean relative to all the rating type. The thresholds for the measure. Further, the same threshold rated contracts without adjustments. categorization of the weighted variance criterion would be employed per We proposed to codify the calculation and weighted mean for contracts would category regardless of whether the and use of the reward factor in be based upon the distribution of the improvement measure was included or §§ 422.166(f)(1) and 423.186(f)(1); our calculated values of all rated contracts excluded in the calculation of the rating. proposal was to generally codify the of the same type. Because highly-rated The values that correspond to the current practice for the reward factor. contracts may have the improvement thresholds would be based on the Under our proposal, the contract’s measure(s) excluded in the distribution of all rated contracts and stability of performance would be determination of their final highest determined with and without the assessed using its weighted variance rating, each contract’s weighted improvement measure(s) and exclusive relative to all rated contracts at the same variance and weighted mean would be of any adjustments. Table C8A details rating level (overall, summary Part C, calculated both with and without the the criteria for the categorization of a and summary Part D). The Part D improvement measures. contract’s weighted variance for the summary thresholds for MA–PDs would Under the methodology CMS summary and overall ratings. Table C8B be, like current practice determined proposed for this factor, a contract’s details the criteria for the categorization independently of the thresholds for weighted variance would be categorized of a contract’s weighted mean PDPs. into one of three mutually exclusive (performance) for the overall and We proposed to update annually the categories, identified in Table C8A, summary ratings. Like current practice, performance and variance thresholds for based upon the weighted variance of its the values that correspond to the cutoffs the reward factor based upon the data measure-level Star Ratings. Its ranking would be provided each year during the for the Star Ratings year, consistent with would be relative to all other contracts’ plan preview and are published in the current policy. A multistep process weighted variance for the rating type Technical Notes.

TABLE 8A—CATEGORIZATION OF A CONTRACT BASED ON ITS WEIGHTED VARIANCE RANKING

Variance category Ranking

Low ...... Below the 30th percentile. Medium ...... At or above the 30th percentile to less than the 70th percentile. High ...... At or above the 70th percentile.

63 A deviation is the difference between the weighted mean of all applicable measures for the performance measure’s Star Rating and the contract.

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TABLE 8B—CATEGORIZATION OF A CONTRACT BASED ON WEIGHTED MEAN (PERFORMANCE) RANKING

Weighted mean (performance) category Ranking

High ...... At or above the 85th percentile. Relatively High ...... At or above the 65th percentile to less than the 85th percentile. Other ...... Below the 65th percentile.

These definitions of high, medium, A contract’s categorization for both categorization; we proposed to codify and low weighted variance ranking and weighted mean and weighted variance these values (in a narrative description) high, relatively high, and other determines the value of the reward in paragraph (f)(1)(iii). The weighted weighted mean ranking were proposed factor. Table C9 shows the values of the variance and weighted mean thresholds to be codified in narrative form in reward factor based on the weighted for the reward factor are available in the paragraph (f)(1)(ii). variance and weighted mean Technical Notes and updated annually.

TABLE 9—CATEGORIZATION OF A CONTRACT FOR THE REWARD FACTOR

Weighted mean Weighted variance (performance) Reward factor

Low ...... High ...... 0.4 Medium ...... High ...... 0.3 Low ...... Relatively High ...... 0.2 Medium ...... Relatively high ...... 0.1 High ...... Other ...... 0.0

We proposed to continue the use of a qualify for the reward based on its thresholds for the reward factor are reward factor to reward contracts with summary or overall (or both) rating if a published each year in the Technical consistently high and stable contract has both high and stable Notes, the recipients of the reward performance over time. Further, we relative performance. CMS believes the factor are not part of the public use files. proposed to continue to employ the reward factor methodology identifies However, we are persuaded that this is same methodology to categorize and the contracts that have both high and important information for beneficiaries determine the reward factor for stable relative performance and and could assist in providing greater contracts. As proposed in paragraphs recognizes that such performance may transparency into the development and (c)(1) and (d)(1), these reward factor exist overall (Part C and D performance) assignment of the Star Ratings. adjustments would be applied at the or in one particular area (health plan Therefore, CMS will begin incorporating summary and overall rating level. quality and performance domain on Part information related to the distribution We received the following comments C measures or the prescription drug and characteristics of contracts on our proposal and our responses plan quality and performance domain receiving the reward factor in the follow: on Part D measures). Since the reward annual Fact Sheet for the 2021 Star Comment: The majority of factor is based on a relative Ratings. commenters were supportive of the performance, it serves to incentivize Summary of Regulatory Changes continued use of the reward factor. A plans and recognize plans that provide commenter expressed support the highest and consistent level of care For the reasons set forth in the specifically related to the reward as reflected in their ratings. Ratings proposed rule and our responses to the methodology and the codification of the calculated using a consistent related comments summarized above, calculation of the reward factor. methodology allow to the identification we are finalizing the provisions as Response: CMS appreciates our of top performers based on rankings. proposed at §§ 422.162(f1) and stakeholders’ support of the reward 423.182(f)(1) without modification. factor. Comment: A commenter suggested Comment: A commenter expressed that CMS annually publish the list of t. Categorical Adjustment Index support of the use of a reward factor for reward factor recipients. The As we discussed in the proposed rule, the overall rating, but was concerned commenter referenced the publication a growing body of evidence links the that the proposed (and current) of the Categorical Adjustment Index prevalence of beneficiary-level social methodology for calculating the reward (CAI) final adjustment categories for risk factors with performance on factor did not consistently award contracts to support the request. measures included in Medicare value- contracts that maintained high Further, the commenter believed that based purchasing programs, including performance and demonstrated the publication of the reward factor MA and Part D Star Ratings. With incremental improvement at the recipients would maintain the attributes support from our contractors, we measure level. Further, the commenter of fairness and transparency of the Star undertook research to provide scientific linked the potential for a high Ratings system. evidence as to whether MA performing contract not receiving a Response: CMS appreciates this organizations or Part D sponsors that reward factor to flaws in the assignment feedback. As noted in the comment, the enroll a disproportionate number of of measure cut points. CAI final adjustment categories per vulnerable beneficiaries are Response: CMS appreciates the contract are available in the annual systematically disadvantaged by the careful consideration of the reward public use files available using the current Star Ratings. In 2014, we issued factor. Since the reward factor is a following link: http://go.cms.gov/ a Request for Information to gather rating-specific factor, a contract can partcanddstarratings. While the information directly from organizations

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to supplement the data that CMS We have also engaged NCQA and the PD contracts can have up to three rating- collects, as we believe that plans and PQA to examine their measure specific CAI adjustments—one for the sponsors are uniquely positioned to specifications used in the Part C and overall Star Rating and one for each of provide both qualitative and Part D Star Ratings program to the summary ratings (Part C and Part D). quantitative information that is not determine if re-specification is MA-only contracts can have one available from other sources. In warranted. The majority of measures adjustment for the Part C summary February and September 2015, we used for the Star Ratings program are rating. PDPs can have one adjustment released details on the findings of our consensus-based. Measure for the Part D summary rating. We research.64 We also reviewed reports specifications can be changed only by proposed to codify the calculation and about the impact of socio-economic the measure steward (the owner and use of the CAI in §§ 422.166(f)(2) and status (SES) on quality ratings, such as developer of the measure). Thus, 423.186(f)(2), while we consider other the report published by the NQF posted measure scores cannot be adjusted for alternatives for the future. at www.qualityforum.org/risk_ differences in enrollee case mix unless As has been done with the 2017 and adjustment_ses.aspx and the Medicare the specifications for the measure are 2018 Star Ratings, we proposed that the Payment Advisory Commission’s adjusted by the measure steward. adjusted measure scores of a subset of (MedPAC) Report to the Congress: Measure re-specification is a multiyear the Star Ratings measures would serve Medicare Payment Policy posted at process. For example, NCQA has a as the foundation for the determination http://www.medpac.gov/docs/default- standard process for reviewing any of the index values. Measures would be source/reports/march-2016-report-to- measure and determining whether a excluded as candidates for adjustment if (A) the measures are already case-mix the-congress-medicare-payment- measure requires re-specification. adjusted for SES (for example, CAHPS policy.pdf?sfvrsn=0. More recently, we NCQA’s re-evaluation process is and HOS outcome measures); (B) the have been reviewing reports prepared designed to ensure any resulting focus of the measurement is not a by the Office of the Assistant Secretary measure updates have desirable attributes of relevance, scientific beneficiary-level issue but rather a plan for Planning and Evaluation (ASPE 65) soundness, and feasibility: or provider-level issue (for example, and the National Academies of • Relevance describes the extent to appeals, call center, Part D price Sciences, Engineering, and Medicine on which the measure captures information accuracy measures); (C) the measure is the issue of measuring and accounting important to different groups, for scheduled to be retired or revised for social risk factors in CMS’s value- example, consumers, purchasers, during the Star Rating year in which the based purchasing and quality reporting policymakers. To determine relevance, CAI is being applied; or (D) the measure programs, and we have been NCQA assesses issues such as health is applicable to only Special Needs considering options on how to address importance, financial importance, and Plans (SNPs) (for example, SNP Care the issue in these programs. On potential for improvement among Management, Care for Older Adults December 21, 2016, ASPE submitted a entities being measured. measures). We proposed to codify these Report to Congress on a study it was • Scientific soundness captures the paragraphs for determining the required to conduct under section 2(d) extent to which the measure adheres to measures for CAI values at paragraph of the Improving Medicare Post-Acute clinical evidence and whether the (f)(2)(ii). In addition, the 2017 and 2018 Care Transformation (IMPACT) Act of measure is valid, reliable, and precise. Ratings were based on a group of 2014. The study analyzed the effects of • Feasibility captures the extent to measures from within the cohort certain social risk factors of Medicare which a measure can be collected at identified using these rules. beneficiaries on quality measures and reasonable cost and without undue The categorization of a beneficiary as measures of resource use in nine burden. To determine feasibility, NCQA LIS/DE for the CAI would rely on the Medicare value-based purchasing also assesses whether a measure is monthly indicators in the enrollment programs. The report also included precisely specified and can be audited. file. For the determination of the CAI considerations for strategies to account The overall process for assessing the values, the measurement period would for social risk factors in these programs. value of re-specification emphasizes correspond to the previous Star Ratings A January 10, 2017 report released by multi-stakeholder input, use of year’s measurement period. For the the National Academies of Sciences, evidence-based guidelines and data, and identification of a contract’s final Engineering, and Medicine provided wide public input. adjustment category for its application various potential methods for measuring Beginning with 2017 Star Ratings, we of the CAI in the current year’s Star and accounting for social risk factors, implemented the CAI that adjusts for Ratings program, the measurement including stratified public reporting.66 the average within-contract disparity in period would align with the Star Ratings performance associated with the year. If a beneficiary was designated as 64 The February release can be found at https:// percentages of enrollees who receive a full or partially dually eligible or www.cms.gov/medicare/prescription-drug- low income subsidy and/or are dual receiving an LIS at any time during the coverage/prescriptiondrugcovgenin/ eligible (LIS/DE) and/or have disability applicable measurement period, the performancedata.html. status. We developed the CAI as an beneficiary would be categorized as LIS/ The September release can be found at https:// www.cms.gov/Medicare/Prescription-Drug- interim analytical adjustment while we DE. For the categorization of a Coverage/PrescriptionDrugCovGenIn/Downloads/ developed a long-term solution. The beneficiary as disabled, we would Research-on-the-Impact-of-Socioeconomic-Status- adjustment factor varies by a contract’s employ the information from the Social on-Star-Ratingsv1-09082015.pdf. categorization into a final adjustment Security Administration (SSA) and 65 https://aspe.hhs.gov/pdf-report/report- category that is determined by a Railroad Retirement Board (RRB) record congress-social-risk-factors-and-performance- under-medicares-value-based-purchasing- contract’s proportion of LIS/DE and systems. Disability status would be programs. enrollees with disabilities. By design, determined using the variable original 66 National Academies of Sciences, Engineering, the CAI values are monotonic in at least reason for entitlement (OREC) for and Medicine. 2017. Accounting for social risk one dimension (LIS/DE or disability Medicare. The percentages of LIS/DE factors in Medicare payment. Washington, DC: The National Academies Press—https://www.nap.edu/ status) and thus, contracts with larger and disability per contract would rely catalog/21858/accounting-for-social-risk-factors-in- LIS/DE and/or disability percentages on the Medicare enrollment data from medicare-payment-identifying-social. realize larger positive adjustments. MA– the applicable measurement year. The

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counts of beneficiaries for enrollment pooling the Part D measures for MA– As described in §§ 422.166 (f)(2)(v) and categorization of LIS/DE and PDs and PDPs. We proposed to codify and 423.186(f)(2)(v) for the annual disability would be restricted to these paragraphs for the selection of the development of the CAI, the distribution beneficiaries who are alive for part or all adjusted measure set for the CAI for of the percentages for LIS/DE and of the month of December of the MA–PDs and PDPs at (f)(2)(iii)(C). We disabled using the enrollment data that applicable measurement year. Further, a solicited comment on the proposed parallels the previous Star Ratings year’s beneficiary would be assigned to the methodology and criteria for the data would be examined to determine contract based on the December file of selection of the measures for the number of equal-sized initial groups the applicable measurement period. We adjustment. for each attribute (LIS/DE and disabled). proposed to codify these standards for We also addressed how we would The initial categories would be created determining the enrollment counts at release our findings publicly. While the using all groups formed by the initial paragraph (f)(2)(i)(B). CAI would be employed, we proposed LIS/DE and disabled groups. The total Using the subset of the measures that to release on CMS.gov an updated number of initial categories would be meet the basic inclusion requirements, analysis of the subset of the Star Ratings the product of the number of initial we proposed to select the measure set measures identified for adjustment groups for LIS/DE and the number of for adjustment based on the analysis of using this rule as ultimately finalized. initial groups for the disabled the dispersion of the LIS/DE within- Basic descriptive statistics posted would dimension. contract differences using all reportable include the minimum, median, and The mean difference between the numeric scores for contracts receiving a maximum values for the within-contract adjusted and unadjusted summary or rating in the previous rating year. For variation for the LIS/DE differences. We overall ratings per initial category the selection of the Part D measures, also proposed that the set of measures would be calculated and examined. The MA–PDs and PDPs will be for adjustment for the determination of initial categories will then be collapsed independently analyzed. For each the CAI would be announced in the to form the final adjustment categories. contract, the proportion of enrollees draft Call Letter in paragraph (f)(2)(iii). The collapsing of the initial categories to form the final adjustment categories receiving the measured clinical process We proposed, at paragraph (f)(2)(iv) of would be done to enforce monotonicity or outcome for LIS/DE and non-LIS/DE each regulation, to determine the in at least one dimension (LIS/DE or beneficiaries would be estimated adjusted measure scores for LIS/DE and disabled). The mean difference within separately, and the difference between disability status from regression models each final adjustment category by rating- the LIS/DE and non-LIS/DE of beneficiary-level measure scores that type (Part C, Part D for MA–PD, Part D performance rates per contract will be adjust for the average within-contract for PDPs, or overall) would be the CAI calculated. CMS proposed to use a difference in measure scores for MA or values for the next Star Ratings year. logistic mixed effects model for PDP contracts. We proposed an estimation purposes that includes LIS/ We explained in the proposed rule approach to determine the adjusted that the percentage of LIS/DE is a DE as a predictor, random effects for measure scores that approximates case- contract and an interaction term of critical element in the categorization of mix adjustment using a beneficiary- contracts into the final adjustment contract and LIS/DE. Using the analysis level, logistic regression model with of the dispersion of the within-contract category to identify a contract’s CAI. contract fixed effects and beneficiary- Starting with the 2017 Star Ratings, we disparity of all contracts included in the level indicators of LIS/DE and disability modelling, the measures for adjustment have applied an additional adjustment status, similar to the approach currently for contracts that solely serve the would be identified employing the used to adjust CAHPS patient following decision criteria: (A) A population of beneficiaries in Puerto experience measures. However, unlike Rico to address the lack of LIS in Puerto median absolute difference between CAHPS case-mix adjustment, the only LIS/DE and non-LIS/DE beneficiaries for Rico. That adjustment results in a adjusters would be LIS/DE and modified percentage of LIS/DE all contracts analyzed is 5 percentage disability status. points or more or 67 (B) the LIS/DE beneficiaries that is subsequently used We explained that under our subgroup performed better or worse to categorize contracts into the final proposal, the sole purpose of the than the non-LIS/DE subgroup in all adjustment category for the CAI. adjusted measure scores would be for contracts. We proposed to codify these We proposed to continue this the determination of the CAI values. paragraphs for the selection criteria for adjustment at paragraph (f)(2)(vi) and to They would be converted to a measure- the adjusted measures for the CAI at calculate the contract-level modified level Star Rating using the measure paragraph (f)(2)(iii). LIS/DE percentage for Puerto Rico using thresholds for the Star Ratings year that In addition, we proposed that the Part the following sources of information: corresponds to the measurement period D measures for PDPs would be analyzed The most recent data available at the of the data employed for the CAI independently at paragraph (f)(2)(iii)(C). time of the development of the model of determination. All contracts would have In order to apply consistent adjustments both the 1-year American Community their adjusted summary rating(s) and for across MA–PDs and PDPs, the Part D Survey (ACS) estimates for the MA–PDs, an adjusted overall rating, measures would be selected by applying percentage of people living below the calculated employing the standard the selection criteria to MA–PDs and Federal Poverty Level (FPL) and the methodology proposed at §§ 422.166 PDPs independently and, then, selecting ACS 5-year estimates for the percentage and 423.186 (which would also be of people living below 150 percent of measures that met the criteria for either outlined in the Technical Notes each the FPL, and the Medicare enrollment delivery system. We explained that year), using the subset of adjusted data from the same measurement period under our proposal the measure set for measure-level Star Ratings and all other used for the Star Ratings year. We adjustment of Part D measures for MA– unadjusted measure-level Star Ratings. proposed that the data to develop the PDs and PDPs would be the same after In addition, all contracts would have model would be limited to the 10 states, applying the selection criteria and their summary rating(s) and for MA– drawn from the 50 states plus the District of Columbia, with the highest 67 The use of the word ‘or’ in the decision criteria PDs, an overall rating, calculated using implies that if one condition or both conditions are the traditional methodology and all proportion of people living below the met, the measure will be selected for adjustment. unadjusted measure-level Star Ratings. FPL as identified by the 1-year ACS

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estimates. Further, the Medicare of LIS/DE and disability using the data customer service, quality assurance and enrollment data would be aggregated as outlined previously. The CAI value costs associated with administering the from MA contracts that had at least 90 would be the same for all contracts benefit. We stated our belief that the percent of their enrolled beneficiaries within each final adjustment category. proposal demonstrated our continued with mailing addresses in the 10 highest The CAI values would be determined commitment toward ensuring that all poverty states. A linear regression using data from all contracts that meet beneficiaries have access to and receive model would be developed using the reporting requirements from the prior excellent care, and that the quality of known LIS/DE percentage and the year’s Star Rating data. The CAI care furnished by plans is assessed corresponding DE percentage from the calculation for the PDPs would be fairly in CMS programs. subset of MA contracts. performed separately and use the PDP We received the following comments We explained that the estimated slope specific cut points. Under our proposal, on our proposal and our responses from the linear regression approximates CMS would include the CAI values in follow: the expected relationship between LIS/ the draft and final Call Letter Comment: There was immense DE for each contract in Puerto Rico and attachment of the Advance Notice and support and acclaim for the work that its DE percentage. The intercept term Rate Announcement each year while the CMS continues to do related to the would be adjusted for use with Puerto interim solution is applied. The values impact of sociodemographic factors on Rico contracts by assuming that the for the CAI value would be displayed to the Star Ratings. Puerto Rico model will pass through the 6 decimal places. Rounding would take Response: CMS appreciates the point (x, y) where x is the observed place after the application of the CAI continued support of our stakeholders, average DE percentage in the Puerto value and if applicable, the reward government agencies, and the research Rico contracts based on the enrollment factor; standard rounding rules would community. data, and y is the expected average be employed. (All summary and overall Comment: Overall, commenters percentage of LIS/DE in Puerto Rico. Star Ratings are displayed to the nearest supported the continued use of the CAI, The expected average percentage of LIS/ half-star.) but the majority of commenters DE in Puerto Rico (the y value) would In the proposed rule, CMS noted that suggested some enhancements to the be estimated by multiplying the while recommendations from the ASPE current methodology (which we would observed average percentage of LIS/DE report, findings from measure continue to use under our proposal). in the 10 highest poverty states by the developers, and work by NQF on risk Many commenters believe that the ratio based on the most recent 5-year adjustment for quality measures is selection rules for adjusted measures are ACS estimates of the percentage living considered, we are continuing to somewhat arbitrary or restrictive and below 150 percent of the FPL in Puerto collaborate with stakeholders. As noted, result in a small subset of adjusted Rico compared to the corresponding we seek to balance accurate measures. These commenters suggested percentage in the set of 10 states with measurement of genuine plan expanding the number of measures for the highest poverty level. (Further performance, effective identification of adjustment. The suggested details of the proposed methodology, disparities, and maintenance of enhancements for increasing the which is currently used, can be found incentives to improve the outcomes for number of adjusted measures focused in the CAI Methodology Supplement disadvantaged populations. Keeping on modifying the selection rules. available at http://go.cms.gov/partcandd this in mind, we continue to solicit Commenters suggested revising the starratings.) public comment on whether and how second set of selection criteria that are Using the model developed from this we should account for low SES and based on the within-contract disparity process, the estimated modified LIS/DE other social risk factors in the Part C and analysis across contracts, which would percentage for contracts operating solely D Star Ratings. result in a larger set of adjusted in Puerto Rico would be calculated. We As noted in the proposed rule, we measures. The suggested modifications proposed that the maximum value for look forward to continuing to work with included a revision of the percentage the modified LIS/DE indicator value per stakeholders as we consider the issue of used for the median absolute difference contract will be capped at 100 percent accounting for LIS/DE, disability and between LIS/DE and non-LIS/DE and that all estimated modified LIS/DE other social risk factors and reducing beneficiaries for all contracts analyzed. values for Puerto Rico would be health disparities in CMS programs. We Some commenters suggested changing rounded to 6 decimal places when are continuing to consider options on to the currently employed value of 5 expressed as a percentage. how to measure and account for social percentage points to a lower values, We proposed to continue to employ risk factors in our Star Ratings program. such as 1 or 2 percentage points. A the LIS/DE indicator for contracts Although a sponsoring organization’s commenter suggested that the operating solely in Puerto Rico while administrative costs may increase as a percentage for the rule vary based on the the CAI is being used as an interim result of enrolling significant numbers measure, such that the number is analytical adjustment. Further, we of beneficiaries with LIS/DE status or meaningful for the particular measure. proposed that the modeling results disabilities, our research thus far has A commenter suggested modifying the would continue to be detailed in the demonstrated that the impacts of SES on selection rule from the proposed one appendix of the Technical Notes and the the quality ratings are quite modest, that uses the entire range of the within- modified LIS/DE percentages would be affect only a small subset of measures, contract disparities to instead identify available for contracts to review during and do not always negatively impact the the measures where the LIS/DE the plan previews. measures. Because CMS will like to subgroup performed better or worse We proposed to continue the use of better understand whether, how, and to than the non-LIS/DE subgroup (basing the CAI while the measure stewards what extent a sponsoring organization’s the second selection rule to the middle continue their examination of the administrative costs differ for caring for 90 percent of the differences in the measure specifications and ASPE low-income beneficiaries, we explicitly distribution of the within-contract completes their studies mandated by the solicited comment on that topic. disparity analysis). IMPACT Act and formalizes final Administrative costs may include non- Response: CMS is grateful for the recommendations. Contracts would be medical costs such as transportation continued support of our stakeholders categorized based on their percentages costs, coordination costs, marketing, related to the design and development

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of the CAI. CMS developed two sets of selection rule should be relaxed or improvement and innovation for the rules to determine the adjusted measure eliminated. In cases where there is little care of the LIS/DE/disabled population, set: First, the rules to determine the or no difference in the LIS/DE within as well as distort the signal of the Star measures that comprise the candidate contract performance, there will be very Ratings. measure set for adjustment and second, minimal or no impact on the calculation Comment: Several commenters were the rules applied to the candidate set to of the CAI values. Previously, we have critical of codifying an interim response identify the measures to be adjusted to excluded measures from this calculation and expressed concern that it would determine the values of the CAI. The when the effects were very small. With impede a long-term response. candidate measure set includes the this modification based on the Response: CMS’s goal is to develop a measures in the Star Ratings that have comments received and further analysis, long-term solution that addresses the varying levels of a LIS/DE/disabled these measures will be included but will LIS/DE/disabled effect revealed in our effect. The second set of rules relies on have a very minimal impact on the CAI research. Any response, long- or short- the analysis of the variability of the values. term, must align with our policy and within-contract differences of LIS/DE Comment: Some commenters program goals. CMS is confident that we and non-LIS/DE beneficiaries. The suggested including a hold harmless can maintain our agility and application of the second set of provision for the application of the CAI responsiveness even when codifying the selection rules identified the measures for plans with limited LIS/DE interim solution. The use of the CAI as in the candidate set that demonstrated populations. Some commenters believed an interim response affords CMS the an LIS/DE effect at a level that qualified contracts should not be subject to time to carefully consider each potential them for adjustment. negative adjustments because they have solution, to continue our collaboration a low percentage of LIS/DE or disabled with stakeholders, to incorporate the After thoughtful and careful enrollees. A commenter suggested a findings of the research community, and deliberation of the recommendations of hold harmless provision for contracts to include the anticipated our stakeholders, CMS will finalize that upon the application of the CAI, recommendations in ASPE’s second modified selection rules for identifying would have their ratings fall below a Report to Congress that will be released the adjusted measures: We will not particular threshold. in 2019. finalize the second set of rules for Response: As summarized in the Comment: Some commenters determining the adjusted measure set NPRM, research indicates disparities encouraged the continued collaboration that we proposed at paragraphs exist in performance measures that are with ASPE and measure developers. (f)(2)(iii)(A) through (C) that provided influenced by an individual’s Response: CMS remains firmly for identifying measures for adjustment sociodemographic factors. The CAI was committed to our continued research based on an analysis of the dispersion designed to account for the disparities and collaboration with our stakeholders of the LIS/DE within contract that were revealed in our research and including researchers, industry, differences. Under the rule we are to adjust for those disparities in order to measure stewards, and other finalizing, the 2021 CAI values will be allow fair comparisons among contracts. governmental agencies. The determined using all measures in the The CAI is determined using the data development of a long-term solution candidate measure set for adjustment from the Star Ratings program. Instead that best addresses any sensitivity of the identified by application of paragraphs of a one-size fits-all approach to address Star Ratings to the beneficiaries enrolled (f)(2)(ii)(A) through (D). A measure will the impact of the socioeconomic factors in MA and PDP contracts is only be adjusted if it remains after applying on the Star Ratings, the CAI allows a possible through continued the following four bases for exclusions tailored approach by the categorization collaboration and feedback from our as follows: The measure is already case- of a contract into final adjustment stakeholders. mix adjusted for SES (for example, category that is based on the percentage Comment: Some commenters believe CAHPS and HOS outcome measures); of LIS/DE and disabled beneficiaries that the CAI is an insufficient the focus of the measurement is not a enrolled in a contract. In addition, the adjustment and advocated for a larger beneficiary-level issue but rather a plan CAI values are a series of values based adjustment. Further, some of the or provider-level issue (for example, on the rating-type (overall, Part C commenters justified a larger appeals, call center, Part D price summary, Part D summary). Further, the adjustment due to the higher costs accuracy measures); the measure is CAI values for the Part D summary associated with caring for traditionally scheduled to be retired or revised ratings are contract-type specific and a underserved vulnerable populations. A during the Star Rating year in which the different set of values are developed for few of the commenters suggested the CAI is being applied; or the measure is MA–PDs and PDPs. use of an equity bonus, as suggested in applicable to only Special Needs Plans CMS remains committed to our ASPE’s first Report to Congress, to (SNPs) (for example, SNP Care fundamental principles, which includes address the additional costs for serving Management, Care for Older Adults incentivizing contracts to provide the traditionally underserved populations. measures). With this modification to the best quality of care to all of their Response: CMS believes that any CAI calculations, the ratings will enrollees and providing accurate policy response must delineate the two continue to be data driven in order to information to beneficiaries to allow distinct aspects of the LIS/DE or be a true reflection of plan quality and comparisons among contracts for plan disability issue—quality and payment. enrollee experience, and continue to choice. A hold harmless provision for The Star Ratings program focuses on treat all contracts fairly and equally. The the CAI that specifically targets accurately measuring the quality of care modification will only eliminate the contracts with limited LIS/DE provided, so any response must focus selection rule in regards to the size of populations or contracts that would on enhancing the ability to measure the within contact differences. This realize a negative impact does not align actual quality differences among selection rule was originally developed with the underlying principles of the contracts. To address the LIS/DE and based on a goal of adjusting measures Star Ratings program or the fundamental disability issue CMS must accurately only when there are substantive LIS/DE design principles of the CAI. Such a address any sensitivity of the ratings to within contract measure disparities. provision could have the unintended the composition of the beneficiaries Commenters suggested that this consequence of limiting quality enrolled in a contract at the basic

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building block of the rating system, the represent true differences between commenter believed this would allow measure. CMS believes the CAI contracts in quality. Because of this an apples-to-apples comparison in addresses the quality measurement possibility, we are concerned that regards to performance reimbursement. aspect of the issue at hand. In addition, adjustment of between-contract Response: The CAI adjusts for the CMS has encouraged the measure disparities could mask true differences average within-contract disparities stewards to examine our findings and in quality. across all contracts required to report undertake an independent evaluation of Adjusting for within-contract using the adjusted measures set as the the measures’ specifications to disparities is an approach aligned with basis of the adjustment. Contracts, determine if measure re-specification is the consensus reflected in the NQF including D–SNPs, are categorized warranted. Additionally, the payment report on sociodemographic adjustment, based on their percentages of LIS/DE response which is not the focus of this which states that, ‘‘. . . only the within- and disabled beneficiaries. The regulation focuses on payment accuracy unit effects are adjusted for in a risk adjustment is designed to be monotonic, for beneficiaries with different dual adjustment procedure because these are or in other words, contracts with higher statuses, differentiated by aged or the ones that are related specifically to percentages of LIS/DE or disabled disabled status, by improving the patient characteristics rather than beneficiaries will realize a larger predictive performance of the CMS– differences across units’’ (National adjustment. While the CAI does not HCC risk-adjustment model to take into Quality Forum, 2014). Our research compare D–SNPs to D–SNPs, the account the unique cost patterns of each focused on measuring within-contract adjustment does account for the higher of these subgroups of beneficiaries. differences in performance for LIS/DE percentages of LIS/DE and disabled Comment: Some commenters and/or disabled compared to non-LIS/ beneficiaries in a contract by suggested adjusting for both within- and DE and non-disabled beneficiaries. categorizing the contracts in the higher between-contract differences. The The Improving Medicare Post-Acute final adjustment categories and thus, the commenters referenced one of the two Care Transformation Act of 2014 categories with the higher adjustments. findings in ASPE’s Report to Congress (IMPACT Act, Pub. L. 113–185) The CAI is designed to address the that found differences in plan instructs the Office of the Assistant sensitivity of the Star Ratings to the performance between contracts serving Secretary for Planning and Evaluation composition of the enrollees in a primarily LIS/DE and disabled (ASPE) to conduct a study that contract. The Star Ratings are designed populations and those who do not even examines the effect of individuals’ SES for quality measurement and not for after adjusting for patient-mix. on quality measures, resource use, and payment purposes. The design and Response: As summarized in the other measures for individuals under development of the CAI was done to NPRM, CMS’s focus on within-contract the Medicare program. Because ASPE’s address measurement and not payment. disparities for the development of the research agenda aligns closely with our Comment: A commenter suggested CAI aligns with the recommendations of goals, we have worked and continue to increasing the adjustment for the two the research community including the work collaboratively with ASPE and highest adjustment categories ) in order National Quality Forum (NQF), other governmental agencies to broaden to have a more significant impact on the MedPAC, and ASPE. CMS conducted an and expand the focus of the issue. In overall Star Rating The commenter in-depth examination of the possible December, 2016 ASPE released its believed the underlying efforts are sensitivity of the Star Ratings to the findings to Congress using readily significantly different for contracts with composition of a contract’s enrollees available data which includes data from high percentages of LIS/DE/disabled using a multi-faceted, comprehensive the Star Ratings program. In it, ASPE enrollees. Further, the commenter approach. One analysis permitted the supported the use of the CAI in the Star believed there are administrative estimation of within-contract Ratings program including our focus on challenges and higher costs associated differences associated with LIS/DE or the within-contract disparities. with promoting beneficiary compliance disability to quantify the LIS/DE/ ASPE will release a second Report to in servicing vulnerable populations. disabled effect. Within-contract Congress in the fall of 2019 that will Response: The use of a consistent differences are differences that may focus on the impact of SES on quality methodology and a data-driven exist between subgroups of enrollees in and resource use in Medicare using approach precludes the possibility of an the same contract (for example, if LIS/ measures (for example, education and increase in the adjustment in a subset of DE enrollees within a contract have a health literacy) from other data sources. the final adjustment categories. The CAI different mean or average performance Once the report is released, CMS will is designed from a quality measurement on a measure than non-LIS/DE enrollees carefully review the report and all perspective and not payment. (The CAI in the same contract). These differences recommendations contained within it. methodology is detailed in the CAI may be favorable or unfavorable for LIS/ Comment: A commenter specifically Supplement available at http:// DE and/or disabled beneficiaries. offered to collaborate with CMS. go.cms.gov/partcanddstarratings.) Between-contract differences in Response: CMS appreciates the Comment: A commenter performance associated with LIS/DE or willingness, support, and dedication of recommended enhancing the disability status (‘‘between-contract LIS/ our stakeholders to improve the health categorization of contracts specifically DE and/or disability disparities’’) are the of our beneficiaries. We value the noting that the number of initial possible additional differences in feedback and suggestions provided by categories for MA–PDs increased from performance between contracts our stakeholders. Comments and 50 to 60 categories when comparing the associated with the contract’s suggestions are welcome throughout the 2017 to 2018 CAI, but the number of proportion of LIS/DE and disabled year. Outside of formal comments initial categories for PDPs categories enrollees that remain after accounting periods, stakeholders can contact us via remained at 16 categories. for within-contract disparities by LIS/ email at the following address: Response: The number of groups in DE and disability status. If LIS/DE or [email protected]. each dimension (LIS/DE and disabled) disabled beneficiaries are more or less Comment: A commenter suggested are determined after reviewing each of likely than other beneficiaries to be comparison of like plans for adjustment the distributions using the percentages enrolled in lower-quality contracts, then specifically comparing Dual-Special of LIS/DE and disabled across all between-contract disparities may Needs Plans (D–SNPs) to D–SNPs. The contracts (MAs and PDPs are examined

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separately) using the applicable data. oversight to ensure accuracy and for a subset of their measures that are The MA LIS/DE distribution for the transparency, and not accepting any used in the Star Ratings program and 2018 CAI had shifted slightly as changes to performance measurement will require stratified reporting. A compared to the data for the 2017 CAI that would lead to masking disparities summary of the NCQA analysis and development, so the decision was made and harming disadvantaged patients. recommendations can be accessed at: to increase the number of initial groups Another commenter recommended that http://www.ncqa.org/hedis-quality- for the LIS/DE dimension and maintain CMS monitor how adjustments to the measurement/research/hedis-and-the- the same number of groups for the Star Ratings affect the quality of care impact-act. A summary of the disabled dimension. The number of received by LIS/DE and disabled modification of the PQA measures can initial categories for the 2018 CAI values enrollees. be accessed at: SDS Risk Adjustment was increased from 50 (10 LIS/DE Response: CMS is committed to PQA PDC CMS Part D Stars. CMS will groups and 5 groups for disability) to 60 making informed decisions based on be reviewing the data submitted as a (12 LIS/DE groups and 5 groups for thoughtful and careful consideration of result of these changes in the measure disability). The use of additional initial any unintended consequences of a specifications which impacts the categories in 2018 did not significantly particular approach. CMS has focused measures’ reporting requirements. CMS impact the number of final adjustment on the within-contract disparities, will be developing a proposal for the categories (FAC) since the collapsing of because we do not want to mask true use of the revised data through future the initial categories is done to maintain differences in quality across contracts. rulemaking. monotonicity and maintain a minimum CMS is transparent in the development Comment: A commenter supported an number of contracts per FAC, while process and seeks the input of our additional adjustment for all plans striving for a minimum differential stakeholders, HHS partners, and other serving vulnerable populations outside between the FACs. After examining the government agencies. CMS thoroughly of the CAI. distributions for PDPs, the use of the examines any proposed modification Response: At this time, CMS’ same number of initial groups for each using a comprehensive approach which response to the LIS/DE/disabled effect is dimensions was determined to be commonly includes multiple rounds of the CAI. As our research and that of our appropriate. Additional initial simulations. Further, CMS strives to stakeholders, government agencies, and categories do not enhance or refine the identify any potential unintended measure developers evolves, CMS will final adjustment categories, but rather consequences of any possible change be developing a long-term response and can cause instability in the CAI values. and to develop strategies to mitigate any will take the commenters’ Comment: A few commenters potential risks to the integrity of the Star recommendations into account as part suggested stratifying all measures by Ratings system. Upon implementation, of that. LIS/DE and disabled status. CMS maintains vigilance in its review Comment: Some commenters Response: At this time, the National and monitoring of the change to ensure suggested incorporating other factors Committee for Quality Assurance that the policy goals that prompted the that are well-known as predictors of (NCQA) 68 and the Pharmacy Quality modification have been met. medication adherence and other Star Alliance (PQA) 69 have recommended Comment: Several commenters Rating quality outcomes. stratification for a subset of their suggested working with measure Response: CMS continues to conduct measures that are used in the Star developers. research on the underlying factors Ratings program. CMS is waiting for Response: CMS has been working driving the LIS/DE/disability effect. In ASPE to complete their research under closely with the measure developers for addition, CMS has been working closely the IMPACT Act before developing an the measures used in the Star Ratings with the measure developers for the Agency-coordinated approach to the program and will continue to do so. measures used in the Star Ratings display of measures. Comment: A commenter suggested program. Further, we continue to Comment: A commenter suggested the that CMS set minimum standards for collaborate with stakeholders and other creation of a structural measure that measure developers that include testing governmental agencies including ASPE. reflects the support for LIS/DE and and considerations for adjustments. ASPE will release a second Report to disabled beneficiaries provided by a Further, the commenter believes that the Congress in the fall of 2019 that will contract. research should be made public to align focus on the impact of SES on quality Response: CMS appreciates the with the goal of transparency. and resource use in Medicare using suggestion. CMS is currently examining Response: While CMS does measures (for example, education and the feasibility of a health equity measure collaborate with the measure developers health literacy) from other data sources. that could be potentially proposed in of the measures used in the Star Ratings Comment: Some commenters stated the future. program, they remain independent that geographic and unique Comment: A few commenters entities that are the stewards and characteristics that could affect Star recommended that CMS proceed with shepherds of their own measures. Both Ratings performance should also be caution, citing concerns with creating a National Committee for Quality assessed and addressed. double-standard or tiered system, or Assurance (NCQA) and Pharmacy Response: CMS continues to conduct masking disparities. A commenter Quality Alliance (PQA) have well- research on the underlying factors expressed strong support of CMS in defined processes in place for revising driving the LIS/DE/disability effect. seeking to utilize the Star Rating system or updating their measures. Public CMS has examined the to encourage continuous quality comment is solicited during their sociodemographic correlates with a improvement in the MA and review process, as well as feedback from subset of the HEDIS measures used in Prescription Drug programs, providing their many stakeholders including the the Star Ratings program. CMS is medical community. committed to identifying the cause of 68 A summary of the NCQA analysis and Comment: A commenter inquired any sensitivity of the Star Ratings to the recommendations can be accessed at: http:// about the future use of the stratified composition of enrollees in a contract. www.ncqa.org/hedis-quality-measurement/ research/hedis-and-the-impact-act. measures proposed by PQA and NCQA. CMS continues to examine geographic 69 The PQA summary can be accessed at: SDS Response: Both NCQA and PQA will variation, as well as unique attributes of Risk Adjustment PQA PDC CMS Part D Stars. be modifying the measure specifications both beneficiaries and contracts that

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may play a role in the disparity in will be adjusted if it remains after measures. The high performing icon is performance among subpopulations. applying the exclusions as follows: The assigned to an MA-only contract for Comment: A commenter took the measure is already case-mix adjusted for achieving a 5-star Part C summary opportunity to note that, as the Agency SES (for example, CAHPS and HOS rating, a PDP contract for a 5-star Part moves forward with developing a outcome measures), if the focus of the D summary rating, and an MA–PD Quality Rating System (QRS) for measurement is not a beneficiary-level contract for a 5-star overall rating. Medicaid managed care organizations, issue but rather a plan or provider-level We proposed that a contract receives many of the considerations that apply to issue (for example, appeals, call center, a low performing icon as a result of its the Medicare Star Ratings program will Part D price accuracy measures), if the performance on the Part C or Part D likely have implications for, and measure is scheduled to be retired or summary ratings. The low performing interactions with, this new Medicaid revised during the Star Rating year in icon will be calculated by evaluating the QRS. which the CAI is being applied, or if the Part C and Part D summary ratings for Response: Although this comment is measure is applicable to only Special the current year and the past 2 years (for outside the scope of this rule, we note Needs Plans (SNPs) (for example, SNP example, the 2016, 2017, and 2018 Star that the MA Star Ratings Team is Care Management, Care for Older Adults Ratings). If the contract had any engaged with the team leading the measures). combination of Part C and Part D development of the QRS for Medicaid. For the 2021 Star Ratings program, all summary ratings of 2.5 or lower in all Comment: Some commenters three medication adherence measures 3 years of data, it will be marked with encouraged CMS to explore adjusting will be designated as an adjusted a low performing icon. A contract must for social risk factors at the measure- measure for the determination of the have a summary rating in either Part C level or for the overall Star Rating CAI. or Part D for all 3 years to be considered System. A commenter specifically Comment: A commenter expressed for this icon. These rules were proposed recommended that at minimum, age and support of the additional adjustment for for codification at §§ 422.166(h)(1)(i) gender should be used for adjusting all contracts operating in Puerto Rico. and (ii)(A) and 423.186(h)(1)(i) and measures in the Star Ratings program. Response: CMS appreciates the (ii)(A). Response: A measure specification positive feedback regarding the We also proposed, at paragraph details the adjustments for a measure. additional adjustment for contracts that (h)(1)(ii)(B), to continue our policy of Only a measure steward may make operate solely in Puerto Rico. CMS disabling the Medicare Plan Finder revisions to the measure specification. believes the adjustment allows for an online enrollment function for Medicare CMS continues to engage in equitable application of the CAI for the health and prescription drug plans with conversation with the measure stewards subset of contracts for which it applies. the low-performing icon to ensure that of the Star Ratings measures. beneficiaries are fully aware that they Summary of Regulatory Changes CMS is continuing research and are enrolling in a plan with low quality collaboration with our stakeholders to For the reasons set forth in the and performance ratings; we believe this develop a long-term response to the proposed rule and our responses to the is an important beneficiary protection to sensitivity of the Star Ratings to the related comments summarized above, ensure that the decision to enroll in a composition of enrollees in a contract. we are finalizing the provisions as low rated and low-performing plan has Comment: A commenter requested proposed at §§ 422.166(f)(2) and been thoughtfully considered. additional detail regarding the selection 423.186(f)(2) with modifications to Beneficiaries who still want to enroll in of the Medication Adherence for §§ 422.166(f)(2)(iii) and a low-performing plan or who may need Hypertension for adjustment in the MA– 423.186(f)(2)(iii). The 2021 CAI values to in order to get the benefits and PD and PDP contracts while not will be determined using all measures services they require (for example, in providing an adjustment on the other in the candidate measure set for geographical areas with limited plans) two medication adherence measures. adjustment. A measure will be adjusted would be warned, via explanatory Response: As discussed in the if it remains after applying the messaging of the plan’s poorly-rated proposed rule, CMS initially developed exclusions as follows: The measure is performance, and directed to contact the and used two sets of rules to determine already case-mix adjusted for SES (for plan directly to enroll. the adjusted measure set: First, the rules example, CAHPS and HOS outcome We received the following comments to determine the measures that comprise measures), if the focus of the to our proposal and our responses the candidate measure set for measurement is not a beneficiary-level follow: adjustment and second, the rules issue but rather a plan or provider-level Comment: Commenters applied to the candidate set to identify issue (for example, appeals, call center, overwhelmingly expressed support for the measures to be adjusted to Part D price accuracy measures), if the the icons, as well as our policy of determine the values of the CAI. The measure is scheduled to be retired or disabling the online enrollment option second set of rules relied on the analysis revised during the Star Rating year in for contracts with the low-performing of the variability of the within-contract which the CAI is being applied, or if the icon. A commenter suggested requiring differences of LIS/DE and non-LIS/DE measure is applicable to only Special 3 years of high performance to qualify beneficiaries. Needs Plans (SNPs) (for example, SNP for a high-performing icon, and another After thoughtful and careful Care Management, Care for Older Adults commenter suggested CMS include a deliberation of the recommendations of measures). full explanation for beneficiaries when our stakeholders, CMS will modify the the low-performing icon is assigned. selection rules for identifying the u. High and Low Performing Icons Response: We appreciate this support adjusted measures by eliminating the We proposed regulation text to govern and the suggestions made. We will take second set of rules for determining the assignment of high and low performing them under consideration. adjusted measure set. The 2021 CAI icons at §§ 422.166(h)(1) and Comment: We received one comment values will be determined using all 423.186(h)(1). We proposed to continue requesting that CMS create a separate measures in the candidate measure set current policy that a contract receives a icon to provide beneficiaries with for adjustment, thus eliminating the high performing icon as a result of its information about a contract’s audit second set of selection rules. A measure performance on the Part C and D performance.

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Response: CMS does note on We received the following comments the second plan preview; these can be Medicare Plan Finder when contracts on our proposal and our responses requested by contacting are under sanction. We appreciate this follow: [email protected]. Comment: Several commenters suggestion to share additional We note the NDC files are updated expressed support for the continuation information regarding contract audit three times for a given measurement of plan preview periods. One scores and Civil Money Penalties on year’s PDEs. For 2018 PDEs, the PQA, as specifically mentioned agreeing with Plan Finder. custodian of a measure, publishes the For the reasons set forth in the CMS’ decision not to codify the details at this time. NDC lists in both February and July proposed rule and our responses to the 2018, and again in February 2019 related comments summarized earlier, Response: CMS appreciates this support. allowing sponsors multiple we are finalizing the provisions for high opportunities to identify missing NDCs/ and low performing icons and Comment: Several commenters acknowledged the importance of drugs prior to the release of the April enrollment process limitations as 2019 report that includes all 2018 to- proposed at §§ 422.166(h)(1) and reviewing their data throughout the year. A commenter suggested that CMS date processed PDEs and the first Star 423.186(h)(1) without modification. release Star Ratings for marketing Ratings plan preview in August/early v. Plan Preview of Star Ratings purposes by August 15 each year; September 2019. Furthermore, the another suggested that preview periods PQA’s NDC update schedule does not We proposed in §§ 422.166(h)(2) and be at least four weeks long. Several preclude a Part D sponsor from 423.186(h)(2) that CMS have plan commenters also suggested additional internally updating its NDC list more preview periods before each Star data they believed would be helpful for Ratings release, consistent with current frequently, monitoring its performance CMS to provide during plan previews. practice. Part C and D sponsors can and implementing timely interventions For example, a few specifically preview their Star Ratings data in HPMS including those that could occur at the requested that CMS release prior to display on the Medicare Plan point-of-sale. We believe this improvement measure calculation implementation timeframe is reasonable Finder. We currently use two preview worksheets for all contracts during the periods. During the first plan preview, and appropriate, and defer to the preview. Another commenter requested measure custodian for revisions. we expect Part C and D sponsors to more timely and frequent drug list and closely review the methodology and PDE edit updates to ensure reporting For several Patient Safety measures their posted numeric data for each accuracy, as well as additional reporting CMS provides each Part D contract a file measure. The second plan preview on adherence measures. containing their beneficiary-level includes any revisions made as a result Response: CMS strives to allow plans adjusted and unadjusted rates that can of the first plan preview. In addition, as much time as possible to preview be used by the contract to our preliminary Star Ratings for each their data but there are operational independently test their internal measure, domain, summary score, and constraints that limit how soon Star reporting processes and assess the overall score are displayed. During the Ratings can be made available for plan impact of adjustment factors. In second plan preview, we expect Part C preview. The data time frame for several particular, the adherence measure report and D sponsors to again closely review measures currently runs through June of provides up to 70,000 beneficiary the methodology and their posted data each year, and CMS does not receive all enrollment episodes (including begin for each measure, as well as their of the data until the end of July. The and end dates) where the beneficiary preliminary Star Rating assignments. first plan preview currently starts in was not adherent, along with the We proposed that CMS continue to offer early August, the second plan preview adjusted and unadjusted numerator and plan preview periods before each Star starts in September, and the public denominator days used in the Ratings release (meaning the display in release on MPF is in October. In beneficiary’s PDC calculations. The size the MPF), but to not codify the details between plan preview periods CMS of the adherence beneficiary sample of each period because over time the must make any necessary corrections to should be sufficient to perform the PDC process has evolved to provide more the data, so four-week preview periods calculation to address systematic issues data to sponsors to help validate their are not feasible operationally. Many as requested. data. We explained in the proposed rule datasets and reports are available for that we envision the plan preview Comment: Several commenters ongoing monitoring purposes prior to suggested that CMS post national Star periods to continue to evolve in the Star Rating plan previews. We urge Part future and do not believe that codifying Ratings data during the plan preview C and D sponsors to regularly review period. specific display content is necessary. their underlying measure data that are We also emphasized in the proposed the basis for the Part C and D Star Response: The purpose of the plan rule how it is important that Part C and Ratings and immediately alert CMS if previews is for sponsors to review and D sponsors regularly review their errors or anomalies are identified so any raise any questions about their own underlying measure data that are the issues can be resolved prior to the first plan’s data prior to the public release of basis for the Part C and D Star Ratings. plan preview period. For measures that data for all plans on Medicare.gov. This For measures that are based on data are based on data reported directly from allows for any necessary corrections to reported directly from sponsors, any sponsors, any issues or problems can be made prior to the Star Ratings data issues or problems should be raised well and should be raised well in advance of being public. Releasing national Star in advance of CMS’ plan preview CMS’s plan preview periods. Ratings data (meaning data about other periods. A draft version of the Technical CMS appreciates comments received plans’ ratings) would not serve this Notes has traditionally been and will in about additional data that could be purpose. Further, to the extent that the future be available during the first provided during previews. The errors are identified and changes need plan preview. The draft is then updated improvement calculation emulation to be made to data, it would mean that for the second plan preview and worksheets are available to sponsoring updates to the national data render finalized when the ratings data have organizations to preview their own earlier release inaccurate and less been posted to Medicare Plan Finder. improvement scores per contract during useful.

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Summary of Regulatory Changes Part D summary plan rating score of at commenters contended that Part D For the reasons set forth in the least 3 stars pursuant to the 5-star rating enrollees are able to exercise freedom of proposed rule and our responses to the system specified in part 423 subpart D. choice without any willing pharmacy related comments summarized above, A Part D summary plan rating is mandates, and that preferred pharmacy we are finalizing the provisions for plan calculated as provided in § 423.186. networks are popular among We welcomed comment on these previews as proposed at beneficiaries. A number of other technical changes and whether there are independent pharmacies requested that §§ 422.166(h)(2) and 423.186(h)(2) additional changes that should be made we consider extending any willing without modification. to account for our proposal to codify the pharmacy provisions to preferred w. Technical Changes Star Ratings methodology and measures pharmacy networks in future We also proposed a number of in regulation text. rulemaking, and several Part D plan We did not receive any comments on technical changes to other existing sponsors thanked us for recognizing that the proposed technical changes and regulations that refer to the quality we should not limit the ability of Part therefore are finalizing them. However, ratings of MA and Part D plans; we D plan sponsors to develop and we noted in our review that in several proposed to make technical changes to maintain preferred pharmacy networks. of these technical corrections, the text Response: We believe that the refer to the proposed new regulation mistakenly referred to ‘‘subpart 166’’ or commenters who thought our proposal text that provides for the calculation ‘‘subpart 186’’ which is incorrect. The was intended to restrict Part D plan and assignment of Star Ratings. quality rating system regulations are sponsors’ ability to have preferred Specifically, we proposed: finalized in subpart D of part 422 and pharmacy networks misunderstood the • In § 422.258(d)(7), to revise part 423, so we are finalizing these proposal. The proposed rule’s paragraph (d)(7) to specify that technical changes with the correct discussion of any willing pharmacy beginning with 2012, the blended reference to ‘‘subpart D’’. standard terms and conditions benchmark under paragraphs (a) and (b) 12. Any Willing Pharmacy Standards requirements, proposed definitions of will reflect the level of quality rating at retail and mail-order pharmacies, and the plan or contract level, as determined Terms and Conditions and Better Define Pharmacy Types (§§ 423.100, 423.505) accreditation requirements in standard by the Secretary. The quality rating for terms and conditions were not intended a plan is determined by the Secretary Section 1860D–4(b)(1)(A) of the Act to limit Part D plan sponsors’ ability to according to the 5-star rating system and § 423.120(a)(8)(i) require a Part D develop and maintain preferred (based on the data collected under plan sponsor to contract with any pharmacy networks. On the contrary, section 1852(e) of the Act) specified in pharmacy that meets the Part D plan we explicitly stated in the proposed rule subpart D of this part 422. Specifically, sponsor’s standard terms and conditions that we were attempting to ensure that the applicable percentage under for network participation. Section Part D plan sponsors could continue to paragraph (d)(5) must be increased 423.505(b)(18) requires Part D plan develop and maintain preferred according to criteria in paragraphs sponsors to have a standard contract networks while complying with the any (d)(7)(i) through (v) if the plan or with reasonable and relevant terms and willing pharmacy requirement, which contract is determined to be a qualifying conditions of participation whereby any applies to standard terms and plan or a qualifying plan in a qualifying willing pharmacy may access the conditions. county for the year. standard contract and participate as a Comment: Some commenters asked us • In § 422.260(a), to revise the network pharmacy. to abandon the any willing pharmacy paragraph to specify that the provisions In the proposed rule, we intended to construct within the Part D program. A of this section pertain to the clarify that the any willing pharmacy commenter pointed out that the any administrative review process to appeal requirement applies to all pharmacies, willing pharmacy provision would quality bonus payment status regardless of how they have organized require Part D plan sponsors to contract determinations based on section 1853(o) one or more functional lines of with any pharmacy who agrees to meet of the Act and that such determinations pharmacy business. Second, we the terms and conditions of the are made based on the overall rating for proposed to revise the definition of organization, whether or not the MA–PDs and Part C summary rating for retail pharmacy and define mail-order pharmacy’s participation in the network MA-only contracts for the contract pharmacy. Third, we proposed to clarify is necessary for the Part D plan sponsor assigned pursuant to subpart 166 of this our regulatory requirements for what to satisfy geographic access needs. This part 422. constitutes ‘‘reasonable and relevant’’ commenter contended that the any • In § 422.260(b), to revise the standard contract terms and conditions. willing pharmacy provision is definition of ‘‘quality bonus payment Finally, we proposed to codify our unnecessary because sponsors are (QBP) determination methodology’’ to existing guidance with respect to when already motivated to provide access to mean the quality ratings system a pharmacy must be provided with a a broad number of pharmacies because specified in subpart 166 of this part 422 Part D plan sponsor’s standard terms Part D enrollees select a health or for assigning quality ratings to provide and conditions. prescription drug plan based on its comparative information about MA We received the following comments ability to provide broad access by plans and evaluating whether MA and our response follows: having pharmacy networks in place organizations qualify for a QBP. Comment: A large number of Part D across many geographic areas. Other • In § 422.504(a)(18), to revise enrollees expressed appreciation for our commenters stated that CMS’ proposal paragraph (a)(18) to state to maintain a series of any willing pharmacy only addressed pharmacy complaints Part C summary plan rating score of at proposals, while other commenters and was unnecessary because the least 3 stars pursuant to the 5-star rating expressed concerns with our preamble proposed rule provided nothing to system specified in subpart 166 of this discussion because they believed that suggest that Part D enrollees were part 422. A Part C summary plan rating CMS was considering eliminating or dissatisfied with how Part D plan is calculated as provided in § 422.166. otherwise changing the ability for Part D sponsors develop and maintain their • In § 423.505(b)(26), to revise plan sponsors to develop and maintain contracted pharmacy networks. Other paragraph (b)(26) to state maintain a preferred pharmacy networks. Some commenters believed that our any

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willing pharmacy proposals violate the requirements to promote competition reasonable and relevant. That is, should spirit of the non-interference clause at and have pursued goals such as a pharmacy violate the relevant terms § 1860D–11(i) of the Act. Additionally, increasing the transparency of prices and conditions, or have a history of a number of pharmacies submitted and minimizing barriers to entry to the doing so, a Part D plan sponsor would comments that Part D plan sponsors extent possible while still ensuring have no obligation to contract with the offer reimbursement rates below quality. Accordingly, CMS has always pharmacy under the any willing acquisition costs, that CMS should interpreted the any willing pharmacy pharmacy requirement. codify its sub-regulatory guidance requirement to require Part D sponsors Comment: Some commenters regarding unreasonably low to offer reasonable and relevant contract suggested that CMS should explore reimbursement rates as a means to terms and conditions to minimize policy options to encourage Part D plan subvert the convenient access standards, barriers to pharmacy network sponsors to offer medically complex or that the extended definition of participation and we maintain that patients reduced/zero cost sharing when reasonable and relevant should prevent requirement in this rule. Our utilizing high-touch pharmacy models financial terms and conditions that clarifications are intended to ensure that to support both patient-centered care result in a negotiated reimbursement such contract terms and conditions and the goals of Medication Therapy rate, that, inclusive of payment and offered by Part D sponsors remain Management. adjustment, results in a loss to the reasonable and relevant in light of the Response: We thank the commenters, provider, as such a term that would not changes and innovations in pharmacy however these comments are beyond the be ‘‘reasonable.’’ practice and business models since the scope of this rule. Response: The any willing pharmacy beginning of the Part D program. a. Any Willing Pharmacy Required for requirement is statutory and CMS does Finally, the proposed rule explicitly All Pharmacy Business Models not have the discretion to abandon it. addressed the any willing pharmacy CMS has already established through requirement in relationship to With the pharmaceutical distribution rulemaking that Part D plan sponsors complaints received from Part D and pharmacy practice landscape must contract with any pharmacy that enrollees (such as, confusion concerning evolving rapidly, and because meets the Part D plan sponsor’s Part D enrollee cost-sharing pharmacies’ business and service standard terms and conditions for expectations). Further, although we delivery models now frequently perform network participation (§ 423.120(a)(8)(i)) believe they misunderstood our multiple pharmacy practice functions, and offer a standard contract with proposal, many of the Part D enrollees many pharmacies no longer fit squarely reasonable and relevant terms and that commented on our proposed rule into traditional pharmacy type conditions of participation whereby any specifically communicated their dislike classifications. For example, willing pharmacy may access the of preferred pharmacy networks. compounding pharmacies and specialty standard contract and participate as a We believe our clarifications on pharmacies, including but not limited to network pharmacy (§ 423.505(b)(18)). It application of the statutory any willing manufacturer-limited-access is within our authority and appropriate pharmacy requirement, address Part D pharmacies, and those that may for CMS to provide additional enrollee and marketplace confusion, specialize in certain drugs, disease clarification of these regulatory maintain Part D plan sponsor flexibility, states, or both, are increasingly requirements when necessary to help and address recent innovations common, and Part D enrollees ensure they are being effectuated in pharmacy business and care delivery increasingly need access to specialty accordance with the statutory models. drugs. In the preamble to final rule requirement. While we did not propose Comment: Several commenters published on January 28, 2005 (January to further specify ‘‘reasonable and expressed concern that our proposals 2005 final rule) (70 FR 4194), which relevant’’ standard terms and conditions would lead to more fraud, waste, and implemented § 423.120(a)(8)(i) and in this rulemaking, and generally would abuse in the Part D program. A § 423.505(b)(18), we indicated that prefer not to do so for the reason we commenter provided two examples of standard terms and conditions, have provided in prior rulemaking (that fraud, waste, and abuse that resulted in particularly for payment terms, could is, to provide plans with maximum both pharmacies being terminated and vary to accommodate geographic areas flexibility to structure standard terms prohibited from reapplying to be a or types of pharmacies, so long as all and conditions) (see 70 FR 4254), we contracted network pharmacy. Another similarly situated pharmacies were will consider it in the future if we find commenter expressed concerns that offered the same terms and conditions. that our current requirements are no they encountered fraudulent claims in In the original rule that implemented longer sufficient to implement the situations where Part D enrollees the Part D program (70 FR 4194, January statutory any willing pharmacy received prescriptions by mail that they 28, 2005), we defined certain types of requirement as a result of the changing never requested from a pharmacy in pharmacies (that is, retail, mail order, pharmaceutical distribution another state and from a provider in yet Long Term Care (LTC)/institutional, and marketplace. another state. A commenter suggested I/T/U [Indian Health Service, Indian Additionally, the non-interference that CMS should allow Part D plan tribe or tribal organization, or urban clause at section 1860D–11(i) of the Act sponsors to suspend claims when fraud Indian organization]) at § 423.100 to does not prohibit us from establishing or is suspected. operationalize various statutory clarifying regulatory requirements to Response: While we thank the provisions that specifically mention implement the any willing pharmacy commenters for their views, we fail to these types of pharmacies (for example, requirement. Since the inception of the see how our clarifications would have section 1860D–4(b)(1)(C)(iv) of the Act). Part D program, consistent with the non- any impact on Part D plan sponsors’ However, these definitions were never interference clause, CMS has declined abilities to combat fraud, waste, and intended to limit the scope of the any to intervene in negotiations or disputes abuse. Part D plan sponsors are required willing pharmacy requirement. involving payment-related contractual at § 423.504(b)(4)(vi) to take appropriate Nevertheless, we received a number of terms. However, within the limits of our steps to combat fraud, waste, and abuse, complaints that some Part D plan authority, we also have a duty to and such terms and conditions are in no sponsors have declined to permit implement and enforce other statutory way prohibited, so long as they are willing pharmacies to participate in

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their networks on the grounds that they classify pharmacies. Again, CMS is not pharmacies that perform multiple do not meet the Part D plan sponsor’s prescribing what the terms and functions to maintain and use a unique definition of a pharmacy type for which conditions have to be; we were only National Provider Identifier (NPI)/ it has developed standard terms and clarifying that they must actually be National Council for Prescription Drug conditions. Therefore, we clarified in reasonable and relevant to those Programs (NCPDP) identification the preamble to the proposed rule that, functions performed, and not number for each designation/function. although Part D plan sponsors may theoretically reasonable and relevant Other commenters added that the continue to tailor their standard terms based upon outdated pharmacy NCPDP telecommunication standards and conditions for various types of classifications that do not accurately named under HIPAA for pharmacy pharmacies, Part D plan sponsors may reflect today’s pharmacy business claim submission allow the pharmacy to not exclude pharmacies with unique or model(s) and practices. indicate the appropriate pharmacy innovative business or care delivery Comment: Some commenters service type at a claim level, thus models from participating in their contended that our proposal effectively enabling the Part D plan sponsor to contracted pharmacy network on the classifies all pharmacies as similarly determine under which network the basis of not fitting in the Part D plan situated and would require Part D plan claim is processed for reimbursement sponsor’s pharmacy type classification. sponsors to require a single standard and allows pharmacies to be held We received the following comments contract for all pharmacies, regardless of accountable at a claim level to the and our response follows: their business models or type of threshold associated with that Comment: A commenter contended classification. We received comments designation. A commenter suggested that CMS is reading ‘‘that meets the from several pharmacies with that our proposed changes would terms and conditions under the plan’’ innovative pharmacy practice models, require modification of NCPDP out of the statute. including one that possesses elements of standards, which is a time intensive Response: We take this comment to mail-order, retail, and long term care but process. mean that commenter believes that we doesn’t squarely meet any one of those Response: CMS thanks the are reading ‘‘A prescription drug plan definitions. commenters for their perspective. shall permit the participation of any Response: We disagree. We explicitly Because telecommunications standards pharmacy’’ at section 1860D–4(b)(1)(A) stated in our proposed rule and reiterate accommodate a retail pharmacy service of the Act to the exclusion of ‘‘that here that Part D plan sponsors may type which pharmacies could continue meets the terms and conditions under continue to tailor their standard terms to use, we do not believe our any the plan’’ in the same paragraph. We and conditions to various types of willing pharmacy clarifications will disagree. We are concerned that such an pharmacies. We also said that require changes to NCPDP standards. interpretation conflates a Part D plan pharmacies whose pharmacy practice The industry, through NCPDP, could sponsor’s ability to develop and business and service delivery model redefine the retail pharmacy service maintain preferred pharmacy networks crosses multiple functions would be type. Nevertheless, claims processing with the any willing pharmacy considered to be similarly situated for should not be impacted. provision, thereby effectively nullifying each of the pharmacy types they Comment: A number of pharmacies the any willing pharmacy provision. represent. By referring to pharmacy commented that Part D plan sponsors or The ‘‘reasonable and relevant’’ types, we mean the types of services PBMs only make standard terms and requirement strikes the right balance in provided by the pharmacy. While some conditions for a retail network available the inherent tension between the pharmacies may still offer exclusively to pharmacies that express interest in statutory any willing pharmacy and one type of service, an increasing network participation and do not preferred pharmacy network provisions. number of pharmacies are offering advertise the existence of any other We believe it is necessary to require innovative and multiple types of ‘‘type’’ of network. terms and conditions to be reasonable services that do not fit within the Response: Part D plan sponsors must and relevant to avoid subverting the any traditional pharmacy classifications. provide the standard terms and willing pharmacy requirement entirely. Consequently, we are merely stating that conditions that are requested by the Consequently, CMS requires the Part D plan sponsors need to offer pharmacy. While pharmacies may standard terms and conditions under standard terms and conditions that are request any standard terms and the plan to be reasonable and relevant. reasonable and relevant for the types of conditions offered by the Part D plan In order to be reasonable and relevant, services being provided by the sponsor, it is incumbent upon the such terms and conditions must pertain pharmacy, which could be pharmacy to request terms and to the pharmacy’s business and services accomplished via multiple contracts or conditions that are applicable to the as allowed under its license(s). While addenda that are specific to types of business model(s) and types of services traditionally such terms and conditions services. For example, a pharmacy that the pharmacy provides so that the terms could easily be established based upon predominantly provides retail services and conditions offered are reasonable classification as a retail or mail-order but also provides mail services would and relevant. The pharmacy cannot pharmacy, our intent is to illustrate that presumably be offered terms and expect to receive reasonable and those traditional labels likely do not conditions that are reasonable and relevant terms and conditions if the Part sufficiently encompass today’s evolving relevant to both types of services. It is D plan sponsor is not made aware of pharmacy practice. Pharmacies up to Part D plan sponsors to determine different types of services the pharmacy complained to us that they had been if this is best accomplished with seeking network participation provides. excluded from network participation, multiple contracts based upon service Comment: Several commenters agreed not because they were unwilling or type, addenda to a single contract, or that declining a pharmacy’s request for unable to meet the standard contracting another type of contract that network participation exclusively on the terms and conditions, but because their accommodates unique and innovate basis of its multiple pharmacy service business and service delivery models pharmacy practice business and care offerings is inappropriate, and that Part represented hybrids that did not delivery models. D plan sponsors should be permitted to squarely meet any of the definitions by Comment: Some commenters grant applying pharmacies entry into which Part D plan sponsors typically suggested that best practice requires the network for services based on the

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pharmacy’s ability to comply with the acceptable reasonable and relevant Response: We did not propose the terms and conditions specific to each terms with such pharmacies could also changes that the commenters service model individually. apply. Later in this section of this final recommend, and for reasons noted Commenters urged us to clarify that rule, we discuss in greater detail elsewhere in this preamble, we decline nothing precludes a Part D plan sponsor situations where individual negotiations to adopt them now. However, we from structuring standard terms and may be appropriate. For example, if a reserve the right to review all conditions addressing a particular pharmacy offers retail and home contracting terms and conditions and pharmacy practice model or models and infusion services, the Part D plan investigate complaints regarding applying those terms and conditions to sponsor must offer that pharmacy its compliance with our rules. pharmacies providing multiple standard terms and conditions for both b. Revise the Definition of Retail pharmacy services. Other commenters the retail and home infusion pharmacy Pharmacy and Add a Definition of Mail- urged us to clarify whether CMS is functions. If the pharmacy is able to Order Pharmacy stating that a pharmacy can participate agree to and demonstrate compliance under multiple contracts with a Part D with the Part D plan sponsor’s standard In creating the Part D program, the plan sponsor and/or whether a retail terms and conditions, but not the Medicare Prescription Drug, pharmacy can choose which terms and Part D plan sponsor’s standard home Improvement, and Modernization Act of conditions under which it wants to infusion terms and conditions, the 2003 (MMA) (Pub. L. 108–173) added participate with that Part D plan pharmacy should be granted access to the convenient access provision of sponsor. Additionally, other the Part D plan sponsor’s contracted section 1860D–4(b)(1)(C) of the Act and commenters urged us to clarify whether retail pharmacy network, and not the the level playing field provision of Part D plan sponsors should develop Part D plan sponsor’s contracted home section 1860D–4(b)(1)(D) of the Act. The standard terms and conditions infusion network (until such time that convenient access provision, as codified applicable to unique and innovative the pharmacy is willing and able to at § 423.120(a)(1)–(7), requires Part D pharmacy business models as they arise, comply with the Part D plan sponsor’s plan sponsors to secure the or, if they should engage in individual standard home infusion terms and participation in their networks a negotiations to determine mutually conditions). When the pharmacy is sufficient number of pharmacies that acceptable reasonable and relevant willing and able to comply with both dispense (other than by mail order) terms with such pharmacies. Another the Part D plan sponsor’s retail and drugs directly to patients to ensure commenter suggested CMS should home infusion terms and conditions, convenient access (consistent with rules acknowledge that contractual terms and that pharmacy may be counted for established by the Secretary) and conditions that do not directly address purposes of both retail convenient includes special provisions for unique pharmacy and business and access standards and home infusion standards with respect to Long Term service models would likely not be network adequacy standards. Care (LTC) and I/T/U pharmacies (as reasonable and relevant. Finally, As discussed previously, Part D plan defined at § 423.100). The level playing another commented asked, if sponsors must provide standard terms field provision, as codified at pharmacies are counted in multiple and conditions that are applicable to the § 423.120(a)(10), requires Part D plan categories, what is the impact on pharmacy requesting the terms and sponsors to permit enrollees to receive inclusion in access standards? conditions. Conversely, we would not benefits (which may include a 90-day Response: We thank the commenters expect Part D plan sponsors to provide supply of drugs or biologicals), for their support and for requesting standard terms and conditions that are including extended days’ supplies, these clarifications. We have recognized not applicable to the pharmacy through a pharmacy (other than a mail- since our January 2005 final rule that requesting the terms and conditions. We order pharmacy), although the Part D pharmacies may have multiple agree with the commenter that standard plan sponsor may require the enrollee to functional lines of business, including contracting terms and conditions that do pay a higher level of cost-sharing to do retail pharmacies that may offer home not directly address unique pharmacy so. delivery services (see 70 FR 4235 and and business and service models would We currently define ‘‘retail 4255). Additionally, existing operational likely not be reasonable and relevant. pharmacy’’ at § 423.100 to mean ‘‘any guidance states ‘‘[Part D] Plan sponsors Comment: A number of commenters licensed pharmacy that is not a mail- may submit data for pharmacies that urged CMS to routinely review Part D order pharmacy from which Part D serve multiple roles as retail or mail plan sponsors’ terms and conditions and enrollees could purchase a covered Part order and LTC, HI, or LA pharmacies’’ require complete transparency as to D drug without being required to receive (see our Pricing Data Requirements and what constitutes ‘‘reasonable and medical services from a provider or Submission Calendar guidance, relevant’’ by disclosing standard institution affiliated with that available at https://www.cms.gov/ contracting terms and conditions to the pharmacy.’’ Although we did not define Medicare/Prescription-Drug-Coverage/ public. Other commenters urged that ‘‘non-retail pharmacy,’’ § 423.120(a)(3) PrescriptionDrugCovContra/ CMS should create an independent provides that ‘‘a Part D plan’s contracted RxContracting_FormularyGuidance. audit and review process, perhaps by a pharmacy network may be html). To the extent a pharmacy serves third party, by which a pharmacy can supplemented by non-retail pharmacies, multiple roles, that pharmacy may be challenge and/or appeal specific including pharmacies offering home counted toward multiple access standard terms and conditions that it delivery via mail-order and institutional standards. believes do not meet the any willing pharmacies,’’ provided the convenient We agree with the commenters’ pharmacy reasonable and relevant access requirements are met (emphasis assessments of our intent. While Part D standard. Another commenter added). In the preamble to our January plan sponsors should develop standard recommended that CMS should allow 2005 final rule, we also stated, terms and conditions applicable to Part D plan sponsors the flexibility to ‘‘examples of non-retail pharmacies unique and innovative pharmacy develop standard terms and conditions include I/T/U, FQHC, Rural Health business models, we can envision as they deem appropriate, but require Center (RHC) and hospital and other circumstances where individual them to submit a justification for provider-based pharmacies, as well as negotiations to determine mutually reasonableness and relevance. Part D [plan]-owned and operated

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pharmacies that serve only plan the term ‘‘mail order’’ have generated However, this language does not refer to members’’ (see 70 FR 4249). We also confusion in the marketplace over what pharmacy ownership and instead has to stated in that rule that ‘‘home infusion constitutes ‘‘mail-order’’ pharmacy or do with being closed to the walk-in pharmacies will not count toward Part services. This confusion has contributed general public. To the extent that a D plans’ pharmacy access requirements to complaints from pharmacies and Part physician, physician group, hospital, or (at § 423.120(a)(1)) because they are not D enrollees regarding how Part D plan health system owns and operates a retail retail pharmacies’’ and assumed most sponsors classify pharmacies for pharmacy that accepts and dispenses specialty pharmacies to be a specialized network participation, the Plan Finder, prescriptions that are not limited to its subset of home infusion pharmacies, and Part D enrollee cost-sharing own prescriber network, such a such that access to specialty pharmacies expectations. Additionally, we received pharmacy could be counted toward the that did not provide home infusion complaints from pharmacies that may convenient access standards. services could be adequately addressed offer home delivery services by mail Comment: Several commenters by out-of-network rules at § 423.124 (see among other services offered by their requested that we expand our definition 70 FR 4250). overall operation, but that are not mail- of ‘‘network pharmacy’’ and Since 2005, our regulation at order pharmacies as Part D plan interpretation of ‘‘any willing § 423.120(a) has included access sponsors have traditionally defined the pharmacy’’ to include dispensing requirements for retail, home infusion, term. These pharmacies have physicians. Alternatively, other LTC, and I/T/U pharmacies. While non- complained because Part D plan commenters suggested that CMS should retail pharmacies like home infusion sponsors singularly classified them as reiterate that accreditation provisions do and LTC pharmacies do not count mail-order pharmacies for network not apply to dispensing physicians as toward the retail pharmacy access participation despite their other non- physicians are not pharmacies, and requirements, we allow Part D plan mail-order services and required them urged us not to impede any provisions sponsors to count certain non-retail to be licensed in all United States, that impede physician dispensing. pharmacies, specifically I/T/U, FQHC, territories, and the District of Columbia, Response: We thank the commenters and RHC pharmacies toward the retail as would be required for traditional but these comments are outside the pharmacy access requirements (see 70 mail-order pharmacies providing the scope of this rule. FR 4248). Consequently, in light of the Part D plan sponsor’s mail-order benefit Comment: A number of commenters rapidly evolving pharmacy practice at mail-order cost sharing. Therefore, to suggested that we should add landscape, and given that it expressly clarify what a mail-order pharmacy is, ‘‘primarily,’’ ‘‘predominantly,’’ excludes only one type of non-retail we proposed to define mail-order ‘‘routinely,’’ or other similar terms to pharmacy, that is, mail-order pharmacy at § 423.100 as a licensed the definitions of retail and mail-order pharmacies, without a corresponding pharmacy that dispenses and delivers pharmacy, similar to Medicaid’s definition of that term, we believe that extended days’ supplies of covered Part definition. Some commenters suggested our definition of retail pharmacy has D drugs via common carrier at mail- that we adopt Medicaid’s definition. been a source of confusion. order cost sharing. Some commenters suggested that we Therefore, to clarify what a retail We solicited comment on our should specify a threshold for these pharmacy is, we proposed to revise the proposed modification to the definition terms or by which a pharmacy could be definition of retail pharmacy at of retail pharmacy and our proposed considered one type of pharmacy or § 423.100. First, we noted that the definition of mail-order pharmacy. another, such as 50 or 95 percent of the existing definition of ‘‘retail pharmacy’’ Specifically, we solicited comment pharmacy’s prescription volume. A is not in alphabetical order, and we regarding whether stakeholders believe commenter added that there is a proposed a technical change to move it these definitions strike the right balance fundamental difference between a retail such that it will appear in alphabetical to resolve confusion in the marketplace, pharmacy that provides some home order. Second, we proposed to afford Part D plan sponsor flexibility, delivery by mail and a mail-order incorporate the concepts of being open and incorporate recent innovations in pharmacy that provides some retail to the walk-in general public and retail pharmacy business and care delivery services. Another commenter urged us cost-sharing such that the definition of models. to specify that a retail pharmacy cannot retail pharmacy would be ‘‘any licensed We received the following comments simultaneously be a mail-order pharmacy that is open to dispense and our response follows: pharmacy, or vice-versa. prescription drugs to the walk-in Comment: A number of commenters Response: We thank the commenters general public from which Part D expressed strong support for our for their perspectives. As discussed in enrollees could purchase a covered Part definitions of retail pharmacy, mail- the preamble to the proposed rule, the D drug at retail cost sharing without order pharmacy, and for declining to pharmacy types we defined and being required to receive medical further define specialty pharmacy and proposed to modify and define in services from a provider or institution non-retail pharmacy. regulation describe pharmacy practice affiliated with that pharmacy.’’ Response: We thank the commenters business and service delivery functions As mentioned previously, since the for their support. that an individual pharmacy may inception of the Part D program, Part D Comment: A commenter asked why perform, solely, or in combination. We statute, regulations, and sub-regulatory the definition of retail pharmacy are clarifying the definition of retail guidance have referred to ‘‘mail-order’’ excluded physician- and hospital- pharmacy for purposes of establishing pharmacy and services without defining owned pharmacies. which pharmacies in a Part D plan the term ‘‘mail order.’’ While mail-order Response: We thank the commenter sponsor’s contracted pharmacy network pharmacies could be considered one of for the question and assume the can count toward Part D convenient several subsets of non-retail pharmacies, commenter is referring to the phrase access standards under § 423.120(a)(1). we never defined the term mail-order ‘‘without being required to receive The purpose of these definitions is not pharmacy in regulation, nor have we medical services from a provider or related to contracting terms between the specified access or service-level institution affiliation with that Part D plan sponsor and pharmacy, or requirements at § 423.120(a) for mail- pharmacy.’’ This language exists in our any willing pharmacy. We understand order pharmacies. Unclear references to current definition at § 423.100. that our proposed definitions of retail

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and mail-order pharmacy could be some commenters expressed concern granular requirements in our definition narrower, but we do not believe that we that while such pharmacies may of retail pharmacy. need to establish a threshold for technically be open to the walk-in CMS is also aware that some state purposes of evaluating convenient general public, they are located in pharmacy practice acts do not access standards and are not otherwise obscure locations, such as in industrial distinguish mail-order pharmacies from defining it for purposes of establishing parks, or have minimal signage. other types of pharmacies, and may which terms and conditions are Commenters added that when such have a requirement for all pharmacies to reasonable and relevant. pharmacies appear in the directory as offer general public access. Therefore, Similarly, we proposed a definition of ‘‘retail’’ pharmacies, it creates specifying that a mail-order pharmacy mail-order pharmacy for the very beneficiary confusion. In that vein, a be closed to the general walk-in public specific reason of clarifying Part D commenter provided an extensive list of may unintentionally create a conflict enrollee cost-sharing expectations and standards they believed should be with some state pharmacy practice acts. differentiating national mail-order required to determine if a pharmacy Comment: Several commenters pharmacies that contract with Part D maintains a legitimate retail pharmacy suggested that dispensing and plan sponsors to provide the Part D plan presence. Some commenters believed delivering drugs to an individual’s sponsors’ mail-order benefits from they would not be able to classify such home gives rise to unique quality, pharmacies that otherwise deliver some pharmacies as mail-order pharmacies safety, privacy, and timeliness or all of their business through mail because technically having a public- considerations as compared to retail service without providing the Part D facing door, they met the definition of dispensing, which CMS explicitly plan sponsors’ mail order benefits. It retail. recognized when it considered its own was not intended to preclude terms and Other commenters expressed concern timely delivery standard on mail-order conditions that are reasonable and that the idea of retail as a ‘‘walk-in’’ pharmacies. Another commenter added relevant to mail-service delivery by all enterprise is outdated because patients that if distinctions in terms and pharmacies. increasingly expect to receive their conditions relevant to mail-order, specialty, and compounding pharmacies Comment: Some commenters medications delivered even by their requested that we should define a are not allowed to be used for standard local community retail pharmacies. threshold for ‘‘extended days’ supply’’ networks, Part D enrollee safety may be Similarly, a commenter ask that we since retail pharmacies also dispense jeopardized. Another commenter replace the word ‘‘to’’ with ‘‘for.’’ extended days’ supplies. suggested that the definition of mail- Response: The level playing field Response: We thank the commenters order pharmacy should ensure that provision of the statute (section 1860D– for these perspectives. Our definition of pharmacies are licensed in all of the 4(b)(1)(D) of the Act) provides parity for retail pharmacy is necessary for states in which they are practicing. retail pharmacies to provided extended purposes of applying the convenient Several commenters contended that days’ supplies like mail-order access standards and does not address they have trusted relationships with pharmacies. While the statute refers to whether terms and conditions of a their patients and, because some of their 90-days’ supplies, we are aware that, standard network contract are patients are Part D enrollees who have based on package sizes, extended days’ reasonable and relevant. Only the actual dual residences during various parts of supplies span a range, for example, business being performed by the the year, that their patients prefer to between 63 and 100 days, and that Part pharmacy can dictate what terms and continue to work with their pharmacy D plan sponsors have operationalized conditions may be reasonable and instead of a mail-order pharmacy that parity with retail pharmacies for these relevant. Additionally, we note that our would mail prescriptions to them at quantities, in part, to reduce waste. We definition of retail pharmacy does not their other residence. therefore believe it would be specify that the pharmacy operates Response: We thank the commenters inappropriate for us to proscribe a exclusively to the walk-in general for their perspectives. We believe that threshold that could unintentionally public, nor did our proposed definition the commenter who thought our restrict the arrangements for extended of mail-order pharmacy specify that the proposal was intended to restrict Part D days’ supplies that Part D plan sponsors pharmacy operate exclusively by mail. plan sponsors’ ability to make have made with retail pharmacies or Because the statutory convenient access distinctions in standard terms and generate dispensing waste. provision explicitly discusses the conditions relevant to mail-order, Comment: A number of commenters dispensing of drugs directly to patients, specialty, and compounding pharmacies objected to our use of the phrase ‘‘to the we will maintain the word ‘‘to’’ in lieu misunderstood the proposal. We agree walk-in general public’’ in our proposed of ‘‘for.’’ that mailing prescriptions involves definition of retail pharmacy, and some In these examples, assuming there is unique considerations, for which asked us to expressly state that mail- legitimate pharmacy practice activity, reasonable and relevant standard terms order pharmacies are closed to the walk- such pharmacies maintain a substantial and conditions may be required for in general public. Other commenters felt mail-order line of business, and a retail pharmacies or other unique that the definition of mail-order minimal retail line of business, but pharmacy practice business and service pharmacy was overly restrictive and nonetheless, both. We reiterate that it is delivery models that include a mail only applied to closed-door mail-order incumbent upon the pharmacy to component. Reasonable and relevant pharmacies. inform Part D plan sponsors of all the standard terms and conditions Some commenters expressed concern types of services they provide so that applicable to the functions a particular about traditional mail-order pharmacies the Part D plan sponsor may provide pharmacy practice business or service that have constructed the appearance of applicable reasonable and relevant delivery model performs may be an open-door pharmacy in an effort to standard terms and conditions. required, even if those functions cross participate in a retail network even Moreover, while the standard terms and multiple traditional pharmacy type though such pharmacy conducts conditions for the retail function could classifications. virtually all of their business by mail reasonably incorporate the elements the Existing quality assurance regulations and has no or very few patients that commenter listed, we do not believe it at § 423.153(c)(1) require that Part D walk in for prescriptions. Additionally, is appropriate for CMS to specify such plan sponsors have representation that

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network providers are required to conditions to the pharmacies they definition and fee structure of the mail- comply with minimum standards for represent. order benefit and mail-order cost pharmacy practice as established by the Response: We thank the commenter sharing to Part D plan sponsors. states. Every state, and the District of for this perspective, but we disagree. Therefore, we disagree that our proposal Columbia (state) requires pharmacies to Pharmacies referred us to standard sought to impose a price structure. be licensed in the state in which they contracting terms and conditions that Rather, we wanted to align the are located.70 However, CMS recognizes explicitly prohibited pharmacies in definitions of retail and mail-order that there are differential licensure retail networks from mailing any pharmacy with Part D plan sponsors’ requirements for prescriptions mailed prescriptions, with network termination own operational definitions of mail- across state lines. Some states require as the consequence, and not case-by- order benefit and mail-order cost out-of-state pharmacies to be licensed in case nonpayment of covered Part D sharing. their state, by nature of mailing drugs mailed by that pharmacy. In Comment: A number of commenters, prescriptions to Part D enrollees located addition to the areas addressed in the both in favor and opposed, similarly in their state, but others do not. proposed rule, we were particularly interpreted our proposed definition of Additionally, to the extent a state does concerned by requirements in standard mail-order pharmacy in such a way that not require a pharmacy mailing terms and conditions that stipulated would restrict Part D plan sponsors’ prescriptions into it to be licensed in thresholds for obtaining patient ability to impose standard terms and such state, it would be unreasonable for assistance, prescription dispensing conditions regarding the provision of a Part D plan sponsor to require that a capacity, or personnel and equipment mail services. requirements that are not commensurate Response: It has become clear from pharmacy be licensed in such state, with or reasonable to the size and these comments that commenters, both particularly if licensure in such state prescription volume of the pharmacy. in favor and opposed, misinterpreted requires an address, physical or The comment related to whether a our proposed definition of mail-order otherwise, in such state. Therefore, CMS pharmacy participated in a PSAO is pharmacy well beyond our intended does not believe that the commenters’ outside the scope of this rule. purposes for defining it (that is, for additional licensure language is Comment: A number of commenters purposes of Part D enrollee cost-sharing necessary for the definition of mail- were opposed to our incorporation of expectations, the Plan Finder, and how order pharmacy and additionally has the concept of cost sharing into our Part D plan sponsors classify concerns about the imposition of such a proposed definitions of retail and mail pharmacies for network participation). standard term or condition for order pharmacy. Some commenters We consider the key feature of the mail- pharmacies, retail or otherwise, which believed this would also require us to order benefit to be extended days’ perform a mail function. define retail cost sharing and mail-order supplies at preferential cost sharing (see Comment: A commenter contended cost sharing as terms in regulation. the 2014 Final Call Letter available at that our proposal appeared to be based Others suggested that because we did (see the 2014 Final Call Letter available on the assumption that Part D plan not also propose to define these terms at https://www.cms.gov/Medicare/ sponsors prohibit pharmacies from in regulation, our proposed definitions Health-Plans/MedicareAdvtgSpecRate participating in their networks because were effectively meaningless, and we Stats/downloads/ they provide drugs through home would not have solved the problem we Announcement2014.pdf). CMS has delivery, adding that this is not were trying to address. always left the definition of the mail- generally an accurate understanding of Other commenters opposed the order benefit to Part D plan sponsors. pharmacy contracting practices. The incorporation of cost sharing in the Insofar as a Part D plan sponsor defines commenter added that it was more definitions or retail and mail-order their mail-order benefit to provide likely that a Part D plan sponsor would pharmacy, contending that the proposal services to an expanded geographic require a pharmacy that wants to receive instituted a price structure in violation service area (for example, all 50 United payment for drugs delivered to a Part D of section 1860D–11(i)(2) of the Act. States, departments, territories, and the enrollee’s home to meet certain terms Another commenter believed that District of Columbia), standard terms and conditions relating to the quality, inclusion of cost sharing in the and conditions that require pharmacies safety, and timeliness of such drug definitions of retail and mail-order who contract to provide the mail-order delivery as a condition of coverage of pharmacy would force Part D plan benefit to provide services to those areas such drugs. Some commenters referred sponsors to offer higher payments to all could be reasonable and relevant. We us to some Part D plan sponsors’ network pharmacies when most make a distinction, however, between standard terms and conditions. Another pharmacies have agreed to receive lower service level requirements applicable to commenter opined that pharmacies that payment rates. Another commenter mailing prescriptions, and those that complained to us may not have offered that because Part D plan pertain to providing the Part D plan adequately understood their contracting sponsors are not required to have a sponsor’s mail-order benefit. While terms and conditions secondary to mail-order benefit, and thus would not standard terms and conditions imposing participation in a pharmacy services have preferential mail-order cost- service level requirements applicable to administrative organization (PSAO), sharing, such a plan could not mailing prescriptions may be reasonable citing anecdotes that PSAOs do not operationalize our proposed definition and relevant, we would not expect a adequately communicate terms and of mail-order pharmacy and would risk Part D plan sponsor to require a beneficiary confusion. pharmacy that provides home delivery Response: As discussed in the service by mail to also require such 70 This also applies to the U.S. territories of Puerto Rico, Guam, and the U.S. Virgin Islands, proposed rule, because the statute itself pharmacy to contract to provide the Part which have their own boards of pharmacy. Other discusses retail and mail-order D plan’s mail-order benefit in order to U.S. territories may not have designated boards of pharmacy in terms of differential cost do so. pharmacy. For the few pharmacies located there, sharing between the two, it is not Because our proposed definition of pharmacies are licensed through the territory’s all- unreasonable that we would incorporate mail-order pharmacy was inclusive department of health or require and subsequently reciprocate licensure from another those concepts into a regulatory fundamentally unlike our other U.S. state or territory. definition. CMS has always left the pharmacy type definitions which are

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necessary to establish access standards, pharmacies, and a commenter provided care pharmacy, including basing its we no longer find it would be beneficial a study methodology. definition of long term care pharmacy to have a defined term. Additionally, we Response: Because specialty services more on patient care will rely on Part D plan sponsors to pharmacies’ pharmacy practice business characteristics rather than particular make sure their Part D enrollees and service delivery models are so settings of care. A commenter objected understand which pharmacies are varied, we hesitate to say they are a to CMS’ prohibition on using active contracted to provide their mail-order particular ‘‘type’’ of pharmacy. As pharmaceutical ingredients (APIs) to benefit (if they have one), and to ensure discussed in the proposed rule, because compound prescription drugs instead of they have reasonable and relevant terms the pharmacy practice landscape is those produced by manufacturers. and conditions for all pharmacies that changing so rapidly, and because the Another commenter alleged that our use deliver by mail that take into considerations are so varied, we of compounding pharmacy as an consideration the difference between continue to believe any attempt by us to example, despite existing policies traditional mail order that services the define specialty pharmacy could regarding compounded prescriptions, entire country from those that operate in prematurely and inappropriately seemed to indicate that we were more targeted geographic areas. interfere with the marketplace. encouraging the participation of more Consequently, we are not finalizing our Consequently, although we will compound pharmacies in the Part D proposed definition of mail-order continue to consider it for future policy- program. pharmacy, and will not define mail- making, we continue to decline to Response: We thank the commenters order pharmacy in regulation at this propose a definition of specialty for this perspective. While we may time. pharmacy at this time. Unless they consider these items for future policy perform a retail function, specialty making, they are outside the scope of Comment: A number of commenters pharmacies would be classified as non- this rule. However, we reiterate, to the expressed concern that it is not clear retail pharmacies. Additionally, as we extent a pharmacy serves multiple roles, how non-PBM-owned specialty discuss later in this section of this final they must be offered reasonable and pharmacies or other innovative business rule, CMS supports Part D plan sponsors relevant standard terms and conditions models fit into the proposed definitions that want to negotiate additional terms applicable to the pharmacy practice of retail and mail-order pharmacy. and conditions in exchange for, for functions they perform, and they may Various commenters urged us to adopt example, designating a pharmacy with a be counted toward multiple access a definition of specialty pharmacy, special label such as a ‘‘specialty’’ standards. including network adequacy standards pharmacy in the Part D plan sponsor’s In summary, we have removed the for specialty pharmacies, specialty contracted pharmacy network. Although concept of retail cost sharing from our drugs, or both. However, commenters we appreciate the commenter’s definition of retail pharmacy, and we were divided on the critical elements concerns, we are concerned about are not adopting a definition of mail- that should comprise such a definition circulating definitions of specialty order pharmacy. The definition of retail or set of standards. Commenters pharmacy that limit high-touch clinical pharmacy at § 423.100 will be ‘‘any variably considered accreditation, other services to high-cost, high-risk licensed pharmacy that is open to quality standards and service level medications when such services for dispense prescription drugs to the walk- expectations, drug cost, certain drugs, inexpensive, yet high-risk, medications in general public from which Part D and certain disease states, or suggested may also be warranted, particularly in enrollees could purchase a covered Part the adoption of existing definitions from frail or fragile Part D enrollees who are D drug without being required to receive various trade associations. A commenter still in the community. Nonetheless, we medical services from a provider or suggested that a regulatory definition is reiterate here that Part D plan sponsors institution affiliated with that needed because specialty pharmacies must offer specialty pharmacies pharmacy.’’ may try to hold themselves out to be standard terms and conditions that are retail pharmacies in an attempt to avoid c. Treatment of Accreditation and Other reasonable and relevant to the specialty Similar Any Willing Pharmacy accreditation or skimp on the level of pharmacy’s pharmacy practice business services required for specialty drugs. Requirements in Standard Terms and or service delivery model. Conditions Conversely, a commenter believed our We thank the commenters for their proposal to define mail-order pharmacy suggestions on methodologies, and may Since the beginning of the Part D and clarify the definition of retail consider this for future analysis or program, we have considered standard pharmacy without defining specialty policy making. terms and conditions for network pharmacy might create a perverse Comment: Some pharmacies participation to set a ‘‘floor’’ of incentive for medications normally commented that Part D plan sponsors minimum requirements by which all dispensed in less expensive dispensing are fulfilling pharmacy network similarly situated pharmacies must channels (for example, retail requirements for home infusion abide. We further believe it is pharmacies) to be diverted to more pharmacies by reporting retail reasonable for a Part D plan sponsor to expensive dispensing channels (for pharmacies that do not meet the require additional terms and conditions example, specialty pharmacies). A guidelines discussed in Chapter 5 of the beyond those required in the standard commenter asked how Part D plan Medicare Prescription Drug Benefit contract for network participation for sponsors and PBMs could be expected Manual, Section 50.4. Other pharmacies to obtain preferred status or to follow regulations if terms are not commenters added that retail and mail- to belong to a specially labeled subset defined, as this leads to a subjective order pharmacies should not be (for example, because we have not definition on a plan-by-plan basis and included in the home infusion network defined the term, ‘‘specialty could lead to confusion. Finally, absent adequacy calculation. Some pharmacies’’). Therefore, we a definition or access standards, some commenters offered that CMS should implemented the requirements of commenters urged us to monitor develop an expanded set of any willing section 1860D–4(b)(1)(A) of the Act by whether Part D enrollees have pharmacy regulations specific to long requiring that standard terms and appropriate access to products that are term care pharmacy, and that CMS conditions must be ‘‘reasonable and distributed through specialty should revisit its definition of long term relevant,’’ but declined to further define

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‘‘reasonable and relevant’’ in order to § 423.100. However, because CMS does In situations where it is necessary for provide Part D plan sponsors with not define ‘‘specialty pharmacy,’’ we terms and conditions to be altered, CMS maximum flexibility to structure their have left the definition and fee structure believes it may be more appropriate for standard terms and conditions. of ‘‘specialty pharmacies’’ and Part D plan sponsors to explore As the specialty drug distribution ‘‘specialty networks’’ to Part D plan reasonable alternatives with such market has grown, so has the number of sponsors. Part D plan sponsors may pharmacies, in lieu of waiving such organizations competing to distribute or create a specially labeled subset of requirements outright if they are truly dispense specialty drugs, such as ‘‘specialty pharmacies’’ for their necessary for ensuring a minimum pharmacy benefit managers (PBMs), pharmacy network called a ‘‘specialty quality standard. This may involve health plans, wholesalers, health network.’’ Such specially labeled negotiations to determine mutually systems, physician practices, retail pharmacies could be further acceptable reasonable and relevant pharmacy chains, and small, differentiated as standard/non-preferred terms and conditions that could also be independent pharmacies (see the URAC or preferred. offered to other pharmacies that have White Paper, ‘‘Competing in the Comment: Several commenters not yet achieved such quality standards Specialty Pharmacy Market: Achieving thanked us, while a number of as a means to establish a more Success in Value-Based Healthcare,’’ commenters were concerned, that we achievable de facto ‘‘floor.’’ Insofar as available at http://info.urac.org/ were altogether eliminating the ability standard terms and conditions contain specialtypharmacyreport). CMS is of Part D plan sponsors to impose any such requirement, it must be concerned that Part D plan sponsors accreditation requirements. A reasonable and relevant to the pharmacy might use their standard pharmacy commenter suggested that CMS was practice functions performed by the network contracts in a way that backtracking from our previous pharmacy’s business and service inappropriately limits dispensing of guidance that accreditation can serve as delivery model, and particularly with specialty drugs to certain pharmacies. In part of the ‘‘floor’’ for standard regard to a standard held out to promote fact, we have received complaints from contracting. A commenter urged us to quality, as the ‘‘floor,’’ we would expect pharmacies that Part D plan sponsors allow accreditation that supports access it to be applied consistently. have begun to require accreditation of needs. Several commenters urged us to Comment: Several commenters pharmacies, including accreditation by affirmatively prohibit accreditation. provided that accreditation is best multiple accrediting organizations, or Response: As discussed previously, performed by an independent, third- additional Part D plan-/PBM-specific we agree that there is a role in the Part party actor, and that accreditation serves credentialing or other network criteria, D program for pharmacy accreditation, as an independent validation of for network participation. to the extent pharmacy accreditation excellence. A commenter contended We agree that there is a role in the requirements in network agreements that hundreds of pharmacies that have Part D program for pharmacy promote quality assurance. In particular, obtained their pharmacy accreditation accreditation, to the extent pharmacy we support Part D plan sponsors that certifications are small, community, and accreditation requirements in network want to negotiate an accreditation regional pharmacies, however, a number agreements promote quality assurance. requirement in exchange for, for of pharmacies commented that they However, we raised the concern that example, designating a pharmacy with a have achieved accreditation, but have inconsistent and/or duplicative special label such as a ‘‘specialty’’ done so through other accrediting application of such requirements held pharmacy or as a preferred pharmacy in bodies that Part D plan sponsors would out to promote quality may be the Part D plan sponsor’s contracted not recognize or because they were circumventing the any willing pharmacy network. forced to do so. A number of pharmacy requirements and does not, in However, CMS remains concerned commenters contended that if fact, represent the ‘‘floor.’’ that, in some cases, Part D plan sponsors accreditation is to be required, the We solicited comment on the role of may be requiring accreditation or accreditation standards must be public, pharmacy accreditation in the Part D ‘‘quality assurance’’ standard terms and transparent, and/or consensus based. program. We received the following conditions that may unnecessarily Several commenters believed that CMS comments and our response follows: preclude pharmacy network should establish accreditation Comment: A number of commenters participation or limit the availability of standards, and that CMS approval suggested CMS should codify its certain drugs to certain pharmacies, should be the only requirement for existing guidance regarding specialty especially if such terms and conditions acceptance of accreditation, similar to drugs. are not being required consistently LTC pharmacies and DMEPOS Response: We thank the commenters among similarly situated pharmacies. providers. Some commenters contended and will consider this for future While we recognize that allowances that our allowance of pharmacy rulemaking. must be made for waiving standard accreditation in the Part D program Comment: A number of commenters terms and conditions in certain requires CMS to communicate standard representing Part D plan sponsors, situations to accommodate unique criteria to Part D plan sponsors and PBMs, and independent specialty geographic issues or ensure access to PBMs. Many commenters contended pharmacies believed that we were specific drugs, we generally believe neither Part D plan sponsors nor PBMs conflating preferred pharmacy networks ‘‘quality assurance’’ requirements, more may arbitrarily exclude pharmacies with specialty pharmacies. so than other terms and conditions, that utilizing other nationally recognized Response: We thank the commenters are meant to establish a ‘‘floor’’ in any accreditation organizations, and that for this perspective. We clarify that we willing pharmacy standard terms and Part D plan sponsors/PBMs should not did not intend for these terms to be conditions, would be consistently be able to mandate the use of particular interpreted as interchangeable. Section required and less varied across the plan accreditation organizations. A 1860D–4(b)(1)(B), as codified at network. To the extent the exception commenter offered an extensive edit to § 423.120(a)(9), allows Part D plan becomes the rule, it is questionable that § 423.505 to this effect. sponsors to establish preferred such quality assurance or accreditation Response: Small, community and pharmacy networks. Additionally, the terms and conditions reflect standard regional pharmacies have complained to term ‘‘preferred pharmacy’’ is defined at terms and conditions. us about excessive barriers to entry, and

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alleged that they only underwent specialized services, and rejected any mandated REMS processes or applicable accreditation because they were forced suggestions that the value or impact of state law(s), Part D plan sponsors may to do so. Otherwise, they would have accreditation in promoting quality limit, on a drug-by-drug basis, the been cut out of approximately 75 to 80 assurance is mitigated by the manner of dispensing of additional Part D drugs percent of the market. While we support a network agreement deployed by a Part which require extraordinary special the use of third party accreditation, we D plan sponsor. handling, provider coordination, or are concerned that Part D plan sponsors Response: While some Part D plan patient education, when appropriate may require or do not recognize one sponsors or PBMs may use alternate dispensing cannot be performed by a accreditation certification versus terminology, we have seen documents network pharmacy (that is, a contracted another when pharmacies have already that label such additional Part D plan network pharmacy that has not agreed, obtained an accreditation certification sponsor- or PBM-specific criteria as is not capable, or is not appropriately from a different organization, ‘‘credentialing.’’ Nonetheless, we have licensed to provide this level of service voluntarily or as a requirement from attempted to clarify the terminology in for such drugs, individually, or in another plan sponsor or PBM. We this final rule by also incorporating combination). (For operational guidance believe it is unrealistic to expect ‘‘other network criteria.’’ We reiterate on this policy, see Section 50.3 of pharmacies to obtain multiple that while the Part D program does not Chapter 5 of the Medicare Prescription accreditation certifications, which define ‘‘specialty pharmacy’’ or Drug Benefit available at https:// would be required if multiple Part D ‘‘specialty network,’’ any such www.cms.gov/Medicare/Prescription- sponsors require accreditation by a requirements in Part D plan sponsors’ Drug-Coverage/Prescription specific accrediting organization. standard terms and conditions must be DrugCovContra/Downloads/MemoPDB We expressed concern in the reasonable and relevant to the pharmacy ManualChapter5_093011.pdf) A Part D proposed rule that inconsistent and/or practice functions performed by the plan sponsor may, however, require duplicative application of such specific pharmacy’s business and pharmacies to dispense a roster of requirements held out to promote service delivery model, and particularly certain drugs or drugs for certain disease quality may be circumventing the any with regard to standard terms and states in order to participate in the Part willing pharmacy requirements and conditions held out to promote quality, D plan sponsor’s preferred pharmacy does not, in fact, represent the ‘‘floor.’’ which, as the ‘‘floor,’’ must be applied network or be designated as belonging However, we reiterate here that we consistently. to a specially-labeled subset of the Part support Part D plan sponsors that want Comment: A commenter provided D plan sponsor’s contracted pharmacy to negotiate an accreditation that North Dakota and New Hampshire network (for example, the Part D plan requirement in exchange for, for have enacted laws prohibiting PBMs sponsor’s ‘‘specialty network’’). example, designating a pharmacy with a from requiring additional accreditation special label such as a ‘‘specialty’’ other than the requirement of the As an example, a pharmacy which pharmacy or as a preferred pharmacy in applicable state board of pharmacy. identifies as a ‘‘specialty pharmacy’’ the Part D plan sponsor’s contracted Another commenter offered that they approaches a Part D plan sponsor to pharmacy network. While we did not have seen situations where state participate in the Part D plan sponsor’s propose specific accreditation standards are insufficient, unenforced, contracted pharmacy network. The Part standards, we will consider it in the or unmonitored. D plan sponsor must provide the future if we find that our current Response: CMS thanks the pharmacy with standard terms and requirements are no longer sufficient to stakeholder for this information, and conditions that are reasonable and implement the statutory any willing encourages commenters to keep us relevant to the pharmacy practice pharmacy requirement as a result of apprised of such examples. However, at functions performed by the specific accreditation requirements imposed by present, we continue to believe state pharmacy’s business and service Part D plan sponsors. Similar to our pharmacy practice acts represent a delivery model (including consistently work with the Pharmacy Quality reasonably consistent minimum applied terms and conditions held out Alliance, CMS generally supports the standard of practice. to promote quality). The Part D plan adoption of quality standards that are Comment: Some commenters believed sponsor may have additional terms and public, transparent, and consensus- that our rule would limit the dispensing conditions for that pharmacy to based. While CMS appreciates the of specialty drugs only to drugs for secondarily participate in either the Part commenters’ concerns that accreditation which there are FDA-mandated REMS D plan sponsor’s preferred pharmacy is best performed by an independent, processes, which is such a small network or ‘‘specialty network.’’ Even if third-party actor, we did not consider proportion of drugs that it is insufficient the pharmacy holds itself out as a such a policy change in the proposed as a quality standard for the growing ‘‘specialty pharmacy,’’ if the pharmacy rule and would need to consider the number of Part D enrollees treated by is not capable or does not agree to meet issue further. specialty drugs. such additional terms and conditions, We also thank the commenter for their Response: This was not our intent. As the Part D plan sponsor may preclude suggested edits to § 423.505 and may we discussed in the proposed rule, that pharmacy from participating in the consider them for future policy making. because a pharmacy’s ability to dispense Part D plan sponsor’s preferred Comment: Some commenters objected certain drugs is not dependent on it pharmacy network or ‘‘specialty to our use of the term ‘‘credentialing,’’ having the ability to dispense other network.’’ However, the Part D plan contending that credentialing and drugs, it is not relevant for Part D plan sponsor may not preclude the pharmacy accreditation are different things and sponsors to require pharmacies to from participating in the broader accreditation picks up where dispense a particular roster of certain contracted pharmacy network, so long credentialing leaves off. Some drugs or drugs for certain disease states as it is willing and able to meet commenters provided that, as a tool of in order to receive standard terms and reasonable and relevant standard terms quality assurance, PBMs look to conditions for network participation as and conditions. Additionally, consistent accreditation as a validation of a contracted network pharmacy for that with our longstanding policy, we would excellence to ensure that their network Part D plan sponsor. Beyond drugs not expect Part D plan sponsors to limit has the capacity to fully provide highly whose dispensing is limited by FDA- the dispensing of certain drugs

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(including, but not limited to, drugs on proposed to establish is the date by conditions are acceptable at the same the ‘‘specialty/high cost tier’’) or drugs which Part D plan sponsors must have time Part D plan sponsors are for certain disease states, individually, standard terms and conditions available conducting their own review of the or in combination, to a subset of for pharmacies that request them. By qualifications of the requesting network pharmacies if a contracted mid-September of each year, Part D plan pharmacy. We specifically solicited network pharmacy not belonging to sponsors have signed a contract with comment on whether these timeframes such subset: (1) Is capable of and CMS committing them to delivering the are the right length to address our goal appropriately licensed under applicable Part D benefit through an accessible but are operationally realistic. We also state and Federal law(s), including FDA- pharmacy network during the upcoming request examples of situations where a mandated REMS processes, for doing so, year and have provided information longer timeframe might be needed. and (2) agrees to meet the Part D plan about that network to CMS for posting We received the following comments sponsor’s reasonable and relevant on the Medicare Plan Finder website. At and our response follows: extraordinary special handling, provider that point, Part D plan sponsors should Comment: Many commenters coordination, or patient education have had ample opportunity to develop expressed support for our proposal to requirements in standard terms and standard contract terms and conditions establish timeframes for the delivery of conditions. for the upcoming plan year. Therefore, standard contracting terms and Comment: A commenter contended we proposed to require at conditions to requesting pharmacies. that, since there is no entity that § 423.505(b)(18)(i) that Part D plan Response: CMS appreciates the accredits LTC pharmacies specifically, sponsors have standard terms and supportive comments. Comment: Some commenters Part D plan sponsor/PBM accreditation conditions readily available for recommended changes to the date we requirements are particularly onerous requesting pharmacies no later than proposed as the deadline by which all for LTC pharmacies. September 15 of each year for the Part D plan sponsors would be required Response: CMS thanks the succeeding benefit year. commenter. In 2005, CMS published to have standard terms and conditions Long Term Care guidance, which The second deadline we proposed available for requesting pharmacies. We included Long Term Care Pharmacy concerns the promptness of Part D plan proposed a September 15 deadline for Performance and Service Criteria sponsors’ responses to pharmacy making available contracts with an (available at https://www.cms.gov/ requests for standard terms and effective date of the following January 1. Medicare/Prescription-Drug-Coverage/ conditions. As discussed previously, we Some commenters recommended earlier PrescriptionDrugCovContra/downloads/ proposed to require all Part D plan deadlines of July 15 or September 1, LTCGuidance.pdf). As discussed sponsors to have standard terms and maintaining that such dates would previously, CMS would not expect Part conditions developed and ready for afford more time for pharmacies to D plan sponsors or PBMs to impose distribution by September 15. Therefore, review and execute contracts and have accreditation requirements beyond CMS we proposed to require at their network participation reflected in Long Term Care Pharmacy Performance § 423.505(b)(18)(ii) that, after that date the Medicare Plan Finder (MPF) display and Service Criteria. and throughout the following plan year, of the sponsor’s plan information for the Part D plan sponsors must provide the upcoming year. This information is d. Timing of Contracting Requirements applicable standard terms and posted on October 1 to support the CMS has received complaints over the conditions document to a requesting annual election period (AEP), which years from pharmacies that have sought pharmacy within two business days of begins on October 15. The commenters to participate in a Part D plan sponsor’s receipt of the request. Part D plan noted that sponsors must submit their contracted network but have been told sponsors will be required to clearly Part D bids by early June each year, by the Part D plan sponsor that its identify for interested pharmacies the which they claim includes a standard terms are not available until avenue (for example, phone number, certification of their networks, and the Part D plan sponsor has completed email address, website) through which therefore they should be in a position all other network contracting. In other they can make this request. In instances after that date to develop standard terms instances, pharmacies have told us that where the Part D plan sponsor requires and conditions that support the benefit Part D plan sponsors delay sending a pharmacy to execute a confidentiality plans they proposed to CMS. Another them the requested terms and agreement with respect to the terms and commenter suggested that the deadline conditions for weeks or months or conditions, the Part D plan sponsor will be set at 30 days prior to the start of the require pharmacies to complete be required to provide the upcoming plan year (for example, extensive paperwork demonstrating confidentiality agreement within two approximately December 1 of each their eligibility to participate in the Part business days after receipt of the year). D plan sponsor’s network before the pharmacy’s request and then provide Response: In setting the deadline by sponsor will provide a document the standard terms and conditions which Part D plan sponsors must have containing the standard terms and within 2 business days after receipt of standard terms and conditions available conditions. CMS believes such actions the signed confidentiality agreement. for requesting pharmacies, we must have the effect of frustrating the intent While Part D plan sponsors may ask strike a balance between a date by of the any willing pharmacy pharmacies to demonstrate that they are which Part D plan sponsors can be requirement, and as a result, we believe qualified to meet the Part D plan reasonably certain of their plan pricing it is necessary to codify specific sponsors’ standard terms and conditions for the coming year and a date by which procedural requirements for the delivery before executing the contract, Part D pharmacies must start the contracting of pharmacy network standard terms plan sponsors will be required to process so that they can participate and conditions. provide the pharmacy with a copy of the meaningfully in a sponsor’s Part D To this end, we proposed to establish contract terms for its review within the network, including the beneficiary deadlines by which Part D plan two-day timeframe. This requirement election process, for a particular plan sponsors must furnish their standard will permit pharmacies to do their due year. To do that, we selected September terms and conditions to requesting diligence with respect to whether a Part 15 because it was a date by which we pharmacies. The first deadline we D plan sponsor’s standard terms and could be certain that the annual bid

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review process would be completed. It order) a requesting pharmacy should be September or early October, assuming was also a date that would afford provided. that the sponsor requires takes the pharmacies seeking standard contracts Response: CMS originally proposed maximum 7 business days to provide the opportunity to have their the 2-day response deadline in an effort both a non-disclosure agreement and the participation in a Part D plan sponsor’s to ensure that Part D plan sponsor’s actual contracting terms. This timeframe network made public during the annual responses to requests from pharmacies could permit a pharmacy to enter into election period since sponsors can make for standard terms and conditions are a contract by the start of the AEP on five MPF data submissions after not met with undue delays, so that the October 15 and have information about September 15 that will be reflected in pharmacies can begin their review of the its participation in the sponsor’s Part D the five MPF display updates CMS terms at the same time sponsors are network made public through its own makes during the AEP. conducting their due diligence on the notices to its customers as well as We believe the proposed July 15 and requesting pharmacies. We appreciate through sponsor marketing materials September 1 deadlines are too early. that many commenters with significant and the MPF. A timeframe longer than The bid review and negotiation process experience in building contracted Part D 7 business days would likely push following the bid submission deadline pharmacy networks have explained how pharmacies’ opportunity to contract into in early June usually does not conclude the 2-day timeframe leaves little room November, thus excluding them from until the end of August. Before this date, for any foreseeable communication or the critical early weeks of the AEP. the pricing and formularies associated processing glitches and how a longer Comment: Some commenters noted that they recommended a required with a Part D plan sponsor’s Part D bids timeframe would be more practical to response time of more than two days to may vary, and it would be a burden on implement. While we see the need for allow time for sponsors to determine the Part D plan sponsors to require them to a longer timeframe, we also do not want type of contract for which the requesting develop standard terms and conditions to establish a new deadline that reduces pharmacy qualifies. For some in an uncertain pricing environment. the sense of urgency that sponsors commenters, this process involves Also, Part D plan sponsors are not should bring to their compliance with requiring a pharmacy to complete a required to certify their pharmacy their obligations under the any willing questionnaire before the requested terms network as part of their bid submission, pharmacy requirement. After and conditions are provided. and it is common for sponsors to considering the range of recommended continue to build their pharmacy Commenters also expressed concern response deadlines, we believe that 7 that a required response time would networks after the bid deadline. The business days are sufficient to allow suggested December 1 deadline would compromise Part D plan sponsors’ Part D plan sponsors time to address ability to conduct background checks on tilt too far in the other direction, giving any extenuating circumstances that may requesting pharmacies as part of Part D plan sponsors more time to arise from a contract request and is a necessary fraud prevention efforts. develop standard terms and conditions reasonable maximum period for Response: In our proposal, we made but effectively locking pharmacies pharmacies to have to wait to receive a distinction between sponsors seeking such contracts out of the AEP, the contracting documents they providing requested copies of standard to the detriment of the pharmacies as requested. The 7-day timeframe terms and conditions and sponsors well as their potential Part D customers. provides a more forgiving margin within executing such agreements. We noted Based on our review of the many which a sponsor can resolve its own or that Part D plan sponsors could ask comments in support of the September a pharmacy’s error related to a request pharmacies to demonstrate that they are 15 deadline we proposed and our for standard terms and conditions. Such qualified to enter into a particular consideration of the alternative dates errors could include a lack of clarity in contract before executing the contract. suggested by some commenters, we a pharmacy’s initial request or the Our goal in proposing required believe September 15 effectively allows submission of a request to a part of the timeframes for responses to requests for us to administer the any willing sponsor’s organization unrelated to its standard terms and conditions was to pharmacy requirement in a way that Part D administration, making it ensure that pharmacies have the same best balances the needs of Part D plan necessary to re-assign the request to the opportunity that Part D plan sponsors sponsors and pharmacies. Therefore, we correct department for response. Any of have to conduct due diligence prior to will finalize the date as proposed. these issues would likely take entering into a contractual relationship. Comment: Several commenters additional days to address, placing the We took this step in an effort to remove addressed our proposal to establish a sponsor out of compliance with the the roadblock that some requesting requirement that Part D plan sponsors stricter 2-day timeframe. Given the pharmacies have faced when sponsors respond within 2 business days to a range of potential missteps in the have required pharmacies to apply for a pharmacy’s request for standard terms contracting process, it is important to contract before they are even permitted and conditions. Many agreed with our establish a timeframe broad enough to to see the terms. We do not propose to proposed deadline, while others accommodate the resolution of most mandate that Part D plan sponsors recommended longer time frames, types of issues. We believe that 7 contract with pharmacies that do not ranging from 5 to as many as 15 business days, a period of a little more meet reasonable and relevant business days. Most commenters than a calendar week, is a long enough requirements. recommending a deadline of more than period for sponsors to respond to all In particular, we emphasize that the 2 days noted that we had proposed a forms of pharmacy requests for standard requirements related to the deadline for particularly tight timeframe which left terms and conditions. Any longer responding to contract requests do not little time to accommodate unforeseen timeframe would diminish requesting in any way preclude sponsors from or extenuating circumstances that might pharmacies’ opportunity to have applying to pharmacies requesting arise related to responding to a contracts in place during the AEP. standard terms and conditions the same pharmacy’s request. These included Under the 7-day timeframe, a pharmacy fraud prevention review protocols that difficulties in verifying contact requesting standard terms and they already use to evaluate other information and in determining the type conditions in mid-September should pharmacies seeking a Part D contract. As of contract (for example, retail, mail expect to receive the documents by late noted above, Part D plan sponsors may

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conduct their regular fraud prevention and to be forthcoming in describing shorten the required transition days’ review of a pharmacy prior to executing their range of operations as part of their supply in the long-term care (LTC) a standard contract and may decline to request. In turn, Part D plan sponsors setting to the same supply currently enter into the contract if the review will be expected to work cooperatively required in the outpatient setting. indicates that the pharmacy poses a with pharmacies in identifying the types Second, we proposed a technical change legitimate fraud risk. of Part D services the pharmacies can to the current required days’ transition Comment: Some commenters effectively provide to their plan supply in the outpatient setting to be a expressed concern that if Part D plan enrollees. month’s supply. sponsors are not permitted to evaluate Comment: A commenter noted that In discussing previous revisions to whether a pharmacy qualifies for a CMS was not proposing to establish a our transition regulations, we noted that certain type of standard terms and deadline by which a pharmacy and a in requiring multiple fills for the entire conditions, sponsors may be required in Part D plan sponsor would need to length of the 90-day transition period in some instances to disclose proprietary execute a contract containing standard our April 15, 2010 final rule, we had information to parties to whom it terms and conditions but that CMS’s pointed out that the often complex should not be shown. The commenters expectation is that Part D plan sponsors needs of LTC residents frequently fear that some pharmacies might abuse should not cause undue delay to involved multiple drugs and this process by requesting sets of completion of the contracting process. necessitated longer periods in order to standard terms and conditions for Response: The commenter is correct. successfully transition to new drug which they know they are not qualified We did not propose to establish a regimens. (CMS–4085–F, 75 FR 19678). just to collect sets of such documents to deadline for the execution of a contract However, in proposing to revise the share with other sponsors or containing a set of standard terms and transition days’ supply in the LTC pharmacies. conditions. The appropriate timing in setting to be the same as for outpatient Response: We note in our proposed each instance would be influenced by setting, we observed that, after more rule that Part D plan sponsors could the facts surrounding each request, than 10 years of experience with Part D require requesting pharmacies to enter including the type of requesting in LTC facilities, we had not seen the into non-disclosure agreements prior to pharmacy, the complexity of its concerns that we expressed in the 2010 the delivery of standard terms and operations, and the regular process for final rule materialize, and were not conditions. In that situation, the conducting due diligence adopted by aware of any evidence that transition for deadline for responding to the the relevant Part D plan sponsor. a Part D beneficiary in the LTC setting pharmacy would first apply to the After consideration of the public necessarily takes any longer than it does delivery of the non-disclosure comments received, we are finalizing for a beneficiary in the outpatient agreement. Once the pharmacy returned § 423.505(b)(18)(i) as proposed and setting. We also observed that LTC the executed agreement, the clock on finalizing a change to facilities often contract with a single the deadline would re-set, and the Part § 423.505(b)(18)(ii) by deleting ‘‘2 LTC pharmacy, as well staff or visiting D plan sponsor would be required to business days’’ and replacing it with ‘‘7 physicians, and they would be readily deliver the terms and conditions to the business days.’’ available to address transition drug pharmacy within the required needs. Further, we noted that LTC 13. Changes to the Days’ Supply timeframe. The use of appropriate non- facilities had many years’ experience Required by the Part D Transition disclosure agreements by sponsors with the Medicare Part D program Process (§ 423.120) should substantially reduce the risk that generally and transition specifically. pharmacies would request contract We promulgated regulations under Lastly, we stated that we had continuing terms just to develop a ‘‘contract the authority of section 1860D– concerns about drug waste and the costs library’’ to share with others. 11(d)(2)(B) of the Act to require Part D associated with such waste in the LTC As we noted above, Part D plan sponsors to provide for an appropriate setting. sponsors’ use of questionnaires or other transition process for enrollees We also proposed to change the methods to evaluate a pharmacy’s prescribed Part D drugs that are not on current requirement for a 30 days’ eligibility for a particular type of the prescription drug plan’s formulary transition supply to a ‘‘month’s supply’’, contract before the Part D plan sponsor (including Part D drugs that are on a currently codified for outpatient supply provides the requested document is one sponsor’s formulary but require prior at § 423.120(b)(3)(iii)(A). We observed of the specific issues we intended to authorization or step therapy under a that we had received a number of address with this proposal. Therefore, to plan’s utilization management rules). inquiries from Part D sponsors regarding comply with this proposed timing Section 423.120(b)(3) requires that a scenarios involving medications that do requirement, Part D plan sponsors will Part D sponsor provide certain enrollees not easily add up to a 30 days’ supply be required to provide pharmacies with access to a temporary supply of drugs when dispensed. (For example, for any set of standard terms and conditions within the first 90 days of a new plan drugs that typically are dispensed in 28- a pharmacy requests. As we noted enrollment by ensuring a temporary fill day packages, we noted that we above, Part D plan sponsors may when an enrollee requests a fill of a historically required plans to dispense evaluate a pharmacy’s eligibility for a non-formulary drug during this time more than one package to comply with particular contract during the period period. In the outpatient setting, the the 30 day requirement in the text of the after the delivery of the requested supply must be for at least 30 days of regulation.) We noted that, if finalized, document but before executing the medication. In the long-term care (LTC) this change would mean that the contract. We expect both parties, Part D setting, this supply must be for at least regulation would require that a plan sponsors and pharmacies, to 91 days and may be up to 98 days, transition fill be for a supply of at least operate in good faith in carrying out the consistent with the 14-day-or-less a month of medication, unless the contracting process under the any dispensing increment for brand drugs prescription is written by the prescriber willing pharmacy provisions. Therefore, required by our April 15, 2011 final rule for less. We further noted the supply pharmacies should only request (76 FR 21460 and 21526). would be for at least the days’ supply contracts for the types of services they We proposed to make two changes to that the applicable Part D prescription truly believe they are qualified to offer these regulations. First, we proposed to drug plans has approved in its plan

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benefit package submitted to CMS for Comment: Commenters opposed the would be necessary, we appreciate that the relevant plan year, unless the proposal to reduce the transition supply beneficiaries in LTC facilities often take prescription was written by the for the LTC setting from 90 days to large numbers of drugs. However, we do prescriber for less. conform to the supply offered in the not believe that beneficiaries would We stated that together, our two outpatient setting. Pointing to the often require transition supplies for all proposals—if finalized—would mean complex needs of LTC beneficiaries who the drugs they are taking. Rather, we that § 423.120(b)(3)(iii)(A) would be often have concurrent chronic diseases believe that our robust formulary consolidated into § 423.120(b)(3)(iii) to and take many drugs (10 or more), requirements make it unlikely that, for read that the transition process must commenters expressed concern that instance, a beneficiary taking 10 drugs ‘‘[e]nsure the provision of a temporary changing formulary prescriptions for who transitions to a new Part D plan fill when an enrollee requests a fill of a medical conditions could potentially would find all 10 of those drugs are now non-formulary drug during the time harm LTC beneficiaries who are some of non-formulary drugs which would period specified in paragraph (b)(3)(ii) the most vulnerable patients in the Part require a transition supply. We decline of this section (including Part D drugs D program. Other commenters pointed to carve out exceptions for drug classes that are on a plan’s formulary but out that a month was not long enough to avoid creating further complications. require prior authorization or step because providers and pharmacists need In addition, we also do not believe therapy under a plan’s utilization to transition multiple formulary that only the prescriber who originates management rules) by providing a one- alternatives in a sequence rather than all a prescription can address drug changes. time, temporary supply of at least a at once in order to pinpoint which drugs And while Part A regulations only month’s supply of medication. When caused adverse reactions. Commenters require physician visits every 60 to 70 the prescription is written by a pointed to specific drug challenges, days, we do not believe this would prescriber for less than a month’s such as overdoses or the fact that result in an inability to arrange for supply the Part D sponsor must allow changes to hypertension medications alternative prescriptions when multiple fills to provide up to a total of could lead to falls, as the cause for necessary during a 30 day transition a month’s supply of medication.’’ necessity of more gradual transitions for time frame. It is our understanding that Section 423.120(b)(3)(iii)(B) would be certain drugs or therapeutic drug LTC facilities frequently call physician eliminated. classes. A commenter recommended offices to update prescriptions. And the We received the following comments that CMS require a 90 day supply of regulation itself is not limited to specifying the frequency of physician and our response follows: certain therapeutic drug classes (for visits, but requires that individuals Comment: Commenters offered instance, antidepressants, beta-blockers for cardiovascular disease; and admitted to facilities remain under the support for the transition proposal on Parkinson’s disease) to reduce the risk care of a physician. There is no time the basis that it would eliminate of adverse events. limit on 42 CFR 483.30(a), which additional drug waste and costs, require Another commenter stated a month’s requires NFs to ensure that the medical minimal information technology effort, supply was not adequate because Part A care of each resident is supervised by a and make operations more efficient by nursing facility (NF) regulations on physician—a service we believe would providing uniformity across settings. A physician services at 42 CFR 483.30(b) include prescribing drugs. Further, commenter suggested the impact on require a physician to visit residents under § 483.30(d), facilities must beneficiaries would be minimal. only a minimum of once every 60 to 70 provide physician services 24 hours a Another commenter noted that setting days after the first 90 days of admission, day in case of emergency. In the event the LTC supply to the same required in while another commenter stated that that a beneficiary needed medication on outpatient and changing the supply to LTC facilities needed to reach the same an emergency basis, we believe these be a month’s supply would provide professionals who wrote the rules would require the physician to be easier explanations of rejected claims on prescription for the medication no available to prescribe it. CMS auditing and monitoring projects. longer on formulary rather than any In response to comments on A commenter suggested the extended other prescriber. Some commenters operational challenges, we note that in LTC days supply was no longer provided specific examples and some cases LTC facilities will have the necessary because CMS had additional anecdotal experience with the LTC information to anticipate and plan for beneficiary protections in place to transition policy. A commenter stated some transition changes ahead of time— handle the coverage of non-formulary that it took longer than 30 days to for instance, beneficiaries are informed drugs. A commenter requested that we arrange for transition changes of about prospective plan changes well in include information about this change beneficiaries typically on large numbers the advance of effective dates. in the transition fill letter and Annual of drugs at times, such as when dual Additionally, beneficiaries concerned Notice of Change (ANOC) document, eligibles were reassigned to new zero- about losing access to drugs formerly on and another commenter encouraged premium plans. Commenters expressed their formularies may request coverage CMS to conduct educational outreach to concern that delays in acquiring through the exception and appeals ensure successful implementation. medications could result in increased process. For these reasons, we decline to Response: We appreciate the healthcare expenses, such as emergency adopt the commenters’ commenters’ support. We will update room visits, hospitalizations, or recommendations. our model ANOC, Evidence of Coverage readmissions, and several commenters Comment: Several commenters (EOC), formulary, and model transition requested that we limit the transition suggested that the reason CMS had not letters to reflect that fact that Part D supply to 60 days rather than a month’s seen evidence of problems in LTC sponsors are now required to provide as supply. facilities was partly because CMS had a minimum (unless prescriptions are Response: We appreciate the the appropriate longer transition fill written for fewer days) an approved commenters’ concerns on ensuring and policy in place. Commenters urged CMS month’s supply for enrollees in both the promoting health, but believe that a not to finalize the proposal in the outpatient and LTC settings. We will month’s supply is adequate to achieve absence of new information indicating also consider other ways to educate LTC this goal. As to the comments that concerns CMS noted in 2010 no longer facilities on the policy change. sequential introduction of medications exist. A commenter noted it was likely

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polypharmacy (which we interpret to provided outside of the transition requirements related to formulary mean the concurrent use of multiple period. changes to reflect an approved month’s medications) had increased among LTC Comment: Commenters, including supply in § 423.120(b)(5). See Section beneficiaries over the last decade. many who otherwise supported the II.A.14, Expedited Substitutions of Response: Based on the maturity of proposal, suggested that referring to a Certain Generics and Other Midyear the Part D program and increase in the ‘‘month’’ was vague and could create Formulary Changes.) knowledge and experience that health uncertainty for Part D sponsors and In addition, transition policy care professionals have gained over the confuse beneficiaries—possibly leading currently found in § 423.120(b)(3)(iii)(A) decade managing medication to interruptions in coverage. To address provides that, among other things, the prescribing with formulary adherence their concerns, some commenters transition supply ‘‘must be for at least has led us to believe this change will requested that CMS set a minimum 30 days of medication, unless the not harm beneficiaries. Additionally, number of days’ supply that would prescription is written by a prescriber through our audit and monitoring constitute a month’s transition supply. for less than 30 days’’. We so limit this processes CMS continues to oversee Part Other commenters requested that CMS supply because pharmacies cannot D sponsors adherence to the coverage add language to the regulatory text to dispense more medication than the determination process requirements for clarify that a month’s transition supply amount specified in the prescription by timeliness. corresponds to the number of days the the prescriber. A pharmacy could not Comment: Some commenters Part D sponsor designated as its dispense more than a 10 day transition suggested that changing the LTC applicable month’s supply in its plan supply to an enrollee whose prescriber transition fill to a month’s supply would benefit package submitted to CMS for only writes a prescription for a 10 day have a minimal impact on reducing the relevant plan year. A commenter supply of medication. The enrollee drug cost and waste. A commenter asserted that the policy to state that the could only receive more medication if noted that Part D sponsors do not month’s supply will be what was he or she received another prescription receive the 90 day supply at once and submitted in the PBP or what the from a prescriber. Under the finalized are limited to dispensing 14 day (or less) provider prescribes, whichever is less, is regulation, the Part D sponsor would be increments in the LTC setting. Another confusing. required to provide at a minimum a commenter suggested there was no Response: We agree with the total transition supply equal to the reason the current policy would create commenters’ suggestion that we clarify month’s supply specified in the PBP. waste because substitutions typically in the regulatory text at Comment: Commenters submitted a occurred when the transition supply of § 423.120(b)(3)(iii) that a month’s number of questions about the non-formulary drug was exhausted, supply means the month’s supply prepackaging, for example, a commenter with LTC beneficiaries’ physicians approved in a plan’s bid. Specifically, suggested that CMS clarify that a generally substituting a new on- we refer to an ‘‘approved month’s month’s supply would be considered 30 formulary drug for the non-formulary supply’’ at § 423.120(b)(3)(iii), which is days unless packaging dictated. In drug at the end of the transition period. the terminology also used in the daily another example, a commenter Another commenter suggested that cost sharing regulatory text at § 423.153 recommended that CMS confirm that a limiting the 90 day supply to three 30 and the definition of daily cost sharing drug package in an unbreakable 28 day day supplies could eliminate potential rate found in § 423.100. supply would meet the one month waste. This change to the regulatory text supply requirement for transition fill. Response: We agree that Part D defines that a month’s supply is what Other commenters requested that CMS sponsors cannot dispense more than a the Part D plan sponsor designates as provide specific examples of how the 14 day supply at a time. However, we the applicable month’s supply in its transition policy would apply or remain concerned that LTC facilities are plan benefit package (PBP) submitted to confirm their understanding of the relying on the provision of 90 day CMS for the relevant plan year. For policy as set forth in the examples the supplies rather than transitioning Part D example, if the Part D sponsor commenters provided with different beneficiaries to their new plan submitted ‘‘30 days’’ in the PBP as its quantities (such as 17 or 21 day formularies sooner. This delay may lead month’s supply at retail, and the supplies) and types of drugs (such as to prolonged use of less cost effective transition supply is dispensed at retail, insulin or creams). formulary alternatives which may lead then 30 days is also considered the Response: We appreciate the requests to an overall increase to program applicable month’s supply for the for more direction; however, the very expenditures. transition supply. If the Part D sponsor nature of these disparate inquiries and Comment: A commenter suggested had designated 31 days as its month suggestions has lead us to conclude that that LTC pharmacies that bill on a ‘‘post supply at retail in the PBP, then the we cannot provide bright line guidance consumption’’ method (in which the applicable month’s supply for the retail at this level of detail that could address claims are submitted at the end of the transition supply would be 31 days. all the different scenarios. Part D plans month to reflect drugs actually taken by Similarly, if the Part D sponsor had have been administering prepackaged beneficiaries) would as a practical designated 31 (or 32) days as its LTC drug supplies since 2006 outside of matter often receive much less than a month’s supply in the PBP, then the transition, and we believe they have month’s notice that the transition applicable month’s supply for the LTC established policies and procedures to supply was exhausted. transition supply would be 31 (or 32) determine what constitutes at least a Response: The current transition days. We do not believe this will cause month’s supply of prepackaged drugs to period for new enrollees and continuing confusion. We note that this is how a be dispensed as a transition supply. For enrollees affected by negative new month’s supply is applied for Part D this reason, we believe the requested benefit year changes is 90 days post plans outside of the transition supply clarification is unnecessary. enrollment or the start of a new year. requirement; meaning, the days in a Comment: A commenter suggested CMS expects that LTC pharmacies month’s supply can vary from plan to CMS permit the proposed changes to the utilize processes currently in place for plan and are included in plan transition policy only if patient costs formulary and benefit adherence when documents that beneficiaries receive. would remain the same or less than medications are prescribed and (We additionally are conforming the previously. Another asserted that the

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change to a month’s supply would save skilled setting that was not dispensing sponsors must also have an internet money for Part D sponsors at the medications under the beneficiary’s Part website that provides current and expense of beneficiaries. D benefit. prospective Part D enrollees with at Response: The proposal would not Comment: A commenter suggested least 60 days’ notice regarding the increase beneficiary costs because it that there was no justification to require removal or change in the preferred or provides a sufficient supply for multiple fills to provide for up to a total tiered cost-sharing status of a Part D beneficiaries and prescribers to month’s supply of medication and that drug on its Part D plan’s formulary. The transition to formulary alternatives or to CMS use this opportunity to restate its general notice requirements and burden request a formulary exception. proposed change to require that a are currently approved by OMB under Comment: A commenter noted that transition fill in the outpatient setting be control number 0938–0964 (CMS– the transition from the home to an LTC a one-time, temporary supply of a least 10141). facility can be extremely stressful for a month of medication, unless the In our proposed rule, we noted that elderly patients, which presents a risk to prescription is written by a prescriber while MedPAC had observed that the patient safety, for example due to the for less than a month’s supply. continuity of a plan’s formulary is very risk of falls from hypertension Response: We did not propose to important to all beneficiaries in order to medication changes. This commenter change our existing policy that requires maintain access to the medications that asserted that rushing to change their multiple fills to provide for up to a full were offered by the plan at the time the drug regimens would heighten these transition supply, and we therefore beneficiaries enrolled, the commission concerns. Another commenter noted the decline to adopt such a change in this had also pointed out in the same report need to wholesale switch multiple final rule. that, among other things, CMS could medications simultaneously to meet a After consideration of the public provide Part D sponsors with greater comments received, we are finalizing new Part D formulary requirements flexibility to make changes such as our transition proposal with the when beneficiaries are transitioned into adding a generic drug and removing its modifications to the regulation text a nursing home or other LTC facility is brand name version without first discussed below. fraught with danger, and risks receiving agency approval. (MedPAC, overdosing of patients, which poses a In § 423.120(b)(3)(iii), we are inserting reference to an ‘‘approved month’s Report to the Congress: Medicare and significant health risk. A commenter the Health Care Delivery System, June urged CMS to instead increase the supply’’ to replace a ‘‘month’s supply’’ in three places. 2016, page 192 (hereafter June 2106 transition days’ supply of medication MedPAC Report).) from 90 to 120 days when an LTC The transition fill policy is being We stated in our preamble that this patient’s payer status transfers from finalized with modifications. To proposed rule would implement Medicare Part A to Medicare Part D. summarize, the final transition fill Response: CMS acknowledges the supply policy effective for plan year MedPAC’s recommendation by concerns of the commenters. 2019 is to require Part D sponsors to permitting generic substitutions without Understanding these risks before the provide as a minimum (unless advance approval and discussed other implementation of the Medicare Part D prescriptions are written for fewer days) ways we could better facilitate midyear program led CMS to require that each an approved month’s supply for changes. We described the specific Part D sponsor maintain a uniform enrollees in both the outpatient and LTC changes listed below and explained how formulary regardless of the treatment settings. Please note that we also are they would work with current setting, for example, outpatient or LTC. finalizing a revision to requirements (in related areas such as Therefore, beneficiaries stabilized on § 423.120(b)(3)(i)(B) to state that the beneficiary communications and the certain medication regimens at home transition process is not applicable in exceptions and appeals process) to would be able to continue on the same cases in which a Part D sponsor maintain beneficiary protections. regimen, without disruption, when substitutes a generic drug for a brand Specifically, we proposed: admitted to an LTC facility. This name drug as specified under paragraph (1) Adding new paragraph (b)(5)(iv) to proposal pertains to our transition § 423.120(b)(3)(iv). See II.A.14 § 423.120 to permit Part D sponsors policy which, as always, applies to Expedited Substitutions of Certain meeting all requirements to immediately situations involving either a new plan Generics and Other Midyear Formulary remove brand name drugs (or to make enrollee or continuing enrollee of a Part Changes. changes in their preferred or tiered cost- D plan affected by a negative formulary sharing status), when those Part D change in a new benefit year. Our 14. Expedited Substitutions of Certain sponsors replace the brand name drugs specific proposal with regard to Part D Generics and Other Midyear Formulary with (or add to their formularies) newly beneficiaries in LTC facilities who Changes (§§ 423.100, 423.120, and approved generics rated therapeutically qualify for a transition supply (that we 423.128) equivalent by the Food and Drug did not propose to and are not changing) Section 1860D–4(b)(3)(E) of the Act Administration (FDA) to the brand was to change the supply that Part D requires Part D sponsors to provide name drug—rather than having to wait sponsors are required to dispense from ‘‘appropriate notice’’ to the Secretary, until the direct notice and formulary 91–98 days’ supply to a month’s supply. affected enrollees, authorized change request requirements have been We note that no change is being prescribers, pharmacists, and met. proposed to current policy addressing pharmacies regarding any decision to (2) Revising § 423.120(b)(6) to allow the need for at least a 31-day emergency either: (1) Remove a drug from its sponsors to make those specified supply for current enrollees in the LTC formulary, or (2) make any change in the generic substitutions at any time of the setting found in the Medicare preferred or tiered cost-sharing status of year rather than waiting for them to take Prescription Drug Benefit Manual, a drug. Section 423.120(b)(5) effect two months after the start of the Chapter 6, § 30.4.6, as we believe that implements that requirement by plan year. many of the commenters are referring to defining appropriate notice as that given (3) Adding § 423.120(b)(5)(iv)(C) medication change issues in an LTC at least 60 days prior to such change through (E) to require advance general facility when a Part D beneficiary is taking effect during a given contract and retrospective direct notice to discharged from a hospital or other year. Under § 423.128(d)(2)(iii), Part D enrollees and notice to entities.

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(4) Revising § 423.128(d)(2)(iii) to of brand name drugs for retail options with their providers before clarify the timing of online notice pharmacies. taking a new medication. Commenters requirements. While many commenters underscored suggested that patients require quality (5) Revising § 423.120(b)(3)(i)(B) to their support for the general concept of information and that without such except specified generic substitutions generic substitutions, some provided knowledge, beneficiaries might be from our transition policy. support at a more granular level. We confused to receive drugs at point of (6) Revising § 423.100 to clarify that received specific support for permitting sale that did not have the same brand our definition of ‘‘affected enrollees’’ certain generic substitutions any time name, shape, or color as their earlier applies to changes affecting enrollee during the plan year; conforming the drug and possibly decide not to take access in the current plan year. definition of an affected enrollee to them. We further stated that we were mean enrollees taking the drug who will • Many observed that failure to addressing stakeholder requests for be affected during the current plan year; adhere to a prescribed drug could greater flexibility to make midyear not requiring a transition for immediate adversely affect beneficiary health, and formulary changes in general by generic substitutions; requiring advance stated that this could also lead to proposing to change the general notice followed by retrospective increased costs elsewhere in the health § 423.120(b)(5)(i) notice requirement direct notice; and encouraging, but not care system. when (aside from expedited generic requiring, Part D sponsors to provide • Some commenters professed substitutions and drugs deemed unsafe retrospective notice no later than by the concern that the changes would or withdrawn from the market) drug end of the month after which the change promote ‘‘bait and switch’’ situations in removal or changes in cost-sharing becomes effective. A commenter which beneficiaries enrolled in plans would affect enrollees. Specifically, we recommended that we continue not to believing they would have access to proposed to change the minimum 60 require Part D sponsors to implement certain medications only to find out days’ notice to all entities prior to the generic substitutions in order to provide midyear (with no or little notice) that effective date of changes and at least 60 them flexibility so they can administer the plan no longer covers those days’ direct notice to affected enrollees brand name drugs to patients who may medications. or a 60 day refill upon the request of an medically require them. • Commenters contended that affected enrollee, to at least 30 days’ A commenter specifically concurred removing advance notice for generic notice to all entities prior to the that robust CMS requirements provided substitutions (and reducing notice of effective date of changes and at least 30 the necessary beneficiary protections other midyear formulary changes) days’ direct notice to affected enrollees and that 30 days provided enough time eliminated an important beneficiary or a one month refill upon the request for the time for an enrollee to change to protection. They stated that advance of an affected enrollee. an alternative drug or obtain a formulary general notice in the Evidence of (We also noted that we were exception. Coverage (EOC) did not offer sufficient proposing to amend the refill amount to Response: We thank those information to determine whether a months (namely a month) rather than commenters for their support of both change in medicine was appropriate and days (it was 60 days previously) to our proposed policies. was ineffective given the increasingly conform to a proposed revision to the Comment: While often stating that complex and confusing nature of plan transition policy regulations at they supported the concept of providing benefit designs and drug formularies. § 423.120(b)(3).) For further discussion, Part D sponsors with more formulary Commenters also opined that direct see section II.A.13 of this proposed rule, flexibilities many commenters notice after the fact would be Changes to the Days’ Supply Required opposed—often strongly—the specifics inadequate to satisfy the intent of the by the Part D Transition Process of our proposal for various reasons Part D statutory provisions concerning (§ 423.120) (hereafter referred to as bulleted below. The bulk of specific beneficiary access to medically section II.A.13. Transition Process). comments focused on the proposal to necessary medications. We received the following comments permit immediate generic substitutions • Many commenters contended that and our responses follow: under § 423.120(b)(5)(iv) and related generic drugs could not always proposals. However, many of the substitute for brand name drugs because a. Issues Related to Expediting Certain same—as applicable—points were not all drugs are bioequivalent, and Generic Substitutions and Other directed towards our proposal to reduce recommended that we provide Midyear Formulary Changes the advance notice and refill supply for beneficiaries with more time to speak to Comment: Commenters voiced other midyear formulary changes health care providers before switching general support for the entire proposal required under § 423(b)(5)(i) from 60 to certain medications to avoid adverse and its flexibilities. Many commenters 30 days and from 60 days to a month. results including death. Commenters supported—often strongly—the (For purposes of this preamble, we will suggested that we except specific drugs proposal to permit certain immediate refer to these changes as ‘‘other midyear or classes or types of drugs such as generic substitutions for a variety of formulary changes’’. This section a. of drugs treating hematologic diseases and reasons. They stated that increasing and comments and responses discusses disorders, epilepsy, and cancer and accelerating access to generic comments covering other midyear drugs with a narrow therapeutic range. medications could lead to greater formulary changes in addition to Others noted that inactive ingredients competition, more options, and lower comments focusing on immediate could be harmful for patients with costs for Medicare beneficiaries and the generic substitutions. Section b. covers allergies or conditions such as certain program. They favored the proposal for comments that only discussed autoimmune diseases and that aligning Part D policy to Medicaid and immediate generic substitutions and switching medications could be commercial insurance practices, and section c. covers an issue specific to antithetical to the overall treatment noted that the majority of State other midyear formulary changes.) regimen for people taking a variety of pharmacy boards supported mandatory • Commenters voiced concerns that drugs. A commenter requested that we generic substitution when available. beneficiaries with no (or less) advance acknowledge the unique differences of Several observed that the proposal notice would have no opportunity to complex generic drugs as compared to would decrease inventory carrying costs discuss the transition and therapeutic simple generics as recognized under

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existing FDA guidance, while another believe that Medicare beneficiaries cited for support in our preamble, did urged us not only to ensure that experts generally would understand they could not recommend that we remove the reviewing midyear changes for Part D contact their pharmacists (who are advance notice for generic substitutions, sponsors had the expertise to trained to answer such questions) or but rather envisioned that the 60-day understand molecular and genetic their providers for assistance. advance written notice to beneficiaries diagnostics and targeted precision Beneficiaries who have more recently would stay in place along with any medicine therapeutics but also to transitioned from employer plans may, formulary flexibilities. (June 2016 require that their credentials be in fact, already be familiar with MedPAC Report, page 195). provided to the public. Others generally automatic generic substitutions, which Response: We appreciate that the June objected to midyear formulary changes may have occurred under their prior 2016 MedPAC report assumed we that, for instance, were not medically plans with no advance notice. Under would not change our beneficiary necessary. our proposal, which we are finalizing in advance notice. And, we acknowledge Response: We appreciate concerns this final rule, all beneficiaries would that when we first finalized the 60 days about beneficiary health and the receive advance general notice that such advance notice in our January 2005 importance of continuity of care. certain generic substitutions could take preamble, we referenced the NAIC However, we believe that the policy as place immediately. Section model guidelines (January 28, 2005, 70 proposed strikes the right balance 423.120(b)(5)(iv) requires the notice to FR 4265). However, the fact that the between providing beneficiaries with appear in the formulary and other NAIC subgroup did not recently access to needed drugs and Part D applicable beneficiary communication recommend a change does not mean sponsors with flexibility to administer materials, which as discussed in the that a change is inappropriate. Not only their formularies. Given the context of proposed rule, would include the EOC. has the pharmaceutical marketplace strong Medicare beneficiary Beneficiaries currently taking the drug changed since 2005, but also our protections—including the availability would receive direct notice afterward. experience with the Part D program of the formulary exceptions process— Enrollees who are affected by other since then indicates that other and the workings of the pharmacy midyear formulary changes would beneficiary protections to address market, we believe beneficiaries will not receive 30 days’ advance notice before formulary changes including the be harmed by these changes and the change takes effect, or as applicable, exceptions process are sufficient. possibly might benefit if the added notice of the change and an approved Under the generic substitutions formulary flexibility permits their plans month’s refill. They could use that time policies that we are finalizing, to maintain high quality formularies before the change takes effect to contact beneficiaries will receive advance with lower costs. their providers or request an exception. general notice that certain generic The policies we are finalizing in this Lastly, as we discussed in the substitutions may occur immediately, as rule provide more flexibility with proposed rule, we believe beneficiaries well as direct notice thereafter. We respect to when certain formulary affected by either proposal will be released our proposed rule after the changes, including generic sufficiently protected by the robust NAIC and MedPAC materials were substitutions, can be made but do not coverage determination and appeal published, which means that at the time change what formulary changes we process, including the right of an they recommended 60 days’ advance permit. As noted in the information enrollee or his or her prescriber to notice these entities could not have collection requirements section of this request an exception to their plan’s taken into account that we would rule, our long-standing practice has utilization management (UM) criteria, require the additional beneficiary been to approve all generic substitutions tiered cost-sharing structure, or protection of advance general notice. that would meet the requirements of formulary. We are not proposing to We believe that this advance general this proposed provision—which again change our exceptions and appeals notice for generic substitutions, for means that the proposed provisions will processes. Beneficiaries who, for reasons stated elsewhere in this just permit the same allowable instance, try a generic drug or other preamble, sufficiently balances substitutions to take place sooner. And, drug added as a result of other midyear beneficiaries’ needs with the need for rather than try to parse out the formulary changes and find out the drug additional formulary flexibility. equivalency of specific drugs, as was is less effective or causes adverse Regardless of when they receive their discussed in the preamble to the effects, have the right to request an notices of formulary changes, proposed rule, we rely on Food and exception to obtain coverage of another beneficiaries have the right to request an Drug Administration (FDA) drug based on medical necessity. exception. Again, we are mindful of determinations that the generic Comment: Some commenters beneficiary impact and take this step equivalents are interchangeable. Our suggested that if we were to finalize the only with the knowledge that we would proposal also does not change the types proposed changes, that we require at permit Part D sponsors to only of other midyear formulary changes that least some more notice—for instance, 45 substitute equivalent generic drug we permit. or 30 days’ notice before permitting products that the FDA has determined We also believe that consumers have generic substitutions. Commenters to be interchangeable; that our program a general familiarity with generic drugs pointed out that the National provides strong beneficiary protections; that further mitigates against possible Association of Insurance Commissioners and we are not aware that this confusion. At this time, many people (NAIC) model guidelines on longstanding commercial practice has understand that generics are commonly Prescription Drug Benefit Management harmed patients. substituted for brand name drugs and Model Act (#22) required a minimum We also believe that 30 days’ notice, that they may look different from the 60-day advance notice for both generic and an approved month’s supply as drugs they are replacing. We do not and non-generic substitutions. (A required, are sufficient for other believe that Medicare beneficiaries commenter pointed out that an NAIC midyear formulary changes. In generally would be any more surprised by their subgroup recently recommending recommending a 60 day advance notice different appearance or name or likely revisions to the section did not change period, MedPAC and NAIC did not to stop taking the drug as a result than the 60 day notice.) Others noted that the specifically analyze whether 30 days enrollees in commercial drug plans. We June 2016 MedPAC report, which we might provide enough notice for the

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limited number of particular changes within the requirements for immediate not have access to wholesalers at night falling under the notice provisions of generic substitutions and that would and during the weekend, and asking § 423.120(b)(5)(i). Furthermore, the require a 30 day prospective notice and that we require Part D sponsors to notify same beneficiary protections that apply a month’s fill, as applicable, while network LTC pharmacies before for permitted generic substitutions another queried whether current timing implementing formulary changes. A would apply in the case of other limitations still applied to the other commenter also pointed out that midyear formulary changes. As we midyear formulary changes that did not reducing the notice from 60 to 30 days noted in our proposed rule, the fall within the requirements for for other midyear formulary changes reduction to 30 days and an approved immediate generic substitutions or if would provide problems unique to LTC month’s supply would align these they could be implemented at any time facilities. Because they do not always requirements with the timeframes for of the year. A commenter encouraged us have immediate access to guardians or transition fills, and we have seen no to consider modifying notice the ability to open resident mail, the evidence to suggest that 30 days has requirements depending on the time frame for making decisions about been an insufficient days’ supply for application of our proposal to non- drugs or moving from plans would be transition fills. maintenance changes. very compressed. Comment: Several commenters Response: Section 423.120(b)(5) did Response: While we understand the requested that we consider more ways not, and with the changes we are commenters’ concerns, we do not to provide formulary flexibility by, for finalizing in this rule, does not, believe immediate generic substitution instance, looking to employer practices differentiate between maintenance or is unique to Medicare policy, and so or developing more midyear changes to non-maintenance formulary changes; therefore are not persuaded that we prevent fraud, waste, and abuse. rather, those terms are used in our need special rules for Part D. Many Another commenter suggested that formulary guidance to describe different commercial insurers and states require requiring enrollee notifications when a types of midyear formulary changes. immediate generic substitutions, and we drug becomes generically available With our proposed revisions, the are not aware that this has posed could defeat the cost-savings potential. regulation establishes different notice significant problems for pharmacies Response: We believe that the requirements for three types of midyear serving commercial or Medicaid flexibilities currently available (such as changes: (i) Substitutions of newer enrollees, and so we have no reason to utilization management (UM) criteria) generics that meet the requirements of believe the problems the commenters along with both our proposals (to permit § 423.120(b)(5)(iv) as proposed; (ii) identify would be any more prevalent in immediate generic substitutions and drugs removed from formularies on the Medicare. We assume manufacturers expedite notice of other midyear basis that they are deemed unsafe by the want to move their drugs to pharmacies formulary changes) include those FDA or withdrawn by their as soon as possible. It is also our flexibilities that would work best within manufacturer consistent with current understanding that wholesalers send out the requirements of the current Part D § 423.120(b)(5)(iii); and (iii) all other alerts and literature about new generics program. To the extent not prohibited, midyear formulary changes that do not to alert pharmacies that they are about Part D sponsors may also use strategies fall into one of the first two types, to enter the market—which means it is implemented by employers in the which are governed by § 423.120(b)(5)(i) less likely they will be caught unawares. commercial world. As to fraud, waste, and, as finalized, would require 30 days As such, we do not see any reason that and abuse, we believe that permitting advance notice to affected enrollees (as LTC pharmacies would merit a different immediate generic substitutions as defined in § 423.100) and, as applicable, approach. For the above reasons, we specified would assist Part D sponsors an approved month’s fill for affected decline to adopt the commenters’ to preventing waste of unnecessary enrollees (as defined in § 423.100). suggestions. We encourage Part D expenditures by allowing them to While the changes we are finalizing to sponsors to be mindful of drug substitute less expensive generics for § 423.120(b)(5) reduce the number of availability when setting effective dates brand name drugs sooner. We did not days’ direct advance notice required for for generic substitutions. intend to address fraud or abuse other midyear formulary changes from As for other midyear formulary concerns with our proposal to expedite 60 to 30 days, they do not otherwise changes, we currently do not find it is midyear formulary changes. Given that change requirements or guidance necessary to carve out an exception for Part D sponsors are statutorily required applicable to these other midyear LTC facilities. Pharmacies—including to provide appropriate notice before formulary changes. Thus, consistent LTC pharmacies–presumably will still removing a drug from its formulary or with the changes we are finalizing in receive notice timely and have the making any change in a drug’s preferred this rule, Part D sponsors are required, opportunity to reach out to or tiered cost-sharing status, we decline for example, to provide current and beneficiaries, providers, and LTC to dispense entirely with notice prospective Part D enrollees with at facilities regarding those midyear requirements for generic substitutions. least 30 days’ prior notice on their formulary changes. Instead, the revised notice requirements websites of other midyear formulary Comment: A commenter requested that we are finalizing in this rule are changes (§ 423.128(d)(2)(iii)). that we clarify that online postings intended to reduce burden and increase Comment: Commenters expressed would be considered sufficient notice formulary flexibility within the confines concerns that lack of advance direct for SPAPs, entities providing other of the statutory requirements. notice for certain generic substitutions coverage, authorized prescribers, Comment: Several commenters sought would harm pharmacies because, network pharmacies, and pharmacists clarification regarding the relationship without sufficient opportunity to stock for all types of midyear negative between our regulatory proposal and the new generics, they could be formulary changes. maintenance and non-maintenance obligated to dispense brand name drugs Response: Online postings that are formulary changes outlined in our without reimbursement from Part D otherwise consistent with our guidance. A commenter requested that sponsors. Some commenters expressed requirements for notice to specified we identify the specific maintenance particular concerns about home infusion entities may constitute sufficient notice and non-maintenance other midyear and LTC pharmacies by, for instance, of both immediate generic substitutions formulary changes that do not fall pointing out that LTC pharmacies might and other midyear formulary changes.

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Comment: A commenter suggested limit market availability to the time of § 423.120(b)(5)(iv)(A) to require that Part that requiring errata sheets for generic the initial formulary submission. D sponsors add a therapeutically substitutions could defeat the cost- Specifically, we are revising equivalent generic drug to its formulary savings potential, while another § 423.120(b)(5)(iv)(B) to provide that: A ‘‘on the same or lower cost-sharing tier’’ requested that we generally change the Part D sponsor that otherwise meets our rather than ‘‘with the same or lower timing of errata sheet distributions. requirements may immediately remove cost-sharing’’. Response: We did not make any a brand name drug if it previously could Beneficiaries will pay the same or less proposals with respect to errata sheets, not have included the brand name out of pocket in instances in which and therefore decline to make any drug’s therapeutically equivalent enrollees pay a set copay because policy changes with respect to them at generic because the generic drug was § 423.120(b)(5)(iv)(A) would require that this time. not available on the market at the time a generic drug appear on the same or a less costly tier than the brand name b. Comments Specific to Immediate the Part D sponsor submitted its initial drug it replaces. In contrast, in cases of Generic Substitutions formulary for approval. Part D sponsors that otherwise meet our requirements at coinsurance, the amount paid out of Comment: A number of commenters § 423.120(b)(5)(iv) do not need to submit pocket by an enrollee for a generic drug urged us not to limit immediate their formulary changes to CMS before theoretically could increase if the substitutions of certain generics to those they make a generic substitution. Part D negotiated price for the generic drug is new to the market. They noted that Part sponsors can immediately substitute more than the brand name drug. But, D sponsors may not immediately place generic drugs for brand name drugs at although generics might initially have new drugs on formularies for a variety the time that they submit their negotiated prices that are not much of reasons. For instance, there might formulary changes to CMS, or lower than the brand name drug, we are only be a limited supply of drugs or the alternatively, substitute generic drugs not aware of situations in which such drug might not yet be available in all on their formularies and submit their generic drugs actually have higher markets, such as in United States changes to CMS during the next negotiated prices. Therefore, with the territories. A few noted that generic available update window that occurs exception of the defined standard cost drugs may not initially be priced much after they have made any changes. sharing in the coverage gap in 2019, we lower than brand name drugs. Consistent with the policy we are do not believe beneficiaries will pay Commenters suggested we permit finalizing in this rule, Part D sponsors higher cost sharing for these generic immediate generic substitutions to that follow our requirements can substitutions. occur any time within a year after a substitute generic drugs released to We acknowledge that because generic is available on the market or market after their initial formulary beneficiaries currently pay a larger until the first day of the month submissions for the next year. percentage for generics than for brand following the end of patent challenge Comment: A few commenters name drugs during the coverage gap exclusivity. Another commenter stated suggested that failure to provide under the defined standard benefit, (up it would be reasonable to require Part D advance notice of generic drug until 2020), the cost sharing for generics sponsors to provide CMS with the substitutions might mean an unexpected could be higher than that of brand name reasons for the delay. Conversely, other change in copay or coinsurance could drugs during that benefit phase. commenters supported the proposal to stress beneficiaries or cause them not to However, this dynamic has existed permit Part D sponsors only to take their drugs. Noting that generics since the beginning of the coverage gap immediately substitute newly marketed could have higher cost-sharing than closing in 2011 when beneficiaries generics. brand products during the coverage gap, began paying 50 percent for brand name Response: We are persuaded that we a commenter recommended that we drugs and 93 percent for generic drugs should not limit immediate amend the policy to ensure a beneficiary in the gap. The generic cost sharing substitutions to generic drugs based in the coverage gap who is prescribed a percentage has been decreasing each upon the availability of limited generic drug would not pay more than year and will be the same 25 percent formulary update windows after initial he or she would for the brand name cost sharing as brand name drugs formulary submission because there are drug. beginning in 2020. many reasons that Part D sponsors Response: As we discussed earlier in Comment: A commenter requested might not make (or in some cases not be these responses, this regulation is not that we confirm that the proposal to able to make) substitutions as soon as a changing the standards applied permit specified immediate generic generic drug is released. We appreciated regarding generic substitutions, but substitutions would also apply to and considered the different suggestions rather changing notice requirements in protected class generics, while another offered. However, we believe an order to permit the those substitutions contended that because we did not approach that relies on tracking a to take place sooner. That said, we consider the six protected classes, our generic approval or marketing date to acknowledge that there could be an proposal was contrary to the statutory this extent could be overly burdensome unexpected increase in cost sharing, but requirement of section 1860D–4(b)(3)(G) for us and plans, and confusing for believe that such an occurrence of the Act requiring Part D sponsors to beneficiaries. Additionally, generally would be limited to the offer access to ‘‘all’’ drugs in those implementing a policy that parses out coverage gap in 2019. Our intent was specified categories. detailed scenarios in which we would that Part D sponsors only be permitted Response: We disagree that our permit immediate generic substitutions to immediately substitute generic drugs proposal is contrary to section 1860D– would seem to defeat our goal of if in addition to all other requirements 4(b)(3)(G) of the Act, which expressly creating easier formulary flexibility, and (including application of the same or permits the Secretary to establish requiring Part D sponsors to explain less restrictive UM criteria), the more exceptions to permit Part D sponsors to reasons for each delay they might make recently released therapeutically exclude from their formularies, or would increase burden. equivalent generic drug is on the same otherwise limit access to, Part D drugs Rather, to simplify policy and to or lower cost-sharing tier—not simply that are otherwise required to be encourage Part D sponsors to substitute the same or lower cost-sharing. To make included in the formulary as drugs of generic drugs more often, we plan to this clearer, are revising clinical concern. We established an

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exception through rulemaking at Response: We proposed to revise only direct notice, that we remove § 423.120(b)(2)(vi)(A), which specifies the transition policy as regards information from the direct notice about that drug products rated as immediate generic substitutions: under how to request exceptions to avoid therapeutically equivalent by the FDA § 423.120(b)(3)(i)(B), the transition creating the expectation that enrollees are excepted from the six classes of requirements do not apply for Part D could qualify for exceptions without clinical concern specified in section sponsors that make such substitutions trying generics. Another commenter 1860D–4(b)(3)(G)(iv) of the Act. consistent with § 423.120(b)(5)(iv). The voiced concern about the fact that our Therefore, if a new generic in one of the proposed regulation would not preamble stated that enrollees could not protected classes enters the market, plan otherwise change the application of be certain that they ‘‘would be better sponsors would be able to make an transition policy to other instances. served by taking no medication’’ unless immediate generic substitution, Comment: Commenters pointed out they first tried the generic equivalent. consistent with the requirements we are that there was no need to permit Noting that there could be sound finalizing at § 423.120(b)(5)(iv). immediate generic substitutions because medical reasons to believe alternatives Comment: Noting, for instance, that it Part D sponsors had numerous other could cause particular beneficiaries would create significant savings, UM controls such as step therapy and harm, the commenter requested that we commenters urged us to allow in the prior authorization, which they had clarify that no appeals standard applied future, or even clarify that we currently successfully used to influence to require an enrollee to try an meant to allow, Part D sponsors to beneficiary choices. A commenter also alternative drug before an exception can substitute new to market biosimilars or opined that there was no reason to or must be provided. at least interchangeable biological eliminate advance notice aside from Response: We disagree that retaining products. Conversely, others stated that reducing plan administrative tasks information in the direct notice about they supported the fact that our because Part D sponsors know about the the availability of the exceptions proposal currently did not apply to timing of generic releases well in process would create undue biosimilar biologics. Several advance. expectations, particularly given that this commenters, including one who was Response: We agree that Part D information already is required at concerned that our provision would sponsors currently have other UM § 423.120(b)(5)(i)(E), which we did not pave the way for such an expansion, controls that provide some flexibility; propose to change. In discussing our requested that we ensure that however, our goal is to provide even reasoning for proposing to permit biosimilars be excluded from future more flexibility in addition to those immediate generic substitutions without generic substitutions. They suggested, tools to promote and permit Part D requiring that the plan provide a for instance, that they were not sponsors to switch to generic drugs even transition fill, we did not intend to therapeutically equivalent and that sooner after their release date than we suggest that the standards for exceptions applying this policy would result in currently permit. And a central goal of (which are described in the statute) third parties other than physicians this proposal is to reduce plan would change. Exceptions will remain taking beneficiaries off of stable administrative tasks—albeit while still subject to the standards set forth in medications. A number of commenters maintaining beneficiary protections. § 423.578. urged CMS to revisit treatment of Comment: A commenter Comment: Suggesting that the direct biosimilar and interchangeable recommended that CMS codify the notice repeats information already biological products with regard to mid- requirement that plans must give direct included in the EOB, a few commenters year formulary changes at such time as notice to affected beneficiaries by the recommended that we remove the direct the FDA approves the first end of the month in which the changes notice requirement for immediate interchangeable biological product. take place. Another commenter generic substitutions. Another Response: Our proposal to permit recommended that we require Part D commenter requested that we confirm certain immediate generic substitutions sponsors to notify enrollees of generic that we meant to apply the EOB did not apply to biological products. substitutions as soon as they occur timeframe when we encouraged Part D Rather, § 423.120(b)(5)(iv)(A) permits including providing notice at the point sponsors to provide retrospective direct these substitutions only when the new of sale (POS) before prescriptions are notice of immediate generic generic drug is therapeutically filled if that is the earliest opportunity substitutions ‘‘no later than by the end equivalent (as defined in § 423.100). for notice. of the month after which the change That said, as interchangeable biological Response: While we appreciate the becomes effective’’ such that a Part D products become available, we would idea, we do not currently have in place sponsor making a generic substitution consider whether additional regulatory the means to provide this POS notice effective in April would have until the changes would be warranted. and believe implementing such a system end of May to notify affected members. Comment: Noting that we stated we would create a burden at odds with our Response: We did not propose to did not believe that the transition policy goal of promoting more flexible remove the direct notice requirements is appropriate for immediate generic formulary administration because of the for specified generic substitutions but substitutions, a commenter requested resources and time required to build rather to remove the requirement that that we clarify whether it would apply such a system. We also decline at this they be provided in advance of the for generic substitutions that do not time to set hard deadlines because we permitted substitutions, and we meet the requirements of believe that Part D sponsors have an therefore decline to eliminate them § 423.120(b)(5)(iv). A commenter incentive to provide beneficiaries with now. We did not intend to apply the queried as to whether the exemption of information on specific changes timely EOB timeframe specified at immediate generic substitutions from and, as noted earlier may, for generic § 423.128(e)(6) to the requirement to the transition fill policy would only substitutions that take place before the provide direct retrospective notice of apply to those drugs removed based on start of the next plan year, be able to immediate generic substitutions, but if this process, and whether new enrollees provide notice before the change takes Part D sponsors wish to include the joining a plan during the plan year effect. direct retrospective notice in their would be subject to the same Comment: A few commenters EOBs, they could do so. Those so requirement. suggested that if we were to still require choosing must make sure the EOB

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contents comply with the notice implementation before shortening the § 423.120(b)(5)(i)(B). However, for the requirements of § 423.120(b)(5)(iv). (We notice provisions. Another commenter same reasons we noted with respect to intend to update our model EOB in this requested that we monitor the rate at the transition requirements, we believe regard.) And while we currently intend which formularies are updated to reflect it is appropriate to conform the to permit this flexibility, we continue to changes in coverage. reference to supply for notice of encourage Part D sponsors to provide Response: We do not believe it is formulary changes to that used for direct and other notice as soon as necessary for us to test implementation transition supply. Therefore, in possible. For instance, we see no of this provision. We do not view it as § 423.120(b)(5)(i)(B) rather than impediments to providing online notice a major policy change because, as requiring ‘‘a month’s supply’’ at the of changes if not before or on the discussed above, we have permitted Part time an affected enrollee requests a refill effective date of a generic substitution, D sponsors to make midyear formulary of the Part D drug, we will require ‘‘an at least shortly thereafter. changes for some time and are merely approved month’s supply’’. Comment: A commenter noted that changing the timing of implementation After consideration of the public we had not proposed any requirements and notice rather than the kinds of comments received, we are finalizing for Part D sponsors to update the changes that can be made. Lastly, given our proposal on expedited substitutions content of formularies available to that we currently audit formulary of certain generics and other midyear beneficiaries after making immediate administration and maintain a robust formulary changes with the following generic substitutions. formulary monitoring program, we do modification as discussed and as Response: While we did not propose not see the need to implement a model follows: new beneficiary communications test. In § 423.120(b)(3)(i)(B), we are requirements specific to the content of Comment: A few commenters were removing an extraneous reference to formularies posted online or provided concerned that generic drugs would not ‘‘and (b)(6)’’. on paper, current regulations continue be timely added to our Formulary In § 423.120(b)(5)(i)(B), we are to apply. However, as noted in our Reference File (FRF). We also received removing the phrase ‘‘a month’s proposed rule, we decided not to detailed questions regarding how the supply’’ and adding in its place the require a regulatory deadline because proposed change would affect phrase ‘‘an approved month’s supply’’. we anticipate that Part D sponsors will operations related to matters such as In § 423.120(b)(5)(iv)(A), we are be promptly updating the formularies pharmacy information systems, HPMS removing the phrase ‘‘formulary with posted online. At a minimum, Part D negative change requests, and FRF the same or lower cost-sharing’’ and sponsors must comply with release dates and UM criteria. adding in its place the phrase § 423.128(d)(2)(ii) which still requires Response: Part D sponsors are ‘‘formulary on the same or lower-cost- Part D sponsors to update their websites permitted to cover drugs that are not on sharing tier’’. to reflect their current formularies at the FRF, so long as they have In § 423.120(b)(5)(iv)(B), we are least monthly. Additionally, we are determined that the drug product meets removing the phrase ‘‘requested CMS finalizing revisions to the definition of a Part D drug. We formulary approval’’ and replacing it § 423.128(d)(2)(iii), which currently appreciated the operational inquiries with ‘‘submitted its initial formulary for requires Part D sponsors to provide and plan to update guidance as CMS approval’’. notice online to current and prospective appropriate. 15. Similar Treatment of Biosimilar and enrollees regarding midyear formulary c. Issue Related to Other Midyear Interchangeable Biological Products and changes, to require that the notice be Formulary Changes Generic Drugs for Purposes of LIS Cost provided timely under Sharing § 423.120(b)(5).We further believe that Comment: Commenters responding to Part D sponsors would have the another section of the proposed rule, Similar to the introduction of an incentive to update their formularies II.A.13 Changes to the Days’ Supply abbreviated approval pathway for timely to encourage beneficiaries to Required by the Part D Transition generic drugs provided by the Hatch- move to the newly substituted drugs Process, suggested that referring to a Waxman Amendments in 1984 to spur and to avoid beneficiary confusion. ‘‘month’s’’ supply rather than a ‘‘30 more competition through quicker Comment: A commenter queried: if a day’’ transition supply was vague and approvals and introduction of lower generic is released in October and the could create uncertainty for Part D cost therapeutic alternatives in the brand is on both the current year and sponsors and confuse beneficiaries— marketplace, Congress enacted the the next year’s formulary, could the possibly leading to interruptions in ‘‘Biologics Price Competition and sponsor remove the brand from coverage. Innovation Act of 2009’’ to balance following year’s formulary, but leave the Response: To address the concerns, in innovation and consumer interests. current year formulary unchanged? finalizing the change to our transition Specifically, section 7002 of the PPACA Response: A Part D sponsor that met requirements, we plan to revise amended section 351 of the Public all requirements of § 423.120(b)(5)(iv) § 423.120(b)(3)(iii) to refer to ‘‘an Health Service Act (PHSA) (42 U.S.C. would be able to substitute the generic approved month’s supply’’ rather than 262), adding a subsection (k) to create for the brand drug in the following ‘‘a month’s supply’’ so that it would be an abbreviated licensure pathway for year’s formulary, but leave the brand clear that we mean a month’s supply in biological products that are drug on the current year’s formulary. accordance with the month’s supply demonstrated to be either ‘‘biosimilar’’ Alternatively, the Part D sponsor could approved in a plan’s bid. (See section to or ‘‘interchangeable’’ with a United substitute the generic for the brand II.A.13 Transition Process for more States Food and Drug Administration name drug on both formularies at the discussion of that issue.) In our (FDA) licensed reference biological same time, consistent with the provision on notice of formulary product. According to the FDA, ‘‘a requirements we are finalizing in this changes, we originally proposed to biosimilar product is a biological rule for immediate generic substitutions. revise the days’ supply referenced in product that is approved based on a Comment: Characterizing the proposal formulary changes to conform to that of showing that it is highly similar to an as a major policy change, a commenter the proposed transition provision, from FDA-approved biological product, recommended that we test its a 30 day supply to a month’s supply in known as a reference product, and has

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no clinically meaningful differences in generated a great deal confusion and Comment: A commenter requested terms of safety and effectiveness from concern for Part D plan sponsors and clarification on whether CMS’ usage of the reference product. Only minor advocates alike, and CMS received the term ‘‘biosimilar’’ means ‘‘non- differences in clinically inactive numerous requests to redefine generic interchangeable biosimilar.’’ components are allowable in biosimilar drug at § 423.4. Advocates expressed Response: When CMS uses the term products.’’ However, ‘‘an concerns that LIS enrollees were ‘‘biosimilar’’ or ‘‘biosimilar biological interchangeable biological product is required to pay the higher brand product,’’ we mean a biological product biosimilar to an FDA-approved copayment for biosimilar biological licensed under section 351(k) of the reference product and meets additional products. Stakeholders who contacted PHSA that has not been determined by standards for interchangeability. An us asserted treatment of biosimilar the FDA to be ‘‘interchangeable’’ to the interchangeable biological product may biological products as brands for reference biological product. However, be substituted for the reference product purposes of LIS cost-sharing creates a biological products licensed under by a pharmacist without the disincentive for LIS enrollees to choose section 351(k) of the PHSA are inclusive intervention of the health care provider lower cost alternatives. Some of these of biosimilar and interchangeable who prescribed the reference product.’’ stakeholders also expressed similar biological products. Consequently, (See http://www.fda.gov/Drugs/ concerns for non-LIS enrollees in the because we proposed to apply our DevelopmentApprovalProcess/ catastrophic portion of the benefit. policy with regard to cost-sharing to HowDrugsareDevelopedandApproved/ Consequently, we proposed to revise biological products licensed under ApprovalApplications/ the definition of generic drug at § 423.4 section 351(k) of the PHSA, it would TherapeuticBiologicApplications/ to include biosimilar and apply equally to biosimilar and Biosimilars/) Biological products interchangeable biological products interchangeable biological products. approved under section 351 of the approved under section 351(k) of the Comment: A commenter contended PHSA (42 U.S.C. 262) are listed in the PHSA solely for purposes of cost- that CMS’ proposal would require Part FDA’s Purple Book: Lists of Licensed sharing under sections 1860D–2(b)(4) D plan sponsors to place biosimilar and Biological Products with Reference and 1860D–14(a)(1)(D)(ii–iii) of the Act interchangeable biological products Product Exclusivity and Biosimilarity or by: within their generic tier. In contrast, Interchangeability Evaluations, (1) Redesignating the existing other commenters suggested that available at http://www.fda.gov/Drugs/ definition as paragraph (i), and because biosimilar biological products (2) Adding a new paragraph (ii) to DevelopmentApprovalProcess/ are usually specialty drugs, the proposal state ‘‘for purposes of cost sharing under HowDrugsareDevelopedandApproved/ was not necessary because most Part D sections 1860D–2(b)(4) and 1860D– plan sponsors’ formularies include a ApprovalApplications/Therapeutic 14(a)(1)(D) of the Act only, a biological specialty tier. Other commenters BiologicApplications/Biosimilars/ product for which an application under suggested that CMS should work with ucm411418.htm. Part D plan sponsors section 351(k) of the Public Health Part D plan sponsors to address cost- are also encouraged to monitor the Service Act (42 U.S.C. 262(k)) is sharing issues through their benefit FDA’s website for new biologics license approved.’’ design and cost-sharing structure. application (BLA) approvals at http:// We solicited comment on this Finally, another commenter suggested www.accessdata.fda.gov/scripts/cder/ proposed change to the definition of that our policy would diminish the drugsatfda/index.cfm?fuseaction generic drug at § 423.4. ability of Part D plans and =Reports.ReportsMenu. We received the following comments manufacturers to negotiate. Sections 1860D–2(b)(4) and 1860D– and our response follows: Response: We disagree with 14(a)(1)(D)(ii–iii) of the Act specify Comment: A number of commenters commenters that the proposal would lower Part D maximum copayments for expressed strong support for CMS’ require plan sponsors to place individuals who do not receive the low- proposed change to the definition of biosimilar or interchangeable biological income subsidy (LIS) and are in the generic drug, noting that it would spur products on certain tiers. While catastrophic phase of the benefit and for greater price competition, expand access biosimilar biological products are likely LIS-eligible individuals, respectively, for Part D enrollees, help restrain to be placed on a Part D plan sponsor’s for generic drugs and preferred drugs growth in Part D program spending, specialty tier, we explicitly stated in our that are multiple source drugs (as reduce costs when medically proposed regulatory language that this defined in section 1927(k)(7)(A)(i) of the appropriate, and improve the overall change only applies to statutory cost- Act) than are available for all other Part biologic marketplace. Some commenters sharing for certain Part D enrollees and D drugs. Because biosimilar and expressed support of this proposal, would not impact which tier Part D plan interchangeable biological products do contending that it would help non-LIS sponsors place a particular biosimilar not meet the section 1927(k)(7) Part D enrollees in the coverage gap. biological product. Moreover, since the definition of a multiple source drug or Response: We thank the commenters start of the Part D program, with few the CMS definition of a generic drug at for their support. With regard to exceptions, CMS has generally left § 423.4, biosimilar and interchangeable commenters who suggested the proposal tiering assignments to Part D plan biological products are subject to the would be beneficial to non-LIS Part D sponsors. Consequently, because the higher Part D maximum copayments for enrollees in the coverage gap since, we provision applies to statutory cost- non-LIS Part D enrollees in the believe these commenters may have sharing and not tier placement, we do catastrophic portion of the benefit and misunderstood our proposal. Our not believe that Part D plan sponsors’ or for LIS eligible individuals in any phase proposal would affect non-LIS cost manufacturers’ ability to negotiate of the benefit applicable to all other Part sharing for enrollees who are in the preferable terms for formulary D drugs. Consequently, treatment of catastrophic portion of the benefit. placement will be impacted. biosimilar and interchangeable Further discussion of CMS treatment of Comment: A commenter suggested biological products, which are generally biosimilar and interchangeable CMS exceeded its statutory authority to high-cost, specialty drugs, as brands for biological products during the coverage redefine generic drug in the manner we the purposes of LIS cost sharing and gap is discussed later in this comment proposed, adding that the terms non-LIS catastrophic cost sharing and response. ‘‘multiple source drug’’ and ‘‘generic

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drug’’ have specific meanings in the Part from their statutory treatment as non- biological products under the Part D D statute that do not encompass applicable drugs under the Discount program. In consideration of comments biosimilar biological products. Program. regarding the definition of generic drug, Response: We disagree with the Response: We stated in the proposed we are not finalizing our proposal at commenter. While the statute defines rule that this change would only apply § 423.4 to revise the definition of multiple-source drug at section to cost-sharing for certain Part D generic drug. 1927(k)(7) of the Act, the statute does enrollees. This policy does not change Section 1860D–14(a)(1)(D)(ii)–(iii) of not include a definition of generic drug or supersede our existing formulary the Act establishes that the copayment for purposes of the Part D program. requirements for biosimilar biological amount cannot exceed the higher Consequently, through notice and products that we addressed in the statutory threshold ($3 in 2006 as comment rulemaking, CMS finalized the March 30, 2015 Health Plan increased by Consumer Price Index definition of generic drug at § 423.4 in Management (HPMS) memorandum percentage increase) for drugs other the January 2005 final rule (70 FR 4194). entitled ‘‘Part D Requirements for than generic drugs or preferred drugs Comment: Although a number of Biosimilar Follow-On Biological that are multiple source (as defined in commenters thanked us for resolving Products’’ which is available on the 1927(k)(7)(A)(i) of the Act). However, confusion relative to all LIS Part D CMS website at https://www.cms.gov/ the statute does not prohibit CMS from enrollee cost-sharing and non-LIS Research-Statistics-Data-and-Systems/ establishing a lower maximum copay catastrophic cost sharing, commenters Computer-Data-and-Systems/HPMS/ amount for other drugs since, by opposed to our proposal uniformly HPMS-Memos-Archive-Annual-Items/ definition, such copay would not contended that our policy would create SysHPMS-Memo-Archive-%E2%80%93- exceed the statutory maximum. By confusion in the marketplace on a 2015-Qtr1.html. establishing a lower maximum copay for number of grounds, which they added We appreciate the concerns about biosimilar and interchangeable could ultimately jeopardize Part D biosimilar and interchangeable biological products that is equivalent to enrollee safety. biological products being treated the lower copay required for generic and Commenters contended that our differently under different CMS preferred multiple source drugs, CMS proposal inappropriately equates programs. However, to serve different achieves the same goal intended by our biosimilar biological products with purposes, CMS’ statutory authority original proposal, but now does so generic drugs for purposes of their treats biosimilar and interchangeable without the confusion that would result scientific and clinical applications. biological products differently across from defining biosimilar and Commenters stated that biosimilar CMS programs. Since the proposed rule interchangeable biological products as biological products are not was published, CMS notes that section generic drugs for this limited purpose. interchangeable like therapeutically 53113 of the Bipartisan Budget Act of We believe this approach should avoid equivalent generic drugs, and that CMS 2018 (Pub. L. 115–123) amended section any confusion that would cause should make clear that generic drugs are 1860D–14A(g)(2)(A) of the Act to sunset stakeholders to misinterpret this policy different from biosimilar biological the exclusion of biological products as applying more broadly. products. A commenter requested approved under section 351(k) of the While the statutory authority under clarification on how our proposal affects PHSA from the Discount Program. We section 1860D–14(a)(1)(D)(ii)–(iii) of the formulary requirements, specifically further note that since the proposed rule Act establishes a maximum statutory with regard to the requirement at was published, Medicare Part B policy copay for LIS enrollees, thereby § 423.120(b)(2)(i) that each formulary changes for biosimilar biological providing us with the flexibility to have at least two Part D drugs for each products that were discussed in the CY establish a lower copay amount for category and class submitted on the 2018 PFS final rule (see CMS–1676–F, biosimilar and interchangeable formulary file (except as noted in 82 FR 52976) took effect January 1, biological products, section 1860D– § 423.120(b)(2)(ii)). 2018. As a result, newly approved 2(b)(4) of the Act specifies a copayment In addition, commenters contended biosimilar biological products with a threshold that is ‘‘equal to’’ the higher that it would contribute to confusion common reference product will no amount for any other drug that is not a regarding variable rules for treatment of longer be grouped into the same generic drug or preferred drug that is a biosimilar biological products across Medicare Part B billing code. These two multiple source drug (as defined under CMS programs, including case-by-case policy changes, when taken together section 1927(k)(7)(A)(i) of the Act). determinations for formulary with the policy we are finalizing now Therefore, CMS does not have the requirements, treatment as branded provide for greater alignment of flexibility to establish a lower copay products for the Medicaid Drug Rebate biological products approved under amount for biosimilar and program, treatment as multi-source section 351(k) of the PHSA across CMS interchangeable biological products for generic drugs for purposes of Medicare programs and encourage the use and non-LIS enrollees that have reached the Part B, and similar to generic drugs, development of these products. catastrophic phase of the benefit. treatment as non-applicable drugs for Although we attempted to clarify that Nevertheless, as illustrated by some purposes of the Coverage Gap Discount we were not equating biosimilar and comments below, we do not anticipate Program (Discount Program). Similarly, interchangeable biological products to this will have any practical effect on a number of commenters urged CMS to generic drugs for any other purpose than non-LIS cost sharing in the catastrophic categorize biosimilar and cost sharing intended to encourage phase because such enrollees are interchangeable biological products utilization of lower-cost alternatives, we required to pay cost sharing that is equal approved under section 351(k) of the are persuaded by comments that our to the greater of the applicable copay PHSA as applicable drugs for purposes proposed approach to include amount ($3.35/$8.35 in 2018) or 5 of the Discount Program. Some biosimilar and interchangeable percent. Given the high cost of commenters suggested that CMS could biological products in our definition of biological products in general, the non- accomplish this by using waiver generic drug still could be LIS catastrophic cost sharing will almost authority under section 1860D– misinterpreted and create further certainly be 5 percent. 14A(g)(2)(A) to exempt biosimilar and confusion about the broader treatment In light of the comments, we now interchangeable biological products of biosimilar and interchangeable believe the better approach to encourage

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utilization of biosimilar and Food, Drug, and Cosmetic Act (FDCA), 16. Eliminating the Requirement To interchangeable biological products via New Drug Application (NDA) versus Provide PDP Enhanced Alternative (EA) LIS cost sharing is to include them in Abbreviated New Drug Application to EA Plan Offerings With Meaningful § 423.782(a)(2)(iii)(A) and (ANDA), whereas the approval pathway Differences (§ 423.265) § 423.782(b)(3). The revised paragraphs under section 351(k) of the PHSA CMS has the authority under section will specify the following: addresses two different categories of • 1857(e)(1) of the Act, incorporated for A copayment amount of not more biological products (that is, biosimilar Part D by section 1860D–12(b)(3)(D) of than $1 for a generic drug, biological and interchangeable biological the Act, to establish additional contract product for which an application under products) when compared to a reference terms that CMS finds ‘‘necessary and section 351(k) of the Public Health biological product approved under appropriate,’’ as well as authority under Service Act (42 U.S.C. 262(k)) is section 351(a) of the PHSA, and all three section 1860D–11(d)(2)(B) of the Act to approved, or preferred drugs that are categories of biological products receive propose regulations imposing multiple source (as defined under a Biologics License Application (BLA) ‘‘reasonable minimum standards’’ for section 1927(k)(7)(A)(i) of the Act) or $3 approval. Part D sponsors. Using this authority we for any other drug in 2006, or for years Commenters stated that biological issued regulations in 2010, at after 2006 the amounts specified in this products currently approved through § 423.265(b)(2), that established our paragraph (a)(2)(iii)(A) for the the pathway described by section authority to deny bids that are not percentage increase in the Consumer 505(b)(2) of the FDCA are currently meaningfully different from other bids Price Index, rounded to the nearest treated as applicable drugs for purposes submitted by the same organization in multiple of 5 cents or 10 cents, of the Discount Program. In March 2020, the same service area. Our application respectively; or’’ an approved application for a biological • For covered Part D drugs above the product under section 505 of the FDCA of this authority has eliminated PDP out-of-pocket limit (under will be deemed to be a license for the sponsors’ ability to offer more than one § 423.104(d)(5)(iii)) in 2006, copayments biological product under section 351 of basic plan in a PDP region since all not to exceed $2 for a generic drug, the PHSA. FDA has not yet described basic plan benefit packages must be biological product for which an whether an approved application for a actuarially equivalent to the standard application under section 351(k) of the biological product under section 505 of benefit structure discussed in the Public Health Service Act (42 U.S.C. the FDCA will be deemed to be a license statute, and in guidance we have also 262(k)) is approved, or preferred drugs for the biological product under section limited to two the number of enhanced that are multiple source drugs (as 351(a) or 351(k) of the PHSA. As such, alternative plans that we approve for a defined under section 1927(k)(7)(A)(i) of some commenters urged CMS to single PDP sponsor in a PDP region. the Act) and $5 for any other drug. For preemptively classify biological One of the underlying principles in years beginning in 2007, the amounts products approved under section the establishment of the Medicare Part specified in section (b)(3) for the 505(b)(2) of the FDCA as non-applicable D prescription drug benefit is that both previous years increased by the annual drugs for the Discount Program, while market competition and the flexibility percentage increase in average per other commenters urged CMS to take provided to Part D sponsors in the capita aggregate expenditures for the position that they will remain statute will result in the offering of a covered Part D drugs, rounded to the classified as applicable drugs for broad array of cost effective prescription nearest multiple of 5 cents, respectively. purposes of the Discount Program. drug coverage options for Medicare Comment: Some commenters Finally, some commenters suggested beneficiaries. We wish to continue the suggested that the cost-sharing that, similar to generic utilization rate, trend of using transparency, flexibility, reduction for LIS Part D enrollees ($1.25 CMS should begin to actively monitor program simplification, and innovation versus $3.35 for dually eligible enrollees usage of follow-on biological products to transform the MA and Part D and $3.70 versus $8.35 for non-dually across CMS programs by setting up programs for Medicare enrollees to have eligible enrollees) is insignificant and appropriate infrastructure as a policy options that fit their individual health does not warrant the change. priority for the Agency. needs. To that end, we have Response: We disagree. While Response: We thank the commenters. reconsidered the position that two differences in cost-sharing of $1.10, and While we may consider them for future enhanced plans offered by a plan $4.65 may be inconsequential to many policy making, these comments are sponsor could vary with respect to their Part D enrollees, we believe this change beyond the scope of this rule. However, plan characteristics and benefit design, promotes medication adherence in the CMS notes that since the proposed rule such that they might appeal to different LIS enrollee population, in addition to was published, section 53113 of the subsets of Medicare enrollees, but in the encouraging the use of biosimilar and Bipartisan Budget Act of 2018 (Pub. L. end have similar out-of-pocket interchangeable biological products in 115–123) amended section 1860D– beneficiary costs. We do however the market. 14A(g)(2)(A) of the Act to sunset the continue to believe that a meaningful Comment: A commenter urged CMS exclusion of biological products difference, that takes into account out- to work with the FDA to create different licensed under section 351(k) of the of-pocket costs, be maintained between approval pathways for biosimilar and PHSA from the Discount Program. basic and enhanced plans to ensure that interchangeable biological products. In summary, in consideration of the there is a meaningful value for The commenter added approval of comments received, we are not beneficiaries given the supplemental biosimilar and interchangeable finalizing our proposal to revise the Part D premium associated with the biological products is fundamentally definition of generic drug. Instead, in enhanced plans. Therefore, effective for different from the FDA’s distinct this final rule, we are revising Contract Year (CY) 2019, we proposed approval pathways for other types of § 423.782(a)(2)(iii)(A) and to revise the Part D regulations at drugs and biological products which § 423.782(b)(3) by adding ‘‘, biological § 423.265(b)(2) to eliminate the PDP EA address only one category of follow-on products for which an application under to EA meaningful difference product compared to the reference section 351(k) of the Public Health requirement, while maintaining the product (for example, section 505(b)(1) Service Act (42 U.S.C. 262(k)) is requirement that enhanced plans be versus section 505(b)(2) of the Federal approved,’’. meaningfully different from the basic

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plan offered by a plan sponsor in a assist them in finding the plan that best elimination of the EA to EA meaningful service area. We believe these proposed meets their unique needs. In proposing difference requirement results in revisions will help us accomplish the to maintain the meaningful difference potential beneficiary confusion or harm, balance we wish to strike with respect requirement between basic and CMS will consider reinstating the to encouraging competition and plan enhanced plans, our intent is to ensure requirement between EA plans through flexibilities while still providing PDP that a meaningful value continues to future rulemaking or consider taking choices to beneficiaries that represent exist for those beneficiaries choosing an some other action. meaningful choices in benefit packages. enhanced plan that has an associated Comment: A commenter urged CMS We also announced our future intent supplemental Part D premium. We to share data that suggests the to reexamine, with the benefit of anticipate another positive outcome of meaningful difference requirement is in additional information, how we define this proposed change will be a potential fact preventing innovation by plans. the meaningful difference requirement reduction in Part D supplemental Response: We do not have data that between basic and enhanced plans premiums, as sponsors will not be this requirement specifically hinders offered by a PDP sponsor within a forced to make benefit changes to innovation. However, for a number of service area. We recognize that the comply with a requirement that years we have heard from plan sponsors current OOPC methodology is only one ultimately results in higher their belief that this requirement is method for evaluating whether the supplemental premiums for arbitrary, potentially harmful to the differences between plan offerings are beneficiaries. competitive Part D market, and results meaningful, and will investigate Comment: A subset of commenters in plans that are becoming increasingly whether the current OOPC model or an who opposed this proposal stated that a unaffordable for many beneficiaries. alternative methodology should be used quantifiable measure provides valuable This proposal aims to combat these to evaluate meaningful differences information to beneficiaries and ensures concerns, with the added benefit of between PDP offerings. While we intend substantial differences between plans. allowing for flexibility in benefit design. to conduct our own analyses, we also While the commenters believe using the Comment: Several commenters solicited stakeholder input on how to OOPC model as the only measure of supported the proposal to eliminate the define meaningful difference as it meaningful difference is a flawed PDP EA to EA meaningful difference applies to basic and enhanced Part D approach, they believe CMS should requirement, applauding CMS efforts to plans. CMS will continue to provide maintain the requirement between increase innovation and plan guidance for basic and enhanced plan enhanced plans but allow plan sponsors flexibilities. In addition to those offering requirements in the annual Call to seek waivers by providing alternate flexibilities, a few commenters noted Letter. evidence of meaningful difference if the the potential this proposal has to We received the following comments meaningful difference threshold is not decrease total Part D premiums, due to and our responses follow: met. lower supplemental Part D premiums Comment: Commenters opposed to Response: We disagree with the associated with enhanced plans not this proposal expressed concerns that commenter’s suggested approach to needing to meet this requirement, and to Medicare beneficiaries will be faced maintain the PDP EA to EA meaningful increase beneficiaries’ choice of with even more plans to choose from, difference requirement but allow coverage options. Comments supportive resulting in ‘‘choice overload’’ and sponsors to seek waivers if the of the proposed change suggested it will beneficiary confusion when trying to meaningful difference threshold(s) are eliminate unneeded disruption and distinguish between plan options. not met. The use of a waiver or provide more plan stability to Several of these commenters were at justification process introduces beneficiaries currently enrolled in least encouraged to see that CMS additional subjectivity into the benefit second EA plans, as sponsors will not intends to maintain the meaningful review. be forced to adjust benefits to comply difference requirement between basic Comment: A commenter stated that it with changing requirements. and enhanced PDP offerings. is crucial that CMS continue to limit Response: We appreciate the Response: We appreciate the concerns plan sponsors to offering no more than comments received in support of this raised about potential beneficiary two EA plans in each region. proposal to eliminate the PDP EA to EA confusion. We believe that the tools Response: We agree and wish to meaningful difference requirement. The CMS provides for beneficiaries to make clarify that the proposed changes to the closure of the coverage gap has decisions (for example, Medicare Plan meaningful difference requirement for introduced challenges for plan sponsors Finder, Medicare and You Handbook, PDP plan offerings does not change to meet the EA to EA meaningful 1–800–MEDICARE) and our CMS’s intention to use our bid difference requirement, as the provision enforcement of communication and negotiation authority to limit to three, of additional coverage in the gap has marketing requirements address these the number of plans approved within a been a key approach sponsors have used concerns. The current approach to PDP region by a parent organization to meet the meaningful difference define meaningful difference is based on (one required basic plan and no more requirement. We agree with the concern a model tool that takes into account a than two enhanced plans). The potential that continued enforcement of this cohort of Medicare beneficiaries in increase in plan offerings that we requirement could result in disruption aggregate and is intended to identify a discuss takes into account only the and instability for beneficiaries as it meaningful value between plan addition of a second enhanced plan by may necessitate Part D sponsors to comparisons based on that cohort’s any parent organization that currently significantly modify their benefit utilization run through a plan’s benefit offers a single enhanced plan within a structure from year-to-year or even design and formulary. An individual PDP region. It is CMS’s intent to require them to non-renew a plan if beneficiary’s utilization may not mirror maintain a balance with respect to unable to attain the out-of-pocket that of the model cohort, so we continue encouraging competition and plan threshold that has been set annually. to strongly encourage individual flexibilities while still providing PDP The proposal could also result in plan beneficiaries to use the Medicare Plan choices to beneficiaries that represent offerings that are more competitive and Finder tool and the many other meaningful choices in benefit packages. market-driven within a less restrictive resources that CMS makes available to To the extent that CMS finds the regulatory framework. We agree that

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elimination of this requirement may beneficiaries means that total afford sponsors more predictability and offer plan sponsors additional government cost would likely increase. could reduce unnecessary changes, flexibilities in terms of their plan benefit Comment: A commenter suggested while still ensuring beneficiaries receive designs. As previously noted in the that the meaningful difference rules also meaningful value. NPRM, we agree that it is possible for be relaxed in the case of acquisitions/ With respect to potential alternatives plan sponsors to offer unique benefit mergers so that multiple plan options to the OOPC model, two suggestions designs that attract different subsets of can exist between the two merged were received. One recommendation Medicare beneficiaries but have similar entities for multiple years. was for CMS to establish a minimum estimated out-of-pocket costs. Arguably, Response: Current regulations at actuarial difference between basic and an EA plan that completely waives the § 423.272(b)(3)(ii) offer this flexibility, enhanced plans (for example, 20 percent deductible could be attractive to one providing a two-year transition period average member cost-sharing for an subset of enrollees, while another EA following a new acquisition before a enhanced plan vs. 25 percent average plan that instead offers reduced cost- PDP plan sponsor will be held to the member cost-sharing for a basic plan). sharing or provides supplemental requirement that its bids be Another commenter suggested that CMS coverage of drugs that are excluded substantially different. Revisions to allow plans to demonstrate a under Part D might attract a different § 423.272(b)(3)(ii) will be made to better meaningful difference between plan subset of enrollees. While providing for align the requirements with the offerings by providing an actuarial different benefit designs, these two proposed change for § 423.265(b)(2), attestation as to their actuarial value plans could have similar estimated out- specifically to remove the reference that differences, while allowing actuaries to of-pocket costs. benefit package or plan costs being use a utilization profile that is Comment: Some commenters urged substantially different from ANY representative of their population for (emphasis added) other bid submitted the agency to eliminate the meaningful quantifying differences in actuarial by the same Part D sponsor and to refer difference test in all instances for PDPs value (without the impact of selection the reader to § 423.265(b)(2) that will (that is, also between basic to EA plans), effect or risk score differential). reflect the provision change which Response: We appreciate the and pursue a suitable replacement that identifies which plan benefit types are thoughtful input on how to redefine would provide more meaningful expected to be substantially different. what constitutes a meaningful decision support for beneficiaries Comment: A commenter interpreted difference between basic and enhanced during open enrollment. A commenter the proposal as rescinding CMS’s policy PDP offerings. Both the claimed that the meaningful difference that a second EA plan provide brand recommendations to improve upon the requirement may stifle innovation, gap coverage, and noted that removing OOPC model and the alternative reduce consumer choice, and impose this policy also has the capability to approaches will be carefully considered additional costs on plans. The increase plan flexibilities and increase by CMS as we evaluate options moving commenter further asserted that the beneficiary plan choice. forward. For CY 2019, CMS intends to current OOPC difference between basic Response: As part of our application maintain the current methodology to set and EA PDP offerings remains too high, of the meaningful difference a basic to enhanced OOPC differential which may make enhanced plans very requirement to stand-alone PDPs, CMS threshold. expensive and cost prohibitive for many reviewed additional enhanced PDPs Comment: A significant number of beneficiaries, further limiting consumer within a service area with the commenters strongly believe that choice. expectation that they represent a higher significant efforts need to be made to Response: We disagree with value than the first enhanced plan and ensure beneficiary information tools are completely eliminating the meaningful as such would include additional gap enhanced to improve upon the plan difference requirement across all PDP cost-sharing reductions for at least 10 election experience. Some commenters offerings. While we support the percent of their formulary brand drugs. recommended research focusing on flexibility and competition that this We confirm that elimination of the understanding beneficiary perceptions proposal to eliminate the meaningful meaningful difference requirement of value and meaningful difference. difference requirement between between PDP enhanced plans would Several commenters provided specific enhanced plans will stimulate, we also eliminate this expectation. recommendations to enhance the believe it is important to balance this Comment: With respect to our request Medicare Plan Finder (MPF); one such with a need to ensure beneficiaries have for stakeholder input on how to redefine suggestion is to add flags within the a meaningful choice between plans, the meaningful difference requirement system to highlight benefit especially when some of those plans between basic and enhanced PDP enhancements, such as reduced cost include an additional supplemental Part offerings, we received very few detailed sharing, additional coverage in the gap, D premium. Eliminating the meaningful proposals, but many responses reduced deductible or coverage of difference requirements between the encouraged transparency and excluded Part D drugs. Another basic and enhanced plan offerings could stakeholder input on any contemplated commenter suggested CMS modify the result in sponsor behaviors that changes. With respect to potential MPF to allow beneficiaries to filter and/ adversely affect the program, such as the modifications to the current OOPC or sort plans by enhanced features (for creation of enhanced plan options model, two suggestions were received. example, ‘‘Show me plans in my area designed solely to engage in risk One recommendation is for CMS to that offer no deductible’’). Some segmentation. Healthier beneficiaries reconsider the approach to have non- commenters suggested that if CMS may be increasingly incentivized to formulary drugs be priced at the cost- intends to finalize this proposal, it be enroll in enhanced plans, leading to a sharing of the Part D sponsor’s postponed until those enhancements to higher risk pool in the basic plans. This formulary exceptions tier rather than beneficiary tools have been could ultimately result in increasing priced at the retail cash price. The other implemented. bids and premiums for basic plans, recommended that CMS set a consistent Response: These recommendations given that LIS auto-enrollment is and reasonable OOPC differential that are outside of the scope of this final rule limited to basic plans. The fact that does not change from year to year, provision. We do however agree with CMS pays most of the premium for LIS suggesting that this approach would the need for clear and complete

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information and intend to continue B. Improving the CMS Customer Original Medicare with or without a improving the MPF to make it as user Experience PDP. The OEP will also allow an individual enrolled in an MA-only plan friendly as possible. We encourage third 1. Restoration of the Medicare to switch to—(1) another MA-only plan; party organizations that support Advantage Open Enrollment Period (2) an MA–PD plan; or (3) Original beneficiaries in their decision-making to (§§ 422.60, 422.62, 422.68, 423.38 and take advantage of existing resources (for 423.40) Medicare with or without a PDP. example, public use files (PUF) However, this enrollment period does Section 17005 of the 21st Century available for the Part D program). not allow for Part D changes for Cures Act (the Cures Act) modified individuals enrolled in Original After consideration of all of the section 1851(e)(2) of the Act to Medicare, including those with comments received, we are finalizing eliminate the Medicare Advantage enrollment in stand-alone PDPs. our proposal to revise § 423.265(b)(2) to Disenrollment Period (MADP) and to In addition, individuals with eliminate the PDP EA to EA meaningful establish, beginning in 2019, a new enrollment in Original Medicare or difference requirement, while open enrollment period (OEP) to be held other Medicare health plan types, such maintaining the requirement that from January 1 to March 31 each year. as cost plans, are not able use the OEP enhanced plans be meaningfully Subject to the MA plan being open to to enroll in an MA plan, regardless of different from the basic plan offered by enrollees as provided under whether or not they have Part D. a plan sponsor in a service area. We are § 422.60(a)(2), the OEP allows Furthermore, unsolicited marketing is also modifying the language of individuals enrolled in an MA plan to prohibited by statute during this period, § 423.272(b)(3)(ii) to make the make a one-time election during the first and is discussed in section II.B.5.c of provisions governing the meaningful 3 months of the calendar year to switch this final rule. difference transition period following a MA plans or to disenroll from an MA To implement the changes required plan and obtain coverage through plan sponsor acquisition consistent with by the Cures Act, we proposed the Original Medicare. In addition, this following revisions: the new requirements stated at provision affords newly MA-eligible • § 423.265(b)(2). Amend current § 422.62(a)(5) and individuals (those with Part A and Part add §§ 423.38(e) and 423.40(e) to 17. Request for Information Regarding B) who enroll in a MA plan, the establish the new OEP starting 2019 and the Application of Manufacturer Rebates opportunity to also make a one-time the corresponding limited Part D and Pharmacy Price Concessions to election to change MA plans or drop enrollment period. Drug Prices at the Point of Sale MA coverage and obtain Original • Amend §§ 422.62(a)(7), 422.68(f), Medicare. 423.38(d) and 423.40(d) to end the In this proposed rule, we solicited Pursuant to the statute, newly eligible MADP at the end of 2018. comment on potential policy MA individuals can only use the OEP • Remove current regulations in approaches for applying some during the first 3 months in which they § 422.62(a)(3) and (a)(4) that outline manufacturer rebates and all pharmacy have both Part A and Part B. Under historical OEPs which are no longer in price concessions to drug prices at point existing regulation (§ 422.68(c)), effect and renumber the enrollment of sale under Part D. We received over enrollments made using the OEP are periods which follow them. As such, we effective the first of the month following 1,400 responses to this request for proposed that § 422.62(a)(5) become the month in which the enrollment is information. We thank the commenters § 422.62(a)(3), and both §§ 422.62(a)(6) made. In addition, an MA organization and (a)(7) be renumbered as for the thought, time, and effort that has the option under section 1851(e)(6) went into developing these detailed §§ 422.62(a)(4) and (a)(5), respectively. of the Act to voluntarily close one or • Amend new redesignated paragraph responses. We will carefully review all more of its MA plans to OEP enrollment (a)(4) (proposed to be redesignated from input received from stakeholders as we requests. If an MA plan is closed for (a)(6)) to make two technical changes to continue our efforts to meaningfully OEP enrollments, then it is closed to all replace the phrase ‘‘as defined by CMS’’ address rising prescription drug costs individuals in the entire plan service with ‘‘as defined in § 422.2’’ and to for beneficiaries. area who are making OEP enrollment capitalize ‘‘original Medicare.’’ We further note that the President’s requests. All MA plans must accept OEP • As discussed in section II.B.5.c, Fiscal Year 2019 Budget included a disenrollment requests, regardless of §§ 422.2268 and 423.2268 will be proposal similar to the point-of-sale whether or not it is open for enrollment. revised to prohibit marketing to MA rebate policy considered in this request The OEP, as enacted, permits changes enrollees during the OEP. to Part D coverage for individuals who, • for information. As explained in the Conforming technical edits to prior to the change in election during request for information, we believe the update cross references in the OEP, were enrolled in an MA plan. statute provides us with discretion to §§ 422.60(a)(2), 422.62(a)(5)(iii), and As eligibility to use the OEP is available require that Part D sponsors apply at 422.68(c). only for MA enrollees, the ability to We received the following comments least a portion of the manufacturer make changes to Part D coverage is and our response follows: rebates and all pharmacy price limited to any individual who uses the Comment: We received a number of concessions they receive to the price of OEP; however, the OEP does not comments supporting the restoration of a Part D drug at the point of sale. Any provide enrollment rights to any the Medicare Advantage OEP. new requirements regarding the individual who is not enrolled in an MA Commenters noted that the OEP reflects application of rebates at the point of sale plan during the applicable 3-month the Administration’s focus on consumer would be proposed through notice and period. Individuals who use the OEP to choice and competition, provides comment rulemaking, in the future. make changes to their MA coverage may additional time for beneficiaries to make also enroll in or disenroll from Part D health plan decisions and ensures coverage. For example, an individual beneficiaries are enrolled in plans that enrolled in an MA–PD plan may use the best suits their needs and budgets, by OEP to switch to: (1) Another MA–PD affording an opportunity to make a plan; (2) an MA-only plan; or (3) change from the MA plan previously

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chosen during the Annual Election Response: While the MA OEP, as open enrollment period could result in Period (AEP). enacted, provides a 3-month window for inappropriate ‘‘gaming’’; the Response: We thank commentators for beneficiaries in an MA plan to make a commenters urged CMS to consider a their support of this proposal. change in their enrollment if they are more narrow interpretation of the Comment: A couple of commenters dissatisfied with their choice during the eligibility and/or mechanisms to requested clarification on the ability to AEP, we do not have the discretionary monitor abuse of this provision. use other election periods such as the 5- authority of expanding the scope to all Response: We thank the commenters Star special enrollment period (SEP) or beneficiaries. In our view, broadening for their suggestions. We disagree with the SEP for individuals in the Program the scope of this election period would narrowing the scope of those eligible or of All-inclusive Care for the Elderly contradict the intent of the statute. limiting the MA choices in the OEP to (PACE) to make changes outside the Comment: A few commenters only the previous MA plan in which the OEP. recommended CMS conduct robust beneficiary was enrolled, as the Response: We note that the OEP has beneficiary outreach and education on individual may have different needs no effect on other valid election periods, the OEP to ensure beneficiaries are than the previous year. In our view, except that the Cures Act eliminates the aware of the enrollment changes, Congress intended for enrollees to be Medicare Advantage Disenrollment including their rights and able to select any MA plan that best Period (MADP) after 2018. The OEP is responsibilities, in order to mitigate meets their needs or select Original an additional statutory enrollment confusion and potential disruption. Medicare, if they prefer that healthcare period that allows individuals enrolled Response: We appreciate the option. Further, we believe the statute is in an MA plan to make a one-time comments. We will take the necessary clear on the scope of choices permitted election during the first 3 months of the steps to ensure that beneficiaries are to enrollees during the OEP. calendar year. made aware of the new OEP and its Comment: A commenter opposed the Comment: A commenter asked timeframe. We believe that through restoration of the MA OEP to all MA whether the OEP was applicable to cost education efforts directed to enrollees. The commenter believed it plans. The commenter further beneficiaries by CMS and plans (that is, would create a new special enrollment questioned if CMS intends to revise the 2019 Medicare & You handbook, period for all MA–PD beneficiaries and current SEP to enroll in a PDP, or Medicare.gov, member materials), offer an unlimited ability to switch MA provide a corresponding SEP for cost beneficiaries will have sufficient plans or disenroll from MA, which plans with Part D to accept new notification to make their health plan conflicts with the proposed changes to enrollees. decisions. limit SEP enrollments for those dually- Response: An individual enrolled in a Comment: A couple commenters eligible for Medicare and Medicaid. The cost plan may not use the OEP to make requested CMS issue clear expectations commenter recommended CMS a change. Additionally, an individual and guidance as soon as possible to consider retaining the current MADP cannot use the OEP to disenroll from an detail the changes afforded by the MA and offer the OEP through March 31 of MA plan and enroll in a cost plan. As OEP, including the ability to make each year solely for dually eligible noted in statute, an individual is solely changes to Part D coverage, and the individuals in conjunction with the able to switch from one MA plan to effective dates for OEP elections to proposed rule to limit Part D SEP for the another MA plan or from an MA plan adequately prepare MA organizations remainder of the year. to Original Medicare. As part of that for enrollees. Response: Under the new statutory enrollment change, the individual may Response: CMS will issue guidance in provisions in section 1851(e)(2), add, drop, or keep Part D coverage; a timely manner to provide plans time individuals enrolled in MA plans may those enrolling in Original Medicare to implement. However, the discussion make one change during the first 3 may enroll in a stand-alone Part D plan. and regulation changes in this final rule months of the plan year to switch to If an individual makes a change from an should provide plans the information another MA plan or select Original MA plan to Original Medicare during and guidance necessary to proceed and Medicare coverage. Individuals that use the OEP, he or she can enroll in a cost implement changes during the OEP. the OEP to make a change would plan if the cost plan is open for Comment: Several commenters generally retain that coverage for the enrollment. They would not, however, opposed the establishment of the OEP remainder of the coverage year unless be able to enroll in Part D without and requested narrowing those eligible they qualify for another SEP. While we another valid enrollment period. Open to use it. A commenter indicated appreciate the commenter’s suggestions, enrollment periods for cost plans are narrowing the eligibility requirements the statute mandates the establishment outlined in § 417.426. would prevent ‘‘gaming’’ (that is, of the OEP and the discontinuation of Comment: A commenter wanted to allowing MA beneficiaries, already the MADP. understand whether the OEP allowed enrolled in an MA plan for the previous Comment: Another commenter only for changes from one contract to year, to use a secondary open opposed the law change from the MADP another, or if it allowed for changes enrollment period). Many commenters to the OEP but acknowledged the within a contract (that is, from one Plan suggested limiting its use to only permit requirements are set forth by Congress. Benefit Package (PBP) to another PBP). individuals to return to their prior plan The commenter asked for clarification Response: The OEP permits or Original Medicare. They indicate on who is eligible for the new OEP and individuals to switch to any MA plan in such change would allow enrollees to how this change affects a new which they are eligible to join (that is, ‘‘correct’’ coverage decisions with enrollment in Part D if the beneficiary lives in service area, etc.). This includes which the beneficiary may not be returns to FFS. The commenter further switches from PBP to PBP, contract to satisfied and would reduce the requested CMS clarify whether the OEP contract under a MA organization, or opportunity for agents to market is open to all MA enrollees, including from one MA organization to another. coverage that may not meet the needs of those who had an opportunity to make Comment: We received a comment the beneficiary. The commenters believe changes during the previous AEP and suggesting CMS exercise discretionary that allowing beneficiaries who are elected not to. authority and expand the MA OEP to all already enrolled in an MA plan for the Response: The OEP is open to all MA beneficiaries. entire previous year to use a secondary enrollees, even if they chose to remain

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in their current MA plan during the contracts with MA organizations and creating a huge burden on their previous AEP. As noted earlier, during Part D sponsors shall contain other operation. the OEP, individuals who disenroll from terms and conditions that the Secretary However, after implementation of the an MA plan and obtain coverage may find necessary and appropriate. We new CMS training, we continued to through Original Medicare may also have previously established that all Part receive hundreds of inquiries and enroll in stand-alone Part D coverage. C and Part D sponsoring organizations concerns from sponsors and FDRs Comment: A few commenters stated must have the necessary administrative regarding their difficulties with that the OEP could inadvertently and management arrangements to have adopting CMS’ compliance training to degrade the value of MA plans with 5- an effective compliance program, as satisfy the compliance program training Star ratings as high-quality MA reflected in § 422.503(b)(4)(vi) and requirement. While CMS’ previous organizations are granted year-round § 423.504(b)(4)(vi). Effective compliance market research indicated that this enrollment. A commenter asked CMS to programs are those designed and provision would mitigate the problems identify a comparable opportunity for implemented to prevent, detect and raised by FDRs who held contracts with plans achieving 5-Star status in order to correct Medicare non-compliance, fraud multiple sponsors and who completed maintain incentives for these plans. waste and abuse and address improper repetitive trainings for each sponsor Response: While the new MA OEP conduct in a timely and well- with which they contract, in practice, provides individuals with an documented manner. Medicare non- we learned that the problems persisted. opportunity to switch to another MA compliance may include inaccurate and Many sponsoring organizations required plan, it is limited to, the first 3 months untimely payment or delivery of items their own plan specific training, as part of the year (or of the enrollment for or medical services, complaints from of their contract with their FDRs, in newly eligible beneficiaries), unlike the providers and enrollees, illegal activities addition to the CMS training. Also, year-round special enrollment period and unethical behavior. While there is sponsoring organizations were available to enroll in a 5-Star MA plan. no ‘‘one-size fits all’’ program for every unwilling to identify which critical As discussed in section II.B.5.c, plans sponsoring organization, there are seven positions within the FDR were subject may not conduct targeted marketing to core elements that must exist to have an to the training requirement. As a result, those in the OEP. We believe that the effective compliance program that is FDRs were still being subjected to benefit provided to a 5-Star MA plan— tailored to the organization’s unique multiple sponsors’ specific training that they may market and enroll the rest operations, compliance risks, resources programs. Furthermore, stakeholders of the year—is a valuable incentive to and circumstances. These 7 core have indicated that the requirement has achieve a high quality rating. We note elements are codified in current increased the burden for various Part C that the MA OEP provides an regulations at §§ 422.503(b)(4)(vi)(A) and Part D program stakeholders, opportunity for individuals who may through (G) and 423.504(b)(4)(vi)(A) including hospitals, suppliers, health not be satisfied with their plan choice through (G). One of the 7 core elements care providers, pharmacists and for the new year, regardless of the plan’s is training and education. Current physicians, all of which may be rating, to find another MA plan that regulations require compliance considered FDRs. Since the meets their needs or to select original programs for Part C and Part D implementation of the mandatory CMS- Medicare. CMS continues to encourage sponsoring organizations that must developed training has not achieved the plans to strive for the highest quality. include training and education between efficiencies intended, we proposed to delete the provisions from the Part C Comment: We received numerous the compliance officer and the and Part D regulations that require use comments related to the ability to sponsoring organization’s employees, of the CMS-developed compliance conduct marketing during the OEP. senior administrators, governing body Response: We appreciate and training. members as well as their first-tier, In addition, we believe that the acknowledge all comments. A downstream and related entities (FDRs). discussion related to marketing during broader requirement that sponsoring the OEP and responses to those specific FDRs have long complained of the organizations provide compliance comments can be found in section burden of having to complete multiple training to their FDRs no longer II.B.5.c. sponsoring organizations’ compliance promotes the effective and efficient We thank all the commenters for their trainings and the amount of time it can administration of the Medicare feedback and suggestions. We note that take away from providing care to Advantage and Prescription Drug there was a technical error in the beneficiaries. In the May 23, 2014 final programs. Part C and Part D sponsoring language proposed in § 423.40(e). This rule (79 FR 29853 and 29855)), we organizations have evolved greatly and new section should have been titled attempted to resolve this burden by their compliance program operations ‘‘PDP enrollment period to coordinate developing our own web-based and systems are well established. Many with the MA open enrollment period.’’ standardized compliance program of these organizations have developed We have made this correction in this training modules and establishing, that effective training and learning models to final rule. FDRs were required to complete the communicate compliance expectations After review and consideration of all CMS training to satisfy the compliance and ensure that employees and FDRs are comments on the restoration of the OEP, training requirement. This requirement aware of the Medicare program we are finalizing the revisions to was applicable beginning January 1, requirements. Also, the attention §§ 422.60(a), 422.62(a), 422.68, 2016. The mandatory use of the CMS focused on compliance program 423.38(d) and (e), and 423.40(d) and (e) training by FDRs was designed to ensure effectiveness by CMS’ Part C and Part D as proposed, with the technical that FDRs will only have to complete program audits has further encouraged modification noted above. the compliance training once on an sponsors to continually improve their annual basis. The FDRs could then compliance operations. 2. Reducing the Burden of the provide the certificate of completion to CMS does not generally interfere in Compliance Program Training all Part C and Part D sponsoring private contractual matters between Requirements (§§ 422.503 and 423.504) organizations they served, hence, sponsoring organizations and their Sections 1857(e) and 1860D– eliminating the prior duplication of FDRs. Pursuant to § 422.504(i)(1) and 12(b)(3)(D) of the Act specify that effort that so many FDRs stated was § 423.505(i)(1), sponsoring organizations

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maintain ultimate responsibility for training requirements on their FDRs is holding FDRs accountable will be more adhering to and otherwise fully the best way to achieve compliance. challenging. complying with all terms and Specifically, we proposed to remove the Response: While we recognize some conditions of its contract with CMS. Our phrases in paragraphs (C)(1) and (C)(2) sponsors were able to utilize our contract is with the sponsoring that refer to first tier, downstream and training requirements as a means to organization, and sponsoring related entities and remove the ensure FDRs at least completed organizations are ultimately responsible paragraphs specific to FDR training at compliance training, we believe by for compliance with all applicable §§ 422.503(b)(4)(vi)(C)(2) and (3) and deleting this requirement we are statutes, regulations and sub-regulatory 423.504(b)(4)(vi)(C)(3) and (4). Those affording sponsors much greater guidance, regardless of who is proposed changes include restructuring flexibility in designing an FDR oversight performing the work. Additionally, § 422.503(b)(4)(vi)(C)(1) (with the structure that best suits the needs of delegated entities range in size, proposed revisions) into two paragraphs each sponsors’ organization. Sponsoring structure, risks, staffing, functions, and (that is, paragraph (C)(1) and (C)(2)) to organizations are free to choose the most contractual arrangements which separate the scope of the compliance effective and efficient method for necessitates the sponsoring organization training from the frequency with which ensuring that all their FDRs are in have discretion in its method of the training must occur, as these are two compliance with all applicable laws, oversight to ensure compliance with distinct requirements. With this rules, and regulations, and Medicare program requirements. This may be proposed revision, the organization of requirements (for example, training, accomplished through routine § 422.503(b)(4)(vi)(C) will mirror that of attestations, reports, routine monitoring monitoring and implementing corrective § 423.504(b)(4)(vi)(C). Further, we and auditing, and/or corrective actions). action, which may include training or proposed to revise the text in Additionally, sponsoring organizations retraining as appropriate, when non- § 423.504(b)(4)(vi)(C)(2) to track the should continue to evaluate their compliance or misconduct is identified. phrasing in § 422.503(b)(4)(vi)(C)(2), as contractual arrangements with their We will continue to hold sponsoring reorganized. The technical changes were FDRs to ensure appropriate levels of organizations accountable for the designed to eliminate any potential accountability for compliance are in failures of their FDRs to comply with ambiguity created by different phrasing place. Medicare program requirements, even in what we intend to be identical Comment: Several commenters with these proposed changes. Existing requirements as to the timing suggested that FDRs should be held to regulations at § 422.503(b)(4)(vi) and requirements for the training. We also the same compliance program training § 423.504(b)(4)(vi) require that every believe these technical changes make requirements as sponsoring sponsoring organization’s contract must the requirements easier to understand. organizations. specify that FDRs must comply with all Compliance training will still be Response: CMS does not interfere in applicable federal laws, regulations and required of MA and Part D sponsoring private contractual matters or written CMS instructions. Additionally, we organizations, their employees, chief arrangements between sponsoring audit sponsoring organizations’ executives or senior administrators, organizations and their FDRs. CMS’ compliance programs when we conduct managers, and governing body contract is with the sponsoring routine program audits, and our audit members. The primary goal of deleting organization and sponsoring process includes evaluations of the compliance training requirement for organizations are ultimately accountable sponsoring organizations’ monitoring FDRs is to reduce administrative burden for the performance of their FDRs and auditing of their FDRs as well as on both sponsors and FDRs, but also compliance with applicable statutes, FDR oversight. Our audits also evaluate allow MA and Part D sponsoring regulations and standards. Sponsoring formulary administration and organizations the flexibility to oversee organizations are required to develop an processing of coverage and appeal FDR compliance with Medicare Part C effective oversight structure for their requests in the Part C and Part D and D requirements in a way that is FDRs. As part of routine monitoring programs. FDRs often perform some or tailored to its organization, operations, activities, sponsoring organizations all of these functions for sponsoring resources and risks. We believe should evaluate whether regulatory organizations, so if they are non- sponsoring organizations are in the best requirements and accountability compliant, it will come to light during position to determine the most effective measures are included in contractual the program audit and the sponsoring way to monitor and track compliance agreements. The burden of monitoring organization will ultimately be held and fraud, waste and abuse (FWA) and documenting an FDR’s compliance responsible for the FDRs’ failure to responsibilities and contractual with applicable standards ultimately comply with program requirements. obligations amongst their FDRs. We rests with the sponsoring organization. Given that compliance programs are requested comments concerning these Comment: A few commenters stated very well established and have grown proposals and suggestions on other that sponsoring organizations and FDRs more sophisticated since their options we could implement to may incorrectly interpret the new inception, coupled with stakeholders’ accomplish the desired outcome. proposed rule to mean compliance desire to perform well on audit, the We received the following comments training is not required. A commenter CMS training requirement is not the and our response follows: suggested that not requiring training driver of performance improvement or Comment: A few commenters stated will lead to confusion, reduce provider FDR compliance with key CMS the current training requirements and compliance and increase compliance requirements. Given this accumulated process meet their needs because they risks across the Medicare program. program experience and the growing had already invested resources to Response: This change eliminates the sophistication of stakeholders’ develop efficient systems for ensuring CMS requirement for FDRs to complete compliance operations, as well as our their FDRs satisfied the general compliance program training. However, continuing requirements on sponsoring compliance requirement. They FDRs are still required to comply with organizations for oversight and expressed that eliminating the CMS all statutes, regulations, and CMS monitoring of FDRs, we no longer compliance training for FDRs will add program specific requirements. CMS believe requiring sponsoring new administrative burden on sponsors recognizes that sponsoring organizations organizations to impose the compliance to ensure CMS standards are met and may continue to have requirements in

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their contracts setting out their Comment: Several commenters 3. Medicare Advantage Plan Minimum expectations with respect to oversight of inquired if FDR oversight requirements Enrollment Waiver (§ 422.514(b)) FDRs’ compliance with statutes, and expectations will be updated in Under section 1857(b) of the Act, regulations, and CMS program specific Chapter 9 of Pub. 100–18, Medicare CMS may not enter into a contract with requirements. If sponsors choose to Prescription Drug Manual, and Chapter an MA organization unless the include a compliance program training 21 of Pub. 100–16 of the Medicare organization complies with the requirement as part of their contract Advantage Manual immediately minimum enrollment requirement. with FDRs that is a private contractual following the implementation of the Under the basic rule at § 422.514(a), to matter between the FDR and sponsoring final rule. The commenters suggested provide health care benefits under the organization. Such training would not that feedback should be solicited from MA program, MA organizations must be prohibited by these rules as sponsoring organizations to assist with demonstrate that they have the amended. providing industry best practices for capability to enroll at least 5,000 Comment: A commenter suggested communicating and monitoring FDR individuals, and provider sponsored that CMS create user-friendly compliance. organizations (PSOs) must demonstrate compliance training content for FDRs. Response: We always welcome that they have the capability to enroll at Response: CMS did develop a feedback from sponsoring organizations least 1,500 individuals. If an MA generalized training that was available and FDRs with respect to improving our organization intends to offer health care 24/7 on the CMS Medicare Learning sub-regulatory guidance and benefits outside urbanized areas as Network Learning Management System. communicating expectations. We defined in § 422.62(f), then the The overwhelming feedback we acknowledge that policy, technology minimum enrollment level is reduced to received was that the training content and Medicare business practices 1,500 for MA organizations and to 500 did not alleviate the large administrative continue to evolve. We intend to update for PSOs. The statute permits CMS to burden associated with compliance Chapters 9 and 21, respectively and waive this requirement in the first 3 training and, that the training was too issue a draft to obtain public comment. years of the contract for an MA contract generic to be helpful to most FDRs. applicant. We previously codified this Comment: Multiple commenters Comment: A commenter requested authority at § 422.514(b) and limited it recommended that CMS continue to clarification on whether FDRs who are to circumstances where the MA contract enrolled in Medicare will continue to maintain the CMS standardized training applicant is capable of administering receive the ‘‘deemed’’ status for FWA modules and make them available on and managing an MA contract and is training. Commenters also requested the CMS Medicare Learning Network able to manage the level of risk required clarification on who was deemed for (MLN) as an acceptable form of training under the contract. 63 FR 35099, June purposes of the FWA training for situations where sponsoring 26, 1998, as amended at 65 FR 40328, requirement (for example, whether organizations choose to require FDRs to June 29, 2000. We proposed to revise deeming was limited to just the hospital complete compliance training or where § 422.514 regarding the minimum participating in Medicare FFS or FDRs found the CMS training to be more enrollment requirements to improve extends to their hospital’s employees)? convenient to complete. Additionally, program efficiencies. Response: This provision eliminates commenters stated that CMS should Currently, MA organizations, Parts C and D compliance program and increase the MLN’s tracking and including PSOs, with an approved FWA training for FDRs. Therefore, reporting capabilities (that is to create a minimum enrollment waiver for their deeming of these training requirements searchable database to confirm who has first contract year have the option to is no longer relevant for the Part C and taken the training and reports that could resubmit the waiver request for CMS in D program. be issued to sponsoring organizations) the second and third year of the Comment: A commenter questioned for compliance training requirements. contract. In conjunction with the waiver how this provision affects PACE Response: CMS is unable, at this time, request, the MA organization must organizations. to provide the capacity for a searchable continue to demonstrate the Response: This provision does not database of users who have completed organization’s ability to operate and directly apply to all PACE training or a system that would allow demonstrate that it has and uses an organizations. However, PACE reports to be sent to sponsoring effective marketing and enrollment organizations that offer qualified organizations regarding the training system, despite continued failure to prescription benefits are Part D plan status of various FDR organizations. We meet the minimum enrollment sponsors that must comply Part D also believe that leaving the compliance requirement. In addition, the current requirements and regulations in part training on the MLN website could regulation limits our authority to grant 423 unless they are waived. create confusion among sponsoring the waiver in the third year to situations Comment: A commenter questioned organizations and FDRs. Therefore, this where the MA organization has at least how this provision affects agents and training course may be removed from attained a projected number of enrollees brokers. the Medicare Learning Network website. in the second year. Since 2012, we have Response: If FDRs, agents and brokers Comment: Sponsoring organizations, not received any request for waiver to would be subject to the contract FDRs (that is, hospitals, physicians, the minimum enrollment requirement requirements sponsoring organizations pharmacies and health care providers) during the second and third year of the have for FDRs. As this final rule would and other stakeholders wrote in support contract. Rather, we only received remove a specific CMS compliance of the provision, agreeing that it would minimum enrollment waiver requests training requirement for FDRs, agents significantly reduce burden on FDRs. through the initial application process. and brokers would not be required to We believe the current requirement to take this specific CMS compliance Response: We thank the commenters resubmit the waiver in the second and training either. Other regulations and for their support. third year of the contract is unnecessary. requirements applicable to agents and After careful consideration of all the The statute does not require a brokers are outside of the scope of this comments received, we are finalizing reevaluation of the minimum proposal. this proposal without modification. enrollment standard each year and

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plainly authorizes a waiver ‘‘during the second and third year of a contract. could result in disruption of services to first 3 contract years with respect to an These commenters also support the their enrollees. The commenter organization.’’ The current minimum proposal to approve the minimum recommended that CMS retain the enrollment waiver review in the initial enrollment waiver for 3 years in year 1 existing policy to review waiver MA contract application provides CMS of the contract as part of the initial requests on an annual basis to protect the confidence to determine whether an application process. Several beneficiaries from disruptions in their MA organization may operate for the commenters noted that the requirement care. first 3 years of the contract without to resubmit the waiver in the second Response: We disagree that the review meeting the minimum enrollment and third year of the contract created of waiver requests on an basis is requirement. CMS currently monitors unnecessary burden on organizations, necessary to monitor the financial low enrollment at the plan benefit with a commenter noting that stability of organizations or compliance package (PBP) level. We note that a organizations already demonstrate their with other MA requirements (such as similar provision in current capacity to bear risk during the waiver benefit administration). CMS requires § 422.506(b)(1)(iv) permits CMS to submission for the first year in the that organizations meet all applicable terminate an MA contract (or terminate application process. A commenter state licensure and fiscal soundness a specific plan benefit package) if the expressed support for this proposal requirements or compliance with other MA plan fails to maintain a sufficient because an approved 3-year minimum MA requirements (such as benefit number of enrollees to establish that it enrollment waiver encourages entry into administration). According to is a viable independent plan option for the MA–PD market from smaller §§ 422.504(a)(14) and 422.516(a)(5), existing or new enrollees. In addition, organizations that require more time to CMS monitors an organization’s compliance with § 422.514 is required ramp up their operations. compliance with fiscal soundness under § 422.503(a)(13). If an Response: We appreciate the requirements, primarily through organization’s PBP does not achieve and commenters’ support for the proposal independently audited annual financial maintain enrollment levels in and agree that removing the statements and other required accordance with the applicable low and resubmission of the minimum documentation for the legal entity. All minimum enrollment policies in enrollment waiver in the second and organizations must submit audited existing regulations, CMS may move to third year of the contract eliminates an annual financial statements and some terminate the PBP absent an approved unnecessary burden for organizations. organizations may also be required or waiver from CMS during the first 3 We also agree that approving the notified by CMS to submit quarterly years of the contract pursuant to minimum enrollment waiver for financial statements in certain § 422.510(a). organizations for a 3-year period situations. CMS believes that these We proposed to only review and supports market entry for smaller requirements provide adequate approve waivers through the MA organizations. assurance that organizations contracting application process as opposed to the Comment: A commenter expressed with CMS are financially viable while current practice of reviewing annual concern that the proposal to remove the protecting Medicare beneficiaries from requests and, potentially, requests from requirement to resubmit the minimum disrupted access to care. existing MA organizations that fail to enrollment waiver in the second and After considering these comments, we maintain enrollment in the second or third years of the contract would are finalizing the revisions to § 422.514 third year of operation. discourage MA organizations from as proposed. We proposed to revise the text in engaging in market strategies to increase 4. Revisions to Timing and Method of § 422.514(b) to provide that the waiver their enrollment. Disclosure Requirements (§§ 417.427, of the minimum enrollment requirement Response: We disagree that removing 422.111 and 423.128) may be in effect for the first 3 years of our requirement to re-submit the the contract. Further, we proposed to minimum enrollment waiver in the As provided in sections 1852(c)(1) delete all references to ‘‘MA second and third year of the contract and 1860D–4(a)(1)(A) of the Act, organizations’’ in paragraph (b) to reflect would discourage organizations from Medicare Advantage (MA) organizations our proposal that we will only review increasing their market share in the and Part D sponsors must disclose and approve waiver requests during the MA–PD program. As stated in our detailed information about the plans contract application process. proposal, CMS monitors low enrollment they offer to their enrollees ‘‘at the time We also proposed to delete current at the plan benefit package (PBP) level. of enrollment and at least annually paragraphs (b)(2) and (b)(3) in their After the third contract year, the thereafter.’’ The Act specifies this entirety to remove the requirement for provision at § 422.506(b)(1)(iv) allows detailed information in section MA organizations to submit an CMS to terminate an MA contract (or 1852(c)(1), and also requires additional additional minimum enrollment waiver terminate a specific plan benefit information specific to the Part D annually for the second and third years package) if the MA plan fails to benefit under section 1860D–4(a)(1)(B). of the contract. Finally, the proposed maintain a sufficient number of Under § 422.111(a)(3), CMS requires MA text also included technical changes to enrollees to establish that it is a viable plans to disclose this information to redesignate paragraphs (b)(1)(i) through independent plan option for existing or each enrollee ‘‘at the time of enrollment (iii) as (b)(1) through (3), consistent with new enrollees. We believe that our and at least annually thereafter, 15 days regulation style requirements of the ability to terminate the contract or plan before the annual election period.’’ A Office of the Federal Register. for low enrollment after the third year similar rule for Part D sponsors is found We received the following comments, provides sufficient incentive for new at § 423.128(a)(3). Additionally, and our response follows: organizations to market and grow their § 417.427 directs 1876 cost plans to Comment: We received several enrollment during years 2 and 3 of the follow the disclosure requirements in comments, primarily from plans, contract. § 422.111 and § 423.128. In making the expressing support for the proposal to Comment: A commenter expressed changes proposed here, we will also remove the requirement for MA concern that low contract enrollment affect 1876 cost plans, though it is not organizations to resubmit the minimum can impact an organization’s financial necessary to change the regulatory text enrollment waiver requests during the capability and that financial problems at § 417.427.

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Sections 422.111(b) and 423.128(b) of information subject to paragraph (a) to formulary also contain information the Part C and Part D program enrollees; as discussed in the proposed necessary to access care and benefits. As regulations, respectively, describe the rule, we intend to use that authority to such, CMS requires MA organizations information plans must disclose. The provide MAOs the flexibility to deliver and Part D sponsors to make these content listed in § 422.111(b) is found in certain required documents—such as documents available at the start of the an MA plan’s Evidence of Coverage the EOC and provider directory but not AEP, so CMS proposed to amend (EOC) and provider directory. The the Summary of Benefits—through §§ 422.111(a)(3) and 423.128(a)(3) to content listed in § 422.111(b) is found in electronic delivery or posting on the remove the current deadline and insert an MA plan’s Evidence of Coverage website in conjunction with delivery of ‘‘by the first day of the annual election (EOC), summary of benefits, and a hard copy notice (describing how the period.’’ To the extent that enrollees provider directory. The content listed in information and materials are available) find the EOC, provider directory, § 423.128(b) is found in a Part D and provision of a hard copy upon pharmacy directory, and formulary Sponsor’s EOC, summary of benefits, request. We believe this final rule will useful in making informed enrollment formulary, and pharmacy directory. allow plans to take advantage of decisions, CMS believes that receipt of Section 422.111(h)(2)(i) requires that technological developments and reduce these documents by the first day of the plans must maintain an internet website the amount of mail enrollees receive AEP is sufficient. Any changes in the that contains the information listed in from plans. plan rules reflected in these documents § 422.111(b) and also states that posting Prior to the 2009 contract year, for the next year must be adequately the EOC, Summary of Benefits, and §§ 422.111(a) and 423.128(a) required described in the ANOC (per provider network information on the the provision of the materials in their § 422.111(d)), which is provided at least plan’s website ‘‘does not relieve the MA respective paragraphs (b) at the time of 15 days before the AEP. organization of its responsibility under enrollment and at least annually This change will also provide an § 422.111(a) to provide hard copies to thereafter, but did not specify a additional 2 weeks for MA organizations enrollees.’’ deadline. In the September 18, 2008, and Part D plan sponsors to prepare, final rule, CMS required MA review, and ensure the accuracy of the We initially proposed, and will organizations to send this material to EOC, provider directory, pharmacy finalize, two changes to the disclosure current enrollees 15 days before the directory, and formulary documents. requirements, but will also finalize a annual election period (AEP) (73 FR CMS considers the additional time for third change in response to comments 54216). The rationale for this the EOC important due to the high received. First, we proposed to revise requirement was to provide number of errors that plans self-identify §§ 422.111(a)(3) and 423.128(a)(3) to beneficiaries with comprehensive in the document through errata sheets require MA organizations and Part D information prior to the AEP so that they submit to CMS and mail to sponsors to provide the information in they could make informed enrollment beneficiaries. In late-2016 and early- paragraph (b) of the respective decisions. 2017 for the 2017 plan year, MA and regulations by the first day of the annual However, we have found through Part D plans overall submitted 166 enrollment period, rather than 15 days consumer testing that the large size of ANOC/EOC errata, which identified 221 before. Second, we proposed to add the these mailings overwhelmed enrollees. ANOC errors and 553 EOC errors in the phrase ‘‘in the manner specified by In particular, the EOC is a long 2017 plan materials. Additional time to CMS’’ to § 422.111(a) and to modify the document that enrollees found difficult produce the EOC will give plans more sentence in § 422.111(h)(2)(ii) which to navigate. Enrollees were more likely time to conduct quality assurance and states that posting documents on the to review the Annual Notice of Change improve accuracy and result in fewer plan’s website does not relieve the plan (ANOC), a shorter document errata sheets in the future. of responsibility to provide hard copies summarizing any changes to plan In addition to the proposed changes to enrollees in order to provide benefits beginning on January 1 of the in §§ 422.111(a)(3) and 423.128(a)(3), we authority for CMS to permit MA plans upcoming year, if it was separate from also proposed that we would use the to provide these documents by directing the EOC. Current sections 422.111(d) authority to direct the manner of enrollees to the website posting of the and 423.128(g)(2) require MA delivery under paragraph (a) to give documents. We proposed to revise the organizations and Part D sponsors to plans more flexibility to provide certain sentence to add ‘‘upon request’’ to the provide the ANOC to all enrollees at materials specified in § 422.111(b) existing regulatory language to make it least 15 days before the AEP. electronically. The language in clear when any document that is The ANOC is intended to convey all § 422.111(h)(2)(ii) requiring hard copies required to be delivered under of the information essential to an of the specified documents first paragraph (a) in a manner that includes enrollee’s decision to remain enrolled in appeared in the January 28, 2005, final provision of a hard copy upon request, the same plan for the following year or rule (70 FR 4587) in § 422.111(f)(2). At posting the document on the website choose another plan during the AEP. that time, MA plans were not required (whether that document is the EOC, CMS’s research and experience have to maintain a website, but if they chose directory information or other materials) indicated that the ANOC is particularly to they were required to include the does not relieve the MA organization of useful to and used by enrollees. EOC, Summary of Benefits, and the responsibility to deliver hard copies Therefore, we did not propose to change provider network information on the upon request. Finally, in response to a the §§ 422.111(d) and 423.128(g) website. However, plans were comment we received with which we requirements that the ANOC be received prohibited from posting these agreed, we intend to further revise 15 days prior to AEP. documents online as a substitute for § 422.111(h)(2)(ii) and to add new Unlike the ANOC, the EOC is a providing hard copies to enrollees. A § 422.111(h)(2)(iii) to make explicit that document akin to a contract that subsequent final rule, published April the Summary of Benefits be provided in provides enrollees with exhaustive 15, 2011, established that MA plans are hard copy when directed to do so by information about their medical required to maintain an internet website CMS. We intend the final rule to coverage and rights and responsibilities at § 422.111(h)(2) and moved the authorize CMS to direct the manner in as members of a plan. The provider requirement that posting documents on which plans provide the documents and directory, pharmacy directory, and the plan website did not substitute for

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hard copies from § 422.111(f)(12) to number of beneficiaries who ‘‘use the believe that it is appropriate to codify § 422.111(h)(2)(ii) (76 FR 21502). internet’’ will only continue to grow the authority to permit this flexibility in There is no parallel to with time. Posted electronic documents the applicable regulation. § 422.111(h)(2)(ii) in § 423.128. Instead, can also be accessed from anywhere the We intend to issue sub-regulatory § 423.128(a) states that Part D sponsors internet is available. guidance to identify permissible must disclose the information in As mentioned previously, the EOC manners of disclosure under this final paragraph (b) in the manner specified by sometimes contains errors. To correct rule; we expect such guidance will be CMS. Section 423.128(d)(2)(i) requires these, MA and Part D plans currently similar to the current guidance for the Part D sponsors to maintain an internet have to mail errata sheets and post an provider directory, pharmacy directory, website that includes information listed updated version online. The hardcopy and formulary regarding dissemination in § 423.128(b). CMS sub-regulatory version of the EOC is then out-of-date. of the EOC. Importantly, neither the guidance has instructed plans to Beneficiaries either have to refer to proposal nor this final rule eliminate the provide the EOC in hard copy, but we errata sheets in addition to the hardcopy requirement for plans to provide believe that the proposed regulatory text EOC or go online to access a corrected accessible formats of required for § 422.111(a) will permit delivery by EOC. Increasing beneficiary use of the documents. As recipients of federal notifying enrollees of the internet electronic, online EOC ensures that funding, plans are obligated to provide posting of the documents, subject to the beneficiaries are using the most accurate materials in accessible formats upon right to request hard copies.71 As information. Under this proposal to request, at no cost to the individual, to explained in the proposed rule permit flexibility for us to approve non- individuals with disabilities, under regarding the changes to § 422.111, we hard-copy delivery in some cases, we Section 504 of the Rehabilitation Act of intend to use the authority provided by intend to continue requiring hardcopy 1973 and Section 1557, and to take this rule to give plans the flexibility to mailings of any ANOC or EOC errata. reasonable steps to provide meaningful provide certain documents such as the Plans have also continued to request access, including translation services, to EOC and the provider network CMS give plans the flexibility to provide individuals who have limited English information in an electronic manner and the EOC electronically. They have proficiency under Title VI of the Civil format. We intend to change the frequently cited the expense of printing Rights Act of 1964 and Section 1557. relevant sub-regulatory guidance to and mailing large documents. Medicaid To create the flexibility for delivery of coincide with this as well. managed care plans already have the required materials, CMS proposed to In the preamble to the 2005 final rule, flexibility to provide directories, modify § 422.111(h)(2)(ii) and to revise we noted that the prohibition on formularies, and member handbooks § 422.111(a). The proposed changes will substituting electronic posting on the (similar to the EOC) electronically, per align §§ 422.111(a) and 423.128(a) to MA plan’s internet site for delivery of §§ 438.10(h)(1), 438.10(h)(4)(i), and authorize CMS to provide flexibility to hardcopy documents was in response to 438.10(g)(3) respectively. MA plans and Part D sponsors to use comments recommending this change To begin addressing this, in the technology to provide beneficiaries with (70 FR 4623). At the time, we did not Medicare Marketing Guidelines released information. As the current version of believe enough Medicare beneficiaries July 2, 2015, CMS notified plans that § 422.111(a) and (h)(2) require hard used the internet to permit posting the they could mail either a hardcopy copies, we believe this proposal will documents online in place of mailing provider and/or pharmacy directory or a ultimately result in reducing burden them. hardcopy notice to enrollees instructing and providing more flexibility for In the 12 years since the rule was them where to find the directories sponsoring organizations. finalized, research indicates that online and how to request a hard copy. We received the following comments internet use has increased significantly That guidance has been moved to on our proposals regarding the time and among Medicare beneficiaries. Drawing Chapter 4, section 110.2.3, of the manner of delivery of required materials on nationally representative surveys, the Medicare Managed Care Manual. If to MA and Part D plan enrollees, and Pew Research Center found that 67 plans choose to mail a notice with the our response follows: percent of American adults age 65 and location of the online directory rather Comment: Many commenters older use the internet. Half of seniors than a hard copy, the notice must indicated unequivocal support for the have broadband available at home. include: A direct link to the online provision as proposed. Internet use increases even more among directory, the customer service number Response: We appreciate the support seniors age 65–69, of which 82 percent to call and request a hard copy, and if of the proposed change. available the email address to request a Comment: Many commenters use the internet and 66 percent have hard copy. The notice must be distinct, indicated that they did not support the broadband at home.72 Electronic separate, and mailed with the ANOC/ proposal to allow plans to deliver documents include advantages such as EOC.73 Section 60.4 of the Medicare certain required documents word search tools, the ability to magnify Marketing Guidelines released July 20, electronically and only provide hard text, screen reader capabilities, and 2017, extends the same flexibility to copy versions of those required bookmarks or embedded links, all of formularies, with the same required documents upon request. These which make documents easier to content in the notice identifying the commenters expressed concern that navigate. Given that the younger range location of the online formulary. As there are still many beneficiaries who of Medicare beneficiaries have a higher CMS has received few complaints from do not have easy access to electronic rate of internet access, we believe the any source about this new process, we documents, especially those in rural believe allowing plans the option to use areas and those who are of advanced 71 Medicare Marketing Guidelines, section 60.6, issued July 20, 2017, https://www.cms.gov/ a similar strategy for additional age. Medicare/Health-Plans/ManagedCareMarketing/ materials is appropriate. In addition, we Response: We appreciate the concern Downloads/CY-2018-Medicare-Marketing- that these commenters have about _ Guidelines Final072017.pdf. 73 Medicare Managed Care Manual Chapter 4— Medicare beneficiaries’ ability to access 72 Pew Research Center, May 2017, ‘‘Tech Benefits and Beneficiary Protections, Rev. 121, electronic documents. We believe that Adoption Climbs Among Older Adults’’, http:// issued April 22, 2016, https://www.cms.gov/ www.pewinternet.org/2017/05/17/tech-adoption- Regulations-and-Guidance/Guidance/Manuals/ the hard copy notification of the ability climbs-among-older-adults/. downloads/mc86c04.pdf. to request a hard copy as well as the

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electronic status and availability of the Benefits when enrolling in a plan. Benefits when CMS determines that it documents should mitigate this as Because plans provide the Summary of is in the best interest of beneficiaries. enrollees who want or need hard copies Benefits with an enrollment mechanism, These revisions authorize CMS to will be able to call the plan to request to avoid an extra step, the Summary of specify the manner of delivery of them. Additionally, we know from our Benefits must be available in the same materials described in paragraph (b) of experience administering the program format as the enrollment mechanism. To both §§ 422.111 and 423.128, and to that many of these beneficiaries rely on that end, when plans provide a paper clarify that posting of certain family members and friends to review application to a prospective enrollee, information or materials on the MA important documents for them, and that CMS instructs the plan to also provide organization’s website does not relieve these family members and friends will a paper Summary of Benefits along with the organization of the obligation to be more likely to have access to the paper application. provide information in hard copy when electronic versions of the required Comment: Many commenters beneficiaries request hard copy. documents. As an additional measure, indicated support for the proposed we intend to suggest in our changes, but also requested additional 5. Revisions to Parts 422 and 423, subregulatory guidance regarding use of considerations that mainly fell into two Subpart V, Communication/Marketing electronic delivery, that when a areas: (1) A request to allow plans the Materials and Activities beneficiary requests hard copy delivery option to include the hard copy Section 1851(h) of the Act prohibits of a required document in place of notification about electronic posting of Medicare Advantage (MA) organizations electronic delivery, the plan may wish the EOC and provider directories along from distributing marketing materials to continue to provide hard copies to with the ANOC; and (2) a request to and application forms to (or for the use that beneficiary on an ongoing basis, so allow plans the option to include other of) MA eligible individuals unless the that the beneficiary does not have to information with the ANOC, especially document has been submitted to the request hard copy format again. Finally, additional benefit information (for Secretary at least 45 days (10 days for as we indicated earlier, the number of example, supplemental benefits) as, certain materials) prior to use and the beneficiaries who have access to while CMS requires plans to provide document has not been disapproved. electronic mediums such as broadband this information, CMS currently Further, in section 1851(j), the Secretary internet access is growing every year. prohibits plans from providing this is authorized to adopt standards We believe we have placed sufficient information with the ANOC. regarding marketing activities, and the protections in place and have addressed Response: We also agree with both statute identifies certain prohibited the growing desire for electronic suggestions regarding the ANOC. We are activities. While the Act requires the versions of required documents. revisiting our prior guidance (section submission and review of the marketing Comment: A commenter requested 60.6 in the 2018 Medicare Marketing materials and applications, it does not that we exclude the Summary of Guidelines document) prohibiting plans provide a definition of what materials Benefits from electronic delivery citing from providing other materials along the importance of hard copy for this fall under the umbrella term with the ANOC as we make the changes ‘‘marketing.’’ Sections 1806D– document in the beneficiary’s process of to align our subregulatory guidance with choosing to remain in a current plan or 1(d)(3)(B)(iv) and 1860D–4(l) of the Act this final rule. provide similar restrictions on use of choose a new plan. As discussed earlier, we are finalizing Response: We agree with this marketing and enrollment materials and as proposed revisions to § 422.111(a)(3) comment and are finalizing additional activities to promote enrollment in Part and § 423.128(a)(3) to require delivery revisions to § 422.111(h)(2)(ii) and new D plans. by the beginning of the Annual text in § 422.111(h)(2)(iii). The new Section 1876(c)(3)(C) of the Act states paragraph (h)(2)(iii) provides that Coordinated Election Period of the that no brochures, application forms, or posting the Summary of Benefits does Evidence of Coverage and other other promotional or informational not relieve the obligation to provide materials and information described in material may be distributed by cost plan hard copies of the document to paragraph (b) of each regulation. In to (or for the use of) individuals eligible enrollees when CMS determines that it addition, we are finalizing revisions to to enroll with the organization under is in the best interest of the beneficiary. the regulation text as follows: this section unless (i) at least 45 days CMS considers the Summary of —In § 422.111(a), the proposed revision before its distribution, the organization Benefits, unlike the EOC, to be a to add ‘‘in the manner specified by has submitted the material to the marketing material because its primary CMS’’ at the end of the introductory Secretary for review, and (ii) the purpose is to influence a prospective sentence; Secretary has not disapproved the enrollee’s decision to enroll in a plan. —in § 422.111(h)(2)(ii), the proposed distribution of the material. As For example, agents use the Summary of revision to specify that posting of the delegated this authority by the Benefits as a tool to help sell plans to EOC and provider directory—but not Secretary, CMS reviews all such prospective enrollees. It indicates key the summary of benefits—on the material submitted and disapproves benefits in a standardized arrangement, plan’s website does not relieve the such material upon determination that providing the beneficiary with a plan of the obligation to provide hard the material is materially inaccurate or safeguard to confirm what the agent has copies of those materials upon request misleading or otherwise makes a presented. On the other hand, the EOC under paragraph (a) when requested material misrepresentation. Similar to is a document delivered after a by the beneficiary; 1851(h) of the Act, section 1876(c)(3)(C) beneficiary has made an enrollment —in § 422.111(h)(2)(iii), new text to of the Act focuses more on the review decision and is, in essence, a contract move the requirement to post the and approval of materials as opposed to between a current enrollee and the plan, Summary of Benefits on the plan’s providing an exhaustive list of materials articulating rights and responsibilities, website from paragraph (h)(2)(ii) to that will qualify as marketing or as well as detailed guidance on how to this new paragraph and a provision promotional information and materials. interact with the plan. CMS believes clarifying that posting does not relieve As part of the implementation of section that enrollees should not have to take an the plan of the obligation to deliver 1876(c)(3)(C) of the Act, the regulation extra step to find the Summary of hard copies of the Summary of governing cost plans at § 417.428(a)

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refers to Subpart V of part 422 for proposed changes, they are addressed in With this CMS proposal to narrow the marketing prohibitions and four areas of focus: (a) Including marketing definition, we believe there is requirements. Throughout this proposal, ‘‘communication requirements’’ in the a need to continue to apply the current the changes discussed for MA scope of Subpart V or parts 422 and 423, standards to and develop guidance for organizations/MA plans and which will include new definitions for those materials that fall outside of the prescription drug plan (PDP) sponsors/ ‘‘communications’’ and proposed definition. We proposed Part D plans apply as well to cost plans ‘‘communication materials’’ in changing the title of each Subpart V by subject to the same requirements as a §§ 422.2260 and 423.2260; (b) amending replacing the term ‘‘Marketing’’ with result of this cross-reference. §§ 422.2260 and 423.2260 to add a ‘‘Communication.’’ We proposed to Section 422.2260(1)–(4) of the Part C definition of ‘‘marketing’’ in place of the define in §§ 422.2260 and 423.2260 the program regulations currently identifies current definition of ‘‘marketing terms ‘‘communications’’ (activities and marketing materials as any materials materials’’ and to provide lists use of materials to provide information that: (1) Promote the MA organization, identifying marketing materials and to current and prospective enrollees) or any MA plan offered by the MA non-marketing materials; (c) adding new and ‘‘communications materials’’ organization; (2) inform Medicare regulation text to prohibit marketing (materials that include all information beneficiaries that they may enroll, or during the Open Enrollment Period provided to current members and remain enrolled in, an MA plan offered proposed in section II.B.1 of this prospective enrollees). We proposed by the MA organization; (3) explain the proposed rule; (d) technical changes to that marketing materials (discussed later benefits of enrollment in an MA plan, or other regulatory provisions as a result of in this section) will be a subset of rules that apply to enrollees; and (4) the changes to Subpart V. To the extent communications materials. In many explain how Medicare services are necessary, CMS relies on its authority to ways, the proposed definition of covered under an MA plan, including add regulatory and contract communications materials is similar to conditions that apply to such coverage. requirements to the cost plan, MA, and the current definition of marketing Section 423.2260(1)–(4) applies Part D programs to propose and materials; the proposed definition has a identical regulatory provisions to the (ultimately) adopt these changes. In broad scope and will include both Part D program. addition, section 1876(c)(3)(C) mandatory disclosures that are Sections 422.2260(5) and 423.2260(5) authorizes CMS to adopt conditions and primarily informative and materials that provide specific examples of materials procedures under which a cost plan are primarily geared to encourage under the ‘‘marketing materials’’ informs potential enrollees about the enrollment. definition, which include: General cost plan, which would clearly cover In addition to these proposals related audience materials such as general the scope of regulations proposed in this to defined terms and revising the scope circulation brochures, newspapers, section that will be applicable to cost of Subparts V in parts 422 and 423, we magazines, television, radio, billboards, plans. We note as well that sections proposed changes to the current yellow pages, or the internet; marketing 1851(h) and (j) of the Act (cross- regulations at §§ 422.2264 and 423.2264 representative materials such as scripts referenced in sections 1860D–1 and and §§ 422.2268 and 423.2268 that are or outlines for telemarketing or other 1860D–4(l)) of the Act address activities related to our proposal to distinguish presentations; presentation materials and direct that the Secretary adopt between marketing and such as slides and charts; promotional standards limiting marketing activities, communications. materials such as brochures or leaflets, CMS proposed, through revisions to which CMS interprets as permitting including materials for circulation by §§ 422.2268 and 423.2268, to apply regulation of communications about the third parties (for example, physicians or some of the current standards and plan that do not rise to the level of other providers); membership prohibitions related to marketing to all communication materials such as activities and materials that specifically communications and to apply others membership rules, subscriber promote enrollment. only to marketing. Marketing and agreements, member handbooks and a. Revising the Scope of Subpart V To marketing materials will be subject to wallet card instructions to enrollees; Include Communications and the more stringent requirements, letters to members about contractual Communications Materials including the need for submission to changes; changes in providers, and review by CMS. Under this premiums, benefits, plan procedures The current version of Subpart V of proposal, we stated in the proposed etc.; and membership activities (for parts 422 and 423 focuses on marketing rule, those materials that are not example, materials on rules involving materials, as opposed to other materials considered marketing, per the proposed non-payment of premiums, currently referred to as ‘‘non-marketing’’ definition of marketing, will fall under confirmation of enrollment or in the sub-regulatory Medicare the less stringent communication disenrollment, or no claim specific Marketing Guidelines. This leaves a requirements. notification information). regulatory void for the requirements that With regard to §§ 422.2264 and Finally, §§ 422.2260(6) and pertain to those materials that are not 423.2264, we specifically proposed the 423.2260(6) provide a list of materials considered marketing. Historically, the following changes: that are not considered marketing impact of not having regulatory • Deletion of paragraph (a)(3), which materials, including materials that are guidance for materials other than currently provides for an adequate targeted to current enrollees; are marketing has been muted because the written explanation of the grievance and customized or limited to a subset of current regulatory definition of appeals process to be provided as part enrollees or apply to a specific situation; marketing is so broad, resulting in most of marketing materials. In our view do not include information about the materials falling under the definition. grievance and appeals communications plan’s benefit structure; and apply to a The overall effect of this combination— will not be within the scope of specific situation or cover claims no definition of materials other than marketing as proposed in this rule. processing or other operational issues. marketing and a broad marketing • Deletion of paragraph (a)(4), which We proposed several changes to definition—is that marketing and provides for CMS to determine that Subpart V of the part 422 and 423 communications with enrollees became marketing materials include any other regulations. To better outline these synonymous. information necessary to enable

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beneficiaries to make an informed to the new definitions under Subpart V. Congress’ intent was to target for prior decision about enrollment. The intent of Prohibitions that offer broader CMS review and approval those this section was to ensure that materials beneficiary protections and are materials that could mislead or confuse which include measuring or ranking currently applicable to a wide variety of beneficiaries into making an adverse mechanisms such as Star Ratings were materials are proposed here to apply to enrollment decision. Since the original a part of CMS’s marketing review. We communications activities and adoption of §§ 422.2260 and 423.2260, proposed deleting this section as the communication materials; this list of CMS has reviewed thousands of exclusion list to be codified at prohibitions is proposed as paragraph marketing materials, tracked and § 422.2260(c)(2)(ii) ensures materials (a). Conversely, prohibitions that are resolved thousands of beneficiary that include measuring or ranking currently targeted to activities and complaints through the complaints standards will be considered marketing, materials that are within the narrower tracking module (CTM), conducted thus making §§ 422.2264(a)(4) and scope of marketing and marketing secret shopping programs of MA plan § 423.2264(a)(4) duplicative. materials are proposed at paragraph (b) sales events, and investigated numerous • Deletion of paragraph (e), which as prohibitions on marketing. We did marketing complaints. These efforts requires sponsoring organizations to not propose to expand the list of have provided CMS insight into the provide translated materials in certain prohibitions, but proposed to notate types of plan materials that present the areas where there is a significant non- which prohibitions are applicable to greatest risk of misleading or confusing English speaking population. We which category. The only substantive beneficiaries. Based on this experience, proposed to recodify these requirement change proposed is in connection with we believe that the current regulatory as a general communication standard in paragraph (a)(7), which we discuss definition of marketing materials is §§ 422.2268 and 423.2268, at new earlier in this section. We solicited overly broad. As a result, materials that paragraph (a)(7). As part of the comment on our proposed distinctions pose little to no threat of a detrimental redesignation of this requirement as a between these types of prohibitions and enrollment decision fall under the standard applicable to all whether certain standards or current broad marketing definition and communications and communication prohibitions from current §§ 422.2268 are required to follow the associated materials, we also proposed revisions. and 423.2268 should apply more marketing requirements, including First, we proposed to revise the text so narrowly or broadly than we have submission to CMS for potential review that it is stated as a prohibition on proposed. under limited statutory timeframes. sponsoring organizations: Sponsoring CMS believes that the level of scrutiny organizations may not, for markets with b. Amending the Regulatory Definition of Marketing and Marketing Materials required on numerous documents that a significant non-English speaking are not intended to influence an In conjunction with adding new population, provide materials, as enrollment decision, combined with proposed communication requirements, defined by CMS, unless in the language associated burden to sponsoring we also proposed a definition of of these individuals. We proposed organizations and CMS, is not justified. ‘‘marketing’’ to be codified in adding the statement of ‘‘as defined by By narrowing the scope of materials that §§ 422.2260 and 423.2260. We proposed CMS’’ to allow the agency the ability to fall under the scope of marketing, we to delete the current text in that section define the significant materials that will stated that the proposal would allow us defining only ‘‘marketing materials’’ to require translation. We proposed to better focus review on those materials add a new definition of ‘‘marketing’’ deleting the word ‘‘marketing’’ so the that present the greatest likelihood for a second sentence now reads as and lists of materials that are negative beneficiary experience. ‘‘materials,’’ to make it clear that the ‘‘marketing materials’’ and that are not. updated section applies to the broader Specifically, the term ‘‘marketing’’ was We proposed to more appropriately term of communications rather than the proposed as the use of materials or implement the statute by narrowing the more narrow term of marketing. activities by the sponsoring organization definition of marketing to focus on In addition, we proposed to revise (that is, the MA organization, Part D materials and activities that aim to §§ 422.2262(d) and 423.2262(d) to delete Sponsor, or cost plan, depending on the influence enrollment decisions. We the term ‘‘ad hoc’’ from the heading and specific part) or downstream entities believe this is consistent with regulation text in favor of referring to that are intended to draw a beneficiary’s Congress’s intent. Moreover, the new ‘‘communication materials’’ to conform attention to the plan or plans and definition differentiates between to the addition of communication influence a beneficiary’s decision providing factual information about the materials under Subpart V. making process when making a plan plan or benefits (that is, the Evidence of Current regulations at §§ 422.2268 selection; this last criterion would also Coverage (EOC)) versus persuasively and 423.2268 list prohibited marketing be met when the intent is to influence conveying information in a manner activities. These activities include items an enrollee’s decision to remain in a designed to prompt the beneficiary to such as providing meals to potential plan (that is, retention-based marketing). make a new plan decision or to stay enrollees, soliciting door to door, and The current regulations address both with their current plan (for example, a marketing in provider settings. With the prohibited marketing activities and flyer that touts a low monthly proposal to distinguish between overall marketing materials. The prohibited premium). As discussed later, the communications and marketing activities are directly related to majority of member materials will no activities, we proposed to break out the marketing activities, but the current longer fall within the definition of prohibitions into categories: Those definition of ‘‘marketing materials’’ is marketing under the proposal. The EOC, applicable to all communications overly broad and has resulted in a subscriber agreements, and wallet card (activities and materials) and those that significant number of documents being instructions are not developed nor are specific to marketing and marketing classified as marketing materials, such intended to influence enrollment materials. In reviewing the various as materials promoting the sponsoring decisions. Rather, they are utilized for standards under the current regulations organization as a whole (that is, brand current enrollees to understand the full to determine if they will apply to awareness) rather than materials that scope of and the rules associated with communications or marketing, we promote enrollment in a specific their plan. We believe the proposed new looked at the each standard as it applied Medicare plan. We believe that marketing definition appropriately

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safeguards potential and current regulation text excluded from the provides the necessary beneficiary enrollees while not placing an undue definition of marketing materials those protections and negates the need for our burden on sponsoring organizations. that are required by §§ 422.111 or review of these materials before Moreover, those materials that will be 423.128 unless CMS specified otherwise distribution to enrollees. excluded from the marketing definition because of the use or purpose of the The proposed changes do not release will fall under the proposed definition materials. We proposed to revise the list cost plans, MA organizations, or Part D of communication materials, with what of exclusions from marketing materials sponsors from the requirements in we believe are more appropriate to maintain the current beneficiary sections 1876(c)(3)(C), 1851(h), and requirements. Enrollment and protections that apply to marketing 1860D–1(b)(1)(B)(vi) of the Act to have mandatory disclosure materials materials but to narrow the scope of application forms reviewed by CMS as continue to be subject to requirements CMS’s review and approval well. To clarify this requirement, we in §§ 422.60(c), 422.111, 423.32(b), and responsibilities to exclude materials that proposed to revise § 417.430(a)(1) and 423.128. are unlikely to lead to or influence an § 423.32(b), which pertain to application Second, we proposed to revise the list enrollment decision. and enrollment processes, to add a cross of marketing materials, currently Our proposal was intended to exclude reference to §§ 422.2262 and 423.2262, codified at §§ 422.2260(5) and from marketing any materials that do respectively. The cross references 423.2260(5), and to include it in the not include information about the plan’s directly link enrollment applications proposed new §§ 422.2260 and benefit structure or cost-sharing. We back to requirements related to review 423.2260. The current list of examples believe that materials that do not and distribution of marketing materials. includes: Brochures; advertisements in mention benefit structure or cost sharing These proposed changes update an old newspapers and magazines, and on will not be used to make an enrollment cross-reference, codify existing television, billboards, radio, or the decision in a specific Medicare plan, practices, and are consistent with internet; social media content; rather they will be used to drive language already in § 422.60(c). marketing representative materials, such beneficiaries to request additional as scripts or outlines for telemarketing information that will fall under the new c. Prohibition of Marketing During the or other presentations; and presentation definition of marketing. Similarly, we Open Enrollment Period materials such as slides and charts. In want to be sure it is clear that the use The 21st Century Cures Act (the Cures conjunction with the proposed new of measuring or ranking standards, such Act) amended section 1851(e)(2) of the definition of marketing, we proposed to as the CMS Star Ratings, even when not Act by adding a new continuous open remove from the list of examples items accompanied by other plan benefit enrollment and disenrollment period such as membership communication structure or cost sharing information, (OEP) for MA and certain PDP members. materials, subscriber agreements, could lead a beneficiary to make an Elsewhere in this final rule (section member handbooks, and wallet card enrollment decision; we therefore II.B.1 (Restoration of the Medicare instructions to enrollees, as they did not proposed to exclude materials that do Advantage Open Enrollment Period fall under the proposed regulatory not have such rankings or (§§ 422.60, 422.62, 422.68, 423.38 and definition of marketing. The proposed measurements from marketing. In 423.40)), we finalize that revision to the text complements the new definition by addition, we proposed to exclude MA regulations. As part of establishing providing a concise non-exhaustive list materials that mention benefits or cost this OEP, the Cures Act prohibits of example material types that will be sharing but do not otherwise meet the unsolicited marketing and mailing considered marketing. proposed definition of marketing. The marketing materials to individuals who Third, we proposed to revise the list goal of this proposal is to exclude are eligible for the new OEP. We of exclusions from marketing materials, member communications that convey proposed to add a new paragraph currently codified at §§ 422.2260(6) and important factual information that is not (b)(10) 74 to both proposed §§ 422.2268 423.2260(6), and to include it in the intended to influence the enrollee’s and 423.2268 to apply this prohibition proposed new §§ 422.2260 and 423.2260 decision to make a plan selection or to on marketing. We also requested to identify the types of materials that stay enrolled in their current plan. An comment on how the agency could will not be considered marketing. example is a monthly newsletter to implement the statutory requirement. Materials that do not include current enrollees reminding them of The new OEP is not available for information about the plan’s benefit preventive services at $0 cost sharing. enrollees in Medicare cost plans; structure or cost sharing or do not In addition, proposed to exclude therefore, these limitations apply to MA include information about measuring or those materials required under enrollees and to any PDP enrollee who ranking standards (for example, star § 422.111 (for MA plans) and § 423.128 was enrolled in an MA plan the prior ratings) will be excluded from (for Part D sponsors), unless otherwise year. CMS expressed concern in the marketing. In addition, materials that do specified by CMS because of their use proposed rule that it may be difficult for mention benefits or cost sharing, but do or purpose. This proposal is intended to a sponsoring organization to limit not meet the definition of marketing as exclude post-enrollment materials that marketing to only those individuals who proposed here, will also be excluded we require be disclosed and distributed have not yet enrolled in a plan during from marketing. We also proposed, in to enrollees, such as the EOC. Such the OEP. We noted that one mechanism the preamble, that required materials in materials convey important plan could be to limit marketing entirely § 422.111 and § 423.128 not be information in a factual manner rather during that period, but were concerned considered marketing, unless otherwise than to entice a prospective enrollee to that such a prohibition would be too specified, and, separately, materials choose a specific plan or an existing broad. We proposed a ‘‘knowing’’ specifically designated by us as not enrollee to stay in a specific plan. In standard instead, believing that it would meeting the definition of the proposed addition, either these materials use both effectuate the statutory provision marketing definition based on their use model formats and text developed by us and avoid against overly broad or purpose; however, the proposed or are developed by plans based on regulation text (82 FR 56505–06 and detailed instructions on the required 74 The proposed rule, at 82 FR 56436, mistakenly 52525) combined these categories content from us; this high level of referred to paragraph (b)(9) as the location of this inadvertently so that the proposed standardization by us on the front-end new proposed text.

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implementation. We solicited comment the current broad definition of use the term in a way that is consistent on how a sponsoring organization could ‘‘marketing materials’’ from being issued with the proposed definition of the term appropriately control who would or by a sponsoring organization while that ‘‘marketing,’’ and the underlying should be marketed to during the new entity is under sanction. For this reason, requirements and standards do not need OEP, such as through as mailing CMS proposed the following changes to to be extended to all communications campaigns aimed at a more general §§ 422.750 and 422.752: from a PDP sponsor. audience. • In § 422.750, we proposed to revise We solicited comment on the paragraph (a)(3) to refer to suspension of proposed technical changes, particularly d. Technical Changes to Other ‘‘communication activities.’’ whether a proposed revision would be Regulatory Provisions as a Result of the • In § 422.752, we proposed to more expansive than anticipated or have Changes to Subpart V replace the term ‘‘marketing’’ in unintended consequences for As previously stated, because of the paragraph (a)(11) and the heading for sponsoring organizations or for CMS’s broad regulatory definition of paragraph (b) with the term oversight and monitoring of the MA and marketing, the term marketing became ‘‘communications.’’ Part D programs. synonymous with communications from We did not propose any changes to In conclusion, we stated our belief the plan to enrollees or potential the use of the term ‘‘marketing’’ in that our proposals would maintain the enrollees. As a result of our proposal to §§ 422.384, 422.504(a)(17), appropriate level of beneficiary define both ‘‘marketing’’ and 422.504(d)(2)(vi), or 422.514, as those protection and facilitate and focus our ‘‘communications,’’ we proposed a regulations use the term in a way that oversight of marketing materials, while number of technical changes that we is consistent with the proposed appropriately narrowing the scope of believe are necessary to update definition of the term ‘‘marketing,’’ and what is considered marketing. We regulation text that uses the term the underlying requirements and believe beneficiary protections are marketing throughout parts 422 and standards do not need to be extended to further enhanced by adding 423. Accordingly, we proposed the all communications from an MA communication materials and following technical changes in Part C: organization. associated standards under Subpart V. • In § 422.54, we proposed to update We also proposed the following These changes would allow CMS to paragraphs (c)(1)(i) and (d)(4)(ii) to technical changes in Part D: focus its oversight efforts on plan replace ‘‘marketing materials’’ with • In § 423.38(c)(8)(i)(C), we proposed marketing materials that have the ‘‘communication materials.’’ to revise the paragraph to read: ‘‘The highest potential for influencing a • In § 422.62, we proposed to update organization (or its agent, beneficiary to make an enrollment paragraph (b)(3)(B)(ii) by replacing ‘‘in representative, or plan provider) decision that is not in the beneficiary’s marketing the plans to the individual’’ materially misrepresented the plan’s best interest. We solicited comment on with ‘‘in communication materials.’’ provisions in communication these proposals and whether the • In § 422.102(d), we proposed to use materials.’’ appropriate balance is achieved with the ‘‘supplemental benefits packaging’’ • In § 423.504(b)(4)(ii), we proposed proposed regulation text. instead of ‘‘marketing of supplemental to replace ‘‘marketing’’ with e. Comments and Reponses on benefits.’’ ‘‘communications’’ to reflect the change • In § 422.206(b)(2)(i), we proposed to Proposals Related to Communications to Subpart V. and Marketing replace ‘‘§ 422.80 (concerning approval • In § 423.505(b)(25), we proposed to of marketing materials and election replace ‘‘marketing’’ with CMS was pleased to see a large forms)’’ with ‘‘all applicable ‘‘communications’’ to reflect the change number of comments in support of requirements under subpart V’’. to Subpart V. using the narrower definition for • In § 422.503(b)(4)(ii), we proposed • In § 423.509(a)(4)(V)(A), we ‘‘marketing,’’ and the new term to replace the term ‘‘marketing’’ with proposed to delete the word ‘‘communications’’ in Subpart V. the term ‘‘communication.’’ Commenters in favor of the proposed • ‘‘marketing’’ and instead simply refer to In § 422.510(a)(4)(iii), we proposed Subpart V. changes indicated that the proposed to remove the word ‘‘marketing’’ so that For the reasons explained in new definitions appropriately safeguard the reference is to the broader connection with our proposal to revise prospective and current enrollees, while Subpart V. the Part C sanction regulations, we also not placing an undue burden on MA CMS has had longstanding authority proposed the following changes: 75 plans and Part D plan sponsors. In that to initiate ‘‘marketing sanctions’’ in • In § 423.750, we proposed to revise same vein, commenters expressed that conjunction with enrollment sanctions paragraph (a)(3) to refer to suspension of the proposed changes allow for a less as a means of protecting beneficiaries ‘‘communication activities.’’ burdensome approach to from the confusion that stems from • In § 423.752, we proposed to communicating with beneficiaries. receiving information provided by a replace the term ‘‘marketing’’ in Other commenters said that the new plan that is—as a result of enrollment paragraph (a)(9) and the heading for definition of marketing was logical and sanctions—unable to accept paragraph (b) with the term aligns with the layman’s definition of enrollments. In this rulemaking, CMS ‘‘communications.’’ ‘‘marketing.’’ proposed to replace the term We did not propose any changes to We received the following comments, ‘‘marketing’’ with ‘‘communications’’ in the use of the term ‘‘marketing’’ in and our response follows: § 422.750 and 422.752 to reflect its §§ 423.505(d)(2)(vi), 423.871(c), or Comment: Many commenters in favor proposal for Subpart V. The proposal to 423.756(c)(3)(ii), as those regulations of the proposed changes to Subpart V change the terminology was not asked CMS to provide more information intended or designed to expand the 75 We note that the proposed rule preamble (82 on what materials would fall under the scope of CMS’s authority with respect to FR 56437) mistakenly did not include a discussion definition of marketing and what sanction regulations. Rather, CMS of the specific Part D regulation sections that we materials would fall under the proposed to revise in connection with CMS sought to preserve the existing reach of sanction authority; however, the proposed definition of communications, but not the sanction authority it currently has— regulation text (82 FR 56524) did include the marketing. Moreover, commenters to prohibit any communications under proposed change. requested additional information on

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whether or not communication §§ 422.111 and 423.128 are not materials—whether communications or materials that are not marketing marketing materials. To the extent that marketing—after release and use of the materials would still be submitted to a document (or materials) required by materials by the sponsoring CMS for review. Several commenters those regulations appears to serve a organization. The regulation authorizes suggested materials, such as marketing purpose, meaning that it is CMS to direct modification or stopped standardized models, be considered promotional materials or designed to use of the materials to clarify that CMS’s communications, but not marketing. influence an enrollment decision ability to oversee and enforce Many of these comments acknowledged instead of providing factual information compliance with the limits on that they expected such detail to be that is required to be disclosed under communications and marketing is not captured in sub-regulatory guidance, the Medicare program, we believe it is limited to the pre-use review and such as the MMG. Additionally, a subset important that the regulation text approval required for marketing of commenters reiterated the importance provide CMS the authority to designate materials. of CMS working with industry to the document as a marketing material Comment: Some commenters develop updated sub-regulatory subject to the higher level of scrutiny. expressing concern with the changes to guidance for marketing and Comment: Several commenters were Subpart V asked that CMS monitor the communications. not in favor of the changes to Subpart impact of this change and revisit or Response: CMS agrees that sub- V and expressed concern that CMS is reverse course if there is clear evidence regulatory guidance is the more reducing oversight of important plan that beneficiaries are receiving appropriate vehicle for applying the materials while proposing to give plans inaccurate or incomplete plan materials. definitions and identifying what types more flexibility on plan design and in Response: CMS agrees that monitoring of materials are marketing and what the types of benefits that can be offered. and evaluation are critical parts of the types are communications. As such, we The majority of these comments focused oversight process and that protection of intend to develop a successor to the on concerns regarding CMS’s proposal beneficiaries is a primary goal. The current MMG that will include guidance to no longer designate and review the authority outlined earlier will keep CMS for both communications and EOC as a marketing material. These well-equipped to monitor any marketing. CMS will seek comment as a commenters believed this proposal communication issues and to act as part of the development of the new suggested CMS was stepping back from needed without additional regulatory guidelines. its oversight responsibilities. changes. In addition to the more formal Comment: A commenter who Response: CMS understands the processes, CMS may act on any supported the updates to Subpart V concern and assures the commenters information received from Medicare urged CMS to further refine the that our oversight of the EOC will not beneficiaries, typically through our definition of marketing to include change for a few reasons. First, the EOC Complaints Tracking Module (CTM), as materials or activities targeting is based on a model material created by well as complaints received from ‘‘prospects’’ and not current enrollees. CMS and therefore is a document over competing plans. Response: CMS disagrees with this which CMS already has a high level of Comment: CMS received several suggestion and believes that the oversight and monitoring. Second, the comments asking how the changes to definition of marketing, as proposed and benefits information used to populate Subpart V will impact D–SNPs whose finalized, correctly focuses on all the EOC is derived from the plan’s bid materials are also reviewed by the state. beneficiaries, including existing, new submission, which goes through its own A reviewer suggested that CMS work and potential enrollees of a plan, when CMS-based review. with the states to develop joint the intent is to draw attention to the Third, for over 10 years, EOCs have guidance. plan and influence the individual’s plan been submitted to CMS as a marketing Response: In general, CMS does not selection. Plans market to their current material under ‘‘File and Use.’’ As a believe that the changes to Subpart V members for the purposes of result, the EOCs have not been will have an impact on D–SNPs that is ‘‘upselling’’ or retention and such efforts prospectively reviewed upon different from the impact on other MA are appropriately subject to our submission but CMS has historically plans and Part D plan sponsors. marketing oversight and regulations. exercised oversight of the accuracy of Currently, most marketing reviews are Additionally, we note that this final rule EOCs through retrospective reviews, conducted separately by both CMS and includes a provision (in finalized timeliness monitoring studies, and by the states for materials used by D–SNPs. § 422.2260 and § 423.2260) that collecting and analyzing EOC-based The changes to Subpart V will result in authorizes CMS to characterize errata reported by the plans. The vast some materials currently defined as materials that fall under § 422.111 and majority of EOC errors have been marketing not being subject to prior § 423.128 as not marketing materials identified through these retrospective review and approval by CMS. This, based on their use and purpose; processes. We do not expect these however, should have no bearing on any therefore, many required materials will oversight and enforcement processes to state requirements that may necessitate fall under the broad communication change with the regulation changes in state review. Additionally, states retain definition. this final rule. In addition, with this authority to control and supervise We generally agree with the regulatory change, CMS will retain Medicaid managed care plans, even if commenter(s) that required and oversight authority over any current those plans also have Part C or Part D standardized materials, such as the marketing material that will become a contracts. State Medicaid agencies also EOC, directories, and materials required communication material as a result of may establish or modify requirements under §§ 422.111 and 423.128, should the changes to Subpart V, principally with respect to review of D–SNP generally fall under communications the changes to §§ 422.2262, 422.2264, materials as part of the contract required rather than marketing materials under 422.2268, 423.2262, 423.2264 and under § 422.107. the definition we proposed and are 423.2268. In particular, we proposed Comment: CMS also received several finalizing here. We are finalizing an and are finalizing, with slight provider-focused comments expressing exclusion from marketing materials that grammatical revisions, text to an overarching concern with how the provides that unless CMS provides §§ 422.2262(d) and 423.2262(d) to restriction of marketing in the health otherwise, materials required under provide authority for CMS to review care setting impacts a provider’s ability

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to counsel patients about coverage when selecting a plan or choosing to continued that, currently, many options, particularly if a patient can utilize a specific pharmacy (including important documents are not translated, benefit from coordinated, accountable the use of the term ‘‘preferred’’) should such as notices that beneficiaries are care in MA. A commenter suggested that be expressly prohibited. The commenter being denied services or will be CMS exclude from the definition of continued that all information provided disenrolled for failure to pay premiums. marketing materials under section to beneficiaries should be inclusive, Response: CMS appreciates the 422.2260 any communications from complete, and accurate to allow the supportive feedback. We are finalizing providers or MAOs to their patients beneficiary to make their own decisions the regulatory language at regarding their care, including regarding which plan to select and § 422.2268(a)(7) and § 423.2268(a)(7) to communications regarding cost-sharing which pharmacy to use. require translation of ‘‘vital materials’’ responsibilities or listing the plans in Response: CMS agrees with the as opposed to materials ‘‘as defined by which a provider participates. The same commenter that all information CMS’’. We believe that this standard commenter noted that CMS does not provided to beneficiaries should be will provide sufficient flexibility to generally require providers to seek inclusive, complete, and accurate to sponsoring organizations in connection CMS’s approval for communications allow the beneficiary to make their own with mere marketing materials as well with patients who are enrolled in decisions regarding which plan to select as provide beneficiaries with access to traditional Medicare. Further, they and which pharmacy to use. The the information and materials that are expressed that as long as the provider- regulations finalized today, as do the vital to coverage. In conjunction with patient or MAO-patient communication current regulations, explicitly prohibit the final regulation, CMS intends to does not serve to ‘‘influence a the provision or information or other develop a successor to the current MMG beneficiary’s decision-making process activities that mislead beneficiaries at that will include guidance for both when making a MA plan selection or paragraphs (a)(1) and (2) of §§ 422.2268 communications and marketing. In this influence a beneficiary’s decision to stay and 423.2268. However, we disagree sub-regulatory guidance, we intend to enrolled in a plan,’’ then such with the commenter’s suggestion that provide additional guidance explaining communications regarding cost-sharing the use of the term ‘‘preferred’’ should which documents and materials are obligations should not be subject to not be allowed. CMS allows for vital materials that must be translated. CMS review simply because the patient preferred pharmacies where the copay We also remind commenters and plans receives Medicare benefits through an may be lower for the beneficiary that this regulation is not the only legal MAO. (§ 423.120(a)(9)) and we believe that obligation for MA organizations and Response: CMS’s restrictions on sales conveying this potential cost savings to Part D sponsors with regard to Medicare and marketing in the health care setting, enrollees is important. beneficiaries who have limited English which are required by section Comment: CMS received a comment proficiencies. As recipients of federal 1851(j)(1)(D) of the Act, were never outlining the unique challenges of ESRD funding, plans are obligated to provide intended to preclude a doctor from beneficiaries and that treatment area is materials in accessible formats upon discussing MA with patients. Rather, an ideal location for clinical and non- request, at no cost to the individual, to the requirements prohibit a sponsoring clinical staff to help beneficiaries assess individuals with disabilities, under organization (including its officials, their coverage choices. Section 504 of the Rehabilitation Act of employees, contractors, participating Response: CMS appreciates the real- 1973 and Section 1557, and to take providers, the agents, brokers, and other world insight that this example reasonable steps to provide meaningful third parties representing such provides. However, the restriction on access, including translation services, to organization) from marketing to a marketing in the health care setting is individuals who have limited English Medicare beneficiary in the health care statutory. By contrast, any activities that proficiency under Title VI of the Civil setting. Based on the examples would fall under the new definition of Rights Act of 1964 and Section 1557. provided, combined with the changes communications, but not marketing, are Guidance about obligations under these made to Subpart V, CMS does not allowed in the health care setting, so other statutes is available from the believe that discussions about cost- long as the communication activity Office for Civil Rights. Further, we note sharing responsibilities of a patient, complies with new §§ 422.2268(a) and that § 422.111(h)(1)(iii) and identifying the plans with which a 423.2268(a). Plan-specific materials that § 423.128(d)(1)(iii) require the call provider participates, or about patient are still considered marketing may not centers of sponsoring organizations to care are considered marketing. As the be distributed in areas where care is provide interpreters to enrollees who commenter points out, such discussions delivered. But a provider may discuss are LEP or do not speak English, are intended to educate a beneficiary the MA program with the patient and without limitation based on the number about the merits of the MA program and make the plan’s marketing materials of enrollees in a service area that are the respective responsibilities of the available in common areas. LEP or do not speak English. patient and the provider under MA CMS received overwhelming support Comment: Several commenters asked coverage, not to influence a for extending the translation that CMS change the current translation beneficiary’s decision-making process. requirement proposed at standard, which only covers languages However, certain activities or §§ 422.2268(a)(7) and 423.2268(a)(7). spoken by five percent or more of the discussions undertaken by a provider Comment: Several commenters population in the service area. The could be marketing, such as distribution expressed that they were pleased that commenters expressed concern that the of brochures or appointment forms for CMS proposed to extend its current current rule means that, except for a specific plans or attempting to persuade document translation requirement to couple small pockets, the only required a beneficiary to select a specific plan. ‘‘communications’’ designated by CMS language for translation is Spanish. Based on the comments received, we rather than limiting it to certain Response: CMS uses U.S. Census will clarify this distinction in sub- marketing documents. The commenters Bureau’s American Community Survey regulatory guidance. asked that CMS adopt this change and, data to determine which PBPs must Comment: Another commenter stated in implementation, expand the list of provide translated materials and has that any attempts to use information to specific documents that are subject to determined that five percent of a intentionally mislead beneficiaries translation rules. The commenters language spoken in service area is an

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appropriate threshold for translation enrollment decision during the AEP, ‘‘unsolicited’’ to modify ‘‘marketing requirements. We reiterate that other sending unsolicited marketing materials materials’’ to be consistent with the laws also apply to sponsoring to that individual, even if the OEP was statute and to clarify that responses to organizations and this marketing and not mentioned, would be considered inquiries from beneficiaries is not communication regulation is not the ‘‘knowingly targeting’’. To that point, as prohibited. only applicable provision for ensuring finalized, the regulation accomplishes Comment: A commenter suggested the access for beneficiaries with limited what the commenters have suggested, as ‘‘knowing’’ standard would unfairly English proficiency. For example, as well as addresses marketing to specific disadvantage MA plans where a recipients of federal financial assistance, individuals that are able to make a plan beneficiary might already be enrolled, MA plans and Part D prescription drug selection during the OEP. since that plan would be more likely to plans are subject to the Comment: Another commenter stated know that the enrollee was enrolled in nondiscrimination requirements under that marketing often takes the form of an MA plan during the previous year. If Title VI of the Civil Rights Act of 1964 educating beneficiaries about their another MA plan does not know that and Section 1557 and their options and their rights to change plans, enrollees are already enrolled, that MA implementing regulations (45 CFR parts or remain in their plan if they are plan could market to those enrollees, 80 and 92). satisfied. Restricting such marketing potentially influencing enrollees to Comment: A commenter asked if the will effectively undo much of the switch plans. This standard would not language used in §§ 422.2268(a)(7) and ‘‘good’’ that was established under OEP, be in the best interest of beneficiaries 423.2268(a)(7) was error in the wording, discouraging beneficiaries from and could cause market disruption. The as the commenter found it unclear. exploring various plan options and commenter recommended that CMS Response: The language is correct. It selecting the plan that is best for them, create a standard where marketing is written in the context of what plans and their families. The commenter during OEP is not targeted to specific cannot do. Paragraph (a)(7), as proposed supported a policy which would allow enrollees, thus plans would be and finalized, prohibits plans from marketing to all beneficiaries during permitted to run general marketing providing materials in markets with OEP, including those beneficiaries campaigns (plan-specific or on the MA significant non-English speaking eligible for OEP. In particular, the and/or Part D program). This type of populations unless the communications commenter asserted that it would be standard would satisfy statutory are in the language of the non-English largely unworkable to limit marketing requirements, would reduce beneficiary speaking populations. We believe that only to a subset of individuals who have confusion, and would ensure that plans this is a clear statement of the intended not yet enrolled in a plan during OEP. are on a level playing field. prohibition. The commenter offered that one Response: CMS appreciates the We received a number of comments potential option is to only prohibit commenter sharing this concern. Our based on the updates to §§ 422.2268 and direct marketing communications to goal is to implement the Congressional 423.2268 to address section 1851(e)(2) OEP beneficiaries, but permit broader intent without creating an additional of The 21st Century Cures Act (the communications including: Television undue burden to plans. In addition, the Cures Act). Overall, comments were ads, general mailing campaigns, internet OEP does not impact those beneficiaries evenly split among those in favor of marketing, and radio ads during the who are aging into the Medicare CMS’s proposed language and those OEP. program and have not yet made an commenters who suggested alternative Response: The statute prohibits enrollment decision, as they are still in methods of addressing the Cures Act unsolicited marketing and the final their the Initial Coverage Election prohibition on marketing during the regulation has been updated to reflect Period (ICEP). We believe that tying the new OEP. There were no commenters in this. Neither the statute nor regulation marketing prohibition to a ‘‘knowingly’’ favor of a broader prohibition on restricts a plan from providing standard implements the statute while marketing during the OEP. educational materials or marketing avoiding an unnecessary burden on Comment: Several commenters were materials if and when the beneficiary plans and sponsoring organizations. It is in favor of CMS’s use of the term proactively reach out looking for OEP true that a plan that just processed an ‘‘knowingly’’ stating that it would help. To that end, CMS supports each enrollment may have more knowledge protect a plan from the marketing plan’s ability to reactively respond to of the status of a beneficiary, yet we prohibition when the plan does not beneficiaries when it comes to the OEP. believe that ‘‘knowingly’’ also address know that the beneficiary is enrolled in CMS disagrees that plans should be able the content of the message, which an MA plan at the time. to market its coverage under the guise should mitigate the concern by not Response: CMS appreciates feedback of help. permitting other organizations to and concurrence. CMS believes that the intent of specifically target such individuals with Comment: Some commenters Congress was to allow beneficiaries to marketing that touts the ability to make suggested that, during the OEP, make an enrollment decision during the another plan choice via the OEP. marketing could be acceptable if it did OEP, but not for it to be a second Comment: A commenter stated that not include any reference to the OEP. opportunity for plans to proactively implementing these marketing Response: CMS appreciates the persuade or attempt to persuade limitations could prevent a plan from suggestion; however, using the term beneficiaries to switch plans. sending marketing mailings to ‘‘knowingly’’ takes into account the Prohibiting plans from knowingly individuals who are not enrolled in a recipient as well as the content of the targeting beneficiaries during the OEP plan, but would otherwise be eligible message so we believe that a prohibition addresses Congress’s intent while (for example, age-ins). The commenter that only addressed the term ‘‘OEP’’ affording plans with the flexibility to states that it is important to note that a would be too narrow to satisfy the still conduct marketing to other purchased mail list could not accurately statute. For example, if a plan were to potential enrollees, such as age-ins. exclude individuals already enrolled in send messaging specifically calling out Upon review of the proposed rule, in a Medicare Advantage plan. The the OEP, that would be knowingly light of these comments, we are commenter also asked if there could be targeting. Likewise, if a plan was aware finalizing the proposed regulation text exceptions to such a prohibition for that an individual had already made an with the addition of the word marketing mailings intended to reach

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individuals eligible to enroll in an MA MA organization, if the intent is to get Comment: Several commenters plan outside of using the OEP election those in the OEP to switch MA plans expressed concern with brokers’ period (for example, a targeted age-in rather than actually marketing a activities, with a commenter stating the mailing). Medigap plan. CMS does not believe the OEP should not be a time for aggressive Response: The intent of the guidance answer is to allow marketing across the marketing tactics or a time in which is not to restrict plans’ ability to use board, as that would only exacerbate the brokers are incentivized to promote mailings or other marketing aimed at concern and conflict with the statute. beneficiaries to switch plans. Several individuals aging into the Medicare Comment: A commenter asked if it is commenters suggested that CMS should program who have not yet made an possible that during the Open consider monitoring for churn of enrollment decision. Such marketing Enrollment Period a beneficiary may beneficiaries among multiple plans and would focused on the fact that these request marketing materials from possible beneficiary confusion during age-ins are a entering (or have entered) different plans if they were unhappy the OEP. Similarly, another commenter the Initial Coverage Election Period. In with their plan and wanted to switch. asked how this will be enforced and this instance, if a plan buys a list of age- This information would inform them where a beneficiary should report ins and sends general marketing mailers about their choices. marketing abuse. to all on the list, but some of those on Response: The statute clearly Response: CMS agrees with the the list have already selected an MA prohibits unsolicited marketing. CMS commenter that the OEP should not be plan during their Initial Coverage agrees that providing marketing a time for plans and brokers to Election Period, CMS would not materials and other information in aggressively market. Further, CMS consider it knowingly targeting based on response to a request from a beneficiary believes this very concern is what the content of the message combined is allowed under this final rule as it is prompted Congress to include the OEP with the fact that the plan would have at the beneficiary’s request and hence marketing restrictions in the statute. no way of knowing that an enrollment not unsolicited. To address this, we CMS will monitor for violations of the decision had already been made. In this have updated the regulatory language in prohibition of knowingly marketing to instance, the content of the marketing the final rule to specifically state beneficiaries in the OEP and take must not address or include a reference unsolicited. appropriate compliance or enforcement to the OEP or the opportunity to make Comment: A commenter requested a action. CMS encourages beneficiaries to an additional enrollment change during clarification if this also includes report any abusive, confusing or their first 3 months of coverage. marketing to beneficiaries aging into misleading marketing practices by Comment: A commenter asked how Medicare. plans, agents and brokers by contacting OEP marketing restrictions will impact contact 1–800–Medicare. In addition, access for dually-eligible members who Response: The exclusion is directed to we encourage reports of potential want to move during that time to a FIDE those eligible for the OEP, including violations of this requirement. or other highly integrated D–SNP. The newly eligible enrollees. For more Comment: A commenter asked that commenter stated that CMS should also information about the OEP, we direct allow marketing to dually eligible readers to section II.B.1 of this final education about this prohibition to be beneficiaries for integrated FIDE and rule. targeted to all related industries and D–SNPs during the OEP. Comment: A commenter asked if interest groups so that all entities that Response: CMS does not intend the Medicare Advantage plans that have may target this vulnerable population restriction of OEP marketing to impact achieved a 5-Star plan rating are will understand the law and the any D–SNP marketing. Barring allowed to market to beneficiaries all consequences for knowing violations. information to the contrary, such year round. The commenter also asked Response: CMS agrees that marketing appears aimed at dually if CMS will be allowing an exception to compliance with this provision is the eligible individuals who are using the the statutory requirements of The 21st responsibility of plans and their first Part D SEP that is available to dually- Century Cures Act to allow 5-Star plans tier, related and downstream entities, eligible beneficiaries other LIS eligible year round marketing. including agents and brokers. CMS will individuals, rather than use of the OEP, Response: With the exception of include additional sub-regulatory for changing enrollment. This would targeted marketing to those in the OEP guidance on this change in the law and indicate that the plan is not knowingly and marketing prior to October 1 for the reminds plans that they are responsible targeting those in the OEP, which is next contract year, all plans may market for the activities of their downstream what the rule, as proposed and year round. What distinguishes 5-Star entities, including agents and brokers. finalized, prohibits. plans is that they may also enroll year Comment: CMS received a number of Comment: A commenter expressed round pursuant to the SEP we have comments requesting the agency to concern that an organization could use adopted under our authority at define ‘‘unsolicited marketing’’ as it their Medigap line of business using a §§ 422.64(b)(4) and 423.38(c), which appears in the statute. generic marketing line of, ‘‘not happy could make marketing year round more Response: We do not believe that is with your plan, change now’’ to advantageous and effective. However, 5- necessary and do not adopt a definition generate leads. This would generate Star plans may not target those in the of the phrase in this final rule. CMS inquiries from those in a MA plan, at OEP; we believe that 5-star plans would believes the intent of Congress was for which point the company can steer the not need to target enrollees in the OEP, plain and ordinary meaning of those conversation to their MA products. The however, because the beneficiary could words to apply, consistent with CMS’s commenter suggested that, if CMS is enroll in a 5-star plan at any time during existing guidance on the prohibition on going to offer the open enrollment the year as a result of the plan’s 5-Star unsolicited direct contact required by window, CMS should allow marketing status. To that point, CMS believes that section 1851(j)(1)(A) of the Act. in order to keep the playing field equal. a 5-Star plan marketing its 5-Star status After considering these comments, we Response: While veiled by the use of and the ability to enroll year round does are finalizing the proposed changes Medigap, CMS would still consider the not prove that the MA organization is related to marketing and situation described by the commenter as knowingly targeting those who may also communications requirements as targeted marketing performed by the be eligible for the OEP. proposed with some modifications:

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We are finalizing the new definitions responsibilities for processing requests will result in a more thorough proposed at §§ 422.2260 and 423.2260 redeterminations, including review of the payment request which with corrections to the list of exclusions adjudication timeframes. Pursuant to may lead to fewer unfavorable decisions from marketing materials (as noted in section 1860D–4(h) of the Act, § 423.600 due to insufficient information to section II.B.5.b) to exclude disclosures sets forth the requirements for an support the request. We also agree that required by §§ 422.111 and 423.128 independent review entity (IRE) for affording more time for payment unless CMS directs otherwise and to processing reconsiderations. requests will permit plan sponsors to exclude materials specifically We proposed changes to the better prioritize requests for coverage; designated by CMS as not meeting the adjudication timeframe for Part D this will help plan sponsors efficiently definition of the proposed marketing standard redetermination requests for allocate resources to more time-sensitive definition based on their use or purpose. payment at § 423.590(b) and the related pre-service requests where the We are also finalizing technical and effectuation provision § 423.636(a)(2). beneficiary has not yet obtained the editorial corrections to the text, Specifically, we proposed to change the drug. including the removal of the incorrect timeframe for issuing decisions on Comment: Several commenters paragraph designations in § 423.2260 payment redeterminations from 7 expressed concern about the effect of and alignment of the text in §§ 422.2260 calendar days from the date the plan this proposed change on beneficiaries and 423.2260. sponsor receives the request to 14 and encouraged CMS to keep the We are finalizing the amendment to calendar days from the date the plan existing adjudication deadline for plan §§ 422.2262(d) and 423.2262(d), the sponsor receives the request. This sponsors and the IRE. Some commenters revisions to §§ 422.2264 and 423.2264, proposed 14-day timeframe for issuing a noted concern about the increased and the revisions to §§ 422.2268 and decision related to a payment request financial burden this proposal would 423.2268 as substantially as proposed, will also apply to the IRE place on enrollees given that many with modifications in paragraph (a)(7) reconsideration pursuant to Medicare beneficiaries are on limited that the translation provision is § 423.600(d). We did not propose to budgets. A commenter noted that applicable to ‘‘vital documents’’ instead make changes to the existing enrollees who wait up to a month to of to documents specified by CMS and requirements for making payment. learn that their case has been decided in paragraph (b)(10) to add the modifier When applicable, the Part D plan against them would have to either pay ‘‘unsolicited’’ before the phrase sponsor must make payment no later for the drug out of pocket again or get ‘‘marketing materials.’’ than 30 days from receipt of the request a prescription for an alternative drug We are finalizing as proposed the for redetermination, or the IRE within a short time period. Commenters technical amendments described in reconsideration notice, respectively. believed these options jeopardize section II.B.5.d of this final rule with We received the following comments enrollees’ access to needed drugs. A modifications in §§ 422.62(b)(3)(B)(ii) and our responses follow: commenter asked for clarification on and § 423.38(c)(8)(i)(C) to clarify that the Comment: We received many when payment must be made to an special enrollment period is available comments, primarily from plans, enrollee if a favorable decision is issued. when the sponsoring organization ‘‘(or expressing support for the proposed Response: We’d like to clarify that, its agent, representative, or plan change to the payment adjudication contrary to the statement of a provider) materially misrepresented the timeframe from 7 to 14 calendar days at commenter, enrollees will not have to plan’s provisions in communications as the redetermination and reconsideration wait ‘‘up to a month’’ to receive a plan outlined in subpart V of this part.’’ levels. Commenters noted that, because sponsor’s redetermination decision on a These technical amendments are payment requests involve an enrollee request for payment. Our proposal was necessary because after we published who has already received the to extend the adjudication timeframe for the proposed rule, we discovered that medication, allowing the plan 14 payment cases from 7 to 14 calendar our proposed change limited this calendar days (instead of 7 calendar days. While we acknowledge that authority to only written days) to process the payment request extending the adjudication timeframe communications. This was not our would allow the plan to prioritize for 7 calendar days at the intent. In addition, among the minor requests for coverage where the enrollee redetermination and IRE level increases edits to improve the regulation text in has not yet accessed the prescription the length of time the enrollee will wait subpart V of parts 422 and 423, we are drug, particularly during times when for a decision, we do not believe that an finalizing a correction to the internal the plan sponsor is experiencing a high additional 7 calendar days to receive cross-reference in §§ 422.2274 and volume of requests. Commenters noted notice on a payment request will create 423.2274 to cite to paragraph that this would ensure adequate access issues for enrollees, given that ‘‘(b)(2)(iii)’’ instead of ‘‘(b)(3)(iii)’’ in resources are directed to processing the enrollee has already received the newly redesignated paragraph more time-sensitive pre-service requests drug. We believe the additional 7 (b)(2)(ii)(A). where the beneficiary has not yet calendar days plan sponsors and the IRE obtained the drug. Commenters also will have to gather information and 6. Lengthening Adjudication expressed support for this proposal for process these requests could be Timeframes for Part D Payment the reason that it could reduce the beneficial to enrollees because decisions Redeterminations and IRE number of unfavorable decisions made are likely to be informed which, in turn, Reconsiderations (§§ 423.590 and due to insufficient information to will potentially result in fewer payment 423.636) support the request. Some of these decisions being denied and subject to Sections 1860D–4(g) and (h) of the commenters requested that CMS further appeal. Act require the Secretary to establish consider lengthening the timeframe for The change we proposed is limited to processes for initial coverage other decisions, such as coverage payment requests where the enrollee determinations and appeals similar to determinations. has already received the drug, so we those used in the Medicare Advantage Response: We appreciate the believe there is minimal to no risk that program. In accordance with section commenters’ support for the proposal an additional 7 calendar days to process 1860D–4(g) of the Act, § 423.590 and agree that allowing an additional 7 these requests will adversely affect the establishes Part D plan sponsors’ calendar days to process payment health of an enrollee who has requested

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reimbursement. As we noted in the requests will establish consistency with other party) of the progress of the appeal proposed rule, when coverage is the timeframe for coverage and to allow MA plans to redirect approved, the plan must make payment determinations that involve a request for resources to time-sensitive activities, to the affected enrollee no later than 30 payment. Since these are cases where such as review of coverage requests and calendar days after the date the plan the enrollee has already obtained the improved efficiency in appeals sponsor receives the redetermination drug, we believe it’s reasonable to afford processing and provision of health request. In other words, the change to a plan sponsors and the IRE additional benefits. 14 calendar day adjudication timeframe time to obtain the documentation We received the following comments will not change the time in which the necessary to support a favorable and our responses follow: plan sponsor has to issue payment to decision on the request. We Comment: We received many the enrollee. acknowledge that audit protocols and comments expressing strong support for We believe the proposed change to a related materials will need to be our proposal to eliminate the MA notice 14 calendar day timeframe is an modified to comport with the new 14 when plans forward cases to the Part C appropriate balance between plan calendar day payment timeframe for IRE. A majority of commenters agreed sponsors’ need to obtain information to redeterminations in order to measure that the current MA plan notice thoroughly evaluate a payment request plan performance in meeting this requirement is duplicative and and the interest of enrollees in receiving timeframe. We agree with the unnecessary, as the Part C IRE also is prompt notice on a payment request. We commenter that plan sponsors’ responsible for notifying an enrollee believe the proposed change will performance in meeting this new that it has received the case. These enhance efficiency in the adjudication timeframe for payment redeterminations commenters indicated that the of these types of cases, reduce adverse should be evaluated, but disagree that redundant notice is costly, elimination payment decisions, and reduce the implementation of the new timeframe of this unnecessary notice will reduce number of late cases that have to be should be delayed. beneficiary confusion, and the proposed auto-forwarded to the IRE. As Comment: A commenter that change is in line with current previously noted, the proposed change expressed support for the proposal paperwork reduction initiatives. to a 14-calendar day adjudication noted that CMS should align the Response: We agree with the timeframe will also apply to payment coverage determination payment commenters that this proposal will ease requests processed by the Part D IRE. timeline with the existing unnecessary administrative burden on Because the enrollee has received the redetermination timeline of 30 calendar MA plans while favorably impacting prescription drug that is subject to the days. enrollees. We expect this change to payment request, we disagree with Response: We appreciate the increase beneficiary understanding and commenters who believe the additional commenter’s support for the proposal, allow plans to redirect resources time will needlessly delay access to but wish to clarify that the existing previously allocated to issuing this treatment. We believe that allowing plan redetermination timeframe is 72 hours notice to more patient-care related, sponsors and the IRE additional time to for expedited requests and 7 calendar time-sensitive activities. We appreciate obtain necessary documentation and days for standard redetermination the comment that this proposal is thoroughly review the case will be requests. consistent with the agency’s Patients beneficial overall and that the After consideration of the public Over Paperwork initiative to reduce advantages offset the additional 7 comments received, we are finalizing paperwork and agree the change will calendar days an enrollee may have to this provision as proposed. benefit beneficiaries, plans and wait for a decision on a payment providers. 7. Elimination of Medicare Advantage Comment: A few commenters request. Plan Notice for Cases Sent to the IRE Comment: A commenter noted that suggested CMS implement additional (§ 422.590) there’s no evidence to support the measures related to the proposal—such proposed change and that, instead of In accordance with section 1852(g) of as setting a timeframe by which the IRE increasing the timeframe, CMS should the Act, our current regulations at must acknowledge receipt of a member’s enforce current timeframes and delay §§ 422.578, 422.582, and 422.584 case (for example, within 5 days). implementation of this change until the provide MA enrollees with the right to Response: CMS agrees an enrollee extended timeframe can be tied to request reconsideration of a health must receive timely notice when his or specific enhanced performance plan’s initial decision to deny Medicare her case is forwarded to the Part C IRE. standards, with substandard coverage. Pursuant to § 422.590, when We will continue analyzing notification performance resulting in financial the MA plan upholds initial payment or timeframes as we endeavor to ensure the consequences for plans. Another service denials, in whole or in part, it IRE’s notification process is timely and commenter noted that new protocols must forward member case files to an efficient. We note that a regulatory will need to be issued and that independent review entity (IRE) change would not be necessary as CMS timeliness calculations for data universe contracted with CMS to review plan- contracts with the Part C IRE and may fields will need to be adjusted. level appeals. Pursuant to § 422.590(f), implement changes to certain parts of Response: CMS has received MA plans must notify enrollees upon the IRE’s workload and deadlines significant feedback from plan sponsors forwarding cases to the IRE. through that contract. regarding the difficulties encountered We proposed to revise § 422.590 to Comment: Some commenters with receiving information necessary to remove paragraph (f) to delete the recommended other programmatic process requests in a timely manner. requirement for plans to notify enrollees improvements—including issuance of CMS has also received feedback that upon forwarding cases to the IRE. The new protocols used during program there should be greater consistency in Part C IRE will continue to be audits or the timeliness monitoring the appeals process. As noted in the contractually responsible for notifying project to delete the applicable proposed rule, implementing a 14 enrollees upon receipt of cases from MA timeliness calculations for this notice. calendar day timeframe for plans. We proposed this change to ease Other commenters recommended we redeterminations and IRE burden on MA plans without consider electronic issuance of IRE reconsiderations involving payment compromising notice to the enrollee (or notifications to enrollees.

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Response: While the commenter’s timeframe specific to the type of and Medicare Advantage (MA) suggestions are outside the scope of this reconsideration. organizations offering Medicare rule, we appreciate these comments and Comment: A few commenters Advantage-Prescription Drug Plans will ensure the suggestions are objected to this proposal, indicating that (MA–PD) are required to establish appropriately conveyed. MA enrollees expect to receive notices electronic prescription drug programs Comment: Some commenters from their plans and would find notices that comply with the e-prescribing generally support this change, but from the IRE confusing. Another standards that are adopted under this requested additional clarification. For commenter asserted the provision of authority. There is no requirement that example, a few commenters inquired this notice is not a burden on MA plans. prescribers or dispensers implement e- whether MA plans may voluntarily A commenter anticipated the Part C prescribing. However, prescribers and continue the current practice of IRE’s notification would not be as dispensers who electronically transmit notifying their members upon timely as plan notification and some prescription and certain other forwarding cases to the IRE. These asked CMS to eliminate IRE notice information for covered drugs commenters indicated providing notices instead of eliminating MA plan notice. prescribed for Medicare Part D eligible to members on an optional basis could Response: We disagree with the beneficiaries, directly or through an prevent increased member inquiries. commenters. While MA enrollees expect intermediary, are required to comply Another commenter sought clarification to receive material from their plans, we with any applicable standards that are regarding Appendix 10 of Chapter 13 of believe that enrollees who are awaiting in effect. the Medicare Managed Care manual—a appeals decisions anticipate notification For a further discussion of the sample (model) notice (‘‘Notice of from the Medicare IRE to confirm the statutory basis for this rule and the Appeal Status’’) provided to plans for IRE has actually received the case and statutory requirements at section the purpose of informing enrollees what the beneficiary can expect next. 1860D–4(e) of the Act, please refer to whose cases are forwarded to the IRE for Mandatory materials sent by MA plans section I. (Background) of the E- review. Another commenter indicated to enrollees, such as Medicare’s Prescribing and the Prescription Drug Appendix 10 includes redundant integrated denial notice, describe the Program proposed rule, published information the IRE is expected to IRE-level of review following denial at February 4, 2005 (70 FR 6256). provide. While another commenter the MA plan reconsideration stage. b. Regulatory History Additionally, even before this change inquired whether MA plans would Transaction standards are periodically was proposed, the IRE was required to continue to have the full adjudication updated to take new knowledge, provide a notice to enrollees. We also timeframe to forward the denied case to technology, and other considerations believe beneficiaries welcome knowing the IRE or if the MAO’s processing into account. As CMS adopted specific an independent, outside entity, under timeframe would be reduced. versions of the standards when it contract with Medicare, is reviewing Response: We would like to clarify adopted the foundation and final e- their health plan’s initial coverage that this change does not preclude plans prescribing standards, there was a need denial. As set forth in our regulatory from continuing to notify enrollees to establish a process by which the impact analysis, we believe that upon forwarding cases to the IRE; plans standards could be updated or replaced are permitted to continue the current providing this notice is a burden for MA over time to ensure that the standards practice of notifying members upon plans and an unnecessary one at that. did not hold back progress in the forwarding case files to the IRE if they Eliminating this duplicative notice will industry. We discussed these processes choose to do so. We will no longer relieve an unnecessary burden on MA in the November 7, 2005 final rule (70 expect plans to use CMS’ Model Notice plans. We will continue to work closely FR 67579). of Appeal Status (Appendix 10 of with the IRE—through CMS’ contract The discussion noted that the Chapter 13 of the Medicare Managed oversight and evaluation efforts and by rulemaking process will generally be Care manual) after the end of the 2018 promulgating additional contractor used to retire, replace, or adopt a new plan year. By removing the requirement guidance, as needed—to ensure e-prescribing standard, but it also that MA plans must notify beneficiaries Medicare beneficiaries nationwide provided for a simplified ‘‘updating upon forwarding cases to the Part C IRE, receive timely notice in a consistent process’’ when a non-HIPAA standard we no longer expect plans to use CMS’ form and manner. could be updated with a newer Model Notice of Appeal Status; thus, After consideration of the public ‘‘backward-compatible’’ version of the inclusion of duplicative language on the comments received, we are finalizing adopted standard. In instances in which model notice is unnecessary as well as this amendment to delete paragraph (f) the user of the later version can moot. While plans opting to notify and redesignate the subsequent accommodate users of the earlier members upon forwarding cases to the paragraphs of § 422.590 as proposed. version of the adopted non-HIPAA IRE may continue using CMS’ model 8. E-Prescribing and the Part D standard without modification, it noted notice, CMS will no longer expect MA Prescription Drug Program; Updating that notice and comment rulemaking plans to utilize the current model Part D E-Prescribing Standards could be waived, and the use of either notice. Changes to processing the new or old version of the adopted timeframes are outside the scope of this a. Legislative Background standard would be considered rule but we note that § 422.590(a), (b) Section 101 of the Medicare compliant upon the effective date of the and (d), which control the timeframe for Prescription Drug, Improvement, and newer version’s incorporation by service, payment and expedited Modernization Act of 2003 (MMA) (Pub. reference in the Federal Register. We reconsiderations, are not being amended L. 108–173) amended title XVIII of the utilized this streamlined process when in this rule; those provisions require Act to establish a voluntary prescription we published an interim final rule with that an MA plan prepare a written drug benefit program at section 1860D– comment on June 23, 2006 (71 FR explanation and send the case file to the 4(e) of the Act. Among other things, 36020). That rule recognized NCPDP independent entity contracted by CMS these provisions required the adoption SCRIPT 8.1 as a backward compatible as expeditiously as the enrollee’s health of Part D e-prescribing standards. update to the NCPDP SCRIPT 5.0 for the condition requires, but no later than the Prescription Drug Plan (PDP) sponsors specified transactions, thereby allowing

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for use of either of the two versions in of NCPDP SCRIPT 2017071 for the the reference at § 423.160(b)(1)(iv) to the Part D program. Then, on April 7, following new transactions: reference (b)(2)(iii) instead of (b)(2)(ii). 2008, we used notice and comment • Prescription drug administration We received the following comments rulemaking (73 FR 18,918) to finalize message, and our response follows: the identification of the NCPDP SCRIPT • New prescription requests, Comment: Many commenters urged 8.1 as a backward compatible update of • New prescription response denials, CMS to adopt the NCPDP SCRIPT the NCPDP SCRIPT 5.0, and, effective • Prescription transfer message, electronic Prior Authorization (ePA) • April 1, 2009, retire NCPDP SCRIPT 5.0 Prescription fill indicator change, transaction for the Part D program. They • Prescription recertification, note that ePA is more efficient for and adopt NCPDP SCRIPT 8.1 as the • official Part D e-prescribing standard for Risk Evaluation and Mitigation prescribers, pharmacies, plans, and the specified transactions. On July 1, Strategy (REMS) initiation request, patients. • REMS initiation response, REMS 2010, CMS utilized the streamlined Response: We understand that Part D request, and plans are anxious to adopt the NCPDP process to recognize NCPDP SCRIPT • REMS response. SCRIPT ePA standard. However, the 10.6 as a backward compatible update of To implement these proposed NCPDP SCRIPT 8.1 in an interim final HIPAA standard transaction for prior policies, we proposed to revise rule (75 FR 38026). We finalized the authorization does not accept the § 423.160(b)(1)(iv) so as to limit its NCPDP SCRIPT 10.6 as a Backward NCPDP SCRIPT ePA standard. In order application to transactions before Compatible Version of NCPDP SCRIPT for CMS to adopt the 2017071 for use in January 1, 2019 and add a new 8.1, and retired NCPDP SCRIPT 8.1 and the Part D e-prescribing program, the § 423.160(b)(1)(v). As amended, the adopted the NCPDP SCRIPT 10.6 as the HIPAA standard transaction would need requirement at § 423.160(b)(1)(v) would official Part D e-Prescribing Standard for to be modified to allow for use of an identify the standards that will be in the specified transactions in the CY NCPDP SCRIPT ePA standard. Such effect for the named transactions on or 2013 Physician Fee Schedule, effective HIPAA changes will need to occur in a after January 1, 2019. November 1, 2013. For a more detailed Departmental regulation, and cannot be We also proposed adoption of NCPDP discussion, see the CY 2013 PFS final effectuated in a CMS regulation. If the SCRIPT 2017071 as the official Part D e- rule (77 FR 69329 through 69333). HIPAA regulations are modified, CMS prescribing standard for the medication will be able to propose adoption of the c. Proposed Adoption of NCPDP SCRIPT history transaction at § 423.160(b)(4) NCPDP SCRIPT ePA for use in the Part Version 2017071 as the Official Part D and proposed to retire NCPDP SCRIPT D e-prescribing program. E-Prescribing Standard for Certain versions 8.1 and 10.6 for medication Comment: We received a variety of Specified Transactions, Retirement of history transactions transmitted on or comments concerning the amount of NCPDP SCRIPT 10.6, Proposed after January 1, 2019. Furthermore, we lead time needed to adopt a new Conforming Changes Elsewhere in proposed to amend § 423.160(b)(1) by standard. Some commenters requested § 423.160, and Correction of a Historic modifying § 423.160(b)(1)(iv) to limit that CMS’ proposed time frame for Typographical Error in the Regulatory usage of NCPDP SCRIPT version 10.6 to implementing the new NCPDP SCRIPT Text Which Occurred When NCPDP transactions before January 1, 2019, and version be extended. Several SCRIPT 10.6 Was Initially Adopted proposed to add § 423.160(b)(1)(v) to commenters expressed the desire to We proposed to adopt the NCPDP require use of NCPDP SCRIPT Version begin using the new standard SCRIPT 2017071 as the official Part D e- 2017071 on or after January 1, 2019. immediately after the rule is finalized prescribing standard for certain Furthermore, we proposed to amend but wanted to accommodate other plans specified transactions, and to retire the § 423.160(b)(2) by adding who were not ready to adopt the current standard (NCPDP SCRIPT § 423.160(b)(2)(iv) to name NCPDP standard. These commenters favored a version 10.6). Unlike past updates to the SCRIPT Version 2017071 for the gradual transition whereby plans could part D e-prescribing standards, as applicable transactions. Finally, we opt to adopt Version 2017017 version 2017071 is not fully backward proposed to incorporate NCPDP SCRIPT voluntarily when the final rule is compatible with version 10.6, we were version 2017071 by reference in our published or be permitted to use unable to propose a transition period in regulations at 42 CFR 423.160(c)(1)(vii). Version 10.6 for 18 to 24 months which use of either the new or old We also solicited comments regarding thereafter. A commenter asked CMS not version of the adopted standard would the impact of these proposed effective to require implementation of the new be considered compliant upon the dates on industry and other interested NCPDP SCRIPT version on a Federal effective date of the newer version’s stakeholders, and proposed a technical holiday or in January, since plans would incorporation by reference in the correction of a prior regulation. On July be in the midst of open season. Federal Register. While moving directly 30, 2012, we published a regulation Response: Comments have persuaded from one version to another may present (CMS–1590–P), which established us that it will take some plans more challenges, we believe that the new version 10.6 as the Part D e prescribing time to update the standard than we had version provides the opportunity to standard effective March 1, 2015 for the previously anticipated. We also standardize additional transactions over electronic transactions listed in appreciate that many plans would like what was possible with the current § 423.160(b)(2)(iii). However, despite to begin using the new standard version, and, as noted in our proposed the preamble discussion’s clear immediately. Given these two rule, we believe that those added adoption of NCPDP SCRIPT 10.6 as the viewpoints we would have liked to have transactions and the improvements to Part D e-prescribing standard for the proposed a phased-in transition for the existing transactions would, among listed transactions, due to a plans to use when implementing the other things, improve communications typographical error, § 423.160(b)(1)(iv) new NCPDP SCRIPT version. However, between the prescriber and dispensers. of the regulation text erroneously cross- because we understand that Version Specifically, in addition to the referenced the standard named in 2017017 is not backwards compatible to transactions for which prior versions of (b)(2)(ii) (NCPDP SCRIPT 8.1), rather Version 10.6, this is not a feasible NCPDP SCRIPT were adopted (as than that named in (b)(2)(iii) (NCPDP option, necessitating a hard cut off reflected in the current regulations at SCRIPT 10.6). We proposed a correction point. We also understand that some 423.160(b)), we proposed to require use of this typographical error by changing industry partners would prefer not to

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implement the new NCPDP SCRIPT Comment: A commenter correctly Certification Criteria to NCPDP SCRIPT version on January 1 however, Section noted that the proposed rule mentions 2017071 for the named transactions 1860D–12(f)(2) prohibits the some of the changes in the new effective the January 1, 2020 implementation of ‘‘significant’’ standard, but it doesn’t mention all of implementation date. regulatory requirements on a them. Specifically, the commenter asked Comment: A commenter asked prescription drug plan other than at the whether a new field for language access whether stakeholders are required to beginning of the year. Therefore, in is included in the transactions we are adopt all transactions within the NCPDP order to ensure that all Part D plans, adopting from version 2017071. SCRIPT standard or only those which prescribers and dispensers are able to Response: The language field was are applicable to their business purpose. make a successful transition to the new added to a prior NCPDP SCRIPT Response: PDP sponsors and MA part D e-prescribing standard, and that standard, Version 10.11, and has not organizations offering MA–PD are the transition is compliant with been removed in any subsequent required to establish electronic statutory requirements, we are delaying updates. Therefore the language field prescription drug programs that comply the implementation date until January 1, continues to be included in all versions with adopted e-prescribing standards. 2020 subject to the additional after 10.11 including Version 2017017. Other organizations such as prescribers conditions regarding certain ONC That said, we did not propose to adopt or dispensers only need to implement standards discussed infra. This will NCPDP SCRIPT 2017071 for that the adopted transactions under that provide affected organizations transaction in the context of the part D standard that they use in their part D e- additional time to develop and test the e-prescribing program, so the public is prescribing operations. If there are any new requirements. free absent other program standards to questions on which transactions apply Comment: A few commenters noted the contrary to convey such content to a business case, organizations should that the use of medication history using whatever standard or means they consult the Business process transactions would help the industry wish to use. descriptions documented within the address opioid overuse and asked that Comment: A few commenters noted version 2017071 NCPDP SCRIPT CMS add them to the list of named that this NPRM proposed use of a standard implementation guide. Comment: A commenter pointed out transactions. different version of the NCPDP SCRIPT standard in Part D than is used in other that the named transactions are Response: The adoption of the programs managed by HHS. These inconsistent with the current 2017071 version of the NCPDP SCRIPT commenters expressed concern that this implementation guide Version medication history transaction was may create confusion in the industry. 20170171. The commenter asked that proposed in the final rule, but, as was Specifically, commenters noted ONC’s CMS reflect the updated nomenclature done historically, we proposed to codify Electronic Health Record Certification and transaction types throughout. it separately from the other transactions Program which currently utilizes the Response: We appreciate this at § 423.160(c)(1)(vii). Furthermore, we NCPDP SCRIPT Version 10.6. comment, and acknowledge that NCPDP proposed to incorporate the 2017071 Response: HHS has a history of made what we understand to be non- proposed transactions at harmonizing NCPDP SCRIPT versions substantive changes to their § 423.160(b)(4)(ii), which we believe across the various programs which it nomenclature. The final regulatory text would include RxHistory Request and manages. For example, please see the therefore reflects those non-substantive RxHistory Response. As a result of final rule titled, ‘‘Health Information changes to the names of the transactions positive feedback to these proposals, Technology: Standards, Implementation from those which appeared in our subject to the additional conditions Specifications, and Certification Criteria proposed regulation. We have amended regarding certain ONC standards for Electronic Health Record the regulatory text in the final rule to discussed infra, we do intend to finalize Technology, 2014 Edition; Revisions to adopt the updated names. these proposals effective January 1, the Permanent Certification Program for Comment: A commenter suggested 2020. Health Information Technology’’ (77 FR that we defer naming the REMS-related Comment: A commenter stated that 54163, 54198–54200), in which HHS transactions until the Risk Evaluation although the Password Change aligned its programs to prior versions of and Mitigation Strategies (REMS) Transaction remains in the 2017017 the part D e-prescribing standard. We program transactions are proven NCPDP SCRIPT Standard, its use is not anticipate similar action in this context, compared to other standards before universally supported and that some and are confident that the necessary mandating the 2017071 version of the payers have replaced these transactions proposals are currently under NCPDP SCRIPT standard for REMS with alternative enhanced security development. Each Agency and Office usage. authentication measures. The within the Department adheres to a Response: We disagree, and have commenter asked CMS to remove the different regulatory schedule so that included the REMS-related transactions Password Change Transaction from the regulations are published at different in our final rule. The FDA designed the final rule. intervals. Nevertheless, with the REMS program to mitigate serious drug- Response: We appreciate the adoption of this version of the NCPDP related risks associated with the some comment, and understand that some SCRIPT standard for Part D prescribing, medications, a goal which CMS whole industry partners are exploring different HHS remains committed to continued heartedly supports. Use of the REMS procedures for processing password agency coordination to ensure transactions will allow REMS resets which may obviate the need for alignment, interoperability, and the requirements to be completed within the NCPDP SCRIPT standard Password adoption of the most appropriate existing healthcare workflows, which Change Transaction. Given the standard and version for each use case. will be critical as the REMS program evolution of these processes and the We are therefore modifying our proposal includes more medications. Absent importance of ensuring up-to-date to adopt NCPDP SCRIPT 20170171 by these transactions the successful security processes for sensitive health conditioning the effective date of our management of the REMS would require information, we have removed the adoption of the proposed on manual intervention for pharmacists Password Change Transaction from the corresponding regulatory action being and prescribers. Manual maintenance of final rule pending further review. taken to update the Health IT REMS program data would be

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particularly difficult because each 2017071 approved July 28, 2017. publish each year; 76 to the methodology REMS has specific safety measures Members of the NCPDP may access scores each applicant’s performance by unique to the risks associated with a these materials through the member assigning weights based on the severity particular drug. For these reasons CMS portal at www.ncpdp.org; non-NCPDP of its non-compliance in several strongly supports using electronic members may obtain these materials for performance categories. Under the processes to support this important drug information purposes by contacting the annual contract qualification safety initiative. Centers for Medicare & Medicaid application submission and review Comment: A commenter Services (CMS), 7500 Security process we conduct, applicants and recommended that CMS immediately Boulevard, Baltimore, Maryland 21244, renewing organizations must submit the adopt the updated NCPDP Mailstop C1–26–05, or by calling (410) application by a date, usually in mid- Telecommunication Standard D.0 which 786–3694. February, announced by us. We allows the conditional use of the field This regulation codifies adoption of proposed to reduce the past ‘‘Quantity Prescribed’’ to communicate the NDPDP SCRIPT Standard Version performance review period from 14 the actual quantity prescribed by the 2017071, and retirement of the current months to 12 months after consideration provider. The commenter stated that NCPDP SCRIPT Version 10.6, as the of our experience. adoption of the field would promote official electronic prescribing standard We originally established the 14- more appropriate beneficiary access to for transmitting prescriptions and month review period because it covered controlled substances, reduce the prescription-related information using the time period from the start of the industry’s administrative burden, and electronic media for covered Part D preceding contract year through the date eliminate the misidentification of drugs for Part D eligible individuals. on which CMS receives contract partially-filled prescriptions as refills. The NCPDP SCRIPT standards are applications for the upcoming contract Response: CMS is aware of the used to exchange information between year. We believed at the time that the concerns noted. The NCPDP prescribers, dispensers, intermediaries combination of the most recent Telecommunications Standard D.0 was and Medicare prescription drug plans. complete contract year and the 2 adopted to include specific Although e-prescribing is optional for months preceding the application implementation guides, and it is a physicians and pharmacies, the submission provided us with the most HIPAA standard, so we’d need to await Medicare Part D statute and regulations complete picture of the most relevant the HIPAA standard changing. As noted require drug plans participating in the information about an applicant’s past above, proposals to modify HIPAA prescription benefit to support contract performance. Our application transactions are promulgated by the electronic prescribing, and physicians of this authority since its publication Department, not CMS, under a different and pharmacies who elect to transmit has prompted comments from rule-making authority. This suggestion e prescriptions and related contracting organizations that the 14- is therefore outside the scope of this communications electronically must month period is too long and is unfair rule. utilize the adopted standards. The as it is applied. In particular, We received broad support for updated NCPDP SCRIPT standards have organizations have noted that non- updating the NCPDP SCRIPT standard been requested by the industry and compliance that occurs during January to Version 2017071, along with include electronic standards for and February of a given year is counted concerns about the implementation date transactions that are commonly used against an organization in 2 consecutive and technical concerns about the such as the transmittal of new past performance review cycles while transactions named. Based on comments prescriptions, changes to existing non-compliance occurring in all other received we are finalizing this provision prescriptions, requests for renewals, and months is counted in only one review with modifications and have transfers of prescriptions between cycle. The result is that some non- conditionally moved the effective date pharmacies. These enhancements will compliance is ‘‘double counted’’ based to January 1, 2020, to give ONC time to provide a number of efficiencies which solely on the timing of the non- update its Electronic Health Record the industry and CMS supports. compliance and can, depending on the certification program to the NCPDP 9. Reduction of Past Performance severity of the non-compliance, prevent SCRIPT 2017071 standard. Review Period for Applications an organization from receiving CMS Summary and Availability of Submitted by Current Medicare approval of its application for 2 Incorporation by Reference Material Contracting Organizations (§§ 422.502 consecutive years. Rather than creating The Office of the Federal Register and 423.503) a gap in the look-back period, as we (OFR) has regulations concerning In April 2010, we clarified our were concerned in 2010, 75 FR 19685, incorporation by reference. 1 CFR part authority to deny contract qualification we now believe a 12-month look-back 51. For a final rule, agencies must applications from organizations that period provides a more accurate period discuss in the preamble to the NPR have failed to comply with the to consider. When we established the ways that the materials the agency requirements of a Medicare Advantage 14-month review period, we did so proposes to incorporate by reference are or Part D plan sponsor contract they based in part on the belief that it was reasonably available to interested currently hold, even if the submitted necessary to include in the period a full persons or how the agency worked to application otherwise demonstrates that contract year (that is, January through make the materials reasonably available. the organization meets the relevant December) of performance to be certain In addition, the preamble to the final program requirements. 75 FR 19677. As that our review captured an applicant’s rule must summarize the materials. part of that rulemaking, we established, most recent full cycle of performance in Consistent with those requirements at § 422.502(b)(1) and § 423.503(b)(1), order to capture all relevant aspects of CMS has established procedures to that we will review an applicant’s prior an organization’s performance. As we ensure that interested parties can review contract performance for the 14-month have implemented the 14-month review and inspect relevant materials. The period preceding the application 76 https://www.cms.gov/Medicare/Compliance- updates to the Part D prescribing submission deadline (see 75 FR 19684 and-Audits/Part-C-and-Part-D-Compliance-and- standards has relied on the NCPDP through 19686). We conduct that review Audits/Downloads/Final_2018_Application_Cycle_ SCRIPT Implementation Guide Version in accordance with a methodology we Past_Performance_Methodology.pdf.

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period, we have learned that the March through February period that 10. Preclusion List Requirements for contract year, as a unit of measure, adds immediately precedes the application. Prescribers in Part D and Individuals little value to our annual analysis. The These commenters noted that the and Entities in MA, Cost Plans, and January-through-December period is calendar year review period would PACE most significant because it covers the allow CMS to let potential contract a. Part D Provisions period during which the organization applicants know whether CMS would must provide approved benefits to its deny their applications based on poor (1) Background enrollees, but it does not truly reflect past performance before they committed (a) 2014 Final Rule the schedule under which we make the resources to preparing and submitting On May 23, 2014, we published a contract compliance and performance applications. final rule in the Federal Register titled determinations that we have adopted as Response: As we discussed when we ‘‘Medicare Program; Contract Year 2015 factors in the past performance proposed this change, we believe it is Policy and Technical Changes to the methodology. For example, compliance critical that CMS consider an Medicare Advantage and the Medicare notices, audit reports and star ratings applicant’s most recent record of Prescription Drug Benefit Programs’’ (79 are often by necessity issued following contract performance at the time of the FR 29844). Among other things, this the conclusion of a particular contract submission of the application to CMS in final rule implemented section 6405(c) year. Therefore, an accurate review of a February. The adoption of a calendar of the Affordable Care Act, which contract’s past performance, conducted year past performance period would provides the Secretary with the as part of the annual application review create an unacceptable gap between the authority to require that prescriptions cycle, does not depend on our being end of the review period and the for covered Part D drugs be prescribed certain that the review period covers a application deadline. Therefore, we will by a physician enrolled in Medicare full contract year that begins two not accept this recommendation. under section 1866(j) of the Act (42 Januarys before an application deadline. U.S.C. 1395cc(j)) or an eligible As part of an annual process, the period While we cannot accommodate the professional as defined at section need cover only 12 months. recommendation that we adopt a We continue to believe that an calendar year review period, we note 1848(k)(3)(B) of the Act (42 U.S.C. applicant’s most recent contract that CMS makes past performance 1395w–4(k)(3)(B)). More specifically, performance is important to consider in resources available to organizations that the final rule revised § 423.120(c)(5) and each review cycle. Therefore, we they can use in making the decision to added new § 423.120(c)(6), the latter of proposed to revise § 422.502(b)(1) and invest resources in preparing an which stated that for a prescription to be § 423.503(b)(1) to reduce the review application. Each year, CMS conducts eligible for coverage under the Part D period from 14 to 12 months. This will mid-year performance reviews of program, the prescriber must have (1) an effectively establish a new review contracting organizations and share approved enrollment record in the period for every application review those results with the organizations. Medicare fee for service program (that cycle of March 1 of the year preceding While the results of such reviews are is, original Medicare); or (2) a valid opt the application submission deadline not final, they give organizations a real out affidavit on file with a Part A/Part through February 28 (February 29 in sense of how CMS views their contract B Medicare Administrative Contractor leap years) of the year in which the performance to that point in the year. (A/B MAC). application is submitted and will We also draft the annual past The purpose of this change was to eliminate the counting of instances of performance methodology in a way that help ensure that Part D drugs are non-compliance in January and allows organizations to track their own prescribed only by qualified prescribers. February of each year in 2 separate past performance scores throughout the In a June 2013 report titled ‘‘Medicare application cycles. We also proposed to year, allowing the organizations to Inappropriately Paid for Drugs Ordered have this review period change reflected determine, as the year goes on, the by Individuals Without Prescribing consistently in the Part C and D likelihood that CMS will deny their Authority’’ (OEI–02–09–00608), the regulation by revising both planned application. Office of Inspector General (OIG) found that the Part D program improperly paid § 422.502(b)(2) and § 423.503(b)(2) to Comment: A commenter provided a for drugs prescribed by persons who did state that CMS may deny an application series of recommendations for not appear to have the authority to from an existing Medicare Advantage or modifications to the methodology CMS prescribe. We also noted in the final Part D plan sponsor in the absence of a adopts each year to evaluate applicants’ rule the reports we received of record of at least 12, rather than 14, past performance record (for example, prescriptions written by physicians with months of Medicare contract changes in weights assigned to certain suspended licenses having been covered performance by the applicant. We areas of performance, evaluation of by the Part D program. These reports clarified in the proposed rule that our performance at the contract, rather than raised concerns within CMS about the proposal would not change any other organization, level). aspect of our consideration of past propriety of Part D payments and the Response: Since these comments do potential for Part D beneficiaries to be performance in the application process. not address the duration of the past We received the following comments prescribed dangerous or unnecessary performance review period, they are and our response follows: drugs by individuals who lack the Comment: All commenters expressed outside the scope of our proposal. We authority or qualifications to prescribe support for the reduction of the past will take the comments under medications. Given that the Medicare performance review period from 14 to consideration for review of the FFS provider enrollment process, as 12 months. methodology in the future. outlined in 42 CFR part 424, subpart P, Response: We appreciate the Based on our review of comments collects identifying information about statements of support for our proposal. expressing broad support for the providers and suppliers who wish to Comment: Some commenters urged reduction of the past performance enroll in Medicare, we believed that that the proposed 12-month period review period, we are finalizing the forging a closer link between Medicare’s cover a calendar year (that is, January amendments to §§ 422.502(b)(1) and (2) coverage of Part D drugs and the through December) rather than the and 423.503(b)(1) and (2) as proposed. provider enrollment process would

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enable CMS to confirm the paragraph § 423.120(c)(6)(v). This announced a phased-in enforcement of qualifications of the prescribers of such provision stated that a Part D sponsor or the enrollment requirements and stated drugs. That is, requiring Part D its PBM must, beginning on January 1, that full enforcement would be delayed prescribers to enroll in Medicare would 2016 and upon receipt of a pharmacy until January 1, 2019. However, the provide CMS with sufficient claim or beneficiary request for concerns of these provider organizations information to determine whether a reimbursement for a Part D drug that a remained. physician or eligible professional is Part D sponsor or PBM would otherwise Recognizing these concerns, and qualified to prescribe Part D drugs. be required to reject or deny, as wanting to reduce as much burden as We stated in the May 23, 2014 final applicable, under § 423.120(c)(6): possible for providers without rule that the compliance date for our • Provide the beneficiary with: compromising our program integrity revisions to new § 423.120(c)(6) would ++ A 3-month provisional supply of objectives, we proposed in the be June 1, 2015. We believed that this the drug (as prescribed by the prescriber November 28, 2017 proposed rule delayed date would give physicians and and if allowed by applicable law); and several changes to § 423.120(c)(6) as eligible professionals who would be ++ Written notice within 3 business well as to several other provisions, affected by these provisions adequate days after adjudication of the claim or which we describe below. time to enroll in or opt-out of Medicare. request in a form and manner specified It would also allow CMS, A/B MACs, by CMS; and (2) Proposed Provisions • Medicare beneficiaries, and other Ensure that reasonable efforts are In accordance with section 1871 of made to notify the prescriber of a impacted stakeholders sufficient the Act, within 3 years of the beneficiary who was sent the notice opportunity to prepare for these publication of the May 6, 2015 IFC, we requirements. referred to in the previous paragraph. The 3-month provisional supply and must either publish a final rule or (b) 2015 Interim Final Rule written notice were intended to (1) publish a notice of a different timeline. If we were to finalize the proposals On May 6, 2015, we published in the notify beneficiaries that a future described in the November 28, 2017 Federal Register an interim final rule prescription written by the same proposed rule, we would not finalize with comment period (IFC) titled prescriber would not be covered unless the provisions of the IFC. Instead, the ‘‘Medicare Program; Changes to the the prescriber enrolled in or opted-out regulations contained in this final rule Requirements for Part D Prescribers’’ (80 of Medicare, and (2) give beneficiaries would supersede our earlier rulemaking. FR 25958). This IFC made changes to time to make arrangements to continue certain requirements outlined in the receiving the prescription if the We proposed an effective date for our May 23, 2014 final rule related to prescriber of the medication did not proposed provisions in § 423.120(c)(5) beneficiary access to covered Part D intend to enroll in or opt-out of of 60 days after the publication of a final drugs. Medicare. rule. We proposed an effective date of First, we changed the compliance date our proposed revisions to (c) Preparations for Enforcement of Part of § 423.120(c)(6) from June 1, 2015 to § 423.120(c)(6) of January 1, 2019. D Prescriber Enrollment Requirement January 1, 2016. This was designed to (a) Prescriber NPI Validation on Part D give all affected parties more time to Immediately after the publication of Claims prepare for the additional provisions the previously mentioned May 23, 2014 included in the IFC. final rule, we undertook major efforts to In the May 6, 2015 IFC, we revised Second, we revised paragraph educate affected stakeholders about the § 423.120(c)(5), which addresses the § 423.120(c)(6)(ii) to address a gap in forthcoming enrollment requirement. submission and validation of National § 423.120(c)(6) regarding certain types of Numerous prescribers have, in Provider Identifiers (NPIs) of Part D prescribers. Revised paragraph (c)(6)(ii) preparation for the enforcement of prescribers, to state that before January stated that pharmacy claims and § 423.120(c)(6), enrolled in or opted out 1, 2016, the following are applicable: • beneficiary requests for reimbursement of Medicare. However, we noted in the In paragraph (c)(5)(i), we stated that for Part D prescriptions written by November 28, 2017 proposed rule that a Part D sponsor must submit to CMS prescribers other than physicians and based on internal CMS data as of July only a prescription drug event (PDE) eligible professionals who are 2016, approximately 420,000 record that contains an active and valid nonetheless permitted by state or other prescribers—or 35 percent of the total individual prescriber NPI. applicable law to prescribe medications 1.2 million prescribers of Part D drugs— • In paragraph (c)(5)(ii), we stated (defined in § 423.100 as ‘‘other whose prescriptions for Part D drugs that a Part D sponsor must ensure that authorized prescribers’’) will not be would be affected by the requirements the lack of an active and valid rejected or denied, as applicable, by the of § 423.120(c)(6) have yet to enroll or individual prescriber NPI on a network pharmacy benefit manager (PBM) if all opt out. Several provider organizations, pharmacy claim does not unreasonably other requirements are met. This meant moreover, expressed concerns about the delay a beneficiary’s access to a covered that the enrollment requirement enrollment requirements. They Part D drug, by taking the steps specified in § 423.120(c)(6) would not contended that (1) most prescribers pose described in paragraph (c)(5)(iii) of this apply to other authorized prescribers— no risk to the Medicare program; and (2) section. that is, to individuals who are ineligible certain types of physicians and eligible • In paragraph (c)(5)(iii), we stated to enroll in or opt out of Medicare professionals prescribe Part D drugs that the sponsor must communicate at because they do not meet the statutory only very infrequently. Their general point-of-sale whether or not a submitted definition of ‘‘physician’’ or ‘‘eligible position, in short, was that the burden NPI is active and valid in accordance professional’’ yet who are otherwise to the prescriber community would with this paragraph (c)(5)(iii). legally authorized to prescribe drugs. outweigh the payment safeguard ++ In paragraph (c)(5)(iii)(A), we Third, and to help ensure that benefits of § 423.120(c)(6). After the stated that if the sponsor communicates beneficiaries would not experience a publication of the IFC, and based on our that the NPI is not active and valid, the sudden lapse in Part D prescription desire to give prescribers and other sponsor must permit the pharmacy to coverage upon the January 1, 2016 stakeholders more time to prepare for (1) confirm that the NPI is active and effective date, we added a new the enrollment requirements, we valid; or (2) correct the NPI.

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++ In paragraph (c)(5)(iii)(B), we certain existing Part D claims Part D prescribers regardless of the stated that if the pharmacy: procedures established by the Secretary possible level of risk posed, we ++ Confirms that the NPI is active that would comply with section 507 of proposed to focus on preventing and valid or corrects the NPI, the MACRA. The provisions in payment for Part D drugs prescribed by sponsor must pay the claim if it is § 423.120(c)(5) that reflected the demonstrably problematic prescribers. otherwise payable; or procedures that would comply with We therefore proposed to establish a ++ Cannot or does not correct or section 507 were the following: ‘‘preclusion list’’ that would include confirm that the NPI is active and valid, • Paragraph (c)(5)(iii). such individuals and would deny the sponsor must require the pharmacy • Paragraph (c)(5)(iii)(A). payment for Part D drugs they prescribe. • to resubmit the claim (when necessary), Paragraph (c)(5)(iii)(B)(1). That is, we proposed to replace the which the sponsor must pay, if it is (Paragraph (c)(5)(iii)(B)(2) would not prescriber enrollment requirement otherwise payable, unless there is an comply with section 507 because the outlined in § 423.120(c)(6) with a claims indication of fraud or the claim involves sponsor has no evidence that the NPI is payment-oriented approach. The a prescription written by a foreign active or valid.) specific provisions we proposed are as prescriber (where permitted by State • Paragraph (c)(5)(iv). • follows: law). Paragraph (c)(5)(v). • In § 423.100, we proposed to delete • Given this, we proposed in the In paragraph (c)(5)(iv), we stated the definition of ‘‘other authorized November 28, 2017 proposed rule to that a Part D sponsor must not later prescriber’’ and add the following: recoup payment from a network include these provisions in new ++ Preclusion List means a CMS pharmacy for a claim that does not paragraph (c)(5). They were to be compiled list of prescribers who: contain an active and valid individual enumerated as, respectively, new ++ Meet all of the following prescriber NPI on the basis that it does paragraphs (c)(5)(ii), (c)(5)(ii)(A), requirements: not contain one, unless the sponsor— (c)(5)(ii)(B), (c)(5)(iii), and (c)(5)(iv). ++ The prescriber is currently ++ Has complied with paragraphs Paragraphs (c)(5)(i), (c)(5)(ii), and revoked from the Medicare program (c)(5)(ii) and (iii) of this section; (c)(5)(iii)(B)(2) were not to be included under § 424.535. ++ Has verified that a submitted NPI in new paragraph (c)(5). We also noted ++ The prescriber is currently under was not in fact active and valid; and in the November 28, 2017 proposed rule a reenrollment bar under § 424.535(c). ++ The agreement between the that in the May 6, 2015 IFC, we revised ++ CMS determines that underlying parties explicitly permits such § 423.120(c)(6)(i) to require a Part D plan conduct that led to the revocation is recoupment. sponsor to reject, or require its detrimental to the best interests of the • In paragraph (c)(5)(v), we stated that pharmaceutical benefit manager (PBM) Medicare program. In making this with respect to requests for to reject, a pharmacy claim for a Part D determination under this paragraph, reimbursement submitted by Medicare drug, unless the claim contained the CMS considers the following factors: (1) beneficiaries, a Part D sponsor may not NPI of the prescriber who prescribed the The seriousness of the conduct make payment to a beneficiary drug. This provision, too, reflected underlying the prescriber’s revocation; dependent upon the sponsor’s existing Part D claims procedures and (2) the degree to which the prescriber’s acquisition of an active and valid policies that comply with section 507 of conduct could affect the integrity of the individual prescriber NPI, unless there MACRA. We therefore proposed to Part D program; and (3) any other is an indication of fraud. retain this provision and sought evidence that CMS deems relevant to its We noted in the November 28, 2017 comment on associated burdens or determination; or proposed rule that these provisions, unintended consequences and ++ Meet both of the following which focused on NPI submission and alternative approaches. However, we requirements: validation, were no longer effective proposed to move it from paragraph ++ The prescriber has engaged in because the January 1, 2016 end-date for (c)(6) to paragraph (c)(5) so that most of behavior for which CMS could have their applicability had passed. We the NPI provisions in § 423.120 were revoked the prescriber to the extent further explained that prior to the included in one paragraph. We stated in applicable if he or she had been January 1, 2016 date, the Medicare the proposed rule that these new enrolled in Medicare. Access and CHIP Reauthorization Act of provisions would not only effectively ++ CMS determines that the 2015 (MACRA) was signed into law on implement section 507 of MACRA but underlying conduct that would have to April 16, 2015 (shortly before the IFC also enhance Part D program integrity the revocation is detrimental to the best was finalized). Section 507 of MACRA by streamlining and strengthening interests of the Medicare program. In amended section 1860D–4(c) of the Act procedures for ensuring the identity of making this determination under this (42 U.S.C. 1395w–104(6)) by requiring prescribers of Part D drugs. paragraph, CMS considers the following that pharmacy claims for covered Part D factors: (1) The seriousness of the drugs include prescriber NPIs that are (b) Targeted Approach to Part D conduct involved; (2) the degree to determined to be valid under Prescribers and Provisional Supply which the prescriber’s conduct could procedures established by the Secretary We outlined in the proposed rule our affect the integrity of the Part D in consultation with appropriate belief that the most effective means of program; and (3) any other evidence that stakeholders, beginning with plan year reducing the burden of the Part D CMS deems relevant to its 2016. enrollment requirement on prescribers, determination In light of the enactment of MACRA, Part D plan sponsors, and beneficiaries • In paragraph (c)(6)(i), we proposed we issued a guidance memo on June 1, without compromising our payment to state: ‘‘Except as provided in 2015 titled, ‘‘Medicare Prescriber safeguard aims would be to concentrate paragraph (c)(6)(iv) of this section, a Enrollment Requirement Update’’ our efforts on preventing Part D Part D sponsor must reject, or must (memo). The memo noted that coverage of prescriptions written by require its PBM to reject, a pharmacy § 423.120(c)(5) would no longer be prescribers who pose an elevated risk to claim for a Part D drug if the individual applicable beginning January 1, 2016 Medicare beneficiaries and the taxpayer- who prescribed the drug is included on due to the IFC we had published, but funded Trust Funds. In other words, the preclusion list, defined in that its several of its provisions reflected rather than require the enrollment of § 423.100.’’ This will ensure that Part D

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sponsors comply with our proposed —Written notice within 3 business days • An alternative by which we would requirement that claims involving after adjudication of the first claim or first identify, through PDE data, those prescribers who are on the preclusion request for the drug in a form and providers who are prescribing drugs to list should not be paid. manner specified by CMS. Medicare beneficiaries. This would • In paragraph (c)(6)(ii), we proposed —Ensure that reasonable efforts are significantly reduce the universe of to state as follows: ‘‘Except as provided made to notify the prescriber of a prescribers who are on the preclusion in paragraph (c)(6)(iv) of this section, a beneficiary who was sent a notice list and reduce the government’s Part D sponsor must deny, or must under paragraph (c)(6)(iv)(B)(1)(ii). surveillance of prescribers that are not require its PBM to deny, a request for • In new § 423.120(c)(6)(v), we prescribing to Part D beneficiaries. We reimbursement from a Medicare proposed that CMS would send written anticipated that this could create delays beneficiary if the request pertains to a notice to the prescriber via letter of his in our ability to screen providers due to Part D drug that was prescribed by an or her inclusion on the preclusion list. data lags and may introduce some individual who is identified by name in The notice would contain the reason for program integrity risks. We were the request and who is included on the the inclusion on the preclusion list and particularly interested in hearing from preclusion list, defined in § 423.100.’’ would inform the prescriber of his or the public on the potential risks this As with paragraph (c)(6)(i), this will her appeal rights. A prescriber may could pose to beneficiaries, especially in ensure that Part D sponsors comply with appeal his or her inclusion on the light of our efforts to address the opioids our proposed requirement that preclusion list in accordance with 42 epidemic. payments not be made for prescriptions CFR part 498. • Whether the actions referenced in written by prescribers who are on the • In new § 423.120(c)(6)(vi), we § 424.535(a) are appropriate grounds for preclusion list. proposed that CMS has the discretion inclusion on the preclusion list. • • In paragraph (c)(6)(iii), we proposed not to include a particular individual on Whether actions other than those to state: ‘‘A Part D plan sponsor may not (or, if warranted, remove the individual referenced in § 424.535(a) should submit a prescription drug event (PDE) from) the preclusion list should it constitute grounds for inclusion on the record to CMS unless it includes on the determine that exceptional preclusion and, if so, what those circumstances exist regarding specific grounds are. PDE record the active and valid • individual NPI of the prescriber of the beneficiary access to prescriptions. In Suggestions for means of drug, and the prescriber is not included making a determination as to whether monitoring abusive prescribing on the preclusion list, defined in such circumstances exist, CMS will take practices and appropriate processes for § 423.100, for the date of service.’’ This into account—(1) the degree to which including such prescribers on the is to help ensure that—(1) the prescriber beneficiary access to Part D drugs would preclusion list. • A reasonable time period for Part D can be properly identified, and (2) be impaired; and (2) any other evidence sponsors/PBMs to incorporate the prescribers who are on the preclusion that CMS deems relevant to its preclusion list into their claims list are not included in PDEs. determination. adjudication systems, and whether and • In paragraph (c)(6)(iv), we proposed We also stated in the proposed rule how our proposed regulatory text needs to address the provisional coverage the following: • We proposed to keep an unenrolled to be modified to accommodate such a period and notice provisions, which we prescriber on the preclusion list for the time period. previously referred to, as follows: same length of time as the reenrollment • What limits or other guardrails CMS ++ A Part D sponsor or its PBM must bar that we could have imposed on the should set with respect to number of not reject a pharmacy claim for a Part prescriber had he or she been enrolled doses, initial dosing, and type of D drug under paragraph (c)(6)(i) or deny and then revoked. product for opioid prescriptions for a request for reimbursement under • Prescribers who were revoked from particular clinical presentations paragraph (c)(6)(ii) unless the sponsor Medicare or, for unenrolled prescribers, (including acute pain, chronic pain, has provided the provisional coverage of engaged in behavior that could serve as hospice setting and so forth). the drug and written notice to the a basis for an applicable revocation • An alternative method of ensuring beneficiary required by paragraph prior to the effective date of this rule (if beneficiaries have access to opioids as (c)(6)(iv)(B). finalized) could, if the requirements of necessary would be to require the ++ Upon receipt of a pharmacy claim § 423.120(c)(6) are met, be added to the sponsor immediately provide a transfer or beneficiary request for preclusion list upon said effective date to a new provider when the first reimbursement for a Part D drug that a even though the underlying action (for provider is on the preclusion list. Part D sponsor would otherwise be instance, felony conviction) occurred required to reject or deny in accordance prior to that date. However, the Part D (c) Appeals with paragraphs (c)(6)(i) or (ii), a Part D claim rejections by Part D sponsors and In our revisions to § 423.120(c)(6), we sponsor or its PBM must do the their PBMs under § 423.120(c)(6) would proposed to permit prescribers who are following: only apply to claims for Part D on the preclusion list to appeal their —Provide the beneficiary with the prescriptions filled or refilled on or after inclusion on this list in accordance with following, subject to all other Part D the date he or she was added to the 42 CFR part 498. We believed that given rules and plan coverage requirements: preclusion list; that is, sponsors and the aforementioned pharmacy claim —A 90-day provisional supply coverage PBMs would not be required to rejections that would be associated with period during which the sponsor must retroactively reject claims based on the a prescriber’s appearance on the cover all drugs dispensed to the effective date of the revocation or, for preclusion list, due process warranted beneficiary pursuant to prescriptions unenrolled prescribers, the date of the that the prescriber have the ability to written by the individual on the behavior that could serve as a basis for challenge this via appeal. Any appeal preclusion list. The provisional an applicable revocation regardless of under this proposed provision, supply period begins on the date-of- whether that date occurred before or however, would be limited strictly to service the first drug is dispensed after the effective date of this rule. the individual’s inclusion on the pursuant to a prescription written by We also solicited comment on the preclusion list. The proposed appeals the individual on the preclusion list. following: process would neither include nor affect

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appeals of payment denials or b. Part C/Medicare Advantage Cost Plan MA organizations can pay for covered enrollment revocations, for there are and PACE Provisions services, those are tied to statutory separate appeals processes for these (1) Background provisions. We concluded that requiring actions. In addition, we would send Medicare enrollment in addition to the written notice to the prescriber of his or (a) 2016 Final Rule existing MA credentialing requirements her inclusion on the preclusion list. The On November 15, 2016, CMS will permit a closer review of MA notice would contain the reason for the published a final rule in the Federal providers and suppliers, which could, inclusion and would inform the Register titled ‘‘Medicare Program; as warranted, involve rigorous screening prescriber of his or her appeal rights. Revisions to Payment Policies Under the practices such as risk-based site visits This was to ensure that the prescriber is Physician Fee Schedule and Other and, in some cases, fingerprint-based duly notified of the action, why it was Revisions to Part B for CY 2017; background checks, an approach we taken, and his or her ability to challenge Medicare Advantage Bid Pricing Data already take in the Medicare Part A and our determination. Release; Medicare Advantage and Part D Part B provider and supplier enrollment arenas. Consistent with our proposed Medical Loss Ratio Data Release; provision in § 423.120(c)(6) regarding Medicare Advantage Provider Network (b) Preparations for Part C Enrollment Requirements; Expansion of Medicare appeal rights, we proposed to update As with our Part D enrollment Diabetes Prevention Program Model; several other regulatory provisions requirement, we promptly commenced regarding appeals: Medicare Shared Savings Program outreach efforts after the publication of Requirements’’ (81 FR 80169). This rule • the November 15, 2016 final rule. We We proposed to revise § 498.3(b) to contained a number of requirements, add a new paragraph (20) stating that a communicated with Part C provider foremost of which was the addition of associations and MA organizations CMS determination to include a new § 422.222 to require providers and prescriber on the preclusion list regarding, among other things, the suppliers that furnish health care items general purpose of the enrollment constitutes an initial determination. or services to a Medicare enrollee who This revision would help enable process, the rationale for § 422.222, and receives his or her Medicare benefit the mechanics of completing and prescribers to utilize the appeals through an MA organization to be processes described in § 498.5. submitting an enrollment application. enrolled in Medicare and be in an According to recent CMS internal data, • In § 498.5, we proposed to add a approved status no later than January 1, approximately 933,000 MA providers new paragraph (n) that would state as 2019. (The term ‘‘MA organization’’ and suppliers are already enrolled in follows: refers to both MA plans and MA plans Medicare and meeting the MA provider ++ In paragraph (n)(1), we proposed that provide drug coverage, otherwise enrollment requirements. However, as that any prescriber dissatisfied with an known as MA–PD plans.) We also added of April 2017, roughly 120,000 MA-only initial determination or revised initial a requirement in new § 422.204(b)(5) providers and suppliers remain determination that he or she is to be that required MA organizations to unenrolled in Medicare. This is comply with the provider and supplier included on the preclusion list may approximately 11% of all MA providers enrollment requirements referenced in request a reconsideration in accordance and suppliers. While there may be § 422.222. Other provisions were also with § 498.22(a). overlap between the Part C and D added or revised to reflect the provider and prescriber populations, it ++ In paragraph (n)(2), we proposed requirements in § 422.222. is minor at approximately 25,000 that if CMS or the prescriber under We believed that these new providers. Concerns have been raised by paragraph (n)(1) is dissatisfied with a requirements, as they pertained to MA, the MA community over the enrollment reconsidered determination under were necessary to help ensure that requirement, principally over the § 498.5(n)(1), or a revised reconsidered Medicare enrollees receive items or burden involved in enrolling in determination under § 498.30, CMS or services from providers and suppliers Medicare while having to also undergo the prescriber is entitled to a hearing that are fully compliant with the credentialing by their respective health before an administrative law judge requirements for Medicare enrollment. plans. (ALJ). We also believed they would, as with We recognized and shared these ++ In paragraph (n)(3), we proposed the previously mentioned Part D concerns. We believed that the Medicare that if CMS or the prescriber under requirement, assist our efforts to prevent enrollment requirement could result in paragraph (n)(2) is dissatisfied with a fraud, waste, and abuse, and to protect a duplication of effort and, hearing decision as described in Medicare enrollees, by allowing us to consequently, impose a burden on MA paragraph (n)(2), CMS or the prescriber carefully screen all providers and providers and suppliers. While we may request review by the Departmental suppliers (especially those that maintained that Medicare enrollment, in Appeals Board (DAB) and the prescriber potentially pose an elevated risk to conjunction with MA credentialing, is may seek judicial review of the DAB’s Medicare) to confirm that they are the most thorough means of confirming decision. qualified to furnish Medicare items and a provider’s compliance with Medicare services. Indeed, although § 422.204(a) requirements and of verifying the In addition, given that a beneficiary’s required MA organizations to have provider’s qualifications to furnish access to a drug may be denied because written policies and procedures for the services and items, we believe that an of the application of the preclusion list selection and evaluation of providers appropriate balance can be achieved to his or her prescription, we believe the and suppliers that conform with the between this program integrity objective beneficiary should be permitted to credentialing and recredentialing and the desire to reduce the burden on appeal alleged errors in applying the requirements in § 422.204(b), CMS has the provider and supplier communities. preclusion list. not historically had direct oversight Given this, we proposed in the We also solicited comment on over all network providers and November 28, 2017, to utilize the same whether a different appeals process is suppliers under contract with MA ‘‘preclusion list’’ concept in MA that we warranted and, if so, what its organizations. While there are CMS are proposing for Part D and to components should be. regulations governing how and when eliminate the current enrollment

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requirement in § 422.222. We believe interests of the Medicare program. In • In § 422.224, we proposed to: this approach will allow us to making this determination under this ++ Change the title thereof to concentrate our efforts on preventing paragraph, CMS will consider the ‘‘Payment to individuals and entities MA payment for items and services following factors: (1) The seriousness of excluded by the OIG or included on the furnished by providers and suppliers the conduct underlying the individual’s preclusion list.’’ that could pose an elevated risk to or entity’s revocation; (2) the degree to ++ Revise paragraph (a) to state that Medicare beneficiaries and the Trust which the individual’s or entity’s an MA organization may not pay, Funds, an approach, as previously conduct could affect the integrity of the directly or indirectly, on any basis, for mentioned, similar to the risk-based Medicare program; (3) any other items or services (other than emergency process in § 424.518. evidence that CMS deems relevant to its or urgently needed services as defined To this end, we proposed the determination; or in § 422.113) furnished to a Medicare following provisions, which included ++ Meet both of the following enrollee by any individual or entity that those permitting provider and requirements: is excluded by the Office of the beneficiary appeals similar those we ++ The individual or entity has Inspector General (OIG) or is included previously mentioned for Part D. engaged in behavior for which CMS on the preclusion list, defined in could have revoked the individual or § 422.2’’. (2) Specific Regulatory Changes entity to the extent applicable had they ++ Revise paragraph (b) to state that Given the foregoing discussion, we been enrolled in Medicare. if an MA organization receives a request proposed the following regulatory ++ CMS determines that the for payment by, or on behalf of, an changes. We note that many of the underlying conduct that would have led individual or entity that is excluded by revisions below merely involved to the revocation is detrimental to the the OIG or an individual or entity that changing references to ‘‘enrollment’’ to best interests of the Medicare program. is included on the preclusion list, ‘‘preclusion list’’ to reflect the proposed In making this determination under this defined in § 422.2, the MA organization replacement of the former requirement paragraph, CMS considers the following must notify the enrollee and the with the latter. We also proposed the factors: (1) The seriousness of the excluded individual or entity or the deletion of several sections that we conduct involved; (2) the degree to individual or entity included on the believed were no longer needed because which the individual’s or entity’s preclusion list in writing, as directed by of our proposed preclusion list policy. conduct could affect the integrity of the contract or other direction provided by • In § 417.478, we proposed to revise Medicare program; and (3) any other CMS, that payments will not be made. paragraph (e) as follows: evidence that CMS deems relevant to its Payment may not be made to, or on ++ In new paragraph (e)(1), we determination. behalf of, an individual or entity that is proposed to state that the prohibitions, • We proposed to delete excluded by the OIG or is included on procedures and requirements relating to § 422.204(b)(5). the preclusion list.’’ payment to individuals and entities on • We proposed to establish a new • In § 422.501(c), we proposed to do the preclusion list (defined in § 422.2 of § 422.204(c) that will require MA the following: this chapter) apply to HMOs and CMPs organizations to follow a documented ++ Revise paragraph (c)(1)(iv) to read: that contract with CMS under section process that ensures compliance with ‘‘Documentation that payment for health 1876 of the Act. the preclusion list provisions in care services or items is not being and ++ In new paragraph (e)(2), we § 422.222. will not be made to individuals and proposed to state that in applying the • We proposed to delete the existing entities included on the preclusion list, provisions of §§ 422.2, 422.222, and version of § 422.222(a) and replace it defined in § 422.2.’’ 422.224 under paragraph (e)(1) of this with the following: ++ Revise paragraph (c)(2) to replace section, references to part 422 of this ++ In § 422.222, we proposed to the language beginning with ‘‘including chapter must be read as references to change the title thereof to ‘‘Preclusion providing documentation . . .’’ with this part, and references to MA list’’. ‘‘including providing documentation organizations as references to HMOs ++ In paragraph (a)(1), we proposed that payment for health care services or and CMPs. to state that an MA organization shall items is not being and will not be made • In § 417.484, we proposed to revise not make payment for a health care item to individuals and entities included on paragraph (b)(3) to state: ‘‘That or service furnished by an individual or the preclusion list, defined in § 422.2.’’ payments must not be made to entity that is included on the preclusion • In § 422.504, we proposed to do the individuals and entities included on the list, defined in § 422.2. following: preclusion list, defined in § 422.2.’’ ++ In paragraph (a)(2), we proposed ++ Replace the language in paragraph • In § 422.2, we proposed to add a to replace the existing language therein (a)(6) that reads ‘‘Medicare provider and definition of ‘‘preclusion list’’ that reads with a provision stating that CMS will supplier enrollment requirements’’ with as follows: send written notice to the individual or ‘‘the preclusion list requirements in ++ Preclusion list means a CMS entity via letter of their inclusion on the § 422.222 and § 422.224.’’ compiled list of individuals and entities preclusion list. The notice will contain ++ Revise paragraph (i)(2)(v) to read, that: the reason for the inclusion and will ‘‘they will ensure that payments are not ++ Meet all of the following inform the individual or entity of their made to individuals and entities requirements: appeal rights. An individual or entity included on the preclusion list, defined ++ The individual or entity is may appeal their inclusion on the in § 422.2.’’ currently revoked from Medicare under preclusion list, defined in § 422.2, in • In § 422.510(a)(4), we proposed to § 424.535. accordance with Part 498. revise paragraph (xiii) to read: ‘‘Fails to ++ The individual or entity is ++ In paragraph (b), we proposed to meet the preclusion list requirements in currently under a reenrollment bar state that an MA organization that does accordance with §§ 422.222 and under § 424.535(c). not comply with paragraph (a) of 422.224.’’ ++ CMS determines that the § 422.222 may be subject to sanctions • In § 422.752, we proposed to revise underlying conduct that led to the under § 422.750 and termination under paragraph (a)(13) to read: ‘‘Fails to revocation is detrimental to the best § 422.510. comply with §§ 422.222 and 422.224,

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that requires the MA organization not to + In paragraph (n)(2), we proposed • We noted that while there would be make payment to excluded individuals that if CMS or the individual or entity separate regulatory provisions for Part C and entities, nor to individuals and under paragraph (n)(1) is dissatisfied and Part D, there would not be two entities included on the preclusion list, with a reconsidered determination separate preclusion lists: one for Part C defined in § 422.2.’’ under (n)(1), or a revised reconsidered and one for Part D. Rather, there would • In § 460.40, we proposed to revise determination under § 498.30, CMS or be a single preclusion list that included paragraph (j) to state: ‘‘Makes payment the individual or entity would be all affected individuals and entities. to any individual or entity that is entitled to a hearing before an ALJ. Having one joint list, we believed, will included on the preclusion list, defined ++ In paragraph (n)(3), we proposed make the preclusion list process easier in § 422.2 of this chapter.’’ that if CMS or the individual or entity to administer. • In § 460.50, we proposed to revise under paragraph (n)(2) is dissatisfied We also solicited comment on the paragraph (b)(1)(ii) by changing the with a hearing decision as described in following matters: current language following ‘‘including’’ paragraph (n)(2), CMS or the individual • An alternative by which CMS to read ‘‘making payment to an or entity may request review by the DAB would first identify through encounter individual or entity that is included on and the individual or entity may seek data those providers or suppliers the preclusion list, defined in § 422.2 of judicial review of the DAB’s decision. furnishing services or items to Medicare this chapter.’’ In addition, given that a beneficiary’s beneficiaries. • • We proposed to delete access to health care items or services Whether the actions referenced in § 460.68(a)(4). may be impaired because of the § 424.535(a) are appropriate grounds for • inclusion on the preclusion list. We proposed to delete application of the preclusion list to his • § 460.70(b)(1)(iv). or her item or service, we believed the Whether actions other than those • We proposed to delete beneficiary should be permitted to referenced in § 424.535(a) should § 460.71(b)(7). appeal alleged errors in applying the constitute grounds for inclusion on the • In § 460.86, we proposed to revise preclusion list. We solicited comment preclusion and, if so, what those paragraphs (a) and (b) to state as whether additional beneficiary specific grounds are. • Suggestions for means of follows: protections, such as notices to enrollees monitoring potentially abusive MA ++ Paragraph (a) would specify that a when an individual or entity that has practices involving providers and PACE organization may not pay, recently furnished services or items to suppliers, and appropriate processes for directly or indirectly, on any basis, for the enrollee is placed on the preclusion including such providers and suppliers items or services (other than emergency list or a limited and temporary coverage on the preclusion list. or urgently needed services as defined approval when an individual or entity is in § 460.100) furnished to a Medicare first placed on the preclusion list but is c. Comments Received enrollee by any individual or entity that in the middle of a course of previously We received 74 comments and our is excluded by the OIG or is included on covered treatment, should also be responses follows. We note that many the preclusion list, defined in § 422.2. included these rules upon finalization. comments concerning the overall • ++ Paragraph (b) will specify that if a We proposed to revise § 422.310 to preclusion list did not clearly PACE organization receives a request for add a new paragraph (d)(5) to require distinguish between the Part D and MA payment by, or on behalf of, an that, for data described in paragraph provisions of the proposed rule. We are individual or entity excluded by the (d)(1) as data equivalent to Medicare therefore grouping these comments OIG or on the preclusion list, the fee-for-service data (which is also together without delineating between organization must notify the enrollee known as MA encounter data), MA the two programs. Comments that is included on the preclusion list in organizations must submit a National concerning other topics, however, such writing, that payments will not be made. Provider Identifier in a Billing Provider as provisional supply and appeals, are Payment may not be made to, or on field on each MA encounter data record, clearly denoted as such. behalf of, an individual or entity per CMS guidance. While the NPI is a excluded by the OIG or is included on required data element for the X12 837 (1) General Comments Concerning the the preclusion list. 5010 format (as set forth in the TR3 Preclusion List Concept ++ We also proposed to change the guides cited in the Background), CMS Comment: A number of commenters title of § 460.86 to ‘‘Payment to has not codified a regulatory expressed support for our preclusion list individuals and entities that are requirement that MA organizations proposal. Some commenters stated that excluded by the OIG or are included on include the Billing Provider NPI in the proposal will accomplish CMS’ the preclusion list.’’ encounter data records. The proposed objective of ensuring that only qualified • In § 498.3(b), we proposed to add a amendment would implement that providers and suppliers provide new paragraph (20) stating that a CMS requirement. We also proposed to services to Medicare beneficiaries, but determination that an individual or include the phrase ‘‘per CMS guidance’’ in a significantly less burdensome way. entity is to be included on the to allow CMS to take into account Other commenters stated that basing preclusion list constitutes an initial situations where there is no bill (no prescription coverage on Medicare determination. claim for payment) in an MA enrollment added duplicative and • In § 498.5, we proposed to add a organization’s system. burdensome requirements on physicians new paragraph (n) that would state as • We also proposed that both basic and providers, leading to more waste follows: and supplemental benefits should be and cost. ++ In paragraph (n)(1), we proposed subject to the payment prohibition that Response: We appreciate the that any individual or entity dissatisfied is tied to the preclusion list. We commenters’ support. with an initial determination or revised believed that restricting the payment Comment: A number of commenters initial determination that they are to be prohibition to only one of these two opposed our proposed preclusion list included on the preclusion list may categories will undercut the requirement. A commenter stated that request a reconsideration in accordance effectiveness of our preclusion list while the proposed rule described the with § 498.22(a). proposal. preclusion list as an effort to reduce the

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burden on providers, the commenter associated with this process could cause developed other systems for those believed it would actually be more some prescribers and providers not to purposes. inefficient to maintain two systems— enroll in Medicare, thus possibly Comment: A commenter stated that specifically, the preclusion list and the leading to access to care issues. For based on CMS’s estimates, traditional Medicare enrollment instance, according to a CMS analysis of approximately 10 percent of MA system—than to simply require all prescriber enrollment trends, as of providers would be negatively impacted providers that seek to serve Medicare January 2017 there are close to 340,000 by a requirement to be enrolled in FFS beneficiaries to enroll in traditional active Part D prescribers based on 2016 Medicare. The commenter contended Medicare. The commenter believed this PDE data who are not enrolled in or that CMS in the proposed rule did not would be particularly onerous on CMS opted-out of Medicare. The number of (1) disclose in the proposed rule if and providers given that nearly half of prescribers who are unenrolled losing 10 percent of providers would providers who serve MA enrollees are constitutes an estimated 25 percent of cause an access issue for Medicare already enrolled in traditional Medicare. all identified Medicare prescribers beneficiaries, or (2) include additional The commenter, as well as others, urged nationwide in 2016. Further data rationale and justification for CMS to retain the current enrollment suggests that an additional 18,000 new eliminating the requirement for requirement, believing it to be, as stated non-enrolled prescribers are identified enrollment. Without such additional in the proposed rule, the most thorough each month. This amount of incoming justification, the commenter stated, it means of confirming a provider’s prescribers, coupled with the 120,000 would be inappropriate to remove the compliance with Medicare requirements unenrolled MA providers referenced enrollment requirement at this time. and of verifying the provider’s above, creates operational challenges Response: We appreciate the qualifications to furnish services and that have led to delays in CMS’ commenter’s feedback on the items. Commenters added that Medicare implementation of such an enrollment clarification needed in the final rule. enrollment remains the most effective requirement. With an estimated 1,053,000 providers way to protect all Medicare Also, we are unclear as to what the currently furnishing services and items to beneficiaries through MA plans, we beneficiaries. commenter means by provider burden. currently estimate that at least 120,000 Response: We recognize the There is no provider burden associated remain unenrolled in Medicare. While commenters’ concerns about the with the preclusion list, except to the this may not seem significant on a removal of the Part D and MA extent that we place a prescriber or national scale, it could negatively enrollment requirements and whether provider on the preclusion list and the impact areas where the current CMS would, consequently, remain able provider wishes to challenge that provider-to-beneficiary ratio is to confirm a prescriber’s or provider’s designation. compliance with Medicare disproportionate, especially noting the Comment: A commenter noted that, requirements. However, we respectfully results of CMS’ Part D enrollment according to a Government decline to adopt the commenters’ efforts, as mentioned earlier. We would Accountability Office (GAO) study recommendation that we retain these expect similar results if we were to enrollment requirements. We continue published in 2015, CMS currently undertake efforts to enroll Part C to believe that the most effective means furnishes insufficient oversight of MA providers and suppliers. Considering of reducing the burden of the Part D and provider networks. The commenter the number of prescribers and providers MA enrollment requirement on stated that there is no mechanism in that have not yet enrolled across both prescribers and providers would be to place to assess the accuracy of the Part C and D and our concerns regarding concentrate our efforts on preventing information submitted by or about MA the potential for access to care issues, Part D coverage of prescriptions written plans to CMS and that CMS does not we disagree with the commenter’s by prescribers who pose an elevated risk require MA plans to routinely submit suggestion that we continue the to Medicare beneficiaries and the Trust updated network information for enrollment requirement and we decline Funds, and preventing MA payment for review. The commenter stated that FFS to adopt changes to the proposal based items and services furnished by provider enrollment may provide a on this feedback. providers and suppliers who pose an mechanism to assist CMS with ensuring Comment: A commenter stated that elevated risk to Medicare beneficiaries the important beneficiary protection of requiring providers to enroll in and the Trust Funds. Such an approach network adequacy. Medicare in order to serve MA plan enables CMS to focus on prescribers and Response: We appreciate the enrollees ensures that all Medicare providers who pose threats to the commenter’s feedback. We clarify, beneficiaries are served by providers Medicare program and its beneficiaries, however, that the MA program does that satisfy CMS’s rigorous criteria. The while minimizing the burden on those have network adequacy requirements to commenter stated that removing the who do not. We believe the criteria ensure that network based MA plans requirement that providers enroll in warranting a prescriber’s or provider’s have adequate providers under contract traditional Medicare in order to serve addition to the preclusion list are to furnish Part A and B services. MA plan enrollees would eliminate a sufficiently comprehensive such that Detailed information on the MA strong incentive for providers that serve this approach will effectively protect network adequacy requirements can be MA enrollees to indeed enroll in Medicare from making payments found in the health service delivery traditional Medicare. The commenter associated with Part D drugs prescribed reference file located at the bottom of believed that enrolling in traditional by, or MA services provided by, the CMS web page at the web link Medicare is an effective tool for problematic parties and prohibit such below: https://www.cms.gov/Medicare/ protecting Medicare beneficiaries and problematic parties from directing the Medicare-dvantage/MedicareAdvantage saw no reason for CMS to abandon it. care of program beneficiaries. Apps/index.html. We do not believe it If, the commenter added, CMS decides While enrolling such prescribers and would be appropriate to add an to finalize the preclusion list providers gives Medicare a greater enrollment requirement for network requirement, the commenter urged that degree of scrutiny in determining a providers merely for CMS to oversee the CMS make clear that any provider that prescriber’s or provider’s qualifications, accuracy of network directories or to is currently enrolled in traditional we note that the perceived burden monitor network adequacy. CMS has Medicare could not be placed on the

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preclusion list. This guarantee, the limit our review or screening to only physicians, and it is important that the commenter explained, would not apply those prescribers present on PDE data impact on beneficiaries be considered. to any providers that are revoked from but will also include those who Not requiring MA providers to be Medicare or under a reenrollment bar; potentially could prescribe based on enrolled in Medicare is particularly rather, it would simply establish that other data in our internal systems. problematic for MA enrolled participation in traditional Medicare is Therefore, we are not restricting our beneficiaries who are patients of a sufficient for a provider to serve MA ability to preclude only those parties provider not enrolled in Medicare and plan enrollees. that are currently furnishing items and who disenroll from the MA plan and Response: While we appreciate the services for program beneficiaries. elect traditional Medicare. Those commenter’s concern, we reiterate our Under § 423.120(c)(6), for instance, we beneficiaries, the commenter stated, view that the criteria warranting a will have the ability to preclude any would no longer be able to receive prescriber’s or provider’s addition to the prescriber, even prior to the prescriber services from their regular physician preclusion list are comprehensive showing up on PDE data, who meets the and have them billed to fee-for-service enough that this approach will provide criteria for being placed on the Medicare. Another commenter, too, sufficient program safeguards. preclusion list. stated that not requiring MA providers Prescribers and providers currently Comment: A commenter stated that, to enroll in Medicare can create enrolled in Medicare (and, therefore, not according to the proposed rule, problems for beneficiaries who disenroll revoked) cannot also be included on the approximately 65 percent of those who from a MA plan and elect traditional preclusion list because they would not were required to enroll or opt-out under FFS Medicare. meet the applicable criteria under, the May 23, 2014 final rule have done Response: We appreciate the respectively, §§ 423.100 and 422.2. so. The commenter believed that this is commenter’s feedback. In regard to Comment: Several commenters stated an impressive figure and that, rather beneficiaries leaving the MA program that the preclusion list would not than eliminating the enrollment and defaulting to traditional Medicare, protect beneficiaries to the extent that requirement altogether and relying on we are not aware of this as a significant the current enrollment requirement the complaints of those prescribers who issue nor was it a part of our rationale would. The commenters explained that found the process burdensome, CMS for the enrollment requirement. MA the enrollment process, through should proceed with the enrollment enrollees in particular are aware of the investigating applicants and preventing requirements and provide additional need to assess whether their health care problems before they occur, ensures that outreach regarding the enrollment providers are in a network of available Part D drugs are prescribed only by process. providers when selecting among qualified prescribers. With the Response: We appreciate the Medicare coverage options and therefore preclusion list, however, CMS would be commenter’s recommendation. As we expect them to able to ask the relying on a retroactive approach such mentioned previously, however, and necessary questions of a treating that it is only after a prescriber has even after CMS undertook vigorous provider when contemplating whether already engaged in inappropriate outreach activities after the May 23, to switch to original FFS Medicare for activities that he or she would be put on 2014 final rule regarding the need to coverage. In addition, we have already the preclusion list. Reactive provisions enroll, approximately 340,000 active expressed our concerns regarding the such as the preclusion list, the Part D prescribers have neither enrolled number of unenrolled prescribers and commenters contended, must by their in nor opted-out of Medicare. The loss providers and the access to care issues very nature lag behind proactive of 340,000 prescribers could potentially that could result if the Part D and MA provisions such as enrollment prove troublesome in areas where the enrollment requirements remain. We do requirements. The preclusion list prescriber population is already low and not agree with the commenters that this proposal, therefore, may put access to care is a serious concern. More issue arises with the frequency or scope beneficiaries at risk for inappropriate specifically, even with a provisional fill to outweigh the policies we have prescribing practices from physicians option approximately 2.5 million Part D articulated for our proposal and and eligible professionals who would beneficiaries (based on analysis decision in this final rule about the not have successfully completed the performed on 2015 and 2016 PDE data) enrollment requirement and preclusion enrollment process. Another commenter could lose access to needed list. expressed serious concerns about prescriptions if full enforcement of the Comment: Several commenters stated implementing the preclusion list enrollment requirement were to take that while CMS gave adequate proposal in lieu of the current effect on the scheduled date. Based on justification for why all applicable Part enrollment requirement. The these figures, and our concerns for D prescribers and MA providers and commenter believed that the careful potential access issues we believe the suppliers should be enrolled in screening involved with the enrollment preclusion approach would be more Medicare, CMS failed in the proposed process is the best means of: (1) appropriate. We note again that an rule to explain why earlier justifications Ensuring that providers and suppliers additional 18,000 new prescribers are are now wrong; specifically, that are qualified to furnish services and are identified each month. These incoming enrollment: (1) Ensures that Medicare fully compliant with Medicare rules; prescribers, coupled with the previously enrollees receive items or services from and (2) preventing fraud, waste, and mentioned 340,000 unenrolled providers and suppliers that are fully abuse. prescribers and 120,000 unenrolled MA compliant with the requirements for Response: We appreciate the providers, creates a significant Medicare enrollment; (2) assists in commenters’ concerns. While workload. efforts to prevent fraud, waste, and enrollment may provide more robust Comment: A commenter stated that in abuse and to protect Medicare enrollees data we believe the preclusion list proposing to eliminate the enrollment by allowing CMS to carefully screen all approach provides sufficient program requirement, CMS failed to consider or providers and suppliers to confirm that safeguards to balance program integrity address continuity of and access to care they were qualified to furnish Medicare initiatives, provider burden, and our issues. The commenter stated that the items and services; (3) in addition to the concerns regarding a potential access to choice of Medicare options has serious existing MA credentialing requirements, care issue. Specifically, we will not consequences for access to services and permits ‘‘a closer review’’ of MA

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providers and suppliers; and (4) is investigations. The loss of prospective being added to the preclusion list. If any necessary due to the fact that CMS has MA plan review of providers will only provider is concerned about burden for access to information and data not make the nature of credentialing and themselves or beneficiaries, they retain available to MA organizations. FWA programs even more cumbersome, the option to enroll, and CMS is Commenters also requested that CMS and will create new incentives for plans continuing to allow plans to require articulate meaningful arguments in to fill the oversight void left by the loss enrollment if they so choose. As long as favor of overturning the current of MA program enrollment. As a result, the provider’s enrollment is in good enrollment policies. the commenter stated, the MA program standing, he or she will not appear on Response: The agency is updating its is likely to see little or no reduction in the preclusion list. policy to reflect its experiences meeting total administrative burden; to the Comment: A commenter expressed the requirement of the aforementioned contrary, a diversity of efforts among concern that the proposed rule would, final rules, updated data analysis, and plans seeking to compensate for the loss in actuality, result in increased continued stakeholder engagement. of enrollment data may make program regulation contrary to (1) Presidential CMS has worked diligently to enroll participation more burdensome for Executive Order 13771 on Reducing providers and suppliers in order to meet providers, who could be subject to new Regulation and Controlling Regulatory the requirements of the May 23, 2014 and unique review or verification Costs and (2) Presidential Executive and November 15, 2016 final rules. As requirements by plans. The commenter Order 13777 on Enforcing the mentioned previously, enrollment can (1) concluded that the risks associated Regulatory Reform Agenda. The permit a greater degree of scrutiny in with elimination of current enrollment commenter asked CMS to reconsider the determining a prescriber or provider’s requirements outweigh any modest preclusion list provisions in light of qualifications. However, we are reduction to provider burden that may these executive orders. concerned that the perceived burden result and (2) urged CMS to retain the Response: We believe that the associated with enrollment may cause enrollment requirement. preclusion list concept complies with some providers to not enroll for Response: We appreciate the these Executive Orders because it purposes of furnishing items and commenter’s feedback. However, we do reduces the burden on prescribers, services under Part C or to prescribe not believe the preclusion list approach providers, and plans. Part D drugs, which could potentially will require the plans to invest more Comment: A commenter stated that lead to access to care issues. Indeed, the heavily in developing resources to CMS did not consider the effect of its significant number of prescribers and combat fraud, waste, and abuse, as the preclusion list proposal on the providers that remain unenrolled bear plans would continue utilizing their protection of Qualified Medicare this out. Such a serious loss of current resources and processes for Beneficiaries (QMBs) from improper prescribers and providers, should the credentialing network providers and billing by in-network providers. The enrollment requirements be enforced, fighting fraud, waste and abuse. We note commenter stated that a provider’s could potentially impact patient care, that the MA and Part D programs have enrollment in Medicare gives CMS a especially for beneficiaries located in compliance and fraud, waste and abuse direct path to enforcement against a areas already experiencing access to monitoring requirements that exist provider that improperly bills a QMB. care issues. Also, we reiterate our belief separate from the preclusion list (and While recognizing that, by regulation, that the criteria warranting a provider enrollment) policy; those CMS requires plans to include billing prescriber’s or provider’s addition to the requirements are not being increased protections in a provider contract, the preclusion list are comprehensive under this final rule. Nor does this final commenter stated that this provision enough to prohibit problematic rule increase the burdens on MA plans does not afford the beneficiary the same prescribers and providers from receiving related to provider credentialing. If the level of protection that is afforded by program dollars or directing the care of requirement to enroll were to remain, CMS’s ability to enforce the Medicare Medicare beneficiaries. In short, given Medicare health and drug plans would provider’s contract with the agency. the data analysis CMS has conducted adjudicate claims based on review of Response We believe the contract regarding the number of prescribers and Medicare’s enrollment data. Under the provisions required between the MA providers that remain unenrolled even preclusion list approach, plans are plan and a network provider pursuant to after a vigorous outreach campaign, completing the same task using § 422.504(g)(1)(iii) are binding on coupled with potential access to care preclusion data in place of enrollment providers; such agreements specify that concerns, we believe the preclusion list data. The plans are not subject to any QMBs must not be charged cost sharing approach is a sufficient alternative to more burden than they would have been when the state is responsible for paying screening prescribers and providers under the previous rule. CMS will such amounts under the Medicaid given the concerns regarding a lack of maintain the responsibility of reviewing program. Further, the regulation at providers enrolling to meet the each provider and making the § 422.504(g) contains broader enrollment requirement. determination to place them on the list beneficiary protection requirements for Comment: Noting our concerns in the or not. Upon implementation of the MA organizations, including a proposed rule about the potential preclusion list, there may be an increase requirement that the plan must burden of the enrollment process, a in notification by plans to beneficiaries indemnify the beneficiary from any fees commenter stated that elimination of regarding the preclusion status of a that are the legal obligation of the MA the enrollment requirement will merely provider they have received organization for services furnished by transfer, rather than eliminate, this prescriptions or services from within providers that do not contract, or that burden. The commenter explained that the past 12-months. However, we have not otherwise entered into an removing the enrollment requirement believe this is only minimally more than agreement with the MA organization, to will deny MAOs a valuable and reliable the burden plans would have been provide services to the organization’s data source when considering provider subject to under the previous rule. enrollees. credentialing and network participation, Further, the preclusion list approach Comment: A commenter meaning that MAOs may need to invest will place no burden on providers or recommended that CMS not eliminate additional resources in developing prescribers as they will not need to take its enrollment requirement but instead fraud, waste, and abuse (FWA) any action, unless they choose to appeal ascertain and attempt to address any

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problems with the enrollment process. adequate access. This narrower for-service—we believe that not As an illustration, the commenter approach, the commenter believed, requiring enrollment will have little to suggested that CMS inquire more deeply would be preferable to the preclusion no impact on state Medicaid programs into the facts behind the 120,000 MA list proposal. that require Medicare enrollment as a providers that are not enrolled, such as Response: We disagree with the prerequisite to Medicaid enrollment determining whether non-enrollment is commenter that the problems and because their reluctance to enroll in concentrated among particular provider concerns we articulated about Medicare would extend to Medicaid as types or specialties, particular implementation of the provider well based on our experience. Regarding geographic regions, or particular plan enrollment requirements are incorrect. It providers that obtain Medicare sponsors. If such concentrations exist, is our hope that by adopting a certification, they typically do so in the commenter stated, CMS could replacement for the provider enrollment order to provide services in the consider extending the 2019 deadline requirements, a broader population of Medicare fee for service program; thus, and undertaking a more targeted highly specialized providers will be able not requiring enrollment will have outreach. Another commenter stated to provide services to MA beneficiaries, minimal impact on those providers that that in eliminating the proactive while prohibiting payment to providers furnish covered services in states that enrollment process that best protects that would typically be revoked from require Medicare certification in their beneficiaries and the Medicare program the program based on our authorities at licensure or registration process. from fraud and abuse, CMS is proposing § 424.535. We believe the preclusion list Finally, reliance on Medicaid to take a step back in time, rather than approach broadens the provider registration would most likely pose a a step forward. The commenter urged population as we are no longer limiting similar issue given that, in CMS’ CMS to keep the enrollment beneficiaries to providers who would be experience, providers who do not enroll requirements in place and to step up Medicare enrolled and either in or out with Medicare are most likely not outreach to those who could have of network, but are limiting the enrolled or willing to enroll with enrolled but have not. population to only those who are not Medicaid. Response: We appreciate the precluded. commenters’ recommendations. Further, with 120,000 MA network (2) Operational Matters Pertaining to the However, we disagree that more targeted providers not currently enrolled, we feel Preclusion List outreach would further reduce the the trend to narrower networks is not so Comment: Many commenters number of prescribers and providers not prevalent that such a high volume could expressed concern about the operational yet enrolled. This is because CMS, as be explained as ‘‘network attrition.’’ complexities of the preclusion list previously stated, has already Comment: A commenter stated that proposals and the lack of details thus far completed a vigorous Part D and MA CMS should take into account, in given. They urged CMS to provide as enrollment campaign (including further consultation with states, how its many operational details about how the targeted outreach), yet the number of proposed change from the enrollment preclusion list will be tested, accessed, unenrolled prescribers and providers requirement to a preclusion list may updated, formatted, downloaded, etc., remains comparatively high, thus impact states given that: (1) State as early as possible to give all affected potentially creating significant access to Medicaid programs use Medicare parties sufficient time to implement care issues. Moreover, it would be provider registration data as part of their new processes. inefficient to continue to pursue the respective Medicaid provider database Response: We appreciate the enrollment approach given the current and registration requirements; (2) commenter’s concern. However, we data and results from our Part D various agencies in the states use believe these details would be best outreach efforts. Medicare certification of particular addressed outside of rulemaking, Comment: A commenter urged CMS provider types as part of their respective though we note our view that the to examine whether the enrollment provider licensure and registration preclusion list will be simpler to requirement has any substantial effect requirements (for example, home health operationalize than an enrollment on a plan’s ability to develop adequate agencies, hospices); (3) states do not requirement because far fewer service provider networks. The commenter’s provisionally address provider and prescription claims will be experience is that plans are narrowing circumstances of behavior that could impacted under Parts C and D. The list their networks as part of delivery result in revocations (as stated in will be available via a secure server strategies and not because there are not proposed § 423.100) and how such from which plans will be able to enough providers available. The circumstances may be addressed download the file. commenter stated that the trend toward differently by provider type; and (4) Comment: A commenter stated that it narrower networks increases the provider registration with state is not clear whether CMS proposed to importance of having participating Medicaid agencies may be considered to create two preclusions lists, one for Part providers in those networks subject to be sufficient in representing effective C and one for Part D. If CMS intends to the Medicare enrollment process. The and valid Medicare program registration create two preclusion lists, the commenter envisioned circumstances by proxy, outside of any additional CMS commenter asked CMS (1) how it will where highly specialized providers are provider preclusion list development, reconcile the appearance of a provider needed and few within a specialty which also may be coordinated with the on one list and not the other, and (2) choose to enroll in Medicare, and stated states. whether one list will take precedence that there may be other unique Response: We appreciate this over the other. circumstances that would merit an recommendation and note that the Response: There will be only one exception to the general rule of impact on state Medicaid programs was preclusion list, which both the Part D Medicare enrollment. The commenter contemplated when we formulated our and MA programs will utilize. contended that CMS could develop an preclusion list proposal. Concerning Comment: A number of commenters authorization process that allows for those providers that would no longer be sought clarification on the relationship those special circumstances and permits required to enroll if the proposal is between the OIG exclusion list and the plans to bring providers into their finalized—specifically, those that are CMS preclusion list. The principal networks so that beneficiaries have not currently enrolled in Medicare fee- issues raised were as follows: (1)

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Whether all parties on the OIG list SAM list, they will also be placed on the list. Further, we do not believe that would be included on the preclusion preclusion list. The only circumstance payment denials due to a party’s list; (2) coordination between the in which a prescriber or provider would inclusion on the preclusion list will preclusion list, the OIG list, and other show up on either one of the above- cause confusion among beneficiaries; lists similar to the OIG exclusion list, mentioned lists and not the preclusion beneficiaries are currently aware that such as the System for Award list is if a delay occurs in including that excluded provider claims will be Management (SAM); (3) how plans prescriber or provider on the preclusion denied, and the preclusion list is a should address situations where a list after the party was added to the OIG similar concept. prescriber or provider is on one list but list or SAM; in that instance, the plan Comment: In raising the question of not the other; (4) the hierarchical order should process in accordance with whether the preclusion list will be of processing when a prescriber or existing procedures. independent of the OIG exclusion list or provider appears on multiple lists (for With respect to the commenter’s if the OIG exclusion list will be example, whether the preclusion list or concerns regarding notices, plans would incorporated by reference, a commenter the OIG list takes precedence if a only need to send one notice to also asked CMS to clarify whether the provider appears on both lists); and (5) beneficiaries notifying them of the process for reinstatement and waiver whether the preclusion list criteria will prescriber’s or provider’s exclusion or applications will be identical for the differ from the OIG exclusion list preclusion. two lists. criteria so as to ensure that prescribers In determining which list will take Response: As already mentioned: (1) and providers are not included on both precedence for the purpose of notifying If a prescriber or provider is placed on lists. the beneficiary and/or provider/supplier the OIG exclusion list, they will also be In addition, several commenters in the event of a payment denial, we placed on the preclusion list; and (2) we recommended that the preclusion list be will address this issue in guidance will address which list will take combined with the OIG exclusion list so outside of rulemaking; in this guidance, precedence for the purpose of notifying as to enhance efficiency and simplicity. we will take into account the fact that the beneficiary and/or provider/supplier A commenter stated that combining the the plans do not currently check the in the event of a payment denial in lists would streamline implementation SAM list. CMS is unable to combine guidance outside of rulemaking. CMS is both lists as they are implemented of the preclusion list requirement by unable to combine both lists as they are under different statutory and regulatory allowing plans to leverage the current implemented under different statutory authorities. Plans will continue to check OIG exclusion list process, while and regulatory authorities. the OIG list as they have done in the another commenter expressed concern The preclusion list will not employ a that two different notices would have to past as the rule proposed no changes to waiver process in contrast to the OIG be sent to the beneficiary if the provider that process. A provider or prescriber list. In the case a provider or supplier appeared on the preclusion and OIG could be either excluded, precluded, or that was excluded and is subsequently lists, thus likely causing beneficiary both. In any event, the claim must deny reinstated, unless enrolled in Medicare confusion. Another commenter stated according to the procedures for each and concurrently revoked for the that if a provider were on both the list. exclusion, the provider or supplier preclusion list and the OIG exclusion Comment: While expressing concerns would remain on the preclusion list list, this would present difficulties from regarding the operational challenges of until the end of the enrollment bar a plan sponsor’s operational standpoint, enrolling prescribers that are not period or until they enroll with for provider remittances and beneficiary ‘‘typical’’ Medicare providers, a explanations of benefits can only report commenter expressed even greater Medicare. Medicare would not be made a single denial reason; this commenter concern about the preclusion list aware of the reinstatement until the recommended that CMS consider not concept. The commenter believed that provider attempted to enroll, at which including OIG excluded providers on the preclusion list would overlap and point, if successfully enrolled, would be the CMS preclusion list so that include additional providers not on the removed from the preclusion list. providers and beneficiaries have a OIG exclusion or SAM lists, thus Comment: A commenter urged that singular reason for claims payment creating additional operational and CMS include precluded and excluded denial. Another commenter, however, administrative challenges. The prescribers in a single file that is made recommended that the preclusion and commenter added that most available to the industry on a regular OIG exclusion lists remain separate and beneficiaries understand that if a basis, rather than maintain a two-file distinct from one another with no provider or supplier has been excluded approach. overlap; if this recommendation cannot from receiving payment from all federal Response: We appreciate the be realized, the commenter suggested programs, their services cannot be commenter’s recommendation. From an that the OIG exclusion list take covered by Medicare. Explaining to a operational perspective, however, we precedence over the preclusion list. beneficiary that a case-by-case are unable to combine the two files, for Response: As stated in the proposed determination has been made that his or both are maintained under different rule, the preclusion list will include her provider is not eligible for Medicare regulatory authorities. We will address those prescribers and providers that payment, the commenter contended, is which list will take precedence for the have engaged in behavior for which very confusing and more likely to result purpose of notifying the beneficiary CMS could have revoked the prescriber in a beneficiary not receiving necessary and/or provider/supplier in the event of or provider to the extent applicable if treatment than to result in the a payment denial in guidance outside of they had been enrolled in Medicare. A prevention of fraud. rulemaking. CMS revocation is based on § 424.535, Response: While we appreciate the Comment: A commenter asked which includes the authority at commenter’s concerns, we do not whether the proposed preclusion list § 424.535(a)(2)(i) to revoke an enrolled believe that administering the would eliminate the requirement to party that is excluded or debarred (per preclusion list would be any more review the regional Medicare opt-out the SAM) from the Medicare program. difficult than the process currently used lists for practitioners. Therefore, if a prescriber or provider is in rejecting claims for services from Response: The preclusion list concept placed on the OIG exclusion list or the providers that are on the OIG exclusion will not alter this requirement.

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Comment: A commenter asked who would have been revoked had they Response: The preclusion list will be whether the proposed preclusion list been enrolled in Medicare. Further, available on a monthly basis via a will include the entire country. prescriptions ordered, or claims for secure website. As for making the file Response: We believe the commenter reimbursement submitted, by a publicly available, CMS does not intend is seeking clarification as to the precluded provider will be denied based to make this information available to the population of prescribers and providers upon the effective date indicated in the public except as required by law. CMS that will be subject to the screening that list. notes that if the file were made public, would determine if a provider is placed Comment: With respect to PDE the information in it could be used in on the preclusion list. Using CMS’ editing, a commenter asked whether an inappropriate manner and not for its internal data and systems, which CMS will use the creation date of the intended purpose. Plans will be includes but is not limited to, PECOS preclusion file or whether it will be expected to download the monthly file, and National Plan and Provider based on the active preclusion file when which we intend to make available to Enumeration System (NPPES), we will the PDE is processed. the plans by January 1, 2019. We will screen any prescriber or provider that Response: We believe these dates are address further operational details may or could potentially prescribe Part insignificant given that claims will be concerning the preclusion list in sub- D drugs or furnish MA services or items edited based on the time period for regulatory guidance. to a Medicare beneficiary, through the which a provider is precluded as Comment: Several commenters asked fee-for-service program or a Medicare indicated in the preclusion list file. whether beneficiary notices would be Advantage plan. The screening process Comment: A commenter stated that required if the beneficiary’s provider will include providers and suppliers CMS must ensure that the preclusion ended up on the preclusion list shortly from the entire country. list is updated frequently and on a after the beneficiary had been assigned Comment: A commenter stated that regular basis to minimize the lag time or received care from the provider. If while the preclusion list could help between when a provider is placed on beneficiary notice is required, CMS combat fraud, waste, and abuse, said list to the time that information is commenters asked whether distribution the Part D preclusion list appears to available to health plans and other of the notice is the responsibility of the only apply to prescribers, not to providers; the greater the lag time health plan or CMS. pharmacists or pharmacies. The between preclusion and disclosure, the Response: Notice will be provided to commenter added that some pharmacies greater the potential of unknowingly beneficiaries at least 60 days prior to the have been involved in fraud schemes filling a prescription written by such a prescriber or provider being added to and that, in the current opioid provider. The commenter added that the list. Whether the notice originates epidemic, pharmacies have occasionally CMS must also ensure the preclusion from CMS or plans will be addressed in been integral to many schemes where list contains the vital information guidance outside of rulemaking. these medications are prescribed needed to properly identify a precluded Comment: A commenter asked without legitimate medical use. Similar prescriber, such as an NPI and the whether a prescriber will be precluded to the MA preclusion list provisions, the current practice address of the provider; immediately after it is included on the commenter recommended that the Part the commenter stated that lack of a preclusion list or if CMS will permit D preclusion list provisions apply to current address increases the difficulty different dates of preclusion both individuals and entities (such as in finding a provider on the preclusion effectiveness on a case-by-case basis. pharmacies). list, especially when a provider has a Response: As stated in the proposed Response: We appreciate this common name that yields many search rule, a prescriber’s or provider’s claims recommendation and clarify that this is results. will be denied based on the effective our intent. The preclusion list will Response: As already mentioned, the date indicated in the preclusion list file. prevent any individual or entity that is preclusion list will be updated once Comment: A commenter asked able to prescribe or provide services every 30 days, and prescriptions whether the preclusion list can be under the Medicare Part C and D ordered, or claims for reimbursement integrated into pharmacy software programs from prescribing or providing submitted, by a precluded provider will systems to ensure that medications are those services, assuming they meet the be denied according to the date not dispensed if the prescriber is on the criteria for inclusion on the preclusion specified on the preclusion list. The list list. list. will indicate the period for which the Response: We believe plans will Comment: A commenter asked provider is precluded. Additionally, integrate the list into their claims whether (1) the preclusion list file will CMS will include the address data it has adjudication process in order to include termination dates as well as available from its internal data sources. appropriately adjudicate pharmacy effective reinstatement dates, and (2) the We will also include the prescriber’s or claims in real-time at the point of sale. prescriber will be removed from the file provider’s NPI, name, and tax We foresee this process as being similar upon reinstatement. identification number, which will be to how plans currently use the OIG Response: The preclusion list will be sufficient to confirm that a particular exclusion list. updated once every 30 days. It is not prescriber or provider is on the Comment: A commenter asked that necessary for the update to include the preclusion list. CMS have specific administrative removal of any prescriber or provider’s Comment: Several commenters sought procedures in place to ensure that NPI whose reenrollment bar has clarification on how the preclusion list prescriptions dispensed without the expired, for the file will contain time information would be shared with pharmacy knowing a prescriber is on periods for which each prescriber health plans. A commenter asked the preclusion list are adjudicated provider is precluded (an expiration whether the preclusion list will be appropriately. date per se), similar to the OIG published on a public site or a restricted Response: If a sponsor pays a exclusion list. The time period for site that only plan sponsors can access. pharmacy claim involving a preclusion will be determined by CMS’ Another commenter requested that CMS prescription written by a precluded current reenrollment bar criteria and clarify when the file layout and location prescriber in error, we would expect will be applied to currently enrolled of the preclusion list of prescribers will that the sponsor would not recoup the revoked providers and those providers be available. payment from the pharmacy since the

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pharmacy will not have access to the domain for download capability; and (3) outlined in technical guidance issued preclusion list. CMS should maintain a file that tracks outside of this rule. Comment: A commenter urged CMS the history for those individuals and Comment: A commenter requested to consider updating the preclusion list entities that are reinstated on the that all technical guidance related to more frequently than monthly. The cumulative file, for this facilitates a ‘‘other authorized prescribers’’ be commenter expressed concern that only more efficient process for updating removed. updating the preclusion list monthly provider records and processing claims. Response: We appreciate the could lead to situations where CMS may Response: We appreciate this commenter’s feedback. All provider be aware that an individual should be feedback and will take it into types, including those that are not removed from the preclusion list (such consideration. We will provide a file eligible to enroll but who are eligible to as the revocation ends on a day at the extension upon making the file prescribe, will be subject to screening beginning of the month but they will not available. As for making the file for placement on the preclusion list. get off the preclusion list for an publicly available, CMS does not intend Comment: A number of commenters additional month, therefore essentially to make this information available to the sought clarification as to who notifies prolonging the revocation for longer public except as required by law. CMS the beneficiary that their provider is on than permitted by current regulation), notes that if the file were made public, the preclusion list. but Part D sponsors have not yet been the information in it could be used in Response: Plans will be responsible notified and, as a result, claims will an inappropriate manner and not for its for notifying beneficiaries of their reject and beneficiaries may not have intended purpose. prescribers being placed on the access to their Part D prescriptions. Further, we do not believe it will be preclusion list as stated at Response: While we appreciate the necessary to create a historic tracking § 423.120(c)(6). As for Part C commenter’s recommendation, we note, file as the preclusion list will be beneficiaries whose provider is for the purpose of comparison, that any cumulative and as such will contain the precluded, whether the notice originates enrolled provider revoked from time period for which a provider is from CMS or plans will be addressed in Medicare does not have their billing precluded. guidance outside of rulemaking. privileges automatically restored upon Comment: A commenter Comment: Several commenters asked the expiration of their enrollment bar; recommended that each updated for clarification on how to handle reinstated providers are required to preclusion list file be effective at least situations where a claim for a dual- submit an application for initial five (5) business days after Part D eligible beneficiary comes from a enrollment and are subject to the sponsors receive it to allow them time prescriber who is on the preclusion list enrollment and screening requirements to configure their claims adjudication but is not excluded by Medicaid. Other in 42 CFR part 424, subpart P as if they systems with the most current version. commenters also requested that CMS were initially enrolling. If the provider Response: We appreciate the explain how claims for dual-eligible was not previously enrolled and does commenter’s feedback and are finalizing beneficiaries should be handled. not wish to enroll, the time period the the rule to include a period of at least Response: If a Part D drug claim is provider would have to wait for the list 30 calendar days with which the plan rejected by the Part D plan because the to be updated—30 days or less—is will have to intake into their system the prescriber is included on the preclusion comparable to the time it may take a most current preclusion data. list, the drug cannot be covered by previously enrolled but revoked Comment: A commenter asked Medicaid and eligible for federal provider to re-enroll. Further, the OIG whether, if a claim for reimbursement is financial participation (FFP) under exclusion list works in a similar manner received several months after the date of Medicaid for dual eligible beneficiaries. and is only updated once every 30 days. service, CMS will require Part D Comment: A commenter stated that If an excluded provider were reinstated sponsors to go back and review the with new admissions, long-term care on the first of the month, the provider preclusion list in effect at the time of the pharmacies often dispense the would have to wait until the updated date of service. Another commenter medication(s) without entering a claim OIG list is released. Ultimately, our sought clarification as to whether CMS in real-time because the relevant intent is to operationalize the preclusion will maintain an archive of the information received from the long-term list similar to how the OIG exclusion list preclusion list files with the dates of care facility on the patient is is operationalized currently. We also enforcement. incomplete. Should this occur with a note the notification to providers that Response: We plan to make the provider on the preclusion list, a long- they are on the preclusion list will preclusion list a cumulative file that term care pharmacy would either have communicate the date on which the will contain periods for which claims to spend resources to contest the denial provider’s reenrollment bar will end should be denied, meaning the list will of payment or bear the cost. To avoid and he or she will be eligible to begin contain start and end dates for undue costs and to prevent the prescribing or furnishing services. preclusion periods. Accordingly, we pharmacy in this situation from Comment: A commenter believe that referring back to archived inadvertently filling such prescriptions, recommended that CMS publish the files will not be necessary. the commenter requested that there be preclusion list in the same format and Comment: A commenter supported a standard process by which the plans record layout as the current OIG CMS’ recommendation to leverage the or CMS inform long-term care exclusion list and, more specifically, to PDE data as the initial data source for pharmacies of providers included on the include the prescriber’s NPI number on precluded provider analysis. The preclusion list. the preclusion list file so that the commenter stated, however, that any Response: We believe this is best individual prescriber is accurately changes to the PDE layout to support addressed by the contract between the identified and appropriately included in these efforts will need to be outlined in plan and the pharmacy. the claims adjudication systems. The technical guidance to ensure efficient Comment: A commenter commenter also suggested the following: and effective data exchanges. recommended that the final rule (1) The file should include the file Response: We appreciate the maintain the proposed language that extension (in other words, .csv); (2) the commenter’s support and agree any payment denials would apply only to file should be placed on a public changes to PDE layout will need to be health care items or services furnished

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on or after the date the individual or services under the entity depends on if excluding providers in the Medicaid entity was added to the preclusion list. the individual met the criteria for being program but we intend to make the Response: We appreciate the placed on the list. Individuals under preclusion list available to State commenter’s recommendation and precluded entities will not Medicaid programs in the future and are agree. We are maintaining the language automatically be precluded based on exploring how best to share this in the proposed rule that payment their association with a precluded information with states. Also, for dual denials or claim rejections occur only entity. eligible beneficiaries, if a Part D drug after the date on which a provider is Comment: A commenter stated that, claim is rejected by the Part D plan placed on the preclusion list and are regardless of who furnishes notice to the because the prescriber is included on effective the date indicated on the beneficiary, CMS will need procedures the preclusion list, the drug cannot be preclusion list file. To clarify, the in place to address beneficiary covered by Medicaid and eligible for preclusion list will include the questions. If plan sponsors must notify federal financial participation (FFP) prospective specified time period for the beneficiary, the commenter under Medicaid for dual eligible which the provider is precluded. explained, the plan sponsor will have beneficiaries. Comment: With regard to beneficiary no access to the reason for the Comment: A commenter urged CMS notification, a commenter urged CMS to preclusion to be able to answer to work closely with industry consider permitting MA plans to follow beneficiary questions. stakeholders to define the minimum existing processes, including, but not Response: We appreciate the necessary attributes of the preclusion limited to, the termination of a commenter’s feedback and will take into list file layout. contracted MA plan provider and consideration that the plan will not Response: We appreciate the subsequent notification to the have the specific reason. However, we commenter’s suggestion and will take beneficiary. Upon submission of a claim believe this is an operational detail best this into consideration as we work to from an individual or entity that is on addressed outside of rulemaking. operationalize these requirements. the preclusion list, the commenter Comment: A commenter stated that Comment: A commenter asked that explained, the claim would be denied CMS should clarify whether the CMS confirm that, similar to the OIG and the beneficiary would not have any preclusion list will be shared with state excluded provider guidance, plan liability for the claim, yet the Medicaid programs for inclusion in the sponsors will not return reject code 569 beneficiary would receive an state’s Medicaid exclusion list. Another (‘‘Provide Notice: Medicare Prescription explanation of benefits notifying the commenter stated that the preclusion Drug Coverage and Your Rights’’) on beneficiary of the claim denial and list policies should apply to both the claims that reject as a result of a reason; if the claim is related to a Medicare and Medicaid benefits where precluded provider. contracted provider who was then coordination occurs between these Response: We appreciate the terminated from a MA plan’s network, programs under Medicare/Medicaid commenter’s question and will take this the beneficiary would be notified of that Plans and Special Needs Plans. Another into consideration. However, we believe status and the reason. commenter expressed concern that the this is an operational detail best Response: With respect to the process preclusion list will not be aligned with addressed outside of rulemaking. that occurs upon a claim being state lists and that the impact on the Comment: A commenter urged CMS submitted for services furnished by a beneficiary at the point of sale will not to ensure that the list is available to contracting provider, if the MA plan be aligned between state and federal prescribers so they are able to confirm determines through its periodic review processes; the commenter stated that their inclusion on the list independent of provider credentialing that a this would be particularly relevant for of notification by a plan sponsor. contracting provider is no longer an MMP beneficiary. Another Response: Prescribers will be notified eligible to treat Medicare beneficiaries commenter recommended that for in advance of being placed on the the MA plan will ensure that the Medicare-Medicaid Plans and Special preclusion list as required by provider does not furnish services for Needs Plans involving situations where § 423.120(c)(6). The notification would plan enrollees until such time as the the prescriber is listed on the preclusion explain that the provider has met the provider is either terminated by the plan list, the beneficiary should not be criteria for preclusion and has the right or the provider resolves the reason for eligible for coverage under both plans. to appeal that determination within 60 being on the preclusion list. If a The commenter believed that this would days. Once a provider has exhausted contracted precluded provider has eliminate confusion for beneficiaries their first level appeal process or has not treated plan enrollees, the enrollee will who have multiple prescriptions that submitted an appeal within 60 days, an only be responsible for the plan allowed could apply to either the Medicare additional 90-day period will lapse cost sharing and will be notified that the benefit or the Medicaid benefit. Another prior to their addition to the preclusion contracted provider is no longer commenter asked whether, for dual- list. The 90-day period allows the plans available. eligible or Medicare-Medicaid Program 30-days to intake the preclusion data Comment: A commenter requested beneficiaries, the drug can be covered and a 60-day beneficiary notification that CMS clarify how ‘‘entities’’ would under Medicaid or whether the final period. Subsequent updates to the list be identified on the preclusion list file rule applies to both lines of business. will provide any newly added provider and whether individual providers Response: We appreciate the feedback with a 60-day appeals window but will furnishing services under that entity of these commenters. In our experience, not provide a 90-day period as would also be precluded (for example, State Medicaid agencies do currently discussed above, thus after if the individual providers under the construct their own exclusion lists implementation beneficiaries may not entity are also precluded, the affiliated based on state-specific criteria. The be notified that they may have received Type 1 NPIs will also be listed on criteria they use may or may not be a prescription or services from a precluded provider file). consistent with the criteria used to provider that is now precluded. Response: Entities that provide health determine if a provider should be We therefore believe it is unnecessary care services will be eligible to be placed on the preclusion list. At this to provide the list to prescribers. As for placed on the preclusion list. Whether time, we are not requiring states to making the file publicly available, CMS or not the individuals providing utilize the preclusion as a means of does not intend to make this

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information available to the public that the list should be updated weekly requirement, only claims thatmust be except as required by law. CMS notes or no less than bi-monthly; a commenter rejected need to be identified. that if the file were made public, the stated that a reasonable timeframe for Comment: A commenter asked CMS information in it could be used in an incorporating the preclusion list into its to clarify the conduct that would lead to inappropriate manner and not for its claims adjudication system would be non-Medicare providers being included intended purpose. within four (4) business days of the on the preclusion list. Comment: A commenter stated that file’s posting This commenter explained Response: As we stated in the CMS must notify prescribers when they that upon removal or resolution of a proposed rule, the preclusion list will are placed on the preclusion list. The provider’s preclusion, the industry will include those prescribers and providers commenter did not believe this need to be able to begin paying the that have engaged in behavior for which administrative function should be the claims as soon as possible in order to CMS could have revoked the prescriber plan sponsors’ responsibility. prevent beneficiary access issues. Even or provider to the extent applicable if he Response: We agree with the if a new override mechanism for data or she had been enrolled in Medicare. commenter. As written in the regulation delays is created, the commenter CMS revokes providers based on the text at § 423.120(c)(6)(v)(A), ‘‘CMS continued, most pharmacies will be authorities located at 42 CFR 424.535. If sends written notice to the prescriber unwilling to override the rejection for it is determined that a prescriber or via letter of his or her inclusion on the fear of audit risk and/or payment provider meets the criteria that would preclusion list.’’ recoupment. The commenter expressed cause them to be revoked if he or she Comment: A commenter stated that concern that claims would be rejected were enrolled in the program and the CMS should not duplicate exclusion for up to a month for prescribers whose underlying cause for revocation is efforts already administered via the OIG. preclusion statuses have been resolved. considered to be detrimental to the Response: While we appreciate the The same situation could happen with program, the prescriber or provider will commenter’s feedback, we do not newly precluded prescribers; if an event be placed on the preclusion list. CMS believe we are duplicating efforts occurs that warrants the prescriber’s would not have the authority outside of currently undertaken by the OIG. We inclusion on the preclusion list, the those listed at 42 CFR 424.535 to revoke note that the preclusion list uses commenter expressed concern over the a provider or therefore add them to the exclusion data from the OIG along with prospect of paying claims for these preclusion list. other provider data to create an prescribers for up to a full month, Comment: A commenter alternative to enrollment. As previously particularly if the prescriber’s behavior recommended that CMS provide stated, the preclusion list will include places beneficiaries at risk. Other sponsors with clarifications on the prescribers and providers who have commenters shared these concerns. process of creating and maintaining the engaged in behavior for which CMS has Response: We appreciate the preclusion list, followed by an or could have revoked the prescriber or commenter’s concerns. We note, opportunity to submit comments and provider to the extent applicable if he or however, that the OIG list is posted feedback. she had been enrolled in Medicare. every 30 days and plans are able to Response: We appreciate the Further, the intent of the preclusion list integrate that file into their systems in commenter’s question and will take this is to be broader than the OIG exclusion a reasonable amount of time. The into consideration. list, for it can include prescribers and preclusion list will be designed to be Comment: A commenter providers who may not be excluded but integrated in a similar manner and recommended that CMS require plan still pose a threat to the program and/ claims adjudicated in a similar process. sponsors to treat all precluded provider or beneficiaries. We therefore believe that posting the list claims in the same manner regardless of Comment: In response to our once every 30 days is sufficient. Further, the drug. If the CMS preclusion solicitation of comments, a commenter the specific time period for which a warrants a discretionary effective date did not recommend any opioid-specific provider is precluded will be identified based on the preclusion reason, the criteria for inclusion on the preclusion on the file shared with plans. commenter stated that this should be list. The commenter believed that the Comment: A commenter requested managed by CMS. end result (for example, suspension/ technical guidance for any PDE changes Response: We appreciate the termination of medical and/or DEA that will be needed to support the commenter’s recommendation and license) should serve as the preclusion preclusion list process. Among the believe that it is consistent with our criteria. specific questions the commenter raised proposal. If a provider is placed on the Response: We appreciate the were: (1) Whether CMS could confirm preclusion list, any prescription drug commenter’s feedback. We note that that plans will no longer need to claims submitted with the provider Medicare has the authority to revoke for identify an exception for ‘‘other listed as the prescriber must be denied improper prescribing practices (42 CFR authorized prescribers’’ on the PDE, and or rejected regardless of the drug or 424.535(a)(14)), which includes a that this field should be submitted with medication being prescribed. pattern or practice that is abusive or spaces or blanks; and (2) whether CMS Comment: A commenter asked represents a threat to the health and anticipates any other changes to the PDE whether the range of providers defined safety of our beneficiaries. In screening file layout and/or processes related to as ‘‘in scope’’ for purposes of complying nonenrolled providers, we would apply the preclusion list. with the preclusion list requirement this authority in determining their Response: We will issue any will be made clear for purposes of inclusion on the list. Further, CMS has necessary PDE guidance outside the implementing the adjudication logic. As the ability to revoke providers for regulatory process. We note that the an illustration, the commenter asked suspension or revocation of their DEA regulatory text no longer refers to other whether providers (such as pharmacies) certification or registration, or loss of authorized prescribers. Such a under MAOs would be designated as prescribing authority (42 CFR designation was necessary to identify ‘‘in scope’’ for this requirement. If so, 424.535(a)(13)). which claims should be paid under an the commenter stated, CMS must Comment: A number of commenters enrollment requirement since other provide clear instructions for sponsors stated that monthly updates of the authorized prescribers could not enroll. to adjudicate claims (or not) involving preclusion list would be inadequate and However, under the preclusion list situations where a pharmacy on the

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preclusion list is in a position to fill a pharmacy notice (CMS–10147— prohibition to only apply to health care prescription for a non-precluded Medicare Prescription Drug Coverage items and services. The commenter prescriber. and Your Rights) if the reason for the urged CMS to explain this distinction in Response: We appreciate this reject is due to a provider who has been § 422.224. comment and clarify that the preclusion excluded from participation in the Response: As mentioned in our list will include any prescriber or Medicare program. The commenter previous response, payment for covered provider that falls within the preclusion sought clarification that this policy will services or items furnished by a list definition in, respectively, also apply to claims rejected due to a precluded prescriber or provider is §§ 423.100 and 422.2. prescriber being on the preclusion list. prohibited under this rule, and the Comment: A commenter urged CMS Response: Regarding this particular screening process for the preclusion list to define how individuals/entities technical guidance, it applies only to will apply to any prescriber or provider would be identified by CMS to add to those prescribers who have been and not those conducting administrative the preclusion list and how the list will excluded by the OIG. Thus, if a services. Further, administrative be created and maintained, followed by beneficiary’s prescribing provider is services may not be reimbursed via the a comment opportunity for the industry both excluded and is on the preclusion claims process and therefore may not be to provide feedback. list, CMS will provide guidance on subject to payment denials due to Response: As already mentioned, the which list should take precedence in preclusion. preclusion list will include those regard to how notification should be Additionally, we note that urgent and prescribers and providers that have made to beneficiaries. emergency services as defined in engaged in behavior for which CMS has § 422.113, are excluded as indicated in (3) Miscellaneous Payment Issues or could have revoked the prescriber or the regulatory text at § 460.86(a) for Part provider to the extent applicable if the Comment: A number of commenters C covered services and § 422.224(a) for prescriber or provider was or had been urged CMS to: (1) Include language to Part D covered drugs. enrolled in Medicare. CMS revokes clearly identify the scope of the Comment: A commenter stated that prescribers and providers based on the payment prohibition to individuals/ the proposed provision to § 422.224(a) authorities located at § 424.535. If it is entities on the preclusion list; and (2) does not appear to exclude emergency determined that a prescriber or provider clarify which payments to individuals/ or urgently needed services from the has met the criteria that would cause the entities are permissible and which are payment prohibition therein. The prescriber or provider to be revoked if not (for example, health care services commenter recommended that CMS they were enrolled with the program, or only; administrative services also). make clearer that such services are is revoked, and the underlying cause for Response: Payment for covered indeed excluded from § 422.224(a)’s revocation is considered detrimental to services or items furnished by a purview. the Medicare program, the prescriber or precluded prescriber or provider is Response: Ultimately, we do not provider will be placed on the prohibited under this rule, and the believe that even emergency or urgent preclusion list. screening process for the preclusion list situations would warrant subjecting Comment: A commenter will apply to any prescriber or provider beneficiaries to care provided by recommended that CMS clarify how and and not those conducting administrative providers who meet the preclusion list in what instances CMS would apply services. However, we note that urgent criteria and therefore, decline to adopt sanctions to a plan that pays an and emergency services as defined in the commenter’s recommendation in individual/entity on the preclusion list. § 422.113, are excluded as indicated in finalizing the rule. Response: CMS will determine the regulatory text at § 460.86(a) for Part Comment: A commenter noted that appropriate compliance action on a C covered services and § 422.224(a) for § 422.224(a) applies the preclusion list case-by-case basis. In doing so, CMS Part D covered drugs. payment prohibition to Medicare will weigh key factors such as Comment: A commenter noted that enrollees of the MAO/Medicare cost beneficiary harm, and duration and proposed § 422.222(a) would prohibit plan. An MAO or Medicare cost plan, extent of compliance failure. payment for health care items and the commenter explained, commonly Comment: A commenter stated that a services. The commenter asked whether offers other product lines besides the pharmacy often needs to send out a person or entity could still be paid for MA program or Medicare cost plan medications for nursing home administrative services furnished to the program that will cover Medicare beneficiaries. If the preclusion list is not sponsor. If the person or entity can be enrollees; an example is the offering of made readily available electronically, paid for such services, the commenter commercial health plan coverage where the commenter sought clarification as to suggested that this be made clear an enrollee is covered under Medicare which party would be responsible for throughout the proposed preclusion list either as primary or secondary payer. payment of these medications. provisions, for some provisions refer to The commenter stated that the OIG Response: As already mentioned, a general prohibition against exclusion payment prohibitions extend CMS will make the preclusion list ‘‘payments’’ while others reference a to payments for these persons as well available every 30 days via a secure prohibition against payment for ‘‘health and asked whether CMS intended to server from which plans will be able to care items and services.’’ In this vein, extend the preclusion list payment download the most up to date list. If the the commenter also cited § 422.224(a), prohibition to non-MA/cost enrollees of plan fails to utilize the most up-to-date which the commenter stated, appears to an MAO or a Medicare cost plan. version of the list, the plan is at risk of combine the payment prohibitions Response: We do not believe we have paying for prescriptions written by arising from an OIG exclusion with a the authority to regulate commercial precluded prescribers. party’s inclusion on the preclusion list. health plans or other non-Medicare Comment: A commenter stated The commenter found this confusing product lines offered by the MAO. according to chapter 18, section 40.3.1 because a sponsor is precluded from of CMS’ Prescription Drug Benefit paying a person who is excluded by the (4) Application to Other Parties Manual and in previous technical OIG for both health care services and Comment: Since PACE organizations guidance, plans do not have to provide administrative services, whereas CMS provide Medicare and Medicaid covered beneficiaries s with the standardized seemingly intends for the preclusion list services, a commenter asked how the

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preclusion list requirement will apply to such that hospitals, nursing homes, Response: We appreciate the staff and contractual individuals and home health agencies, etc. are required commenter’s suggestion and believe the entities that are not eligible to enroll in to check their staff against the appeals process addresses this concern Medicare (for example, nurses, preclusion list. The commenter’s as no provider will be added to the recreational therapists, drivers). The concern is that by imposing an preclusion list until they have commenter sought clarification that additional contractual requirement on exhausted their first level of CMS such individuals and entities will not be PACE organizations, their ability to appeal or if they fail to appeal their vetted for inclusion on the preclusion secure contracts may be negatively addition to the list. Specifically, list and that it will not be necessary to impacted. Also, the commenter urged beneficiaries and Part C and D plans check these individuals and entities that any requirement on PACE will not be notified of the provider’s against the preclusion list. Another organizations for employees of preclusion status until after this period commenter interpreted the proposed contracted entities to be vetted against in order to avoid negative consequences preclusion list requirement (as well as the CMS preclusion list be delayed until for a provider whose preclusion status the OIG exclusion list) to apply to: (1) such a requirement for these employees is not yet final. In regard to the The staff of the PACE organization exists in fee-for-service, at which time subjectivity of the preclusion list (whether employed directly by or under such a requirement would be universal standards, we believe it is necessary to contract with the organization); and (2) and not applied distinctively by PACE maintain this subjectivity given some entities with which a PACE organization (and MA) organizations. providers are revoked for reasons that may contract to furnish care, such as Response: As mentioned in our may not be considered detrimental to inpatient hospitals, nursing homes, and previous response, PACE would follow the program. For example, a provider post-acute care settings. The commenter the same approach as MA organizations; may have failed to update an expired did not, however, believe that the specifically, PACE would verify that license. preclusion list proposal required the contracted providers that furnish Part A Ultimately, we believe the preclusion PACE organization to verify whether and B services and items are not on the list approach will broaden the pool of employees or contracted staff of a preclusion list. This would include available clinicians as they are no longer hospital or other provider entity with those providers that are not otherwise restricted by the requirement that they which the PACE organization contracts eligible to enroll in Medicare. be enrolled in order to furnish items or are included on the preclusion list. Comment: Regarding the requirement services. Likewise, the commenter did not to provide notice to PACE participants Comment: A commenter expressed believe the preclusion list policy if a PACE organization receives a concern that the requirements for included staff members of the PACE request for payment by an individual or putting a prescriber on the preclusion interdisciplinary team who are not entity excluded by the OIG or included list are too narrow. The commenter eligible for Medicare provider or on the preclusion list, a commenter supported a means of including supplier enrollment, such as nurses, asked CMS to consider the differences physicians or other prescribers on the recreational therapists, and drivers. The between PACE organizations and MA preclusion list who have a history of commenter urged that CMS clarify these plans in implementing the notice problematic opioid prescriptions, or at issues. requirement. least to flag such prescriptions if they Response: PACE would follow the Response: We appreciate the would meet the requirements under the same approach as MA organizations; commenter’s recommendation and will Plan Sponsor Drug Management Plan that is, PACE would verify that take this into consideration as we work and do not meet any exemption. contracted providers that furnish Part A to operationalize this requirement. Response: We appreciate the commenter’s recommendation and will and B services and items are not on the (5) Preclusion List Criteria preclusion list. This would include take this into consideration in any those providers that are not otherwise Comment: Several commenters future regulatory revisions of the eligible to enroll in Medicare. To believed that some of the criteria to be preclusion list provisions. At this time, address the specific points raised by the used to make preclusion list however, we are unable to adopt these commenter, the administrative staff of determinations lack objectivity. A recommendations in this final rule as the PACE organization would not be commenter cited the following such data is not readily accessible to subject to the preclusion list examples: (1) The seriousness of the make such a determination. requirements. Further, to the extent a conduct underlying the prescriber’s Comment: A commenter PACE program contracts with a revocation; (2) the degree to which the recommended that Medicare revocation precluded provider, the requirements [physician’s] conduct could affect the reasons § 424.535(a)(6), (9), and (10) be could only be applied if that entity or integrity of the Part D/MA program; and excluded as reasons for a provider to be provider is visible on the claim. (3) any other evidence that CMS deems included on the preclusion list, for these Regarding application of the preclusion relevant to its determination. The reasons only apply to those that are list, we will hold PACE organizations to commenter stated that such criteria enrolled in Medicare. the same requirements as MAOs. hurts the program by potentially Response: We agree that the Comment: A commenter asked limiting the pool of available clinicians revocation authorities at § 424.535(a)(6), whether CMS expects PACE for Medicare beneficiaries and puts the (9), and (10) would not be applicable to organizations to hold contracted entities professional reputation of the physician prescribers and providers that are not responsible for confirming that their in jeopardy; the commenter stated that Medicare enrolled but are evaluated for staffs (whether employed or contracted) once a clinician has been placed on the inclusion on the list. However, these are not on the CMS preclusion list. The list, there will be professional revocation authorities will apply to commenter recommended that the consequences for him or her. The prescribers and providers that are preclusion list requirements not extend commenter did not believe that CMS’ Medicare enrolled and are under review beyond those individuals and entities proposed appeals process is enough to for inclusion on the list. Logically, we with whom PACE organizations contract address this concern. The commenter would not be able to evaluate non- directly unless a similar requirement is urged CMS to remove criteria that are Medicare enrolled providers against this implemented in fee-for-service Medicare subjective in nature in the final rule. criteria, and do not believe it is

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necessary to specifically exclude these NPI on all pharmacy claims apply to active and valid prescriber NPI in the revocation authorities from the PACE organizations, the commenter case of a beneficiary request for preclusion list criteria. To illustrate, the requested a waiver for PACE reimbursement. revocation authority at § 424.535(a)(4) is organizations of the requirement in Comment: A commenter noted that based upon the provider indicating as proposed § 423.120(c)(5)(ii) for Part D the MACRA legislation, which included true information that is in fact false or sponsors to communicate at point-of- the valid NPI requirement, was signed misleading on the enrollment sale if an NPI is active and valid. The into law on April 16, 2015 and became application. The providers who will be commenter stated that such a waiver effective January 1, 2016. Accordingly, precluded may not have enrolled with would be consistent with CMS’ the commenter stated that it, alongside Medicare and therefore would not be recognition of differences in how Part D other major PBMs, has been enforcing subject to this revocation authority. We may be implemented by PACE the active NPI requirement at the point therefore decline to adopt the organizations and the way PACE of sale since January 1, 2016. The commenter’s recommendation in organizations interact with their commenter thus expressed confusion finalizing the rule. contracted pharmacies to obtain Part D about the modifications to (c)(5) and the Comment: A commenter drugs on behalf of their participants. request for comments, and sought recommended that CMS develop Response: Section 423.120(c) is clarification from CMS regarding the prescriber preclusion list criteria that waived for PACE organizations, and no intent of this modified guidance. focuses on beneficiary safety and waiver is necessary. However, to the Response: The modifications to (c)(5) mitigates the risks of opioid prescribing. extent a PACE organization adjudicates are to comply with MACRA. In this Response: We believe that by utilizing claims electronically or contracts with a regard, CMS previously issued guidance Medicare’s current revocation pharmacy to fill prescriptions on their on June 1, 2015 77 that existing authorities as criteria to evaluate a behalf and such pharmacy adjudicates procedures to comply with the previous prescriber’s inclusion on the preclusion beneficiary claims electronically on requirement at § 423.120(c)(5)(iii)(B)(2) list, we are, in fact, safeguarding behalf of PACE enrollees, PACE which stated that a Part D sponsor must beneficiaries against overprescribing of organizations must comply with the pay a claim even when the pharmacy opioids. The current revocation reasons requirements of § 423.120(c). does not correct the NPI or confirm that at § 424.535 allow CMS to exclude or Comment: A commenter sought it is active and valid will no longer remove from the program those confirmation that the NPI is intended apply as of January 1, 2016. Thus, the prescribers who may prove to be a for encounter data submitted to CMS via modifications to (c)(5) are intended to detriment to Medicare. The preclusion the Encounter Data System (EDS), and remove this regulatory language because list expands CMS’ authority by allowing not the abbreviated format via the Risk it does not comply with MACRA. the application of these revocation Adjustment Processing System. The Sponsors in compliance with the June 1, authorities to not only Medicare- commenter also suggested that the 2015 guidance should not have to enrolled prescribers and providers but proposed change to § 422.310(d)(5) be change any existing claims procedures also to any prescriber or provider that revised to state as follows: ‘‘(5) For data due to these modifications. could potentially provide care to our described in paragraph (d)(1) of this Comment: A commenter expressed beneficiaries, thus further broadening section as data equivalent to Medicare support for the proposed amended our ability to keep out problematic fee-for-service data, which is also requirements for risk adjustment data, providers. We also reiterate that known as MA encounter data submitted but urged that CMS consider two related Medicare has two revocation authorities to CMS via the Encounter Data System issues prior to final rulemaking. First, at § 424.535(a)(13) and (14) that (EDS), MA Plans must submit a NPI in while standard claims transactions specifically focus on a prescriber’s a billing provider field on each MA (which represent the vast majority of prescribing practices. The authority at encounter data record, per CMS claims) include provider NPI data, a (a)(14), for instance, gives Medicare the guidance.’’ provider that submits a manual, paper Response: The proposed provision at ability to revoke if a prescriber shows a claim may not have an NPI on file with § 422.310(d)(5) does refer only to pattern or practice of abusive the plan. Plans may engage in efforts to encounter data. The record layout for prescribing that CMS determines is a obtain an NPI, but responses to these Risk Adjustment Processing System threat to the health and safety of efforts from an unaffiliated provider is (RAPS) data has not changed and is not Medicare beneficiaries. Given this not always timely. The commenter addressed in this rule-making. Finally, clarification, we respectfully decline to recommended that CMS adopt a limited we decline to accept the commenter’s adopt the commenter’s exception to its proposed NPI suggested revision to the regulation text, recommendation. requirement where a provider submits a because the name of a system such as paper claim and does not have an NPI (6) NPI Issues the EDS could change over time, and we on file with the receiving plan. Second, Comment: Several commenters believe it is clear that this provision the commenter stated that a number of expressed support for our proposed applies to MA encounter data. Thus, we providers, including rehabilitation changes to § 423.120(c)(5). are finalizing paragraph (d)(5) as centers and durable medical equipment Response: We thank the commenters proposed. for their support. Comment: With respect to the (DME) suppliers, are contracted by and Comment: A commenter stated that requirement for a valid NPI on drug bill plans under a group or ‘‘Type 2’’ § 423.120(c) is among the sections of claims, a commenter stated that the NPI. The commenter stated that the this rule that are listed as waived for beneficiary should not be held proposed rule was not clear regarding PACE organizations. The commenter responsible for the price of the drug in whether CMS will accept a Type 2 NPI asked whether CMS intended to impose the event of an invalid NPI. in satisfaction of the proposed the requirements in proposed Response: We refer the commenter to encounter data standard. For plans that § 423.120(c)(5) and § 423.120(c)(6) on § 423.120(c)(5)(iv), which generally 77 https://www.cms.gov/Medicare/Prescription- PACE organizations. If, the commenter states that a sponsor may not make Drug-Coverage/PrescriptionDrugCovGenIn/ asked, the requirements under proposed payment to a beneficiary dependent Downloads/HPMS-Memo-Prescriber-Enrollment- § 423.120(c)(5) for an active and valid upon the sponsor’s acquisition of an Enforcement-v06012015.pdf.

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currently accept and use Type 2 NPIs, Response: Section 507 of MACRA accommodate for long-term care (LTC) capturing individual NPIs would likely amends section 1860D–4(c) of the Social pharmacies where there is no point of require changes to both credentialing Security Act (42 U.S.C. 1395w–104(c)) sale. The commenter stated that this policies and contracting standards; the by requiring that pharmacy claims for provision must contain a blanket administrative burden of making these covered Part D drugs include prescriber exception for LTC pharmacies changes would be considerable. The NPIs beginning January 1, 2016 that are prohibiting the PDP or PBM from commenter added that while the use of determined to be valid under denying any claim by an LTC pharmacy. exclusively Type 1 NPIs could represent procedures established by the Secretary Second, the commenter sought revisions a very significant burden for some in consultation with appropriate to new § 423.120(c)(5)(iii)(B), which, as plans, the commenter did not believe stakeholders. MACRA does not address proposed, would permit a PDP or its that use of a Type 2 NPI would provide the issue of which NPI a pharmacy must PBM to deny reimbursement to a any less support for CMS’ program use on a claim for a prescription written pharmacy that dispensed a drug integrity efforts than that provided by a by a resident—only that is be active and prescribed by a physician without an Type 1 NPI. The commenter requested valid. In addition, the modifications to NPI number under certain conditions; that the final rule provide allowances (c)(5) are technical to make the the commenter stated that this provision for submission of either Type 1 or Type regulatory text consistent with exiting must contain a similar blanket 2 NPIs in risk adjustment encounter law and guidance. exception prohibiting the denial of LTC data. Comment: A commenter urged CMS pharmacy claims in all circumstances, Response: MA organizations and to consider how to mitigate potential given other regulatory requirements other submitters of MA encounter data access challenges created for patients mandating that the prescription be should follow the national when claims with invalid NPIs are filled. The commenter stated that the implementation guides (known by the submitted in error. aforementioned changes must also be shorthand ‘‘TR3 guides’’): Standards for Response: As already stated, section made to the proposed MA regulations. Electronic Data Interchange Technical 507 of MACRA amends Section 1860D– By making these changes, the Report Type 3, Health Care Claim: 4(c) of the Social Security Act (42 U.S.C. commenter contended, CMS can ensure Institutional (837) and Standards for 1395w–104(c)) by requiring that that LTC pharmacies are able to meet Electronic Data Interchange Technical pharmacy claims for covered Part D beneficiary needs as well as comply Report Type 3, Health Care Claim: drugs include prescriber NPIs beginning with other legal requirements Professional (837), including the TR3 January 1, 2016 that are determined to mandating the dispensing of guidance for use of Type 1 and Type 2 be valid under procedures established medications to nursing home residents. NPIs. Submitters should also follow by the Secretary in consultation with Response: Section 507 of MACRA CMS’ existing guidance regarding NPIs appropriate stakeholders. The requires that for plan year 2016 and that is specific to encounter data modifications to (c)(5) are technical to thereafter, claims for covered Part D submissions. For example, CMS make the regulatory text consistent with drugs must include an active and valid released a December 21, 2017 memo existing law and guidance. prescriber NPI. MACRA did not provide ‘‘Encounter Data Record Submissions— Comment: With the revisions to an exemption for pharmacy claims NPI Submission Guidance—Frequently § 423.120(c)(5) and based on section 507 submitted by long-term care Asked Questions (FAQ),’’ released of MACRA, a commenter sought pharmacies. Therefore, we decline to through CMS’ Health Plan Management clarification as to whether the 24-hour create one in the technical change we System (HPMS), which discusses follow-up for the plan sponsor to work are making to 423.120(c)(5) to comply situations under which default NPIs with the pharmacy to identify the with MACRA. may be used. As noted in this memo, prescriber NPI and resubmit the claim is (7) Effective Date CMS expects the number of encounter no longer applicable. Another data records (EDRs) with default NPIs commenter asked whether, in instances Comment: Many commenters for providers who would otherwise have when a pharmacy encounters an issue expressed concern about the January 1, an NPI (that is, not atypical providers) with a prescriber NPI and the pharmacy 2019 effective date of the preclusion list to be a very small percentage of an either cannot or does not correct the requirement. Aside from the need for MAO’s total EDR submissions. CMS is NPI, plans are still required to outreach CMS to address all of the operational monitoring the level of default NPI use. to network pharmacies within 24 hours complexities of the requirement (for Comment: A commenter urged CMS in an attempt to obtain a valid NPI. example, regarding file layouts, to enforce Section 507 of MACRA as Response: Such outreach is no longer frequency of updates, interaction with effectively and efficiently as possible, required. CMS’ previous guidance in other lists, types of payments affected) taking into account the burdens that this regard was based upon the prior and to issue appropriate guidance to may be imposed on plans and providers, requirement—which the modifications affected stakeholders, commenters as well as on beneficiary access to to § 423.120(c)(5) are removing—for noted several other reasons for the needed medications. For example, the sponsors to pay pharmacy claims with unworkability of the January 1, 2019 commenter cautioned that the proposed inactive and invalid NPIs when the date. First, and most generally, enforcement mechanism could prove pharmacy either could not or did not stakeholders need enough time to adapt problematic with respect to certain correct the prescriber NPI and then to and implement the new providers in limited contexts—such as obtain the active and valid ones requirements. Second, plans may need teaching hospitals with residents and afterward. to make system changes, with several interns who may use the NPI of their Comment: A commenter urged CMS commenters noting that some code attending physician. As such, the to make two modifications to values specific to prescriber enrollment commenter encouraged CMS to provide § 423.120(c)(5). First, the commenter will need to be sunsetted and additional clarity about how the final suggested changes to new potentially new values created. Third, policy will be implemented to account § 423.120(c)(5)(ii), which, as proposed, plan sponsors will need sufficient for these and similar situations that may would require the sponsor at the point opportunity and guidance to clearly arise, in order to maintain beneficiary of sale to communicate whether a understand, test, and use the new file access. submitted NPI is active and valid to layout, including how each field is to be

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interpreted, and how the file may after the initial incorporation, CMS patient access to care based on the post- change over a given time period. should post the preclusion list by the dated preclusion effective date that is Adhering to a January 1, 2019 date, 15th of every month and require Part D applied to the file. The commenter some commenters cautioned, would sponsors to utilize the list beginning on stated that: (1) This approach could lead to beneficiary confusion and delays the first day of the following month. address CMS’ objective of preventing in getting needed medications. Various Response: We understand the problematic prescribers from continuing commenters suggested an effective date commenter’s concerns. As stated in our to prescribe opioids; (2) supporting a 90- of no earlier than January 1, 2020. previous response, however, we believe day or any other discretionary period Others recommended the following that January 1, 2019 is the appropriate determined by CMS before adding a effective dates: (1) 12 months after the date. Further, we do not believe making prescriber to the preclusion list (post- preclusion list provisions are finalized the list available on the 15th of each beneficiary notification) would or published; (2) at least twelve (12) month allows the plan enough time to eliminate the need to provide months after CMS releases its final properly ingest preclusion data into provisional coverage at point of service; guidance, with all of the specifications, their claims adjudication systems. and (3) this would also solve the to have the preclusion list fully (8) Provisional Supply complexities that plans face in incorporated into its claims programming systems to track adjudication systems; or (3) a minimum Comment: A number of commenters provisional supply and ensuring the of 18 months after the publication of opposed the provisional supply program works in conjunction with necessary technical guidance and requirement and recommended its other Medicare requirements, such as confirmed file layouts. Another removal from the final rule for several the transition fill program. commenter urged that the deadline for reasons. Fourth, commenters outlined the full incorporation should be a mid-year First, they contended that the difference between the original date (for example, July 1), as opposed to preclusion list is akin to the OIG provisional fill policy, which was January 1. A mid-year deadline would exclusion list, for which there is no designed to minimize potential allow Part D sponsors to focus more concomitant supply requirement. They disruptions in access to needed drugs exclusively on this important system explained that beneficiaries generally while prescribers were enrolling into modification, while being able to understand that prescriptions written by Medicare, and the newly proposed adequately prepare for annual readiness excluded parties will not be covered. requirement, which would apply to implementation activities at the They saw no reason for a provisional demonstrably problematic prescribers. beginning of the calendar year. Another supply requirement for the preclusion Noting, again, that provisional fills are commenter stated that with a January 1, list when there is none for the OIG not available for prescriptions written 2019 effective date, a fully functional exclusion list. by OIG excluded prescribers, production file is not likely to be Second, they stated that a problematic commenters stated that there is no provided to plan sponsors in time for prescriber, especially one prescribing policy justification for having full testing across various scenarios, opioids or other potentially dangerous provisional fills for prescribers who such as transition periods and coverage drugs, should not be entitled to have engaged in improper behavior. reviews, by that date. The commenter payment, nor enable receipt of a We note that a commenter asked whether CMS will acknowledge medication for such a long period of recommended that CMS provide that flexibility on full implementation time that may negatively impact a outreach to the prescriber and the may be necessary. beneficiary. Indeed, several commenters beneficiary prior to including the Response: We appreciate the specifically noted that the provisional prescriber on the preclusion list; commenters’ concerns and fill requirement could harm specifically, once the appeal period recommendations. We recognize that beneficiaries. A commenter explained ends and CMS adds the prescriber to the operationalizing these changes across that prescribers on the preclusion list preclusion list, CMS would then notify the Part D and MA programs will would likely have already been notified the beneficiary. The prescriber would be require effort and resources for plans by CMS of that status, potentially added to the precluded list 90 days after and for CMS. However, we believe this several times. In this scenario, the the beneficiary notification date. This, approach is similar to how plans precluded provider is aware of their the commenter stated, would help currently utilize the OIG exclusion list status yet will continue to see Medicare eliminate the complexities of and should be operationalized in the patients and issue prescriptions for implementing the provisional supply same manner. We therefore believe that them. This places beneficiaries at risk, process, as the 90-day period would be a significant amount of additional work especially if the prescription issued built into the effective date; CMS could will not be necessary. Although, the involves controlled substances/opioids add the end-date based on reenrollment enrollment requirement may have been or other high-risk drugs. bar criteria. The commenter added that delayed various times, due to the Third, concerns were expressed about its recommendation that the provisional decrease in burden under the preclusion the length of the provisional supply supply requirement be eliminated list approach, we do not believe a delay period, specifically with respect to cost would streamline point-of-sale edits and is necessary and that the January 1, 2019 and overutilization; particular concern avoid potential overlaps or conflicts timeline is sufficient. was expressed about the burdens on with other programs, such as transition Comment: Responding to our plan sponsors of operating and fill. The commenter also contended that solicitation for comment regarding a administering the provisional fill this would deal with the immediate reasonable time period for Part D requirement. A commenter, stating that need to address opioid prescribing risks sponsors and PBMs to incorporate the the provisional supply requirement is as well as reduces the likelihood of preclusion list into claims adjudication highly complex, urged CMS to eliminate beneficiary disruption at point-of-sale. systems, a commenter suggested a 180- it. The commenter contended that if the Response: We appreciate the day period. This would give Part D preclusion list aims to identify commenters’ concerns and sponsors and PBMs sufficient time to problematic prescribers who, through recommendations. Given the prepare their systems and operationalize their prescribing activity, pose a risk to commenter’s points, we agree that the the changes. The commenter added that beneficiaries, then CMS can manage preclusion list will be operationalized

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in the same manner as the OIG prescriber confusion, as well as Response: If payment is denied exclusion list and allowing a compromise existing claim adjudication because the prescriber or provider is on provisional fill for the preclusion list hierarchical rules. Second, the the preclusion list, the beneficiary will and not the exclusion list will cause commenter noted industry confusion as not have the right to appeal. Therefore, confusion among beneficiaries. Second, to whether a remaining days’ supply it will not be necessary to use the we share the commenter’s concern would apply to the 90-day provisional NCPDP Reject code ‘569. regarding problematic prescribers and coverage period, where prescriptions Comment: A commenter asked their ability to continue prescribing could require a shortened days’ supply whether the type of fill and prescriber controlled substances. Finally, we agree or the beneficiary could obtain up to type need to be included in the PDE. that the provisional fill requirement is 180 days’ supply of a medication. The Response: We will issue any highly complex and would represent commenter cited the following scenario: necessary PDE guidance outside of the additional burden for plans to (1) A prescriber’s preclusion effective regulatory process. implement as evidenced by many of the date is January 1, 2020; (2) the Comment: A number of commenters comments we received. beneficiary obtains a 90-day supply of supported our proposed provisional Based on the large number of medication on January 1, 2020; (3) a supply requirement, believing that it comments we received urging us to provisional coverage period of January would ensure that beneficiaries eliminate the provisional fill based on 1, 2020 through April 1, 2020 is set at continue to receive needed the concerns mentioned earlier CMS the beneficiary/prescriber level; and (4) prescriptions while they find another will not finalize the provisional supply on March 20, 2020, the beneficiary prescriber. Response: While we appreciate the requirement at § 423.120(c)(6)(v) and requests a prescription refill for a 90-day commenters’ support, we have decided will not finalize the provisional fill as supply. The commenter asked which of not to finalize our proposed provisional proposed in the interim final rule the following rules would apply: (a) The supply requirements for the reasons expiring in mid-May. Instead, CMS will 90-day supply is covered, for the March stated above. We believe a 60-day only place a prescriber and their 20 claim date of service is within the notification period for beneficiaries will applicable preclusion period on the provisional coverage period; or (b) a 13- provide ample time for those impacted preclusion list after the prescriber has day supply is covered because there are exhausted the appeals process individuals to locate a new provider. only 13 days remaining (March 20 Any beneficiary who received services (described in more detail below), plus through April 1) in the provisional an additional 90-day period, including a furnished by a precluded provider coverage period. within the past 12 months of the 60-day period for plans to ingest Response: We appreciate the preclusion data and a 30-day beneficiary implementation date of the preclusion commenters’ concerns and list will be notified that they have 30 notice period. recommendations. As already stated, Comment: A commenter asked days to locate a new provider. however, we are not finalizing our whether the preclusion list will be on a Comment: Supporting the provisional proposed provisional fill policy. per script basis or whether the plan can supply requirement, a commenter preliminarily notify the beneficiary that Comment: A commenter stated that encouraged CMS to ensure that all scripts prescribed by a particular although provisional fills would likely information on the provisional supply doctor on the preclusion list will be reduce such access disruptions for requirement is provided to beneficiaries rejected. beneficiaries, potential beneficiary in advance to minimize confusion and Response: Section 423.120(c)(6) confusion associated with the disruption. The commenter added that requires the beneficiary to be notified conflicting messages (specifically, the CMS should carefully align the policies within 3 days of adjudication of a claim message that prescriptions from the it finalizes with respect to the written by a prescriber on the precluded provider cannot be filled in implementation of CARA in the context preclusion list. However, because we the future, with the exception of this of the proposed prescriber preclusion are not finalizing the provisional supply one time) may only delay the disruption list; this should include policies to requirement, we are modifying the until the beneficiary seeks to refill the ensure that enrollees with medical language to require the sponsors to send prescription at issue. At this point, the needs for pain medication will have an advance notice to any beneficiary commenter stated, the disruption may appropriate access to that medication who has received a prescription from a be greater to the beneficiary because the should a physician or other prescriber precluded provider as soon as possible delay in addressing the invalid that prescribed pain medications for but that the beneficiary must receive prescription at the outset potentially that enrollee be placed on the such notice no later than 30 days prior risks non-adherence to the necessary preclusion list. The commenter also to the initial publication of the medication while seeking a non- stated that CMS should ensure that the preclusion list. excluded prescriber to issue a substitute provisional supply requirement is Comment: Expressing concern that order. implemented in an administratively the proposed rule places the Response: We understand the feasible manner, such that it is easily responsibility of managing provisional commenter’s concerns. However, as incorporated into prescription claims coverage on the industry, a commenter already mentioned, we are not finalizing systems. requested that CMS consider the our proposed provisional fill policy. Response: Given that we are not numerous risks associated with the Comment: For claims submitted after finalizing our proposed provisional proposed provisional coverage period the provisional coverage period, a supply requirements, we believe that and support an alternate approach that commenter asked whether these claims these comments are moot. allows CMS to manage patient access to receive NCPDP Reject Code 569 Comment: A commenter stated that in care concerns with the use of post-dated (Provide Notice: Medicare Prescription cases where timely access to needed preclusion effective dates. The Drug Coverage and Your Rights) or opioids is medically appropriate, CMS commenter cited several risks. First, the Reject Code 829 (Pharmacy Must Notify should take steps to require Part D commenter stated that unique Beneficiary: Claim Not Covered Due To sponsors to provide timely transfer to a provisional coverage rules based on the Failure To Meet Medicare Part D Active, new prescriber when the first prescriber drug class will create beneficiary and Valid Prescriber NPI Requirements). is on the preclusion list. Such an

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approach will ensure that patients can period would begin on the date of that reasonable efforts must be made by obtain timely access to pain service or on the date the claim is the plan to the prescriber notifying them management while also allowing for an processed by the pharmacy. The of a beneficiary who was sent a notice appropriate assessment for any commenter recommended that CMS use that the prescriber is being precluded. substance use disorder and referral to the claim processing date to apply the The commenter asked CMS to clarify treatment as needed. provisional coverage requirement. whether this outreach is necessary given Response: We believe that the 60 day Response: While we appreciate the that CMS would have previously notification period (as mentioned above) commenter’s suggestion, we note that reached out to the prescriber prior to will provide ample time for a patient to we are not finalizing our proposed placement on the preclusion list. The seek care from another prescriber. provisional fill requirement. commenter stated that CMS notes its Comment: Several commenters noted Comment: A commenter understood intention to allow the normal Part D that a provider could appear on both the the provisional coverage policy to rules to apply for safety edits, prior Medicare Exclusion Database (MED) require that once the 90-day period authorization, quantity limits, etc., (which contains OIG exclusions) and commences, the beneficiary will be able during the provisional coverage period. the proposed preclusion list. This to: (1) Fill any and all prescriptions The commenter: (1) Contended that all scenario, a commenter stated, could from the precluded prescriber during appropriate edits for opioids should also present operational challenges for plan this period; and (2) take multiple fills apply during the provisional coverage sponsors, for while provisional fills do during the 90-day provisional coverage period, as these are designed to prevent not apply to drugs prescribed by period (for example, one 30-day fill, serious adverse events; and (2) providers on the MED, they would then another 30-day fill, and then a 90- recommended that all safety and apply to prescribers on the preclusion day fill). The commenter sought utilization management edits remain the list. The commenter suggested that CMS clarification as to whether this is CMS’ same during the provisional fill period, consider not including providers on the intention. regardless of medication type (that is, MED on the CMS preclusion list; this Response: Given that we are not opioids versus non-opioids). would eliminate duplication and help finalizing our proposed provisional Response: We appreciate the ensure that plan sponsors have more supply requirements, we believe that commenter’s concerns and clarity surrounding whether a this comment is moot. recommendations and reiterate that we provisional fill is required. Comment: A commenter stated that if have decided not to finalize our Response: We recognize the CMS is unable to eliminate the proposed provisional supply commenters’ concerns regarding the provisional supply requirement, CMS requirement. Further, we will provide interaction between the MED and the should furnish clarification regarding beneficiaries with a 30 day advance preclusion list and its relationship to several issues. First, the commenter notice prior to prescriptions being the provisional fill requirement. As stated that previous technical guidance rejected due to their prescriber being already mentioned, however, we (1) are provided details around provisional precluded. not finalizing our proposed provisional supply being a lifetime edit; Comment: Several commenters stated supply requirements and (2) will specifically, for medications prescribed that if the provisional supply provide plans with guidance on which by a precluded prescriber, this guidance requirement is retained, plan sponsors list should take precedence, in regard to clarified that beneficiaries who change will require at least 12 months for its beneficiary notification, when a pharmacies during a provisional supply implementation. A commenter stated provider appears on both lists. period would still only receive one that plan sponsors will, during the 12- Comment: A commenter suggested provisional supply of medication. month period, need (1) CMS to release that as an alternative to providing Similarly, for beneficiaries who change the specific provisional fill beneficiaries with a 90-day provisional plans within the same contract, if the requirements, (2) model beneficiary supply of a drug, CMS could provide plan sponsor or its PBM can determine notice letters, (3) guidance to better advance notice of a prescriber’s via claims history that the beneficiary understand how provisional fills work placement on a preclusion list and make has already received a provisional when a prescriber is on both the it effective 30 days after receipt; this supply, then the provisional supply preclusion and OIG lists, and (4) way, Part D sponsors have time to run requirement has been satisfied. The information on how provisional fills a report to identify affected beneficiaries commenter asked CMS to confirm that function in relation to the existing and provide them with notice that they these details from previous technical transitional fill requirements. Another may obtain only one (1) additional guidance still apply for provisional commenter, noting the time and prescription fill from the precluded coverage. Second, if a single claim resources that will be required to make prescriber. involves both a provisional supply and necessary updates required to sponsors’ Response: We appreciate the a transition supply, the commenter (and their contracted PBMs’) IT systems, commenter’s suggestion, and note this is asked CMS to specify whether there will procedures, and operational policies, similar to the process we are finalizing be a combination letter for the urged that the implementation date of as outlined above. beneficiary notice. The commenter the provisional supply requirement be Comment: A commenter asked recommended that the notification delayed to a date determined to be whether CMS will use the claim process be kept separate for the two feasible after consultation with sponsors processing date (as opposed to the date programs. The provisional supply notice and their contracted PBMs. Another of service) to apply the provisional would be less frequent than a transition commenter urged that CMS continue coverage rule. The commenter cited a letter, for only the initial dispensing dialogue with industry partners on scenario in which a drug is dispensed event would trigger a letter advising the implementing the provisional fill to a beneficiary (according to the date of beneficiary of the issue with the functionality, including the service) prior to his or her prescriber’s prescriber. The transition notification establishment of an ‘‘active date’’ no inclusion on the preclusion list but the should remain status quo and address sooner than 8 months after a production pharmacy processes the claim after the the medication in question and educate file is made available and the functional date of inclusion; the commenter asked the beneficiary about his/her appeal assumptions around the file are whether the 90-day provisional coverage rights. Third, the proposed rule states communicated to the industry.

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Response: While we appreciate the coverage will not continue after the 90- the reasoning for inclusion. The notice commenters’ concerns and day provisional period ends; also, should include a grace period of a recommendations, we reiterate that we MAPDs should be instructed to remove length that CMS deems sufficient to file are not finalizing our proposed precluded prescribers from their an appeal. During this grace period, provisional supply provisions. provider network. CMS should not place the provider on Comment: Regarding the provisional Response: While we appreciate the the preclusion list. If, the commenter supply requirement, a commenter stated commenter’s suggestion, we reiterate continued, the provider does not file an the following: (1) Placing edits on that we are not finalizing our proposed appeal by the end of the grace period, opioids contradicts CMS’ proposal that provisional fill requirement. In addition, CMS should then add the provider on the definition of a drug is no longer and with respect to the removal of the preclusion list. If the provider does needed; (2) the provisional supply precluded prescribers from an MAPD’s file an appeal, the provider should not provisions as stated lack clarity on the network, we decline to make the be included on the preclusion list until use of a ‘‘preclusion reason’’ to be able commenter’s recommendation as the provider’s appeal is upheld or the to identify when a different provisional removing the provider seems redundant provider can no longer exercise the coverage period would apply; (3) it is given they are already precluded. appeal options, whether due to lack of unclear if the revised provisional Comment: A commenter stated that timely filing or because the appeals coverage period applies across a the proposed provisional supply opportunity has been exhausted. The beneficiary’s lifetime (for example, requirement failed to consider the way commenter contended that by forgoing changing plans, changing pharmacies) LTC pharmacies actually operate, immediate inclusion on the preclusion as was outlined in the prescriber particularly legal and regulatory list when the initial determination has enrollment provisional coverage requirements unique to LTC been made, CMS will reduce potential technical guidance; (4) claims that meet pharmacies. Unlike retail pharmacies provider burden by limiting the number both transitional fill and provisional that have access to real time of appeals a provider has to file; as an coverage criteria will result in the adjudication at the pharmacy counter, illustration, the commenter stated that if beneficiary receiving two different LTC pharmacies often must dispense the provider was accidentally included notices; and (5) it is unclear how plan first, and adjudicate afterwards. The on the preclusion list, the provider sponsors would coordinate the commenter stated that while the 90-day would have sufficient time to correct the provisional coverage period and adhere supply of medications permitted under issue without suffering from a loss of to § 423.120(c)(6)(iii), which would state (current and proposed) § 423.120(c)(6) is revenue due to preclusion list-related that a Part D plan sponsor may not appropriate, the proposed ‘‘three-day denials. The commenter added that MA submit a PDE record to CMS unless it fill’’ exception for retail pharmacy is plans would also benefit from not includes on the PDE record the active insufficient for an LTC pharmacy. The having to manually overturn denials and valid individual NPI of the commenter stated that CMS must due to the provider’s mistaken inclusion prescriber of the drug, and the address this issue and prohibit PDPs/ on the preclusion list; such a manual prescriber is not included on the PBMs from denying claims that LTC process, the commenter stated, only preclusion list for the date of service. pharmacies had to dispense before being extends for a longer time the period Response: We recognize the able to verify an NPI number or a between services rendered and commenter’s concerns and reiterate that preclusion list listing. reimbursement for those services. we are not finalizing our proposed Response: With respect to NPIs, Another commenter stated that the provisional supply provisions. Section 507 of MACRA requires that for approach described by the previous Comment: A commenter expressed plan year 2016 and thereafter, claims for commenter would minimize beneficiary concern regarding the provisional covered Part D drugs must include a confusion and eliminate the need for a supply language in § 423.120(c)(6) that valid prescriber NPI. MACRA did not provisional fill requirement. Another reads, ‘‘. . . and if allowed by provide an exemption for pharmacy commenter suggested that claims not be applicable law.’’ The commenter claims submitted by long-term care denied until the provider’s appeal is believed that this implies a requirement pharmacies. Therefore, we decline to completed and, if the provider loses to validate state-by-state prescriptive create one in the technical change we their appeal, the provider then would be authority at the point of sale. The are making to 423.120(c)(5) to comply listed on the preclusion list. Another previous technical guidance, the with MACRA. With respect to the commenter, noting that our proposal commenter stated, made clear that this preclusion list, under the requirements that the preclusion list would be was not a point of sale requirement. The we are finalizing, Part D sponsors are updated monthly, asked whether, if a commenter asked that CMS confirm required to provide impacted prescriber appeals its inclusion on the whether or not this is still true. beneficiaries with a 60 day advance preclusion list, it will require a month Response: Given that we are not notice which would sufficiently alert for the prescriber to be removed from finalizing our proposed provisional LTC facilities that there will be an the list in the event of a successful supply requirements, we believe that upcoming issue with coverage for the appeal. this comment is moot. beneficiaries’ prescriptions under Part Response: We appreciate these Comment: A commenter stated that D. comments and generally agree with stand-alone prescription drug plans them. Concerning appealing one’s (PDPs) and PBMs have no contractual (9) Appeals placement on the preclusion list, our relationship with network prescribers; Comment: Several commenters proposal includes the right for providers only an MAPD with a contracted contended that the administrative or prescribers to appeal their inclusion provider network could manage a burden on both providers and payers on the preclusion list in accordance requirement to transfer the beneficiary could be reduced by allowing providers with the appeals process at 42 CFR part to a new provider upon preclusion. A to appeal before being included on the 498 that we had proposed in the commenter suggested that this could be preclusion list. A commenter suggested November 28, 2017 proposed rule. managed through the provisional fill that once the initial determination is Prescribers and providers will only be notification to the beneficiary, whereby made, CMS should immediately send placed on the list upon exhausting their the beneficiary is instructed that notice of the initial determination and first level appeal plus an additional 90-

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day period. The 90-day period allows would need to resubmit any claims (NCPDP Reject Code ‘569’) requirement the plans 30-days to intake the denied as a result of the preclusion. applies. preclusion data and a 60-day beneficiary Comment: A commenter stated that Response: If payment is denied notification period (That is, claims will CMS should handle any appeals. The because the prescriber or provider is on not begin to be denied until the commenter did not believe this the preclusion list, the beneficiary will expiration of this additional 60-day administrative function should be the not have the right to appeal. Therefore, beneficiary notification period.). responsibility of plan sponsors. it will not be necessary to use the Subsequent updates to the list will Response: We agree with the NCPDP Reject code ‘569.’ provide any newly added provider with commenter. Appeals from precluded Comment: A commenter asked CMS a 60-day appeals window but will not providers due to placement on the list, to confirm that, prior to adding a provide a 90-day period as discussed will be handled by CMS. prescriber to the preclusion list, the above, thus after implementation Comment: A commenter requested appeals timeframe must be exhausted. If beneficiaries may not be notified that clarification regarding a beneficiary’s CMS adds the prescriber to the they may have received a prescription appeal rights for alleged errors in preclusion list while the appeals or services from a provider that is now applying the preclusion list. The timeframe is still in effect, the precluded. We note, however, that the commenter stated that under existing commenter stated that this could cause appeals process is intended to permit a CMS regulations, the denial of access to beneficiary disruption due to prescriber or provider to challenge CMS’ a Part D drug on the basis that the inappropriate rejects, especially if the placement of the prescriber or provider provider is excluded is not a coverage prescriber’s appeal is approved. Another on the list and not to challenge the determination and does not trigger commenter stated that plans will not underlying reason for the revocation, appeal or grievance rights. The have any authority over the preclusion OIG exclusion, or other adverse action commenter contended it therefore list; therefore, they will not be able to that led to the preclusion list inclusion. follows that if a beneficiary does not address or resolve the beneficiary’s Indeed, the preclusion appeals process have access to a Part D drug because the appeal. The commenter stated that there prescriber is on the preclusion list, it is would neither include nor affect appeals will need to be a process in place to not a coverage determination and no of payment denials or enrollment address beneficiary appeals, concerns, appeal or grievance rights are triggered. revocations, for there are separate and questions about why their Accordingly, the commenter appeals processes for these actions. Any prescriber is being added to the recommended that CMS follow appeal under this proposed provision preclusion list; plan sponsors will not processes applicable in situations will be limited strictly to the have access to the reason for the involving an excluded/sanctioned individual’s inclusion on the preclusion preclusion to answer such questions. prescriber and not provide any appeal Response: As already mentioned, list. In addition, CMS will send written rights. The commenter also suggested providers will be afforded appeal rights notice to the provider of his or her that any beneficiary complaint about a in accordance with the appeal process at inclusion on the preclusion list. The denial due to an individual or entity 42 CFR part 498. With respect to the notice would contain the reason for the included on the preclusion list be plans’ ability to respond to beneficiary inclusion and would inform the treated via the grievance process, as questions concerning a provider’s providers of his or her appeal rights. there is no beneficiary liability and, as inclusion on the preclusion, CMS will This is to ensure that the prescriber or such, nothing for the beneficiary to furnish guidance on this matter outside provider is duly notified of the action, appeal. The commenter supported CMS’ of rulemaking. why it was taken, and their ability to proposal of a separate appeals process Comment: A commenter asked CMS challenge CMS’ determination. for parties on the preclusion list should to align the appeals process with the Comment: A commenter asked CMS the latter disagree with CMS’ decision to provisional supply period so that an to clarify how the appeal process would include them on the list. Another initial appeals determination would be work and when reinstatements would commenter recommended that in order rendered prior to the end of the occur. In the case of reinstatements, the to keep the preclusion list and OIG provisional supply period. The commenter recommends that exclusion list processes aligned, CMS commenter believed that this would reinstatements take place when the next should not allow beneficiaries to appeal help reduce patient care disruption file is released, rather than mid-term, a prescriber preclusion. The commenter when clinicians are incorrectly placed and that CMS not allow retroactive stated that CMS should either allow or on the preclusion list. reinstatements. disallow beneficiary appeals in both Response: As already stated, we are Response: As already mentioned, instances for consistency and to prevent not finalizing our provisional supply prescribers and providers will be beneficiary confusion; this is because proposal and will place a prescriber or afforded appeal rights based on the beneficiaries, according to the provider on the preclusion list only after process at 42 CFR part 498. Concerning commenter, will not understand the the prescriber or provider has exhausted reinstatement, the preclusion list will difference between an exclusion and a their first level of appeal plus an include periods for which the prescriber preclusion. additional 90-day period. The 90-day or provider is unable to receive Response: We agree with the period allows the plans 30-days to Medicare reimbursement or submit commenters. We believe that the denial intake the preclusion data and a 60-day prescriptions reimbursable by the of access to a Part D drug on the basis beneficiary notification period. Medicare program; if a prescriber or that the provider is excluded by the OIG Subsequent updates to the list will provider is reinstated after further does not currently grant the beneficiary provide any newly added provider with appeal, the list will be adjusted to appeal rights, and we are finalizing a a 60-day appeals window but will not remove the prescriber or provider’s similar policy to a prescriber or provider provide a 90-day period as discussed period of preclusion and the provider being on the preclusion list. above, thus after implementation would no longer be subject to the Comment: A commenter stated that if beneficiaries may not be notified that payment prohibition. The removal CMS allows beneficiaries to appeal a they may have received a prescription would be applied retroactively. preclusion only, CMS should confirm or services from a provider that is now However, a provider or prescriber whether the point of sale appeal notice precluded.

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Comment: A commenter stated that beneficiary protection requirements for and monitoring activities, potentially as the proposed rule did not clarify what MA organizations, including a part of the Program Audits or the happens to a clinician who wins his or requirement that the plan must Industry Wide Timeliness Monitoring. her initial redetermination but CMS indemnify the beneficiary from any fees Alternatively, the commenter stated, challenges the redetermination. The that are the legal obligation of the MA prescription drug events and/or risk commenter asked whether a provider is organization for services furnished by adjustment data might be used as a taken off the preclusion list if they are providers that do not contract, or that means to confirm that plans are not initially successful in their appeal but have not otherwise entered into an paying providers and suppliers on the CMS challenged the decision. agreement with the MA organization, to prelusion list. Response: As mentioned previously, provide services to the organization’s Response: We agree with the prescribers and providers that are enrollees commenter. We will work to build such notified of their meeting the criteria for Comment: A commenter stated that if review processes into the already placement on the preclusion list will be CMS removes the enrollment existing program audits as we afforded the formal appeals process at requirement, which the commenter operationalize this requirement. 42 CFR part 498 that as we proposed in opposed, CMS should (1) enact Comment: Several commenters asked the November 28, 2017 proposed rule. protections so that a beneficiary who CMS to confirm that, with the proposed Prescribers and providers will only be disenrolls from an MA plan can removal of the enrollment requirement, placed on the list upon exhausting their continue to see a provider who did not MAOs will retain the right to require first level appeal. enroll in Medicare and that the provider providers and suppliers offering Comment: A commenter agreed with can be allowed to submit a claim to services to beneficiaries to be enrolled CMS’ proposal that individuals who are Medicare on behalf of the beneficiary, in Medicare per their contracts. on the preclusion list should be and (2) allow some flexibility for MA Response: MAOs can establish permitted to appeal their inclusion on coverage of services of providers that are enrollment in Medicare as a contracting the list. However, the commenter asked highly specialized and do not typically condition. CMS to issue additional operational accept Medicare. Comment: A commenter stated that guidance on the appeals process and, in Response: We appreciate the the proposed rule did not specifically particular, to provide additional detail commenter’s recommendation. In regard mention how CMS will implement the about (1) the communications process if to beneficiaries leaving the MA program exception for emergency and urgently a prescriber’s appeal was successful, and defaulting to traditional Medicare, needed services furnished by a provider and (2) the timeline for removing the we are not aware of this as a significant on the preclusion list. The commenter prescriber from the preclusion list. issue nor was it a part of our rationale suggested that CMS create a Healthcare Another commenter urged that CMS: (1) for the enrollment requirement. We also Common Procedure Coding System Clarify for plan sponsors and prescribers believe that the preclusion list approach (HCPCS) modifier for this exception to that CMS will handle any appeal will support the need for highly allow for timely, automated processing requests directly rather than through specialized providers. No longer of claims. The commenter explained plans, given that CMS gathered and needing to enroll, highly specialized that if a provider on the preclusion list acted on the information that placed the providers can provide services to MA furnishes a service that meets the prescriber on the preclusion list; and (2) beneficiaries, while the preclusion list definition under § 422.113 for implement a process for notifying will prohibit those providers that would emergency or urgently needed services, prescribers of a date after which typically be revoked from the program the provider should be required to adjudicators will stop their prescription based on our authorities at § 424.535 include the assigned modifier on a claim processing. from servicing MA beneficiaries. claim; the modifier would alleviate the Response: As mentioned previously, Comment: A commenter stated that need for payers to manually review prescribers and providers that are the distribution of the preclusion list every claim in case a rare urgently notified of their meeting the criteria for should include basic hold harmless and needed or emergency service exception placement on the preclusion list will be indemnification language in favor of the might apply. The commenter stated that afforded the formal appeals process at MAOs. CMS has this same processing 42 CFR part 498 that as we proposed in Response: Response under mechanism in place for providers who the November 28, 2017 proposed rule. development and will be furnished in have opted-out of Medicare; those Prescribers and providers will only be the next round of clearance. providers must submit claims using placed on the list upon exhausting their Comment: A commenter urged CMS HCPCS modifier GJ to signal that an first level appeal. to expand efforts to coordinate and urgently needed or emergency exception increase the sharing of information with applies, and the commenter contended (10) Additional Comments other federal public programs, state that CMS should create a separate and Comment: A commenter stated that in medical boards, and other entities on distinct modifier for preclusion list CMS’ implementation of the preclusion potentially problematic prescribing to providers. If, the commenter stated, the list, the beneficiary should be held help inform the identification of scarcity of HCPCS modifiers warrants harmless (unless the beneficiary has prescribers who should appear on the sufficient merit to outweigh the creation engaged in some manner of fraud). preclusion list. of a new modifier, the commenter Response: We believe the contract Response: We appreciate the recommended that CMS edit the GJ provisions required between the MA commenter’s recommendation and will modifier so that it is required to be used plan and a network provider pursuant to consider it as we work to operationalize by providers on the preclusion list in § 422.504(g)(1)(iii) are binding on the preclusion list requirement. addition to Medicare opt-out providers. providers; such agreements specify that Commenter: To ensure that MA plans Response: We are not requiring that QMBs must not be charged cost sharing have appropriate processes in place to MAOs reference the preclusion list when the state is responsible for paying screen providers, suppliers, and when paying non-contract providers such amounts under the Medicaid prescribers against the preclusion list, a though we believe it would be a best program. Further, the regulation at commenter recommended including practice for MAOs to do so. However, if § 422.504(g) contains broader review as part of CMS’ ongoing audit an MAO determines that a non-contract

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provider is on the preclusion list and requirement for ordering and referring Management Systems Society (HIMSS) not eligible for Medicare payment the providers at 42 CFR 424.507, which has formed the Identity Management Task MAO should also not pay that provider been enforced since January 6, 2014. Force that focused on policy and consistent with the requirement that Thus, providers who order or refer technical challenges relating to identity, MAOs pay non-contract providers the would continue to need to enroll for attribute, and role-based access same as Original Medicare as required certain ordered or referred services to be management, as it pertained to patient under the MA regulations at § 422.214. reimbursed. identity, provider identity and IT asset MAOs are required to ensure that their Comment: Several commenters noted identities. The Task Force published: (1) contracted providers are properly that sections 6405(a) and (b) of the ‘‘Patient Portal Identity Proofing and credentialed and not on the preclusion Affordable Care require physicians and Authentication’’ in 2016; and (2) list. When periodically re-validating eligible professionals who (1) order identity proofing and authentication credentialed providers the MAO should durable medical equipment, prosthetics, recommendations for patients accessing also re-verify that their contracted orthotics, and supplies or (2) certify their health information electronically. providers are not on the preclusion list. home health services must be enrolled The commenter stated that while the Comment: A commenter stated that a in Medicare or validly opted-out for the paper defines best practices for patients, challenge associated with FFS provider item or service to be covered. These it leverages existing National Institute of enrollment for MA-only providers is the requirements are currently codified in Standards and Technology (NIST) CMS policy that would terminate a § 424.507, are in effect, and are also guidance for identity proofing and provider’s enrollment in FFS Medicare applicable to physicians and eligible authentication, and many of the cases if at least one claim is not submitted professionals who order imaging and are applicable to providers; the within a 12-month period. If a provider clinical laboratory services. The commenter recommended that CMS has no intention of treating FFS commenters suggested that CMS (1) review them. The commenter also noted Medicare beneficiaries, the provider replace this current enrollment that NIST updated its Digital Identity would have to undertake the requirement with a preclusion list Guidelines in July 2017 (NIST Special administrative burden of re-enrolling requirement akin to that described in Publication 800–63A, ‘‘Digital Identity with FFS Medicare on an annual basis. this rule, and (2) work to seek legislative Guidelines: Enrollment and Identity The commenter recommended that CMS relief from section 6405 of the Proofing’’) and that CMS should address this issue, specifically Affordable Care Act. consider them as they relate to identity suggesting that the CMS–855 enrollment Response: We believe that the subject proofing providers. form be modified to allow a provider to matter addressed by the commenter Response: We appreciate this indicate that he or she only intends to pertains to a different regulatory comment but believe it is outside the treat MA beneficiaries, thus eliminating provision (§ 424.507) and is therefore scope of this rule. the need for the provider to reenroll. outside the scope of this rule. Comment: Several commenters stated Response: In finalizing this rule, we Comment: With respect to the current that some dentists who opted out in will no longer be requiring enrollment version of § 423.120(c)(5)(v), a order to comply with the Part D in Medicare FFS in order for providers commenter stated that the U.S. Drug enrollment requirements did not realize to participate with MA plans. Even if we Enforcement Administration’s 2010 that they would consequently be unable made the commenter’s suggested change Rule for Electronically Prescribing to furnish Part C items and services to the CMS–855 forms, we still believe Controlled Substances defines identity until after the initial 90-day period for that this does not accurately address the proofing requirements for DEA withdrawing his or her opt-out affidavit large volume of prescribers and Registrants (providers), which includes had expired. The commenters urged providers that have yet to enroll with in-person identity proofing that involves CMS to permit its MACs to contact each the program. As already mentioned, checking identity documents such as a dentist who has opted out and allow there are close to 340,000 active Part D driver’s license and/passport. him or her to withdraw his or her prescribers who are not enrolled in or Additionally, providers could be affidavit even if the initial 90-day period opted-out of Medicare and 120,000 MA identity-proofed remotely by answering has passed. providers that would require outreach a series of questions that should be Response: The November 28, 2017 and would need to enroll. We believe known only to them, typically based on proposed rule did not propose changes the success rate for enrollment of MA information contained in one’s credit to current opt-out policy. We note that, providers would be similar to that report. This is known as knowledge- as stated in chapter 15 of the Medicare experienced with the Part D population. based verification (KBV). The Benefit Policy Manual, if a physician or Based on these figures and our concerns commenter stated that KBV was not an practitioner who has not previously for potential access to care issues, we optimal solution since: (1) Passing the opted out changes his or her mind after again believe that this outweighs the questions is based on a combination of the Medicare contractor has approved benefits gained from requiring accuracy and timing; (2) the credit the affidavit, the opt-out may be enrollment. reporting agencies do not have data on terminated within 90 days of the Comment: A commenter contended 100 percent of health care providers; effective date of the affidavit. If the that the proposed rule did not address and (3) there have been cyber-attacks physician or practitioner has previously the exemption from credentialing for across healthcare industries, opted out, the physician or practitioner ordering and referring dentists through compromising personally identifiable may cancel his or her opt-out by PECOS, the Part D enrollment portal, or data on Americans. Should CMS submitting a written notice to each the paper CMS–855O form. Also, the continue to use KBV, it should be Medicare enrollment contractor to commenter asked how the proposed augmented with other means as part of which he or she would file claims rule would affect the credentialing of a risk based approach. absent the opt-out, not later than 30 ordering and referring dentists who refer Response: We appreciate this days before the end of the current 2-year oral biopsies for interpretation to a comment but believe it is outside the opt-out period, indicating that the pathology lab. scope of this rule. physician or practitioner does not want Response: The final rule will not Comment: A commenter stated that to extend the application of the opt-out apply to the existing enrollment the Healthcare Information and affidavit for a subsequent 2-year period.

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Comment: A commenter stated that proposed provisions. The commenter mitigate some of these issues, the prescribing authority is already tied to stated that creating separate policies for commenter recommended that CMS a physician having a DEA number and opioid and non-opioid medications: (1) create and manage a single prescriber not an NPI. Since physicians must Is extremely burdensome; and (2) preclusion list that is modeled after the already establish a relationship with the introduces additional and unnecessary OIG exclusion list so that the two files federal government through the DEA in complexities into a new process when can be handled in a similar manner. order to prescribe, the commenter there are already better clinical Response: We agree with this encouraged CMS to explore programs in place to manage this crisis. recommendation and believe that the implementation of these policies though The commenter encouraged CMS to preclusion list concept would align with closer coordination with the DEA. issue uniform regulations regarding the OIG list and the process that Response: We appreciate this provisional fills and to utilize Part D Medicare health and drug plans use to comment but believe it is outside the sponsors’ clinical programs to combat handle prescribers and providers on that scope of this rule. the opioid epidemic. list. As already mentioned, we are not Comment: In response to our Response: We appreciate the finalizing the 90-day provisional supply solicitation of comments concerning commenter’s recommendation and note period. CMS instead will place a additional solutions for beneficiaries that we are not finalizing our proposed prescriber or provider on the preclusion who try to fill an opioid prescription provisional supply policy. Further, the list after the prescriber or provider has from a provider on the preclusion list, preclusion list approach will apply to exhausted their first level appeal plus a commenter stated that requiring a Part prescribers of prescription drugs, an additional 90-day period, including a D sponsor to transfer beneficiaries from including opioids. 60-day period for plans to ingest one medical provider to another is not Comment: In response to our request preclusion data and a 30 day-beneficiary feasible; the commenter explained that for comment regarding whether notice period. Part D sponsors do not have contracts additional beneficiary protections are Comment: A commenter suggested with medical providers. The commenter necessary, a commenter made two that CMS adopt the following also stated that any drug-specific carve recommendations. First, CMS should operational steps before a precluded out within the program at this time consider having notice requirements to provider edit occurs at the point of sale: would add significant complexity in ensure that all beneficiaries receiving (1) CMS conducts analysis and administering the preclusion list. The care from an individual or entity placed identifies the specific prescriber; (2) commenter thus made two on the preclusion list will be notified CMS notifies the prescriber of the recommendations. First, CMS should well in advance so that they can seek pending precluded status and outlines not pursue drug-specific solutions but care and treatment elsewhere. Second, the appeal process; (3) once the appeal should allow the flexibility to make an exception should be made for those period has concluded, CMS notifies the decisions based on the totality of a in the middle of a course of previously impacted beneficiaries; and (4) CMS prescriber’s activity. Second, to the covered treatment so that their care is adds the prescriber to the precluded extent that CMS will require Part D not interrupted. provider file with a future effective date sponsors to transfer beneficiaries to new Response: As mentioned previously, of 90 days after beneficiary notification, prescribers, CMS should provide Part D we have proposed that after the with CMS to add the precluded provider sponsors with at least a 30-day notice to prescriber or provider has exhausted end-date based on reenrollment bar effectively assist the beneficiaries in the their first level appeal, there will be a criteria. (The commenter contended that transition. 90-day period The 90-day period allows the failure to sufficiently post-date Response: We appreciate the the plans 30-days to intake the effective dates may create additional commenter’s recommendation. We agree preclusion data and a 60-day beneficiary risks where CMS may need to support that a notice period is necessary to notification period, during which time point-of-service override processes due effectively transition beneficiaries. we believe the plan will have adequate to timing delays associated with Accordingly, and as mentioned time to transition the beneficiary to a monthly file updates.) The commenter previously, we are specifying that after new prescriber or provider. Subsequent believed that these steps would allow the prescriber or provider has exhausted updates to the list will provide any CMS to manage the provisional fill their first level appeal, there will be a newly added provider with a 60-day period and any variances across 90-day period, during which time the appeals window but will not provide a preclusion types or beneficiary risk plan can begin working to transition the 90-day period as discussed above, thus levels (for example, opioids). Several beneficiary to a new prescriber or after implementation beneficiaries may other commenters recommended that provider. The 90-day period allows the not be notified that they may have CMS adopt this approach. plans 30-days to intake the preclusion received a prescription or services from Response: We appreciate the data and a 60-day beneficiary a provider that is now precluded. commenter’s feedback and believe our notification period. Subsequent updates Finally, we decline to adopt additional approach allows ample notification time to the list will provide any newly added requirements for beneficiary notice or for beneficiaries and prescribers or provider with a 60-day appeals window exceptions to the preclusion list providers. A prescriber or provider will but will not provide a 90-day period as consequences in this final rule. only be placed on the preclusion list discussed above, thus after Comment: While supportive of the upon exhausting their first level appeal. implementation beneficiaries may not preclusion list concept, a commenter However, before claims are impacted be notified that they may have received expressed concern that the preclusion there will be a 90-day period. The 90- a prescription or services from a list requirement could (1) unnecessarily day period allows the plans 30-days to provider that is now precluded. increase complexity in the Part D intake the preclusion data and a 60-day Comment: In response to our program, (2) expose Medicare beneficiary notification period, during solicitation of comments on limits that beneficiaries to problematic prescribers, which time the plan can begin working should be set with respect to doses for and (3) perpetuate a cycle where there to transition the beneficiary to a new opioid prescriptions, a commenter is insufficient time to implement prescriber or provider. Subsequent stated that CMS should manage the complex new requirements that have updates to the list will provide any opioid epidemic outside of these substantial operational challenges. To newly added provider with a 60-day

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appeals window but will not provide a beneficiary receives the notice no later the flexibility to shape their QI efforts to 90-day period as discussed above, thus than 30 days after publication of the the needs of their enrollees. after implementation beneficiaries may most recent preclusion list.’’ In the April 2010 final rule (75 FR not be notified that they may have ++ We are deleting paragraphs 19677), CMS indicated concern that MA received a prescription or services from (iv)(B)(1)(i) and (ii). Paragraph organizations were choosing QIPs and a provider that is now precluded. (iv)(B)(1)(i), which deals with CCIPs that did not address QI areas that Comment: A commenter provisional drug supply, is no longer best reflected enrollee needs and that recommended that CMS provide MA needed, while the language in paragraph some MA projects focused more on plans with a 30-day advance notice of (iv)(B)(1)(ii) will be merged into revised improving processes rather than the addition of individuals or entities to paragraph (iv)(B)(1). improving clinical outcomes. Therefore, the preclusion list in order to (1) align ++ In paragraph (iv)(B)(2), we are we modified the regulation to provide with provider termination notification changing the reference to for CMS to identify focus areas for QIPs requirements and (2) assist MA plans in (c)(6)(iv)(B)(1)(ii) to (c)(6)(iv)(B)(1). This and population areas for CCIPs. MA identifying and notifying beneficiaries is because, as already mentioned, organizations retained the flexibility to of the individual’s or entity’s preclusion paragraph (c)(6)(iv)(B)(1)(ii) is being identify topics for development of QIPs status. deleted and the language therein merged and CCIPs based on the needs of their Response: We appreciate the into paragraph (c)(6)(iv)(B)(1). population, but also had to implement commenter’s feedback and, as stated • Revise § 422.222(a) to state: ‘‘An QIPs and CCIPs as directed by CMS, earlier, agree that a 30-day period is MA organization may not pay, directly which could identify general areas of necessary after the exhaustion of the or indirectly, on any basis, for items or focus that supported CMS quality provider or prescriber’s first level services furnished to a Medicare strategies and initiatives. appeal for adequate notice to be enrollee by any individual or entity that During this time, CMS was also provided to MA plans. In addition, we is excluded by the Office of the concerned that MA organizations were believe that an additional 60-day period Inspector General (OIG) or is included employing inconsistent methods in is appropriate during which notification on the preclusion list, defined in developing criteria for QIPs and CCIPs. will be provided to the beneficiary. We § 422.2’’. We note that the language that As a result, CMS also amended the are therefore finalizing a 90-day period excluded emergency and urgently regulation to require MA organizations between the end of the first level appeal needed services from the scope of to report progress in a manner identified and the placement of the provider or § 422.222(a) has been removed. by CMS. This allowed CMS to review prescriber on the preclusion list. § 422.222(a) results and extrapolate lessons learned However, we will not finalize the • Beneficiaries will not be permitted and best practices consistently across provisional fill requirement. to appeal the application of the the MA program. Subsequent updates to the list will preclusion list to a particular prescriber, After making these regulation provide any newly added provider with individual, or entity. modifications, CMS issued a number a 60-day appeals window but will not sub-regulatory QIP and CCIP guidance provide a 90-day period as discussed 11. Removal of Quality Improvement documents to ensure that MA above, thus after implementation Project for Medicare Advantage organizations reported and measured beneficiaries may not be notified that Organizations (§ 422.152) progress in a consistent and meaningful they may have received a prescription Section 1852(e) of the Act requires way. For example, the new Plan-Do- or services from a provider that is now that Medicare Advantage (MA) Study-Act QI model required MA precluded. organizations have an ongoing Quality organizations to place some structure (d) Final Provisions Improvement (QI) Program for the and parameters around their QIPs and Given the foregoing, we are finalizing purpose of improving the quality of care CCIPs, ultimately leading to more as proposed all of the provisions we provided to enrollees in the consistency. identified in section 10(a) and (b) above organization’s MA plans. The statute Through annual review of QIP and except as follows: requires that the MA organization CCIP reporting submissions, CMS found • We are changing § 423.120(c)(6)(iv) include a Chronic Care Improvement its implementation of the QIP and CCIP to remove the provisional supply Program (CCIP) as part of the overall QI requirements had become burdensome requirement and to revise the notice Program. and complex, rather than streamlined requirement as follows: Our regulations at § 422.152 outline and conformed to MA organizations’ ++ Paragraph (iv)(A) will state that a the QI Program requirements for MA implementation of QIPs and CCIPs. The Part D sponsor or its PBM must not organizations, which include the complex sub-regulatory guidance led to reject a pharmacy claim for a Part D development and implementation of a wide range of MA organization drug under paragraph (c)(6)(i) of this both Quality Improvement Projects interpretations, resulting in extraneous, section or deny a request for (QIPs), at paragraphs (a)(3) and (d), and irrelevant, voluminous, and redundant reimbursement under paragraph a CCIP, at paragraphs (a)(2) and (c). Both information being reported to CMS. For (c)(6)(ii) of this section unless the provisions require that the MA example, many MA organizations sponsor has provided the written notice organization’s QIP and CCIP address merely re-iterated the CMS reporting to the beneficiary required by paragraph areas or populations identified by CMS. requirements and did not provide (c)(6)(iv)(B) of this section. The January 2005 final rule (70 FR quantitative data or demonstrate that ++ Paragraph (iv)(B)(1) will be 4587) addressed the QI provisions they were meeting their intended revised to read as follows: ‘‘Subject to added to section 1852(e) of the Act by project goals. Often, the results data all other Part D rules and plan coverage the Medicare Modernization Act of 2003 lacked clarity and context and were requirements, provide an advance (MMA). In that final rule, we specified difficult to interpret and validate. MA written notice to any beneficiary who in § 422.152 that MA organizations must organizations cited numerous studies has received a prescription from a have ongoing QI Programs, which but did not indicate how they would prescriber on the preclusion list as soon include chronic care programs, but CMS use the information to improve enrollee as possible but to ensure that the generally provided MA organizations outcomes.

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We gained little value from the organizations to focus on one project promote quality, performance, and information reported. As a result, we that supports improving the efficiency on an ongoing basis. As scaled down our sub-regulatory management of chronic conditions, a explained in the proposed rule, the guidance in order to gain more concise CMS priority, while reducing the proposed amendments do not eliminate and useful information with which to duplication of other QI initiatives. We the CCIP requirements that MA evaluate the outcomes and show any proposed to delete §§ 422.152(a)(3) and organizations address populations sort of attribution. Over the years, we 422.152(d), which outline the QIP identified by CMS and report project have modified the reporting requirements. In addition, in order to status to CMS as requested. Per the requirements in an attempt to gain ensure any references for other April 2010 rule (75 FR 19677), we specific and quantifiable project goals, provisions in this section remain continue to believe that these other clear and concise results data, a accurate, we proposed to reserve requirements are necessary to ensure favorable effect on enrollee health paragraphs (a)(3) and (d). The removal that MA organizations are developing outcomes, and meaningful descriptions of these requirements will reduce projects that positively impact of how the MA organization will burden on both MA organizations and populations identified by CMS and that disseminate those results amongst the CMS. progress is documented and reported in industry to promote best practices. We explained in the proposed rule a way that is consistent with our However, we also found that the that even with this proposed removal of requirements. scaled down guidance did not the QIP requirements, the MA We solicited comments on our necessarily produce better outcomes in requirements for QI Programs will proposal, including whether additional the review of annual updates. remain in place and be robust and revision to § 422.152 is necessary to Continued evaluation through annual sufficient to ensure that the eliminate redundancies CMS has review of plan reported updates of the requirements of section 1852(e) of the identified in this preamble. QIPs and CCIPs has led CMS to believe Act are met. As a part of the QI Program, We received the following comments, that the mandated QIPs in particular do each MA organization will still be and our response follows: not add significant value. Through required to develop and maintain a Comment: Most commenters annual review of plan-reported updates, health information system; encourage expressed strong support for this CMS has found that a number of QIPs providers to participate in CMS and proposal to remove the QIP requirement implemented are duplicative of HHS QI initiatives; implement a for MA organizations. A few supportive activities MA organizations are already program review process for formal commenters suggested that CMS also doing to meet other plan needs and evaluation of the impact and remove the CCIP requirement for MA requirements, such as the CCIP and effectiveness of the QI Program at least organizations. Specifically, the internal organizational focus on Part C annually; correct all problems that come Medicare Payment Advisory Star Rating metrics. For example, we to its attention through internal, Commission (MedPAC) encouraged designated ‘‘Reducing All-Cause surveillance, complaints, or other CMS to remove as well the duplicative Hospital Readmissions’’ as the 2012 QIP mechanisms; contract with an approved CCIP attestation because measures topic. The QIPs for this topic often Medicare Consumer Assessment of around prevalent chronic conditions are duplicated other CMS and MA Health Providers and Systems already measured in the star rating organization care coordination (CAHPS®) survey vendor to conduct the program (for example, diabetes, initiatives aimed to improve transition Medicare CAHPS® satisfaction survey of hypertension). of care across health care settings and Medicare plan enrollees; measure Response: We appreciate the reduce hospital readmissions. We found performance under the plan using significant support for this proposal. We that many MA plans were already standard measures required by CMS and acknowledge the suggestion to also engaged in activities to reduce hospital report its performance to CMS; develop, remove the CCIP requirement for MA readmissions because they are annually compile, evaluate, and report certain organizations, and believe MedPAC has scored on their performance in this area measures and other information to CMS, a valid concern that chronic condition (and many other areas) through its enrollees, and the general public; and measures are already measured in the Healthcare Effectiveness Data and develop and implement a CCIP. Further, star rating program. However, section Information Set (HEDIS), a set of plan CMS emphasizes here that MA 1852(e) of the Act requires that each MA performance and quality measures. Each organizations must have QI Programs organization include a CCIP as part of year, MA organizations are required to that go beyond only performance of its required overall QI Program. report HEDIS data and are evaluated CCIPs that focus on populations Therefore, we will continue to require annually based on these measures. High identified by CMS. The CCIP is only one that MA organizations attest annually to performance on these measures also component of the QI Program, which having an ongoing CCIP and that the plays a large role in achieving high Star has the purpose of improving care and CCIP comply with the requirements Ratings, which has beneficial payment provides for the collection, analysis, and issued by CMS under § 422.152(a)(2) consequences for MA organizations. reporting of data that permits the and (c). This suggests that CMS direction and measurement of health outcomes and Comment: Another commenter detailed regulation of QIPs is other indices of quality under section expressed appreciation for CMS’s unnecessary as the Star Ratings program 1852(e) of the Act. interim sub-regulatory steps to use of HEDIS measures (and other We believe this proposed change will streamline QIP and CCIP reporting measures) incentivizes MA allow MA organizations to maintain requirements and reduce burden on organizations sufficiently to focus on existing health improvement initiatives both MA organizations and CMS (that desired improvements and outcomes, and take steps to reduce the risk of is, for reporting associated with 2018 perhaps by using different means than redundancies or duplication. The QIPs and CCIPs); the commenter a QIP. remaining elements of the QI Program, encouraged CMS to continue to evaluate Based on this, we concluded that the including the CCIP, will maintain the whether any additional steps can be removal of the QIP and the continued intended purpose of the QI Program: taken for 2018 QIPs and CCIPs to further CMS direction of populations for That plans have the necessary streamline reporting and reduce burden. required CCIPs would allow MA infrastructure to coordinate care and Similarly, a commenter requested that

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CMS make a decision on this proposal QIPs are addressing the most important commenters who responded. We plan to so as to limit the resources invested in areas and taking into account other carefully review the information developing a new 2018 QIP. related activities. received, including ideas for continued Response: We would like to clarify Response: We disagree with the conversations with stakeholders. that the required attestations for 2018 suggestion that CMS retain the QIP and QIPs and CCIPs were already completed consider any relevant overlap and other C. Implementing Other Changes at the end of December 2017. Therefore, related activities when issuing 1. Reducing the Burden of the Medicare all organizations should have already mandatory QIP topics instead of Part C and Part D Medical Loss Ratio developed their 2018 QIP plan and finalizing the removal of the QIP Requirements (§§ 422.2410, 422.2420, implemented it beginning on January 1, requirements in § 422.152. Although we 422.2430, 422.2460, 422.2480, 422.2490, 2018. This final rule, making the are eliminating the QIP requirement, 423.2410, 423.2420, 423.2430, 423.2460, proposed changes, will be applicable for MA organizations must still have a CCIP 423.2480, and 423.2490) the 2019 MA plan requirements. (section 1852(e) of the Act; 422.152(a)(2) a. Overview of Proposed Rule Comment: Another commenter and (c)). Through the CCIP, MA recommended that CMS take into organizations must address chronically In the November 28, 2017 proposed account the impact on state external ill populations identified by CMS rule (82 FR 56366), we proposed certain quality review organization (EQRO) through a list of chronic conditions. modifications to the medical loss ratio evaluation activities that currently However, MA organizations are not (MLR) requirements in the Medicare implement the optional use of MA required to choose from this list and Part C and Part D programs. Briefly, we organizations’ QIP reports as part of may choose other chronic conditions as proposed to change the MLR calculation annual reviews for Medicaid managed appropriate to meet the needs of their by including in the MLR numerator, as care plans, citing 42 CFR 438.360. enrollee population. We believe that QIA, all expenditures for fraud Response: CMS’s removal of the QIP this flexibility allows MA organizations reduction activities or for Medication requirement for MA organizations at to identify a focus area that does not Therapy Management (MTM) programs § 422.152(a)(3) and (d) does not alter the overlap or duplicate other related that meet the requirements of Medicaid managed care plan activities, including star rating metrics. § 423.153(d). As explained in the requirements at § 438.360. If review of Alternatively, an MA organization may proposed rule, we believe that the an MA organization’s CCIP does not choose to design a CCIP that proposed inclusion of all fraud produce information that meets the intentionally relates to other activities. reduction activities in the MLR conditions specified in § 438.360(a), We do not prohibit correlated quality numerator as QIA renders extraneous then this information could not be used activities, and MA organizations may the provision that provides an to satisfy that regulation. Guidance on take advantage of this flexibility. adjustment to incurred claims for part 438 requirements is outside of the Comment: Another commenter amounts recovered through fraud scope of this rule, but we appreciate the expressing opposition for this proposal recovery efforts, up to the amount of comment. We will consider how the QIP stated that the QIP requirements fraud reduction expenses. We also removal may impact state EQRO dovetail with existing Medicaid quality proposed to revise the MLR reporting evaluation activities and may issue requirements and integrated programs requirements to significantly reduce the guidance as necessary to state Medicaid have a unique opportunity to pursue amount of MLR data that MA agencies. joint Medicare and Medicaid QIPs. They organizations and Part D sponsors Comment: A commenter questioned feared that the lessening of CMS submit to CMS on an annual basis. whether CMS has intentions to make expectations in this area will result in Finally, we proposed certain Medicare quality initiatives (that is, MA less attention on such activities by dual conforming and technical amendments, QI requirements) and Program of All- eligible special needs plans (D–SNPs). which are described in greater detail in Inclusive Care for the Elderly (PACE) Response: We understand the section II.C.1.e. of this final rule. quality initiatives (that is, Quality commenter’s concerns regarding joint b. Background Assessment and Performance Medicare and Medicaid quality Improvement or QAPI program) more initiatives. However, we believe that The proposed rule provided comparable. MA organizations offering integrated D– background on the Part C and Part D Response: Although there are some SNPs may still achieve this by medical loss ratio (MLR) requirements, similarities in the required quality connecting the Medicaid quality project including the statutory and regulatory initiatives for MA and PACE, the PACE with the required CCIP for MA. States authority. An MLR is expressed as a QAPI program requirements are outside may also strengthen quality percentage, generally representing the the scope of this rule. Due to the unique requirements through State Medicaid percentage of revenue used for patient nature of the PACE model, we do not Agency Contracts. care rather than for such other items as currently intend to align the After consideration of the public administrative expenses or profit. In the requirements between the QIP and the comments we received, we are May 23, 2013 Federal Register (78 FR QAPI program. However, we may finalizing our proposal to remove the 31284), we published a final rule that consider doing so in the future. QIP requirements for MA organizations codified the MLR requirements for MA Comment: A few commenters in § 422.152(a)(3) and (d), as proposed. organizations and Part D sponsors opposed this proposal, believing that it We are reserving those paragraphs. (including organizations offering cost is premature to eliminate the QIPs plans that provide the Part D benefit) in without careful evaluation and 12. Reducing Provider Burden— the regulations at 42 CFR part 422, consideration of where overlaps occur Comment Solicitation subpart X and part 423, subpart X. and which QIPs lead to the greatest In the proposed rule, we solicited For contract year 2014 and improvements. Instead of eliminating comment on the nature and extent of the subsequent contract years, MA the QIPs for MA organizations, they burden faced by providers pursuant to organizations and Part D sponsors are suggested that CMS, when issuing MA organizations’ requests for medical required to report their MLRs and are mandatory topics for QIPs, take into records and for ideas to address the subject to financial and other penalties account any relevant overlap to ensure burden. We thank the over 40 for a failure to meet the statutory

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requirement that they have an MLR of regulations at 45 CFR 158.150 and fraud reduction activities, we proposed at least 85 percent (see §§ 422.2410 and 158.151 in order to facilitate uniform to no longer include in incurred claims 423.2410). Section 1857(e)(4) of the Act accounting for the costs of these the amount of claims payments imposes several levels of sanctions for activities across lines of business (78 FR recovered through fraud reduction failure to meet the 85 percent minimum 12435). Consistent with this policy of efforts, up to the amount of fraud MLR requirement, including remittance alignment, the Medicare MLR reduction expenses, in of funds to CMS, a prohibition on regulations at §§ 422.2430(b)(8) and §§ 422.2420(b)(2)(ix) and enrolling new members, and ultimately 423.2430(b)(8) adopted the commercial 423.2420(b)(2)(viii). contract termination. The minimum MLR rules’ exclusion of fraud We noted that MA organizations and MLR requirement in section 1857(e)(4) prevention activities from QIA. The Part D sponsors are required at of the Act, which is incorporated by Medicare MLR regulations §§ 422.503(b)(4)(vi) and reference in section 1860D–12(b)(3)(D) (§§ 422.2420(b)(2)(ix) and 423.504(b)(4)(vi), respectively, to adopt of the Act, creates incentives for MA 423.2420(b)(2)(viii)) further aligned with an effective compliance program which organizations and Part D sponsors to the commercial MLR rules’ treatment of includes measures that prevent, detect, reduce administrative costs, such as fraud-related expenditures by allowing and correct fraud. We believe that the marketing costs, profits, and other uses the amount of claim payments proposed change to include all of the funds earned by plan sponsors, recovered through fraud reduction expenditures in connection with fraud and helps to ensure that taxpayers and efforts, not to exceed the amount of reduction activities as QIA-related enrolled beneficiaries receive value fraud reduction expenses, to be expenditures in the MLR numerator best from Medicare health and drug plans. included in the MLR numerator as a aligns with this Medicare contracting Section 1001(5) of the Patient positive adjustment to incurred claims. requirement. We are concerned that the Protection and Affordable Care Act The initial Medicare MLR proposed current rules could create a disincentive (Pub. L. 111–148), as amended by rule, published February 22, 2013 (78 to invest in fraud reduction activities, section 10101(f) of the Health Care FR 12433), explained that we which is only partly mitigated by the Reconciliation Act, also established a considered this approach to be current adjustment to incurred claims new MLR requirement under section appropriate because without such an for amounts recovered as a result of 2718 of the Public Health Service Act adjustment, the recovery of paid fraud reduction activities, up to the (PHSA) that applies to issuers of fraudulent claims would reduce an MLR amount of fraud reduction expenses. We employer group and individual market and could create a disincentive to believe that it is particularly important private insurance. We refer to the MLR engage in fraud reduction efforts. that MA organizations and Part D requirements that apply to issuers of In the November 28, 2017 proposed sponsors invest in fraud reduction private insurance as the ‘‘commercial rule, we explained that we had activities as the Medicare trust funds are MLR rules.’’ Regulations implementing reconsidered our policy regarding the used to finance the MA and Part D the commercial MLR rules are treatment of fraud reduction expenses in programs. We believe that including the published at 45 CFR part 158. the Medicare MLR numerator based on full amount of expenses for fraud the specific characteristics of the MA reduction activities as QIA will provide c. Changes to the Calculation of the and Part D programs. We noted that an additional incentive for MA Medical Loss Ratio (§§ 422.2420, limiting or excluding amounts invested organizations and Part D sponsors to 422.2430, 423.2420, and 423.2430) in fraud reduction undermines the develop innovative and more effective (1) Fraud Reduction Activities federal government’s efforts to combat ways to detect and deter fraud. fraud in the Medicare program; such We continue to believe that the In the proposed rule, we explained action also reduces the potential savings minimum MLR requirement in the that our general approach in developing to the government, taxpayers, and Medicare statute is intended to create an the Medicare MLR rules has been to beneficiaries that robust fraud incentive to reduce administrative costs, align with the commercial MLR rules in prevention efforts in the MA and Part D marketing, profits, and other such uses order to limit the burden on programs can provide. We also stated of the funds that plan sponsors receive, organizations that participate in both that fraud prevention activities can and to ensure that taxpayers and markets, and to make commercial and improve patient safety and deter the use enrolled beneficiaries receive value Medicare MLRs as comparable as of medically unnecessary services, from Medicare health and drug plans. possible for comparison and evaluation which is part of the reason we require However, we also believe that MA purposes, including by Medicare such activities as a condition of organizations’ and Part D sponsors’ beneficiaries. However, we also participation in the MA and Part D fraud reduction activities can recognized in the original MLR rule (78 programs. potentially provide significant value to FR 12429) that some areas of the For these reasons, we proposed the government and taxpayers by commercial MLR rules would need to be certain changes to the treatment of reducing trust fund expenditures. When revised to fit the unique characteristics expenses for fraud reduction activities MA organizations and Part D sponsors of the MA and Part D programs. in the Medicare MLR calculation. First, prevent fraud and recover amounts paid One area where we initially aligned we proposed to revise the MA and Part for fraudulent claims, this lowers the the commercial and Medicare MLR D regulations by removing the current overall cost of providing coverage to MA rules was the treatment of expenditures exclusion of fraud prevention activities and Part D enrollees. Because MA related to fraud reduction efforts, which from QIA at §§ 422.2430(b)(8) and organizations’ and Part D sponsors’ we defined to include both fraud 423.2430(b)(8). Second, we proposed to monthly payments are based in part on prevention and fraud recovery (78 FR expand the definition of QIA in their claims experience in prior years, if 12433). The Medicare MLR regulations §§ 422.2430 and 423.2430 to include all MA organizations and Part D sponsors adopted the same definitions of fraud reduction activities, including pay fewer fraudulent claims, this should activities that improve healthcare fraud prevention, fraud detection, and be reflected in their subsequent cost quality (also referred to as quality fraud recovery. Third, given the projections, which will ultimately result improvement activities, or QIA), as had proposed revisions of the QIA in lower payments to MA organizations been adopted in the commercial MLR definitions surrounding the treatment of and Part D sponsors out of the Medicare

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trust funds, and could also result in • Remove and reserve of the comments we received on these lower premiums or additional §§ 422.2420(b)(2)(ix) and proposals and our responses: supplemental benefits for beneficiaries. 423.2420(b)(2)(viii). Comment: A majority of the As we explained in the proposed rule, • In §§ 422.2430 and 423.2430, commenters supported the proposal to we believe that the inclusion of redesignate existing paragraphs (a)(1) designate all fraud reduction activities expenditures for fraud reduction and (a)(2) as (a)(2) and (a)(3), as activities that improve healthcare activities in the QIA portion of the MLR respectively. quality, or QIA. A number of numerator, as proposed, makes it • In §§ 422.2430 and 423.2430, add commenters noted that fraud prevention unnecessary to include in incurred new paragraph (a)(4) that lists activities can improve patient safety, deter the use claims the amount of claim payments that are automatically included in QIA. of medically unnecessary services, and recovered through fraud reduction • Redesignate the introductory text of can lead to higher levels of health care efforts, up to the amount of fraud §§ 422.2430(a) and 423.2430(a) as quality. Several commenters noted that reduction expenses. We originally paragraphs (a)(1), and revise these they agreed with our conclusion that the included an adjustment to incurred newly designated paragraphs (a)(1) to MLR regulations’ limited adjustment to claims for claims payments recovered specify that, for an activity to be incurred claims for fraud recoveries, up through fraud reduction efforts based on included in QIA, it must either fall into to the amount of fraud reduction the rationale that, because the recovery one of the categories listed in newly expenditures, curtailed the incentive to of paid fraudulent claims reduces the redesignated (a)(2) and meet all of the invest in fraud prevention. amount of incurred claims in the MLR requirements in newly redesignated Response: We appreciate the support. Comment: Several commenters numerator, if expenditures for fraud (a)(3), or be listed in paragraph (a)(4). opposed our proposal to include all reduction efforts were treated solely as • Remove and reserve expenditures for fraud reduction nonclaims and nonquality improvement §§ 422.2430(b)(8) and 423.2430(b)(8). activities in the MLR numerator as activities, this could create a We solicited comment on these expenditures for QIA. Some disincentive to engage in fraud proposed changes, particularly whether commenters that opposed our proposal reduction activities. The adjustments to our proposal was based on the best argued that the MLR is supposed to incurred claims under current understanding of the motives and represent the proportion of revenue that §§ 422.2420(b)(2)(ix) and incentives applicable to MA is spent on medical costs or improving 423.2420(b)(2)(viii) mitigate the organizations and Part D sponsors to healthcare quality, whereas amounts potential disincentive to invest in fraud engage in fraud reduction activities. We spent on fraud prevention, detection, reduction activities insofar as MA also solicited comment on the types of and recovery provide little value to organizations’ and Part D sponsors’ activities that should be included in, or beneficiaries and represent recoveries of paid fraudulent claims do excluded from, fraud reduction administrative expenses that are part of not result in a reduction to incurred activities. In addition, we solicited a plan sponsor’s cost of doing business. claims. Because this adjustment to comment on alternative approaches to As such, the commenters argued the incurred claims is only available to the accounting for fraud reduction activities costs were not appropriate for inclusion extent that an MA organization or Part in the MLR calculation. In particular, in the numerator. Other commenters D sponsor recovers paid fraudulent we were interested in receiving input on expressed concern that the proposal claims, it encourages MA organizations the following: would encourage plans to adopt • and Part D sponsors to invest in tracking Whether fraud reduction activities aggressive practices to reduce fraud, down and recouping amounts that have should be included in quality such as claim audits, that would already been paid as a result of fraud, improvement activities as proposed, or ultimately increase provider burden. rather than in preventing payment of whether we should create a separate Response: We appreciate the concerns fraudulent claims. Under our proposal, MLR numerator category for fraud raised by the commenters. We claim payments recovered through fraud reduction activities; and respectfully disagree with the argument reduction efforts will no longer be • Whether fraud reduction activities that fraud reduction expenses do not included in the MLR numerator as a should be subject to any or all of the provide significant value to limited adjustment to incurred claims. exclusions from QIA at §§ 422.2430(b) beneficiaries. We believe, and a number Instead, all expenditures for fraud and 422.2430(b). Although our proposal of commenters on the proposed rule reduction activities will be included in removes the exclusion of fraud noted, that fraud prevention can the MLR numerator as QIA, even if such prevention activities from QIA at improve health care quality by ensuring expenditures exceed the amount §§ 422.2430(b)(8) and 423.2430(b)(8), it that patients receive care that is recovered through fraud reduction is possible that fraud reduction legitimate and appropriate, and that efforts. As a result, MA organizations activities will be subject to one of the providers have the appropriate and Part D sponsors will no longer have other exclusions under §§ 422.2430(b) credentials for the services they the same level of incentive to just and 423.2430(b), such as the exclusion perform. In addition, as explained in the pursue recovery of paid fraudulent that applies to activities that are proposed rule, we believe that fraud claims, and may now be further designed primarily to control or contain reduction activities can lower the cost of incented to invest in fraud prevention. costs (§§ 422.2430(b)(1) and care and reduce trust fund expenditures We believe that effective fraud 423.2430(b)(1)) or the exclusion of and thereby potentially provide value to reduction strategies will include efforts activities that were paid for with grant beneficiaries, the government, and to prevent payment of fraudulent money or other funding separate from taxpayers. claims, and that the inclusion of all premium revenue (§§ 422.2430(b)(1) and We acknowledge that the proposed fraud reduction activities as QIA in the 423.2430(b)(3).) inclusion of fraud reduction activities in MLR numerator will strengthen the We received 43 comments pertaining the MLR numerator could encourage incentive to engage in these vital to the proposed changes to the treatment MA organizations and Part D sponsors activities. of expenses for fraud reduction to implement new practices for In summary, we proposed the activities in the Medicare MLR combatting fraud and that these may following regulatory revisions: calculation. The following is a summary involve new administrative

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requirements for providers. However, create a new numerator category for reduction activities could be included we note that MA organizations and Part fraud reduction expenses. in QIA. As explained earlier, one of the D sponsors would no longer have the Response: We thank the commenter reasons we proposed to depart from the same level of incentive to ‘‘pay and for responding to our solicitation. We commercial MLR rules in our treatment chase’’ claims in order to account for note that MA organizations and Part D of fraud reduction efforts is to encourage fraud reduction expenditures in the sponsors are expected to keep track of MA organizations and Part D sponsors MLR numerator under the proposed any expenses they intend to include in to pay fewer fraudulent claims, which rule; they would instead be further the MLR numerator, regardless of how we believe will lower the overall cost of incented to implement pre-payment the expenses are categorized in the providing coverage to MA and Part D fraud prevention efforts, as they would underlying analysis and data. Given that enrollees and potentially produce now be able to include expenditures the majority of commenters indicated a savings for beneficiaries, taxpayers, and related to these efforts in their MLR preference for the proposed inclusion of the federal government. We believe that numerator, regardless of whether they fraud reduction activities in the QIA excluding from QIA fraud reduction have recovered any claims payments category of the MLR numerator, we have activities that are designed primarily to through fraud reduction efforts. We decided against establishing a separate control or contain costs would believe that any increase in provider numerator category for fraud reduction undermine the incentive to engage in burden as a result of newly- expenditures. We believe, as noted fraud reduction activities. implemented pre-payment fraud earlier and in the proposed rule, that We also agree that the current prevention practices could potentially fraud reduction is sufficiently related to exclusion of costs directly related to be offset by a reduction in the provider’s and supports QIA to consider it health IT that are designed primarily or burden associated with the need to properly part of that category. solely to improve claims payment contest efforts from health plans to Comment: Several commenters capabilities could be construed to recover claims already paid, as is responded to our solicitation for exclude investments in technology necessary under the current rules for feedback on whether fraud reduction solutions that are designed to enhance health plans’ fraud reduction activities should be subject to any or all MA organizations’ and Part D sponsors’ expenditures to have a positive impact of the exclusions at §§ 422.2430(b) and ability to reduce the incidence of fraud. on their MLR. 422.2430(b). Several commenters In order to avoid creating uncertainty Comment: A commenter requested recommended that we amend about whether investments in health IT that we amend the regulations for the §§ 422.2430(b)(1) and 423.2430(b)(1), as a means of reducing fraud may be commercial and Medicaid markets to which exclude from QIA any activities included in QIA, we believe it is align with the proposed changes to the that are designed primarily to control or appropriate that we revise treatment of fraud reduction contain costs, to create an exception for §§ 422.2430(b)(5) and 423.2430(b)(5) to expenditures in the Medicare MLR fraud reduction activities. The specify that the exclusion of costs regulations. commenters contended that fraud directly related to upgrades in health Response: The commercial and reduction activities could arguably be information technology that are Medicaid MLR regulations are outside described as cost-control activities and designed primarily or solely to improve the scope of this final rule but we will expressed concern that a particular claims payment capabilities does not take these comments under advisement. fraud reduction activity could (or apply to costs that are related to fraud Comment: We received several would) be excluded from QIA due to reduction activities under comments that requested that we concerns or confusion regarding this §§ 422.2430(a)(4)(ii) and expand the proposal to include in QIA section of the regulation, thereby 423.2430(a)(4)(ii). all efforts to reduce fraud, waste, and discouraging investment in such After consideration of the public abuse. activities by some health plans that may comments received, we are finalizing Response: We did not propose in this be concerned about being out of the regulatory changes to paragraphs (a) regulation to designate efforts to reduce compliance if they attempted to of §§ 422.2430 and 423.2430 as waste and abuse as QIA for MLR incorporate these expenses as QIA. A proposed, with the following purposes. We appreciate the comments few commenters recommended that modifications. We are revising we received on these issues, however, CMS remove the regulatory language at §§ 422.2430(b)(1) and 423.2430(b)(1), and will consider whether adding these §§ 422.2430(b)(5) and 423.2430(b)(5) which exclude from QIA activities that activities to the QIA category of the that excludes from QIA ‘‘costs directly are designed primarily to control or MLR numerator should be incorporated related to upgrades in health contain costs, to provide an exception into future rulemaking. information technology that are for fraud reduction activities. We are Comment: We received one comment designed primarily or solely to improve also revising the §§ 422.2430(b)(5) and that directly addressed our solicitation claims payment capabilities,’’ as this 423.2430(b)(5) to provide that costs in the proposed rule concerning the would exclude investments in health IT related to fraud reduction activities establishment of a new category in the that could be used to reduce the under §§ 422.2430(a)(4)(ii) and MLR numerator for fraud reduction incidence of fraud, such as claims code 423.2430(a)(4)(ii) are not subject to the expenses. The commenter argued that auditing, pre-pay coding, physician- exclusion that applies to costs directly treating fraud reduction expenses profiling, and audit/recovery operations. related to upgrades in health separately might encourage plan The commenters noted that this change information technology that are sponsors to pay more attention to fraud to the regulatory language should retain designed primarily or solely to improve reduction activities and would make it the exclusion for costs related to claims claims payment capabilities. easier to track, measure, and audit adjudication systems. expenses that were allocated to this Response: We agree with the (2) Medication Therapy Management category. Many commenters supported commenters that maintaining the (MTM) (§§ 422.2430 and 423.2430) the inclusion of fraud reduction current exclusion of cost-control In the May 23, 2013 final rule (78 FR activities in the QIA category of the activities without creating an exception 31294), we provided guidance that MLR numerator, without expressing an for fraud reduction activities could Medication Therapy Management opinion on whether we should instead cause confusion regarding which fraud (MTM) activities (defined at

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§ 423.153(d)) qualify as QIA, provided crisis evolving within the Medicare Response: We acknowledge the they meet the requirements set forth in population. We hope that, by removing commenter’s concerns about possible §§ 422.2430 and 423.2430. To meet any restrictions or uncertainty about increases to physician burden or these requirements, the activity must be whether compliant MTM programs will medication denials and delays for for a purpose identified in paragraph qualify for inclusion in the MLR beneficiaries. However, this final rule (a)(1) and: (1) Improve health quality; numerator as QIA, the proposed changes addresses the designation of MTM (2) increase the likelihood of desired will encourage Part D sponsors to programs that meet the requirements of health outcomes in ways that are strengthen their MTM programs by § 423.153(d) as QIA for MLR purposes; capable of being objectively measured implementing innovative strategies for we believe that rules and requirements and of producing verifiable results; (3) this potentially vulnerable population. pertaining to the administration of MTM be directed toward individual enrollees, We believe that beneficiaries with programs are outside the scope of this specific groups of enrollees, or other higher rates of medication adherence final rule. populations as long as enrollees do not have better health outcomes, and that Comment: A commenter incur additional costs for population- medication adherence can also produce recommended that we only include based activities; and (4) be grounded in medical spending offsets, which could MTM programs in QIA if the sponsor evidence-based medicine, widely lead to government and taxpayer utilizes pharmacists at qualified long- accepted best clinical practice, or savings in the trust fund as well as term care pharmacies. criteria issued by recognized beneficiary savings in the form of Response: As noted earlier, one of the professional medical associations, reduced premiums. We solicited reasons we proposed to explicitly accreditation bodies, government comment on these proposed changes. designate MTM programs that comply agencies or other nationally recognized We received 39 comments pertaining with § 423.153(d) as QIA is to encourage health care quality organizations. In our to our proposal to amend the MLR sponsors to expand access to these prior MLR rulemaking, we did not regulations to specify that all MTM programs. We do not believe that it is attempt to determine whether all MTM programs that comply with § 423.153(d) necessary to create additional programs that comply with § 423.153(d) are QIA. requirements for MTM programs to will necessarily meet the QIA Comment: Nearly all of the comments qualify as QIA, beyond the requirements requirements at § 422.2430 (for MA–PD supported the proposal to explicitly already present in § 423.153(d). contracts) and § 423.2430 (for stand- designate MTM programs that comply After consideration of the public alone Part D contracts). Subsequent to with § 423.153(d) as QIA for MLR comments received, we are finalizing publication of the May 23, 2013 final purposes. A number of commenters without substantive our proposal to rule, we received numerous inquiries noted that MTM programs promote amend §§ 422.2430(a) and 423.2430(a) seeking clarification whether MTM medication adherence and care to specify that all MTM programs that programs are QIA. To address those coordination, which contribute to comply with § 423.153(d) are QIA. questions and resolve any ambiguities improved health outcomes and a or uncertainties, we proposed to reduction in health care costs. Several (3) Additional Technical Changes to specifically address MTM programs in commenters argued that eliminating Calculation of the Medical Loss Ratio the MLR regulations. uncertainty with respect to whether (§§ 422.2420 and 423.2420) We proposed to modify our MTM expenditures will be included in We also proposed technical changes regulations at §§ 422.2430 and 423.2430 the MLR numerator will encourage to the MLR provisions at §§ 422.2420 by adding new paragraph (a)(4)(i), sponsors to expand access to MTM and 423.2420. In § 422.2420(d)(2)(i), we which specifies that all MTM programs programs to include greater numbers of are replacing the phrase ‘‘in that comply with § 423.153(d) and are enrollees who may benefit from § 422.2420(b) or (c)’’ with the phrase ‘‘in offered by Part D sponsors (including participation. paragraph (b) or (c) of this section’’. In MA organizations that offer MA–PD Response: We appreciate the support. § 423.2430, the regulatory text includes plans (described in § 422.2420(a)(2)) are Comment: A commenter requested two paragraphs designated as (d)(2)(ii). QIA. We believe that the MTM programs that we clarify that the Center for We proposed to resolve this error by that we require under the Part D Medicare & Medicaid Innovation’s amending § 423.2420 as follows: regulations improve quality and care (CMMI) Part D Enhanced MTM models • Revise paragraph (d)(2)(i) by adding coordination for Medicare beneficiaries. are also QIA, thereby incentivizing at the end the text of the first paragraph We also believe that allowing Part D participation in these models. designated as (d)(2)(ii). sponsors to include compliant MTM Response: We have waived the MLR • Remove the first paragraph programs as QIA in the calculation of requirements to the extent necessary to designated as (d)(2)(ii). the Medicare MLR will encourage permit all prospective payments for We received no comments on the sponsors to ensure that MTM is better approved and permissible MTM proposed technical changes and utilized, particularly among standalone services under the Part D Enhanced therefore are finalizing the proposed PDPs that may currently lack strong MTM model to be treated as QIA for changes to §§ 422.2420(d) and incentives to promote MTM. purposes of MLR reporting. See 423.2420(d) without modification. Furthermore, we have expressed ‘‘Announcement of Part D Enhanced concern that Part D sponsors may be Medication Therapy Management d. Proposed Regulatory Changes to restricting MTM eligibility criteria to Model Test’’ (September 28, 2015), Medicare MLR Reporting Requirements limit the number of qualified enrollees, available at https://innovation.cms.gov/ (§§ 422.2460 and 423.2460) and we believe that explicitly including Files/x/mtm-announcement.pdf. We proposed to reduce the MLR MTM program expenditures in the MLR Comment: A commenter requested reporting burden by requiring MA numerator as QIA-related expenditures that we take steps to ensure that any organizations and Part D sponsors to could provide an incentive to reduce required MTM programs established by submit the minimum amount of any such restrictions. This is plan sponsors do not create an undue information that CMS needs in order to particularly important in providing administrative burden for prescribing determine whether an MA or Part D individualized disease management in physicians or medication denials and contract has satisfied the minimum conjunction with the ongoing opioid delays for patients. MLR requirement with respect to a

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contract year, and whether the contract was not possible to make these forms Regulatory Costs to manage the costs must remit funds to CMS or face and reports identical due to differences associated with the governmental additional sanctions. in the types of data collected for imposition of private expenditures As we explained in the November 28, purposes of commercial MLR reporting required to comply with Federal 2017 proposed rule (82 FR 56459), our versus Medicare MLR reporting. We regulations. general approach when initially explained in the November 2017 Specifically, we proposed that the developing the Medicare MLR proposed rule that we had become Medicare MLR reporting requirements regulations was to align the Medicare concerned that requiring health will be limited to the following data MLR requirements with the commercial insurance issuers to complete what was fields, as shown in Table E1: MLR requirements to the greatest extent ultimately a substantially different set of • possible. Consistent with this policy, forms for Medicare MLR purposes had Organization name • when we originally developed the created an unnecessary additional Contract number Medicare MLR reporting format, we burden. We noted that our proposal to • Adjusted MLR (which will be attempted to model it on the tools used reduce the burden of MLR reporting for populated as ‘‘Not Applicable’’ or to report commercial MLR data. We the MA and Part D programs aligns with ‘‘N/A’’ for non-credible contracts as believed at the time that this would the directive in the January 30, 2017 determined in accordance with limit the burden on organizations that Presidential Executive Order on §§ 422.2440(d) and 423.2440(d)) participate in both markets. However, it Reducing Regulation and Controlling • Remittance amount

TABLE 10—MLR REPORTING FOR FULLY CREDIBLE, PARTIALLY CREDIBLE, AND NON-CREDIBLE CONTRACTS

Adjusted MLR Remittance Organization Contract No. amount (%) ($)

ABC, Inc ...... H1234 90.1 $0 XYZ, LLC ...... S4321 84.8 17,420 MAO1, LLC ...... H4321 N/A N/A

We noted in the proposed rule that In summary, we proposed to revise § 423.2460(c) and (d), as redesignated although we were proposing a the regulations at §§ 422.2460 and and revised. significant reduction in the amount of 423.2460 as follows: We received 33 public comments, MLR data that MA organizations and • In § 422.2460, redesignate the some in support and some in opposition Part D sponsors must report to CMS on existing regulation text as paragraph (a). to our proposal to reduce the amount of • an annual basis, we did not propose to Revise newly designated MLR data that MA organizations and change our authority under § 422.2480 §§ 422.2460(a) and 423.2460(a) by Part D sponsors submit to CMS on an or § 423.2480 to conduct selected audit adding ‘‘from 2014 through 2017’’ after annual basis. We received the following reviews of the data reported under the phrase ‘‘For each contract year’’ in comments and our response follows: §§ 422.2460 and 423.2460 for purposes the first sentence to limit the more Comment: Most of the commenters of determining that remittance amounts detailed MLR reporting requirement to supported our proposed changes to the under §§ 422.2410(b) and 423.2410(b) that period, making minor grammatical MLR reporting requirements. Several and sanctions under §§ 422.2410(c), changes to clarify the text, and by commenters that supported the proposal 422.2410(d), 423.2410(c), and adding ‘‘under this part’’ to modify the expressed concern that the audit burden 423.2410(d) were accurately calculated, phrase ‘‘for each contract’’. would increase once we started relying • In § 423.2460, redesignate existing reported, and applied. Moreover, MA solely on audits to monitor compliance. paragraphs (b) and (c) as paragraphs (c) organizations and Part D sponsors will Other commenters stated that although and (d), respectively. continue to be required to retain they supported the proposed reduction • In §§ 422.2460 and 423.2460, add a documentation supporting the MLR data in the amount of MLR data they would new paragraph (b) to require MA reported and to make available to CMS, be required to submit to us on an annual organizations and Part D plan sponsors HHS, the Comptroller General, or their basis, they did not expect their MLR designees any information needed to with— ++ Fully credible and partially reporting burden to be significantly determine whether the data and credible experience to report the reduced since they would still be amounts submitted with respect to the Adjusted MLR for each contract for the required to collect and analyze the same Medicare MLR are accurate and valid, in contract year along with the amount of information in order to calculate the accordance with §§ 422.504 and any owed remittance; and MLR percentage and remittance amount. 423.505. ++ Non-credible experience, to report A commenter asked that we issue We also proposed to make a technical that such experience was non-credible. guidance on how we will facilitate the change to § 422.2460 by incorporating For each, the proposed text cross- current desk review in light of the provisions which parallel the language references the applicable regulations for proposed changes. of current paragraphs (b) and (c) of the determination of credibility, and for Response: We appreciate the support. § 423.2460 for purposes of the reporting the general remittance requirement. We do not expect that the proposed requirements for contract year 2014 and • In newly redesignated changes to the MLR reporting subsequent contract years. This § 423.2460(c), revise the text to refer to requirements would cause MLR audits proposed technical change does not total revenue included in the MLR to be more burdensome than the MLR establish any new rules or requirements calculation rather than reports of that audits that we have conducted in for MA organizations; it merely updates information. previous years. We acknowledge that regulatory references that were • Add new paragraphs (c) and (d) to MA organizations and Part D sponsors overlooked in previous rulemaking. § 422.2460 that mirror the text in will continue to collect the same

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information in order to calculate the that the MLR and remittance amounts and make available the reporting MLR percentage and remittance amount. were calculated and reported accurately, template as a tool to assist in calculating However, as we explained in section and that sanctions were appropriately the MLR. II.B.9 of the proposed rule (82 FR applied. MA organizations and Part D Response: In section V.C.16 of the 56472), in estimating the reduction to sponsors will still be required to submit proposed rule (82 FR 56488), we the MLR reporting burden that would an attestation regarding the MLR data explained that, if our proposed result from the proposed changes to the submitted, as they currently do. We reporting requirements, we assumed believe that we can continue to reduction in the amount of MLR data that MA organizations and Part D effectively oversee MA organizations’ reported to CMS were to be finalized, sponsors would spend eleven fewer and Part D sponsors’ compliance with we would reduce the amount we hours per contract performing the the MLR requirements by relying solely currently pay to contractors for software following tasks: (1) Reviewing the MLR on audits. In addition, we note that MA development, data management, and report filing instructions and external organizations and Part D sponsors are technical support related to MLR materials referenced therein and to required to submit and attest to the data reporting. We intend to discontinue input all figures and plan-level data in that details their spending on enrollee development of the more detailed MA accordance with the instructions; (2) health care services as part of their and Part D reporting template after we drafting narrative descriptions of annual bids. collect the MLR reports for contract year methodologies used to allocate Comment: A commenter indicated no 2017. We intend to continue to make expenses; (3) performing an internal objection to the proposed reduction in available the prior years’ more detailed review of the MLR report form prior to the amount of MLR data reported to MLR reporting templates (used in submission; (4) uploading and CMS by MA organizations and Part D contract years 2014 through 2017) on submitting the MLR report and sponsors, but noted that, in order to the CMS website (CMS.gov) as well as attestation; and (5) correcting or monitor the financial performance of in the Health Plan Management System Medicare-Medicaid Plans, states would providing explanations for any (HPMS). Therefore, commenters can need to maintain their ability to specify suspected errors or omissions continue to utilize the prior years’ more discovered by CMS or our contractor and require detailed reporting of detailed MLR reporting templates to during initial review of the submitted financial and MLR data through MIPAA MLR report. We believe that the contracting authority, Financial assist with their MLR calculations. aggregate savings to MA organizations Alignment Initiatives, and other Comment: A commenter requested and Part D sponsors as a result of the coordinated and integrated mechanisms. that we provide instructions to aid MA proposed changes meaningfully reduce Response: We appreciate the organizations and Part D sponsors in the the burden of the MLR reporting commenter’s interest in maintaining preparation of their simplified MLR data requirements. The changes to the MLR access to MLR data for Medicare- submissions, similar to the instructions reporting requirements in this final rule Medicaid Plans and other integrated that we provided to instruct MA will not affect MLR reporting until MLR care products. This final rule does not organizations and Part D sponsors on data for contract year 2018 is submitted diminish states’ existing authority to how to complete the more detailed MLR in 2019. The desk reviews of MLR data collect MLR data from such plans under reporting template. submitted for contract years 2016 and state law, MIPAA contracting, or 2017 will not be affected by the changes Medicaid managed care regulations, or Response: As explained in the to the reporting requirements. terms of three-way contracts for MMPs. Supporting Statement accompanying Comment: Several commenters Comment: A commenter the PRA listing for CMS Form Number objected to the proposal to reduce the recommended the mandatory retention CMS–10476 (published November 28, amount of MLR data that MA period that applies to documents and 2017), respondents can continue to use organizations and Part D sponsors records that support MAOs’ and Part D the current instructions to familiarize submit to CMS on an annual basis. sponsors’ MLR calculations be themselves with the guidance specific to Several commenters contended that we shortened from 10 years to 3 years. the calculation of the MLR, and we cannot conduct meaningful compliance Response: In their contracts with expect that the revised instructions (for oversight with the minimal amount of CMS, MA organizations and Part D contract year 2018 and thereafter) will MLR data that we proposed to collect. sponsors agree to maintain for 10 years make minimal changes to address the Several commenters noted that it is books, records, documents, and other simplified reporting requirements. We important that we continue to have records of accounting procedures and intend to make the revised MLR Data access to detailed data on spending for practices that are sufficient for CMS to Submission Instructions available in health care services and quality conduct various reviews, audits, and subregulatory guidance for contract year improvement activities by MA inspections. §§ 422.504(d) and 2018 MLR reporting. For more organizations and Part D sponsors. A 423.505(d). We are not persuaded that a information, we refer readers to the few commenters argued that the lack of shorter record retention period is Supporting Statement, which is transparency into how an MLR is appropriate for documents that support available on the CMS website at https:// calculated will result in more ‘‘gaming’’ the MLR calculation. of the MLR by MA organizations and Comment: A commenter requested www.cms.gov/Regulations-and- Part D sponsors. that we similarly reduce the amount of Guidance/Legislation/ Response: As noted earlier, we did MLR data that is reported by PaperworkReductionActof1995/PRA- not propose to change our authority commercial health insurance plans. Listing-Items/CMS-10476.html. under §§ 422.2480 or 423.2480 to Response: The MLR reporting After consideration of the public conduct selected audit reviews of the requirements for commercial health comments received, we are finalizing data reported under §§ 422.2460 and insurance plans are outside the scope of the changes to the MLR reporting 423.2460, which includes the capability this rule, but we will take these requirements in §§ 422.2460 and to request detailed data regarding the comments under advisement. 423.2460 as proposed. QIA expenditures included in the Comment: A few commenters Medicare MLR, in order to determine requested that we continue to develop

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e. Proposed Technical Changes to We received no comments on this requests and has received questions Medicare MLR Review and Non- proposal and therefore are finalizing from MA organizations inquiring why Compliance and the Release of MLR these changes to § 422.504(a) as their request was not treated as a Data (§§ 422.2410, 422.2480, 422.2490, proposed without modification. contract non-renewal, but rather as a 423.2410, 423.2480, and 423.2490) termination by mutual consent. 3. Late Contract Non-Renewal We proposed to modify We proposed technical changes to the Notifications (§§ 422.506, 422.508, and § 422.506(a)(3) to remove language that General Requirements, MLR review and 423.508) indicates late non-renewals may be non-compliance, and Release of MLR According to section 1857(c)(1) of the permitted by CMS so that there will data provisions at §§ 422.2410, Act, CMS enters into contracts with MA only be one process—mutual 422.2480, 422.2490, 423.2410, 423.2480, organizations for a period of 1 year. As termination under §§ 422.508—that is and 423.2490. The proposed technical implemented by CMS for this provision, applicable if CMS or the organization is changes bring these provisions into these contracts automatically renew not taking action under § 422.506(b) conformity with the more substantive absent notification by either CMS or the (Nonrenewal of contract) or § 422.510 regulatory text changes being proposed MA organization to terminate the (Termination of contract by CMS). Also, herein. The proposed technical changes contract at the end of the year. Section we proposed to amend §§ 422.508(a)(3) do not establish any new rules or 1860D–12(b)(3)(B) of the Act makes this and 423.508(a) to clarify that requirements for MA organizations or same process applicable to CMS organizations that request to non-renew Part D sponsors. The proposed technical contracts with Part D plan sponsors. a contract after the first Monday in June changes revise references to MLR CMS has implemented these provisions are in effect requesting that CMS agree reports to conform to our proposal to in regulations that permit MA to mutually terminate their contract. scale back Medicare MLR reporting so organizations and Part D plan sponsors We received the following comments, that we only require the submission of to non-renew their contracts, with CMS and our response follows: a limited number of data points, as approval and consent necessary Comment: A commenter expressed opposed to a full report. depending on the timeframe of the support for our clarification that CMS We received no comments on these sponsoring organization’s notice to CMS considers MA organization non-renewal aspects of our proposal and therefore are that a non-renewal is desired. We requests received after the first Monday finalizing the proposed technical proposed to clarify our operational in June as a request for mutual changes to §§ 422.2410, 422.2480, policy that any request to terminate a termination covered under § 422.508. 422.2490, 423.2410, 423.2480, and contract after the first Monday in June The commenter requested that CMS 423.2490 without modification. is considered a request for termination clarify any differences in the 2. Medicare Advantage Contract by mutual consent. notification requirements and other Provisions (§ 422.504) Under § 422.506(a)(2)(i) and processes for contracts that non-renew § 423.507(a)(2)(i), contract non-renewals under § 422.506 and contracts that Under section 1857 of the Act, CMS effective at the end of the one-year mutually terminate under § 422.508. enters into a contract with a Medicare contract term must be submitted to CMS Response: We appreciate the Advantage (MA) organization, through in writing by the first Monday in June. commenter’s support for our proposal which the organization agrees to comply There may be instances where CMS clarifying that CMS treats non-renewal with applicable requirements and accepts a late non-renewal notice after requests received after the first Monday standards. CMS has established and the first Monday in June for an MA in June as a request to mutually codified provisions of contracts between contract if the non-renewal is consistent terminate the contract. The provisions the MA organization and CMS at with the effective and efficient under §§ 422.506(a)(2)(ii) and § 422.504. We proposed to correct an administration of the contract under 422.508(a)(1) outline the notification inconsistency in the text that identifies § 422.506(a)(3). There is no requirements for contracts that non- the contract provisions deemed material corresponding regulatory provision renew and mutually terminate; CMS has to the performance of an MA contract. affording CMS such discretion for Part provided guidance on these provisions Section 422.504(a) states that D contracts (and we did not propose to in the Medicare Managed Care Manual, compliance with paragraphs (1) through add one). Chapter 11 and annual non-renewal and ((13)) is material to the performance of We have seen that many MA contract closeout guidance released in the MA contract; in addition, organizations do not understand that our Health Plan Management System. § 422.504(a)(16) states that compliance CMS treats non-renewals requested after After considering this comment, we with paragraphs (a)(1) through (a)(15) is the first Monday in June as an are finalizing our proposal to remove material to the contract. Neither organization’s request for a mutual § 422.506(a)(3) and to revise provision addresses paragraphs (a)(17) termination pursuant to § 422.508 when §§ 422.508(a)(3) and 423.508(a) without or (a)(18). These inconsistencies could determining whether it is in the best amendment. cause confusion on the part of MA interest of the Medicare program to organizations and complicate CMS permit non-renewals in applying 4. Contract Request for a Hearing enforcement of the regulations. § 422.506(a)(3). Organizations that (§§ 422.664(b) and 423.652(b)) We proposed to correct the request a non-renewal of their contract Under the authority of section 1857(a) inconsistent language by revising the after the first Monday in June must of the Act, CMS enters into contracts language in the introductory text in receive written confirmation from CMS with MA organizations, which authorize § 422.504(a) and deleting paragraph of the termination by mutual consent them to offer MA plans to Medicare § 422.504(a)(16). With this revision, we pursuant to § 422.508(a) (and beneficiaries. Similarly, CMS contracts proposed to renumber current § 423.508(a) if an MA–PD plan) to be with Part D plan sponsors according to paragraphs §§ 422.504(a)(17) and (a)(18). effectively relieved of their obligation to section 1860D–12(a) of the Act. CMS The proposed revision to the paragraph participate in the MA and, as determines that an organization is (a) introductory text was to provide that applicable, Part D programs during the qualified to hold an MA contract compliance with all contract terms upcoming contract year. CMS has through the application process listed in paragraph (a) is material. received a number of late non-renewal established at subpart K of 42 CFR part

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422. CMS evaluates the qualifications of amendments to §§ 422.664(b)(1) and based on the panel size of the physician potential Part D plan sponsors according 423.652(b)(1) without modification. or physician groups that are at risk of to subpart K of 42 CFR part 423. If CMS substantial financial loss—is being 5. Physician Incentive Plans—Update denies an application, organizations finalized as proposed. Also, as we Stop-Loss Protection Requirements have the right to appeal CMS’s decision discuss below, we are considering (§ 422.208) under §§ 422.502(c)(3)(iii) and future rulemaking to implement a more 423.503(c)(3)(iii) using the procedures Pursuant to section 1852(j)(4), MA extensive update of the PIP regulation. in subparts N of 42 CFR parts 422 and organizations that operate physician Additionally, based on the comments 423. We proposed to correct an incentive plans must meet certain we received on the proposed rule and inconsistency in the text that identifies requirements, which CMS has our own review of the proposal, we are CMS’s deadline for rendering its implemented in § 422.208. MA clarifying the methodology we proposed determination on appeals of application organizations must assure that adequate in determining when physicians and denials. and appropriate stop-loss insurance is physician groups are at substantial According to §§ 422.660(c) and provided to all physicians or physician financial risk and the resulting stop-loss 423.650(c), CMS must issue a groups that are at substantial financial insurance requirements. We are determination on appealed application risk under the MA organization’s adopting limited changes to the denials by September 1 in order to enter physician incentive plan (PIP). The regulation text (compared to the into an MA contract for coverage current stop loss insurance deductible proposed regulation text) to clarify these starting January 1 of the following year. limits are identified in a table codified changes and improve the readability of We codified this September 1 deadline at § 422.208(f)(2)(iii); that regulation was the text at § 422.208; we are also in the April 15, 2010, final rule (45 FR adopted in 2000, and was based on a adopting definitions for terms used in 19699). As stated in the 2009 proposed similar rule adopted for section 1876 the final rule. This final rule also rule (74 FR 54650 and 54651), we risk plans pursuant to the similar includes a correction to a typo in the proposed to modify §§ 422.660(c) and physician incentive plan requirements Panel Size row 16,100, Net Benefit 423.660(c), which then specified that under section 1876(i)(8). In recent years, Premium column of the Combined Stop- the notice of any decision favorable to CMS has received a number of requests Loss Insurance Deductible table (Table a Part C or D applicant must be issued to update the stop-loss insurance limits PIP–11), which we discovered in our by July 15 for the contract in question in § 422.208 associated with physician review for purposes of finalizing the to be effective on January 1 of the incentive plan (PIP) arrangements to proposed rule. As proposed, we will following year. However, in that better account for medical costs and apply the methodology in the final rulemaking, we inadvertently utilization changes that have occurred regulation to provide sub-regulatory overlooked other regulatory provisions since the final rule was published in the guidance (for example, in the annual that address the date by which a June 29, 2000, Federal Register (65 FR CMS Call Letter) based on changes to favorable decision must be made on an 40325). medical costs and health care utilization appeal of a CMS determination that an We proposed to change the existing patterns; these updates are anticipated entity is not qualified for a Part C or Part regulation in three substantive ways: to be in the form of a combined stop- D contract. Section 422.660(c) specifies • Update the stop-loss deductible loss insurance deductible table and a that a notice of any decision favorable limits at § 422.208(f)(2)(iii) and codify separate stop-loss insurance deductible to the MA organization appealing a the methodology that CMS would use to table. As noted in the proposed rule, we determination that it is not qualified to update the stop-loss deductible limits in believe this update to the regulation enter into a contract with CMS must be the future to account for changes in governing the stop loss insurance issued by September 1 for the contract medical cost and utilization; requirements is needed at this time to be effective on January 1. However, • Authorize, at paragraph given the changes in underlying medical § 422.664(b)(1) specifies that if a final § 422.208(f)(3), MA organizations to use costs since the tables were originally decision is not reached by July 15, CMS actuarially equivalent arrangements to established. However, we are also aware will not enter into a contract with the protect against substantial financial loss that approaches to risk sharing have applicant for the following year. under the PIP due to the risks associated evolved since the physician incentive Similarly, there is an inconsistency in with the large variety of potential risk regulation was first established. Because regulations regarding the date by which arrangements. of these health care contracting • a Part D sponsor must receive a CMS Modify paragraph 422.208(f)(2) to developments, we are considering more decision on an appeal. Section allow non-risk patient equivalents extensive changes to the physician 423.650(c) specifies that a notice of any (NPEs), such as Medicare Fee-For- incentive rule in the future. To that end, decision favorable to the MA Service patients (FFS), who obtain some CMS will seek further dialogue with organization appealing a determination services from the physician or physician stakeholders on this topic to inform that it is not qualified to enter into a group to be included when determining future rulemaking. contract with CMS must be issued by the deductible. September 1 to be effective on January We received comments from 9 a. Determination of Substantial 1. However, § 423.652(b)(1) specifies stakeholders regarding our proposal to Financial Risk and Stop-Loss Insurance that if a final decision is not reached on update the physician incentive plan Requirements for Physicians and CMS’s determination for an initial (PIP) rule. In this final rule we are Physician Groups contract by July 15, CMS will not enter finalizing the stop loss limits Under the current PIP regulation at into a contract with the applicant for the substantially as proposed but with § 422.208, aggregate stop-loss protection following year. We proposed to modify modifications to adopt definitions and must cover 90 percent of the costs of §§ 422.664(b)(1) and 423.652(b)(1) to streamline the regulation text. The heart referral services that exceed 25 percent align with the September 1 date codified of our proposal—to adopt a of potential payments. Per patient stop- in §§ 422.660(c) and 423.650(c), which methodology that can be applied to loss protection must cover 90 percent of was codified on April 15, 2010. updated claims information in order to the cost of referral services that exceed We received no comments on this create tables that associate minimum the per-patient deductible limit. The proposal and therefore are finalizing the attachment points for stop-loss coverage current stop-loss insurance deductible

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limits are identified in a table codified true if the base payment before bonuses financial loss and stop-loss protection is at § 422.208(f)(2)(iii). The current was a relatively low amount. not required by this regulation. regulation contains a chart that Comment: Some commenters were Case 2: The intermediary shares identifies per-patient stop-loss concerned that the physician incentive additional payments based on use and deductible limits for single combined; rules could apply to payments made to costs of referral services with the separate institutional; and separate physicians related to the quality of their contracted physicians/physician groups. professional insurance. The current care and patient satisfaction. The amount of the additional payment regulation establishes requirements for Response: The Medicare statute at paid to each physician/physician group stop-loss attachment points section 1852(j)(4) of the Social Security is related to the referral services (deductibles) based on the patient panel Act, which established the physician associated with that individual size. There is no requirement for stop- incentive regulation, requires that physician/physician group. In this case, loss protection when the physician or financial incentives related to referrals a the physicians/physician groups are at physician group has a panel of risk physician makes are subject to the financial risk based on their referral patients of more than 25,000; we did not physician incentive rule. However, patterns. The analysis must be propose to change this requirement or bonus payments or other payments to performed at the physician/physician the general rule that aggregate stop-loss physicians for the quality of care group level to evaluate whether that risk protection must cover 90 percent of the furnished or patient satisfaction that are is a substantial financial risk of 25% or costs of referral services that exceed 25 not tied to the referrals a physician more of potential payments for each percent of potential payments. We noted makes are not subject to this rule. physician/physician group. in the proposed rule our belief that the Comment: A commenter asked us to Case 3: The intermediary shares general provisions in the current clarify the ‘‘substantial financial risk’’ additional payments based on use and regulation—for example, the test when an independent practice costs of referral services with the determination of substantial financial association (IPA), a management contracted physicians/physician groups, risk (see § 422.208(d)(2))—do not need services organization (MSO), or any but the amount of additional payments other type of intermediary negotiates to be updated. We did seek comment per physician/physician group are not with the MAO on behalf of physicians/ about whether the definitions of related to the referral services of the physician groups. ‘‘substantial financial risk’’ and ‘‘risk individual physician/physician group. Response: The regulation provides The additional payments are shared threshold’’ contained in the current that a physician/physician group is regulation should be revisited, equally by all physicians/physician placed at substantial financial risk when groups contracted with the intermediary including whether the current the physician/physician group may lose identification of 25 percent of potential based on the financial outcome of the (or fail to receive) 25% or more of intermediary. In this case, payments codified in paragraph (d)(2) potential payments as a result of use determination of substantial financial remains appropriate as the standard in and cost of referral services. Payments risk may be done at the intermediary light of changes in medical cost. based on other factors, such as quality level because the risk is evenly shared We received the following comments of care furnished, are not considered in among all contracted physicians/ and our responses follow: this determination. The substantial physician groups. That is, the Comment: We received a question financial risk test is always focused on physicians/physician groups may pool asking if a bonus based on both quality the potential payments to physicians/ their membership to determine if they and utilization counts towards physician groups. The regulation are at substantial financial risk. substantial financial risk. provides, at paragraph (b), that it applies Case 4: The physicians/physician Response: The statute mandates to an MA organization and any of its groups have an ownership stake in the protection for physicians and physician subcontracting arrangements that utilize intermediary. The intermediary shares groups when risk of substantial a physician incentive plan in their additional payments based on use and financial loss is tied to referrals; payment arrangements with individual costs of referral services with the therefore we must include incentives physicians or physician groups. contracted physicians/physician groups. that are triggered by the level of If stop-loss protection is required, it is The amount of the additional payment referrals. This condition is not changed to be determined at either the paid to each physician/physician group if quality is an additional trigger for the physician/physician group level or the is related to the referral services same referral based payment. However, intermediary level as illustrated in the associated with that individual we do exclude quality-only bonuses following cases. physician/physician group. In this case, from determinations of substantial Case 1: In this case, the physicians/ the physicians/physician groups are at financial risk. physician groups have an agreement financial risk based on their referral Comment: We received two comments with the intermediary for payments patterns. The analysis must be asking if bonus-only risk arrangements which are not influenced by the performed at the physician/physician would be subject to the rule. financial outcome of the intermediary. group level to evaluate whether that risk Response: Bonus-only arrangements The intermediary does not share any is a substantial financial risk of 25% or can tie part of physician compensation additional payments with or reduce more of potential payments for each to reductions or limits in services and payments to the physician/physician physician/physician group. referrals. We interpret the statutory group based on use and costs of referral Case 5: The physicians/physician direction to include bonus-only risk services. Withholds, bonuses, groups have an ownership stake in the arrangements in determining when a capitation, or any other similar intermediary. The intermediary shares physician or physician group is at risk arrangements are applied to payments additional payments based on use and of substantial financial loss. Thus, an only at the intermediary level and not costs of referral services with the excessive bonus-only risk arrangement to payments to those who provide contracted physicians/physician groups, that exceeds the risk threshold and is health care services. If the physician/ but the amount of additional payments payable due to a reduction in physician physician group will earn the same per physician/physician group are not referrals for services, would be subject income regardless of their referral related the referral services of the to the rule. This would be particularly practices, there is no risk of substantial individual physician/physician group.

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The additional payments are shared deductible limits in the future was the of net income based on services equally by all physicians/physician most significant proposed change. We provided personally by individual groups contracted with the intermediary explained in the preamble that medical physicians and directly by physician based on the financial outcome of the cost increases and changes in utilization groups because that is how we have intermediary. In this case, that have occurred since adoption of the determined ‘‘potential payments’’ as determination of substantial financial current rule raised concerns that the defined in the existing regulation. We risk may be done at the intermediary current regulation requires stop-loss then used the central limit theorem to level because the risk is evenly shared insurance that is more conservative and calculate the distribution of claim among all contracted physicians/ more expensive than is necessary. The means for a multi-specialty group of any physician groups. That is, the statute provides us with the authority to given panel size. This distribution was physicians/physician groups may pool adopt standards identifying the used to obtain, with 98 percent their membership to determine if they adequate and appropriate amount of confidence, the point at which a multi- are at substantial financial risk. stop-loss coverage, taking into account specialty group of a given panel size Comment: A few commenters asked if patient panel size and other factors. In that engaged in a global capitation MA plans are required to pay for the developing the new attachment points arrangement would, through referral stop loss coverage. for the stop-loss protection required services, lose more than 25 percent of its Response: MA organizations are under the statute, we stated our belief potential payments. We set that point— responsible for assuring that the that it is appropriate to furnish more the threshold for loss of 25 percent of coverage is in place. The regulation does flexibility for MA organizations and the potential payments—as the single not require MA organizations to pay for physicians and physician groups that combined per patient deductible as this coverage. Payment for the coverage participate in PIPs to select between illustrated in the Combined Stop-Loss may be negotiated between the MA single combined stop-loss insurance and Insurance Deductible Table (Table PIP– organization and its network providers separate stop-loss insurance for 11), which was included in the that participate in the physician institutional services and professional preamble of the proposed rule. We incentive plan. services. performed an analysis for multiple Comment: We received one comment panel sizes, which are also listed on with regard to ensuring that MA plans We explained in the proposed rule the have incentive programs that are open analysis we went through to develop Table PIP–11. We proposed to describe to all providers, including nurse tables that could be used to identify the the methodology used for calculating practitioners, and not just physicians. specific deductibles for the required Table PIP–11 in the regulation, at Response: This comment is outside stop-loss protection. To develop the paragraphs (f)(2)(iii) and (iv), but did the scope of this regulation. specific attachment points, we used a not propose to codify the table itself so We are not finalizing any changes to data-driven analysis using Medicare that CMS could update the table in the the definition of substantial financial Part A and B claims data from 340,000 future as necessary using the risk or risk threshold. randomly selected beneficiaries. We methodology and updated data. We believe that this sample size provided a proposed that the new rule (including b. Update Deductible Limits and Codify statistically significant sample for the published Table PIP–11) would Methodology purposes of the analysis. We assumed a apply for contract years beginning on or Our proposal to update the stop-loss multi-specialty practice, and estimated after January 1, 2019 and until CMS deductible limits at § 422.208(f)(2)(iii) medical group income based on FFS published an update through the annual and codify the methodology that CMS claims, including payments for all Part Call Letter or through other sub- would use to update the stop-loss A and B services. We used projections regulatory guidance to MAOs.

TABLE PIP–11—COMBINED STOP-LOSS INSURANCE DEDUCTIBLES

Net benefit Single premium Panel size combined (NBP) deductible PMPY

400 ...... $5,000 $5,922 800 ...... 10,000 4,891 1,400 ...... 15,000 4,122 2,000 ...... 20,000 3,514 3,300 ...... 30,000 2,612 4,600 ...... 40,000 1,984 5,800 ...... 50,000 1,539 6,900 ...... 60,000 1,216 7,900 ...... 70,000 977 10,100 ...... 100,000 553 12,300 ...... 150,000 267 13,500 ...... 200,000 159 14,800 ...... 300,000 79 16,100 ...... 500,000 28 16,800 ...... 1,000,000 12 17,400–25,000 ...... 2,000,000 4 >25,000 ...... No Stop Loss 0

We proposed at § 422.208(f)(2)(iii)(A) maximum attachment point/maximum stop-loss insurance coverage that must that Table 1 be used to determine the deductible for per-patient-combined be provided for 90 percent of the costs

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above the deductible or an actuarial NBP would be used to identify the § 422.208(f)(2)(v) and (vi). Similar to our equivalent deductible limit can be attachment points for separate stop-loss approach in Table PIP–11, we used Fee- determined. The methodology for insurance for institutional services and For-Service Medicare Part A and Part B developing the table was described in professional services when using the claims data to develop Table PIP–12. proposed § 422.208(f)(2)(iv). For panel Separate Stop-Loss Insurance We estimated professional potential sizes that fall between the table values, Deductibles Table (Table PIP–12). We payments and institutional potential proposed § 422.208(f)(2)(iii)(A) directed explained how the NBP column would payments using the same data set as was use of linear interpolation to identify not be used when combined insurance used for populating Table PIP–11. The the required deductible. In addition, our was used to satisfy the stop-loss central limit theorem was used to obtain proposed § 422.208(f)(2)(iii)(B) provided protection requirements in § 422.208. the distribution of claim means, and for use of Table 1 when using non-risk The NBP is computed by dividing the deductibles were obtained at the 98 patients equivalents in determining the total amount of stop-loss claims (90 percent confidence level. The panel size. percent of claims above the deductible) In addition to the maximum for that panel size by the panel size. We methodology and assumptions for Table deductible permitted for per-patient also explained how Table PIP–12 was PIP–12 were proposed to be codified in combined stop-loss protection, calculated using a methodology similar § 422.208(f)(2)(vi) as the standards for proposed Table 1 included a ‘‘net to the calculation of Table PIP–11 and developing and updating Table PIP–12 benefit premium’’ (NBP) column. We proposed to codify the methodology for in the future as necessary. explained in the proposed rule how the developing Table PIP–12 in proposed BILLING CODE 4120–01–P

VerDate Sep<11>2014 21:39 Apr 13, 2018 Jkt 244001 PO 00000 Frm 00242 Fmt 4701 Sfmt 4700 E:\FR\FM\16APR2.SGM 16APR2 daltland on DSKBBV9HB2PROD with RULES2 Federal Register / Vol. 83, No. 73 / Monday, April 16, 2018 / Rules and Regulations 16681 80 191 101 134 164 752 321 558 446 229 No Loss Stop 85 196 106 139 169 563 757 326 451 234 2,000 90 0 175 331 569 457 202 239 1,00 190 127 112 160 144 584 472 217 254 778 762 347 500 173 152 106 824 393 301 630 263 236 206 300 588 518 894 700 333 306 371 463 276 222 243 200 556 987 794 370 316 682 337 427 400 464 150 DEDUCTIBLES 561 582 802 710 672 615 645 927 100 1,233 1,039 Premiums] thousands) 5 8 7 0 7 4 2 980 947 926 70 1,40 1,03 1,59 1,29 1,16 1,07 1,01 (in Benefit INSURANCE Net 60 1,610 1,804 1,281 1,216 1,186 1,153 1,132 exact Deductibles 50 1,890 1,560 1,523 1,243 1,778 1,498 1,496 1,466 1,433 1,653 1,373 2,083 contain STOP-LOSS 40 1,948 1,910 1,883 1,853 1,820 1,799 1,412 2,471 2,277 2,040 Institutional [Cells 30 2,498 2,828 2,716 2,165 2,461 2,433 2,403 2,370 2,590 2,349 3,021 SEPARATE 20 3,817 3,624 3,512 3,230 3,199 3,145 PIP-12: 15 3,828 3,294 3,790 3,257 3,763 3,733 3,700 3,167 3,920 3,386 3,679 4,351 4,157 4,045 10 5,022 4,499 4,829 4,717 4,462 4,434 4,404 4,371 4,591 4,350 TABLE 5 5,375 5,899 5,705 5,593 5,338 5,311 5,281 5,248 5,468 5,227 15 10 12 1 5 8 3 2 20 25 thousands) Deductible Professional (in

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BILLING CODE 4120–01–C We also explained how our proposal would be identified from the third would use Table PIP–12. The NBP column of Table PIP–11, based on the

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panel size for the applicable physician CMS consider a broad update to the rule approximation of what portion of the or physician group. Our proposal and its underlying methodology and full global capitation amount can be permitted use of linear interpolation for allow for greater stakeholder input. expected to be earned by the physician panel sizes that did not appear on Table They also stated that the changes being or physician group including withholds PIP–11. The cell in Table PIP–12 with proposed further complicate an already and bonuses. We use this amount to a numerical entry that is greater than or complicated regulation and add trigger substantial financial risk in the equal to the NBP would be selected; the technical jargon. determination of the maximum associated combination of professional Response: CMS will seek further deductible in the Tables. and institutional deductible levels for dialogue with stakeholders on this topic Comment: Commenters requested that that NBP would be the maximum to inform future rulemaking. We are CMS to clarify how it defines ‘‘global deductibles for the required stop-loss mindful of the need to minimize capitation’’. protection for each of those respective complexity and make our rules as Response: We are finalizing a claims. The coverage identified using transparent as possible. However, a definition for the term ‘‘Global Table PIP–12 this way was proposed as degree of complication cannot be capitation’’ in § 422.208(a) to avoid the required stop-loss protection for avoided in our attempt to add the ambiguity. Global capitation means a separate per-patient coverage pursuant flexibility needed to handle the many specific type of ‘‘capitation’’ that to proposed § 422.208(f)(2). We variations in risk sharing arrangements includes both professional and proposed to codify the use of Table PIP– between MA plans and physicians. We institutional services. Services covered 12 for deductibles for separate stop-loss replaced the term ‘‘DGCP’’ with the term by global capitation may also include insurance professional services and ‘‘risk patients,’’ which we believe is prescription drug benefits and institutional services based on the NBP clearer. supplemental benefits as well as basic in paragraph (f)(2)(v). Comment: A commenter requested benefits (as those terms are defined in We solicited specific comments on that CMS add the following language to § 422.100(c)). For purposes of Tables the proposed regulation, as follows: the regulation at § 422.208(f)(2)(iii)(A) PIP–11 and PIP–12 global capitation • Whether the methodology for ‘‘Stop-loss protection must cover 90 includes all Parts A and B services developing Tables PIP–1 and PIP–2 as percent of costs of referral services except hospice. If the capitation for a codified in proposed paragraphs above the deductible or an actuarial physician group is different from all (f)(2)(iv), (vi), and (vii) provided equivalent amount of the costs of Parts A and B services except hospice, sufficient detail; referral services that exceed the per- the group must use an actuarially • Whether the proposed regulation patient deductible limit. The single equivalent amount of stop loss coverage. text clearly identified how the tables combined deductible, for policies that Comment: A commenter asked for should be used; and pay 90 percent of costs of referral more detail with respect to the • Whether we should finalize a services above the deductible.’’ description of the methodology specific schedule, such as annually or Response: We agree and have made including a detailed calculation for one every 3 years, for updating the tables this change to the regulation. We are of the cells in the table. using the proposed methodologies, in finalizing paragraph (f)(2)(iii) with this Response: The methodology and order to ensure that the maximum statement. We are also finalizing the text calculation of the panel size for the deductibles are consistent with medical to refer more consistently to ‘‘the Single Combined Deductible of cost and utilization trends. required stop-loss protection’’ to be $100,000 in the Combined Stop-Loss We received the following comments clear that the protection described in Insurance Deductible Table (Table PIP– and our responses follow: this statement with the deductibles 11) is presented here and the parameters Comment: We received several identified in the tables is required. for the methodology for this table is comments in favor of CMS updating the Comment: Several commenters finalized in paragraph (f)(2)(iv). Per the deductible amounts. questioned CMS’ interpretation of the PIP regulation, if the physician Response: We thank the commenters definition of potential payments to incentive plan places a physician or for the support. We are updating the physicians. physician group at substantial financial deducible amounts and finalizing this Response: It is not our intention to risk for services the physician or regulation as proposed with change the definition of potential physician group does not furnish itself clarifications and changes described in payments in the current regulation. Per the MA organization must assure that this final rule. the regulation, potential payments the physician or physician group has Comment: Several commenters agreed means the maximum payments possible stop loss protection. Substantial with CMS that the stop loss tables to physicians or physician groups financial risk is defined to be 25 percent should be regularly updated for cost and including payments for services they of potential payments. utilization. Some suggested a 2- to 3- furnish directly, and additional We used the central limit theorem to year cycle. payments based on use and costs of determine the required panel size for Response: We concur with this referral services such as withholds, each deductible level in Table PIP–11 comment, will monitor cost and bonuses, capitation or any other and Table PIP–12. Our goal is to utilization every 2 to 3 years, and will compensation to the physician or determine the number of individuals implement future updates to the stop physician group. It does not include required for each deductible so that loss tables when CMS determines that payments that ‘‘pass through’’ the there is a 98 percent probability that changes in medical costs and changes in physician or physician group to actual referral claims net of deductible patterns of health care utilization justify compensate other health care providers are less than the sum of expected an update. for referred services. In the development referral claims net of deductible plus 25 Comment: Some commenters stated of Tables PIP–11 and PIP–12, potential percent of potential payments. that CMS should consider changes to payments were derived from payments We model the distribution of claim the physician incentive plan rule to for Parts A and B services provided amounts using the following statistical better reflect changes in the incentive directly by the physician in the sample formula and the Central Limit Theorem: arrangements that are currently being claims data. Our interpretation of Aggregate referral claims for a group of used. These commenters also asked that potential payments is a reasonable n individuals

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a sample of 340,000 randomly selected $100,000 is $17,158, r is our estimate of beneficiaries from the Medicare Part A potential payments which does not vary Where and B claims data excluding hospice, relative to the deductible and is m is the population mean for physician paid calculated to be $1,400 PMPY, n is the Xi is the annual referral claim amount net of referral claims net of the deductible, deductible paid by the physicians with panel size, and N(n × m, n × s2) denotes s is the standard deviation for physician paid × mean (m) and variance (s2) for an referral claims net of the deductible the Normal distribution with mean, n × 2 individual, calculated on a per capita level. m, and variance, n s . basis. Xi is assumed to be independently Given the definitions and and identically distributed for each For this example, the standard assumptions above, we solve for the individual. Statistics are calculated using deviation for an attachment point of following probability:

Standardizing and solving for the Z (nm + n0.25r ¥ nm) / (s√n) = Z0.98 = 2.05 value we attain the formula (Note that this is a one-tail test)

Therefore, the cell on the combined (f)(2)(iv) and (vi). We are also finalizing transferred from a plan to a physician or table with a deductible of $100,000 definitions for the terms ‘‘global physician group. We proposed to amend corresponds to at least 10,100 patients. capitation,’’ ‘‘net benefit premium,’’ and § 422.208 to provide, as a new The net premium is then calculated as ‘‘non-risk patient equivalents’’ as those paragraph (f)(3), that stop-loss 90% of the sum of the claims above terms are discussed above. Finally, we protection would comply with the $100,000, divided by the number of are also finalizing changes to the requirements so long as it were certified patients. regulation compared to the proposal to as actuarially equivalent to the coverage Comment: We received a comment better organize and clarify the described in paragraph (2), meaning the recommending that CMS consult with requirements. coverage described in the tables stop loss coverage experts in developing developed using the methodology c. Actuarially Equivalent Arrangements this regulation. We believe that this codified in paragraph (f)(2). We regulation, as finalized, is consistent We stated in the proposed rule that, proposed that certification of the with the applicable actuarial principles over the past several years, MA actuarially equivalent protection must and practices. organizations have requested that CMS be done by an actuary who meets the Response: Over the years, CMS has update the tables as well as provide qualification standards established by had numerous discussions with additional flexibilities around the American Academy of Actuaries, qualified actuaries regarding our protection arrangements. We noted our follows the standards of the Actuarial method of determining stop-loss belief that providing the flexibility to Standards Board, develops the insurance requirements. MA organizations to use actuarially deductibles of the alternate coverage to After consideration of the comments, equivalent arrangements is appropriate, be actuarially equivalent to the coverage we are finalizing changes to the as the nature of the PIP negotiated in the tables, and makes the regulation text at § 422.208(f)(2)(iii) between the MA organization and computations in accordance with through (vi) substantially as proposed. physicians or physician groups might generally accepted actuarial principles We are finalizing the five new necessitate other arrangements to and practices. definitions; the codification of the properly and adequately protect We received the following comments methodology CMS would use to update physicians from substantial financial and our responses follow: the stop-loss deductible limits; and the risk. Examples we provided where Comment: We received many requirements for using the tables to actuarially equivalent modifications comments in favor of and two against identify the stop-loss protection might be necessary included: Global allowing actuarial equivalent required when a multi-specialty capitation arrangements that include arrangements. Supporters welcome the physician practice in a global capitation some, but not all Part A and B services; flexibility for compliance with the PIP arrangement is at risk for substantial global capitation arrangements that regulation. A commenter was concerned financial loss; and regulation text include supplemental benefits and/or with added complexity and reiterating that stop-loss protection must drug benefits; capitation arrangements administrative burden, the other cover at least 90 percent of the costs of that include only physician services; commenter pointed out a typographical referral services above the deductible or stop-loss policies with different error. an actuarially equivalent amount of the coinsurances; stop-loss policies that use Response: CMS is finalizing as costs of referral services that exceed the medical loss ratios (MLRs), which proposed to allow actuarial equivalent per-patient deductible limit. We are generally pay specific stop-loss amounts arrangements. Given that the finalized finalizing definitions for the terms only to the extent that the overall tables address only multi-specialty ‘‘Combined Stop-Loss Insurance aggregate MLR for the physician group provider groups selecting per-person Deductible Table (Table PIP–11)’’ and exceeds a certain amount; stop-loss stop-loss insurance, allowing actuarial the ‘‘Separate Stop-Loss Insurance policies for exclusively primary care equivalence is critical to meeting the Deductible Table (Table PIP–12)’’ to physicians; and risk arrangements on a requirements of this regulation. The refer to the tables developed using the quota share basis, which occurs when typographical error referring to stop-loss methodologies codified at paragraphs less than full capitation risk is protection for non-capitated

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arrangements has been corrected in the capitated patients and globally capitated the amendment we are finalizing in final regulation text. We are finalizing patients plus NPEs) separately as the § 422.208(f)(2), we are authorizing the § 422.208(f)(3) as proposed to permit panel size. We proposed the same use of Non-risk Patient Equivalents MA organizations to use other stop-loss flexibility for combined per-patient (NPE) so that the panel size includes protection arrangements so long as the stop-loss insurance and the separate non-risk patients served by the following conditions are met: The stop-loss insurances. We are finalizing physician or physician group. With deductibles for the alternate coverage this as proposed. regard to the level of pooling, if there is are actuarially equivalent to the We received the following comments an intermediary involved, the pooling coverage described in paragraph (f)(2); and our responses follow: may be accomplished at the physician/ the actuary makes the computations in Comment: Several commenters asked physician group level or the accordance with generally accepted CMS to clarify how non-risk patient intermediary level. See the response to actuarial principles and practices; and equivalents (NPEs) are calculated and the question regarding how the PIP the actuary is certified as meeting these used. regulation is applied when an requirements by actuaries who meet the Response: NPEs are a measure of the intermediary is involved for guidance in qualification standards established by number of non-risk patients, both section II.C.5.a of this final rule. the American Academy of Actuaries and Medicare and non-Medicare. To Comment: Some commenters follow the practice standards calculate NPEs, estimate the annual questioned how MA plans can satisfy established by the Actuarial Standards claims for physician rendered services their regulatory obligation given the Board. for non-risk patients. Then estimate situation in which physicians or After consideration of the comments, what a PMPY capitation for physician physician groups will not share rendered services would be if non-risk we are finalizing the regulation text in sufficient patient income information patients were capitated for physician § 422.208(f)(3) substantively as for the MA plan to determine NPE. rendered services. The quotient is the proposed with revisions to correct Some suggested other measurements. number of NPEs. As noted above, we are grammatical errors and to refer to the Response: CMS will allow MA plan defined tables as appropriate. finalizing a definition for the term to avoid ambiguity. sponsors to accept attestations regarding d. Non-Risk Patient Equivalents For example, assume that the the calculation of NPE from physicians Included in Panel Size physician claims for non-risk patients is or physician groups. We stated in the proposed rule that expected to be roughly $22 million. Comment: A commenter we believe the number of a physician’s Assume that the average capitation for recommended that CMS amend the or physician group’s non-risk patients physician rendered services is $2,000. regulation at (f) by adding a dollar sign should be taken into account when The number of NPEs would be $22 when using the term DGCP + 100,000 so determining the stop-loss deductible(s) million divided by $2,000, which is that it states DGCP + $100,000, and is for risk arrangements. For example, a 11,000 non-risk patient equivalents. therefore clear what unit is being group with 50,000 non-risk patients and This calculation provides a standard applied. (See (f)(2)(iii)(B) and 5,000 risk patients, needs less protection cost level for non-risk patients (f)(2)(v)(B).) than a group with only 3,000 non-risk regardless of their utilization. Response: We agree and have made patients and 5,000 risk patients. We To use, assume that the physician the change to the physician incentive proposed, at § 422.208(f)(2)(iii) and (v), medical practice has 7,000 risk patients. regulation as proposed in the comment. to allow Non-risk patient equivalents One would first look up the deductible We have also removed the reference to (NPEs), such as Medicare FFS patients (or attachment point) for combined DGCP and replaced it with the phrase or commercial FFS patients, who obtain coverage using 7,000 patients. Then, ‘‘risk patients’’ for continuity with the some services from the physician or look up the attachment point using original regulation. physician group to be included in the 18,000 = (7,000 + 11,000) patients. The We are finalizing amendments to panel size when determining the final attachment point is the lesser of § 422.208 to permit use of the non-risk deductible. Under our proposal, NPEs the attachment point with 18,000 patient panel size in identifying the are equal to the projected annual patients, or $100,000 plus the required stop-loss protection in aggregate payments to a physician or attachment point with 7,000 patients. paragraph (f)(2)(iii). physician group for non-global risk Therefore the NPEs can add a maximum 6. Changes to the Agent/Broker patients, both Medicare and non- of $100,000 to the combined attachment Compensation Requirements Medicare, divided by an estimate of point. (§§ 422.2274 and 423.2274) what the average capitation per member Comment: A commenter asked for per year (PMPY) would be for all non- clarification about how CMS, in its stop- Sections 103(b)(1)(B) and 103(b)(2) of global risk patients. Both the numerator loss methodology, determines what is a the Medicare Improvements for Patients and denominator are for physician risk pool and how it affects the number and Providers Act (MIPPA) revised services that are rendered by the of risk patients. Another commenter section 1851(j)(2)(D) of the Act to charge physician or physician group. We asked about the pooling level. the Secretary with establishing proposed that the deductible for the Response: It is not our intent to alter guidelines to ‘‘ensure that the use of stop-loss insurance that is required the authority to pool patients provided compensation creates incentives for under this regulation will be the lesser in § 422.208(g), which allows a agents/brokers to enroll individuals in of: (1) The deductible for globally physician or physician group to pool, the MA plan that is intended to best capitated patients plus $100,000; or (2) under certain circumstances, the meet their health care needs.’’ Section the deductible calculated for globally Medicare and Non-Medicare patients for 103(b)(2) of MIPPA revised section capitated patients plus NPEs. The whom they accept capitation risk to 1860D–4(l)(2) of the Act to apply these deductible for these groups will be determine panel size. Stated differently, same guidelines to Part D sponsors. separately calculated using the tables pooling allows at-risk commercial, at- CMS implemented these MIPPA-related and requirements in our proposed risk Medicare, and at-risk Medicaid changes in a May 23, 2014 final rule (79 regulation at paragraphs (f)(2)(iii) and patients to be considered in the FR 29960). The 2014 final rule revised (v) and treating the two groups (globally determination of the panel size. With the provisions previously established in

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the interim final rule (IFR) adopted on brokers to move enrollees for financial outside the scope of this regulation but September 18, 2008 (73 FR 54226). gain rather than for the beneficiary’s we will take it under consideration. The IFR had established the previous best interest. In the final rule published All of the comments we received were compensation structure for agents/ on May 23, 2014, we codified technical generally supportive, and therefore we brokers as it applied to the MA and Part changes to the language established by are finalizing the proposal to D programs. In particular, the IFR the IFR relating to agent/broker redesignate paragraphs (b)(1)(iii) as limited compensation for renewal compensation, choosing instead to link (b)(1)(iv); redesignate paragraphs enrollments to no greater than 50 payment rates for renewal enrollments (b)(2)(iii) as (b)(1)(iii); remove percent of the rate paid for the initial to current FMV rates rather than the rate paragraphs (b)(2)(i) and (ii); and enrollment on a 6-year cycle. This paid for the original (that is, initial) redesignate paragraphs (b)(3) as structure had proven to be complicated enrollment. These changes also paragraphs (b)(2) in §§ 422.2274 and to implement and monitor, as it effectively removed the 6-year cycle 423.2274, without modification. In required the MA organization or Part D from the payment structure. We codified addition, we are finalizing the technical sponsor to track the compensation paid these changes in §§ 422.2274(a), (b), and correction to newly redesignated for every enrollee’s initial enrollment (h) for MA organizations and paragraph § 423.2274(b)(2)(iii) to replace and calculate the renewal rate based on §§ 423.2274(a), (b), and (h) for Part D the reference to an MA plan with a that initial payment. To the extent that sponsors. reference to a Part D sponsor. there was confusion about the required At that time, we should have also 7. Changes to the Agent/Broker levels of compensation or the timing of proposed to remove the language at Requirements (§§ 422.2272(e) and compensation, it seemed that there was §§ 422.2274(b)(2)(i), 422.2274(b)(2)(ii), 423.2272(e)) an uneven playing field for MA 423.2274(b)(2)(i), and 423.2274(b)(2)(ii), organizations and Part D sponsors but we failed to do so. This language is Section 1851(h)(7) of the Act directs operating in the same geographic area. no longer relevant, as the current CMS to act in collaboration with the In addition to the many inquiries from compensation structure is not based on states to address fraudulent or MA organizations and Part D sponsors the initial payment, but having the inappropriate marketing practices. In regarding the correct calculation of language in the regulations has created particular, section 1851(h)(7)(A)(i) of the agent/broker compensation, CMS found confusion with plans and brokers. Act requires that MA organizations only it necessary to take compliance actions We proposed to make a technical use agents/brokers who have been against MA organizations and Part D correction to the existing regulatory licensed under state law to sell MA sponsors for failure to comply with the language at §§ 422.2274(b) and plans offered by those organizations. compensation requirements. CMS’s 423.2274(b). We proposed to remove the Section 1860D–4(l)(4) of the Act audit findings and monitoring efforts language at §§ 422.2274(b)(2)(i), references the requirements in section performed after implementation of the 422.2274(b)(2)(ii), 423.2274(b)(2)(i), and 1851(h)(7) of the Act and applies them IFR showed that MA organizations and 423.2274(b)(2)(ii). Additionally, we to Part D sponsors. We have codified the Part D sponsors were having difficulty proposed to renumber the existing requirement in §§ 422.2272(c) and correctly administering the provisions under §§ 422.2274(b) and 423.2272(c). compensation requirements. 423.2274(b) for clarity. In the April 15, 2011, final rule (76 FR Also, we were concerned that the Although not summarized in the 21503 and 21504), we codified a structure as it existed before the 2014 preamble of the proposed rule, we also provision in §§ 422.2272(e) and revisions created an incentive for proposed to correct the language in the 423.2272(e) that required MA agents/brokers to move enrollees from a newly redesignated § 423.2274(b)(2)(iii). organizations and Part D sponsors to plan of one parent organization to a plan The current regulation text reads, terminate any employed agent/broker of another parent organization, even for ‘‘When a beneficiary disenrolls from an who became unlicensed. The provision like plan-type changes. That MA plan. . . .’’ Because the reference is also required MA organizations and Part compensation structure resulted in within the Part D regulations (section D sponsors to notify any beneficiaries different payments when a beneficiary 423), the regulation should refer to Part enrolled by the unqualified agent/broker moved from one plan to another like D sponsors. We proposed regulation text of that agent/broker’s status. Finally, the plan in a different organization. In such to correct the text so that the reference provision specified that the MA situations, the new parent organization to ‘‘an MA plan’’ instead refers to ‘‘a organization or Part D sponsor must would pay the agent 50 percent of the Part D sponsor.’’ (82 FR 56526) comply with any request from the current initial rate of the new parent We received the following comments, beneficiary regarding the beneficiary’s organization, not 50 percent of the and our response follows: options to confirm enrollment or make initial rate paid by the prior parent Comment: A few commenters a plan change if the beneficiary requests organization. Thus, in cases where the indicated support for the proposed such upon notification of the agent/ fair market value (FMV) for change citing decreased burden on broker’s status. compensation had increased, or the plans and requested that we adopt the As discussed in the proposed rule, we other parent organization paid a higher change as proposed. have become aware since commission, an incentive existed for the Response: We appreciate the support implementation of the provision in agent to move beneficiaries from one for this provision. §§ 422.2272(e) and 423.2272(e) that the parent organization to another, rather Comment: A commenter indicated regulation does not allow latitude for than supporting the beneficiary’s support for the provision but also punitive action by the sponsoring continued enrollment in the prior requested that CMS investigate current organization in situations when a parent organization. compensation and administrative fees license lapses. The MA organization or In a 2014 proposed rule (79 FR 1918), charged by field marketing Part D sponsor may terminate the agent/ we proposed to simplify agent/broker organizations (FMO) for exchanges. broker and immediately rehire the compensation rules to help ensure that Response: We appreciate the support individual thereafter if licensure has plan payments were correct and for the provision. The request to been already reinstated or prohibit the establish a level playing field that investigate the compensation and agent/broker from ever selling the MA further limited the incentive for agents/ administrative fees of exchange FMOs is organization’s or Part D sponsor’s

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products again. Discussions with the 8. Codification of Certain Medicare After consideration of the public industry indicate that these two options Premium Adjustments as Initial comments, we are finalizing the change are impractical due to their narrow Determinations (§ 405.924) to § 405.924(a) as proposed. limits. We believe agents/brokers play a Current regulations at § 405.924(a) set 9. Eliminate Use of the Term significant role in providing guidance to forth Social Security Administration ‘‘Nonrenewal’’ to Refer to a CMS- beneficiaries and are in a unique (SSA) actions that constitute initial Initiated Termination (§§ 422.506, position to positively influence determinations under section 1869(a)(1) 422.510, 423.507 and 423.509) beneficiary choice. However, the statute of the Act. These actions at § 405.924(a) directs CMS to require MA Section 1857(c)(2) of the Act provides include determinations with respect to organizations and Part D sponsors to the bases upon which CMS may make entitlement to Medicare hospital (Part only use agents/brokers who are a decision to terminate a contract with A) or supplementary medical insurance licensed under state law. We do not an MA organization. Under section (Part B); disallowance of an application intend to change the regulation, at 1860D 12(b)(3) of the Act, these same for entitlement; a denial of a request for §§ 422.2272(c) and 423.2272(c), that bases are available for a CMS withdrawal of an application for requires agent/broker licensure as a termination of a Part D sponsor contract, Medicare Part A or Part B, or denial of condition of being hired by a plan, and as section 1860D–12(b)(3) of the Act a request for cancellation of a request for will continue to review the licensure incorporates into the Part D program the withdrawal; and a determination as to status of agents/brokers during those Part C bases by reference to section whether an individual, previously monitoring activities that focus on MA 1857(c)(2). Also, sections 1857(h) and determined as entitled to Part A or Part organizations’ and Part D sponsors’ 1860D–12(b)(3)(F) of the Act provide the B, is no longer entitled to these benefits, marketing activities. CMS believes MA procedures CMS must follow in carrying including a determination based on organizations and Part D sponsors out MA organization or Part D sponsor nonpayment of premiums. should determine the level of contract terminations. Although the Act only expressly disciplinary action to take against In addition to the actions set forth at refers to terminations, through agents/brokers who fail to maintain § 405.924(a), SSA, the Office of rulemaking and subregulatory guidance, their license and have sold MA/Part D Medicare Hearings and Appeals we have created two different processes products while unlicensed, so long as (OMHA), and the Departmental Appeals relating to severing the contractual the MA organization or Part D plan Board (DAB) also treat certain Medicare agreement between CMS and an MA complies with the remaining statutory premium adjustments as initial organization or Part D sponsor. In and regulatory requirements. determinations under section 1869(a)(1) of the Act. These Medicare premium accordance with sections 1857(h) and We proposed to delete §§ 422.2272(e) adjustments include Medicare Part A 1860D–12(b)(3)(F) of the Act, we have and 423.2272(e), the provisions that and Part B late enrollment and adopted regulations providing for limit what MA organizations and Part D reenrollment premium increases made distinct bases and procedures for sponsors can do upon discovery that a in accordance with sections 1818 and contract termination versus those for previously licensed agent/broker has 1839(b) of the Act, §§ 406.32(d), nonrenewal of contracts. Our become unlicensed. Nonetheless, CMS 408.20(e), and 408.22 of this chapter, regulations at §§ 422.506 and 422.510 may pursue compliance actions upon and 20 CFR 418.1301. Due to the effect provide for the nonrenewal and discovery of MA organizations and Part that these premium adjustments have on termination, respectively, of CMS D sponsors who allow unlicensed individuals’ entitlement to Medicare contracts with MA organizations. The agents/brokers to continue selling their benefits, they constitute initial Part D regulations provide for similar products in violation of §§ 422.2272(c) determinations under section 1869(a)(1) procedures with respect to Part D and 423.2272(c). of the Act. sponsor contracts at §§ 423.507 and Note that deleting paragraph (e) from 423.509. Accordingly, we proposed to add a Each nonrenewal provision is divided §§ 422.2272 and 423.2272 removes new paragraph (5) to § 405.924(a) to language describing the opportunity into two parts, one governing clarify that these premium adjustments, nonrenewals initiated by a sponsoring beneficiaries have to select a different made in accordance with sections 1818 MA or Part D plan when the broker who organization and another governing and 1839(b) of the Act, §§ 406.32(d) and nonrenewals initiated by CMS. Two enrolled them was unlicensed at the 408.22 of this chapter, and 20 CFR time the beneficiaries enrolled. features of the nonrenewal provisions 418.1301, constitute initial have created multiple meanings for the Removing paragraph (e) from determinations under section 1869(a)(1) §§ 422.2272 and 423.2272 does not term ‘‘nonrenewal’’ in the operation of of the Act. Because this proposed the Part C and D programs, contributing, eliminate the special enrollment period change seeks only to codify existing (SEP) that enrollees receive when it is in some instances, to confusion within processes related to premium CMS and among contracting later discovered that their agent/broker adjustments, and not to alter existing was not licensed at the time of the organizations surrounding the use of the processes or procedures, it applies only term. The first feature is the difference enrollment as that SEP exists under the to Part A and Part B late enrollment and authority of § 422.62(b)(4). between nonrenewals initiated by reenrollment penalties. sponsoring organizations and those We received the following comments, We received the following comments and our response follows: initiated by CMS with respect to the and our response follows: need to establish cause for such an Comment: We received ten comments Comment: A few commenters stated action. The second is the partial overlap supporting the change as proposed. that they believed this proposal would between CMS’ termination authority Response: We appreciate the support only minimally impact plans. and nonrenewal authority. We proposed from industry of this proposed change. Response: We agree that this change to revise our use of terminology such Upon consideration of the comments, to § 405.924(a) will minimally impact that that the term ‘‘nonrenewal’’ only we are finalizing the removal of plans since these premium adjustments refers to timely elections by contracting paragraphs (e) from §§ 422.2272 and are already considered initial organizations to discontinue their 423.2272 as proposed. determinations. contracts at the end of a given year. We

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proposed to remove the CMS initiated sanctions or civil money penalties needed plan election during the annual nonrenewal authority codified at (§§ 422.506(b)(iii) and coordinated election period. paragraph (b) from both §§ 422.506 and § 423.507(b)(1)(ii)), low enrollment in an Response: CMS appreciates the 423.507 and modify the existing CMS- individual MA plan or PDP expressions of support for the proposal. initiated termination authority at (§§ 422.506(b)(iv) and 423.507(b)(1)(iii)), We note that in the event of a CMS- §§ 422.510 and 423.509 to reflect this or failure to fully implement or make initiated contract termination, the change. significant progress on quality contracting organization has MA organizations and Part D plan improvement projects (§ 422.506(b)(i))) administrative appeal rights that, if sponsors may elect to end the automatic were all promulgated in accordance exercised, could prevent affected renewal provision in Part C or Part D with our statutory termination authority beneficiaries from receiving plan contracts and discontinue those at sections 1857(c)(2) and 1860D– termination notices during the annual contracts with CMS without cause, 12(b)(3) of the Act. Further, all more coordinated election period. When CMS simply by providing notice in the specific examples of an organization’s terminates an MA organization or Part D manner and within the timeframes substantial failure to carry out the terms plan sponsor contract under §§ 422.510 stated at § 422.506(a) and § 423.507(a). of its MA or Part D contract or its or 423.509, the organization may request Thus, organizations are free to make a carrying out the contract in an a review of the decision by a hearing business decision to end their Medicare inefficient or ineffective manner. officer under §§ 422.660 and 423.650. contract at the end of a given year and Therefore, we proposed striking these Generally, a request for a hearing need not provide CMS with a rationale provisions from the nonrenewal portion generally postpones the effective date of for their decision. By contrast, CMS may of the regulation and adding them to the the termination (except, for example, in not end an MA organization or Part D list of bases for CMS-initiated contract instances such as financial insolvency plan sponsor’s contract through terminations in §§ 422.510 and 423.509. or imminent threats to beneficiary nonrenewal without establishing that Finally, there are aspects of the notice health and safety), meaning that the contracting organization’s requirements related to the CMS- beneficiary notices would be delayed performance has met the criteria for at initiated nonrenewal authority that are until after the completion of the hearing least one of the stated bases for a CMS useful in the administration of the Part process. So, while we intended to initiated contract nonrenewal in C and D programs and which we establish beneficiary notification paragraphs (b) of those sections. proposed preserving in the revised deadlines that align with the annual Contracting organizations often termination provision. Specifically, coordinated plan election period, we respond to changes in the Medicare § 422.506(b)(2)(ii) requires notice to be recognize that in some instances, the markets or changes in their own provided by mail to a contracting exercise of administrative appeal rights business objectives by making decisions by terminated organizations may organization’s enrollees at least 90 days to end or modify their participation in prevent that outcome for beneficiaries. prior to the effective date of the the Part C and D programs. Thus, these Comment: Some commenters asked nonrenewal, while § 422.510(b)(1)(ii) organizations exercise their nonrenewal CMS to clarify whether the proposed rights under § 422.506(a) and requires affected plan enrollees to be change would prohibit MAOs from § 423.507(a) much more frequently than notified within 30 days of the effective expanding or marketing other plans in CMS conducts contract nonrenewals date of the termination. We see a the service area in which one of its under § 422.506(b) and § 423.507(b). As continuing benefit to the administration plans was terminated or non-renewed. a result, within CMS and among of the Part C and D programs in Response: The proposal would make industry stakeholders, the term retaining the authority to ensure that, no changes to rules that govern an MA ‘‘nonrenewal’’ has effectively come to when possible, enrollees can be made organization’s or Part D plan sponsor’s refer almost exclusively to MA aware of their plan’s discontinuation at ability to offer or market other plans in organization and Part D plan sponsor least by October 1 of a given year so that the same service area affected by the initiated contract non renewals. they can make the necessary plan choice CMS-initiated termination. CMS’ The termination authority allows us during the annual election period. decision to terminate an organization’s to provide notice of such an action at Therefore, we proposed adding MA or Part D contract would have no any time and make it effective at least provisions at §§ 422.510(b)(2)(v) and impact on the status of any other type 30 days after providing such notice to 423.509(b)(2)(v) to require that enrollees of MA or Part D contract the the contracting organization. By receive notice no later than 90 days organization may operate in the same contrast, CMS may issue a nonrenewal prior to the December 31 effective date service area as the terminated contract. notice of a contract no later than August of a contract termination when we make A CMS-initiated termination may affect 1, and the nonrenewal takes effect at the such determination on or before August the contacting organization’s ability to end of the current contract year. Yet, the 1 of the same year. qualify for a new or expanded contract result of both actions taken by CMS is We received the following comments covering the same service area as the the discontinuation, for cause (although and our response follows: terminated contract. Under the basis of that cause might be Comment: CMS received only a few §§ 422.502(b)(3) and 423.503(b)(3), CMS different), of an MA or Part D contract. comments on this proposal, all may deny applications from The similarities between CMS- expressing general support. The organizations for which CMS has initiated nonrenewal and termination commenters expressed particular terminated a contract within the 38 are demonstrated by the extensive but appreciation for our proposal to months preceding the contract not complete overlap in bases for CMS preserve the requirement that affected qualification application deadline. Our action under both processes. For beneficiaries receive notice of a CMS- proposal does nothing to change that example, both authorities incorporate by initiated termination at least 90 days authority. As is currently the case, CMS’ reference the bases for CMS initiated prior to the December 31 effective date application of this authority depends on terminations stated in § 422.510 and when CMS makes such a determination the facts associated with each case, § 423.509. The remaining CMS-initiated on or before August 1. The commenters including the type of contract (for nonrenewal bases (any of the bases that noted that the 90-day notice deadline example, MA coordinated care plan, support the imposition of intermediate enables affected beneficiaries to make a MA private fee-for-service) and the

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service areas associated with the with two minor modifications to • The accuracy of our estimate of the terminated contract and the new §§ 422.510(b) and 423.509(b). In information collection burden. application. reviewing the proposed regulation text, • The quality, utility, and clarity of Comment: Some commenters asked we found that the provisions directing the information to be collected. organizations with contracts terminated CMS to clarify how the proposed change • would affect the plan information prior to August 1 to issue beneficiary Recommendations to minimize the displayed on Medicare.gov. notices at least 90 days prior to the end information collection burden on the Response: CMS proposed eliminating of the current contract year should have affected public, including automated the category of CMS-initiated been added to §§ 422.510(b)(1) and collection techniques. nonrenewals primarily to reduce 423.509(b)(1), which govern ordinary In the November 28, 2017 (82 FR confusion among sponsoring terminations, not §§ 422.510(b)(2) and 56336) proposed rule, we solicited organizations and different CMS staff 423.509(b)(2), which govern immediate public comment on each of these issues concerning the authority under which contract terminations. Therefore, we for the following sections of the rule CMS or a contracting organization may have deleted the references in the containing information collection end a Medicare contract and the regulation text to §§ 422.510(b)(2)(v) and requirements (ICRs). We received instructions that apply to each process 423.509(b)(2)(v) and placed the relevant comments and we provide a summary of (for example, timing of contract language at §§ 422.510(b)(1)(iv) and the comments and our responses under decision, beneficiary notice 423.509(b)(1)(v). the respective ICR section. We also identified a grammatical error requirements). In implementing a in the proposed § 422.510(b)(2) and an termination or nonrenewal, it is critical A. Wage Data inconsistency with the language of for the party taking the step to end the § 423.509(b)(2)(v) which we are While we did not receive comments contract to be clearly identified so that correcting in the finalized text. As a related to any of the private sector or the end of the contract can be properly result we are making the necessary individual occupations or wage implemented. Generally, enrollees need grammatical correction in the new estimates, we are revising our wage only know when their plan will no § 422.510(b)(1)(iv) and making it estimates for individuals. To derive longer be available, not the party consistent with § 423.510(b)(1)(v). average costs for individual responsible for the decision to respondents, the proposed rule used the discontinue the plan. Therefore, we do III. Collection of Information federal minimum wage of $7.27/hour as not expect the proposed regulatory Requirements set out under the Fair Labor Standards change to have an impact on how and Under the Paperwork Reduction Act what plan information is displayed on Act (29 U.S.C. 206(a)). Based on internal of 1995 (44 U.S.C. 3501 et seq.), we are review, we are now adopting a rate of Medicare.gov, since it is a tool designed required to provide 60-day notice in the for use primarily by beneficiaries. $23.86/hour from the U.S. Bureau of Federal Register and solicit public Labor Statistics (BLS). Nevertheless, CMS will keep this comment before a collection of proposed change in mind when information requirement is submitted to 1. Private Sector Wages considering any updates to the the Office of Management and Budget Medicare.gov website. (OMB) for review and approval. In order To derive average costs, we used data Based on our consideration of the to fairly evaluate whether an from BLS’ May 2016 National comments and the expressions of information collection should be Occupational Employment and Wage support for this primarily technical approved by OMB, section 3506(c)(2)(A) Estimates for all salary estimates (http:// change to the regulations governing the of the Paperwork Reduction Act of 1995 www.bls.gov/oes/current/oes_nat.htm). MA and Part D contract termination (PRA) requires that we solicit comment In this regard, Table F1 presents the processes, we are finalizing the on the following issues: mean hourly wage, the cost of fringe amendments to §§ 422.506(b), • The need for the information benefits and overhead (calculated at 100 422.510(a), 422.510(b), 423.507(b), collection and its usefulness in carrying percent of salary), and the adjusted 423.509(a) and 423.509(b) as proposed out the proper functions of our agency. hourly wage.

TABLE 13—NATIONAL OCCUPATIONAL EMPLOYMENT AND WAGE ESTIMATES

Mean hourly Fringe benefits Adjusted BLS occupation title Occupation wage and overhead hourly wage code ($/hr) ($/hr) ($/hr)

Business Operations Specialist ...... 13–1000 $34.54 $34.54 $69.08 Compliance Officers ...... 13–1041 33.77 33.77 67.54 Computer and Information Systems Managers ...... 11–3021 70.07 70.07 140.14 Computer Programmer ...... 15–1131 40.95 40.95 81.90 Health Diagnostic and Treating Practitioners ...... 29–1199 40.77 40.77 81.54 Insurance Claim and Policy Processing Clerk ...... 43–9041 19.61 19.61 39.22 Lawyers ...... 23–1011 67.25 67.25 134.50 Medical and Health Service Manager ...... 11–9111 52.58 52.58 105.16 Medical Secretary ...... 43–6013 16.85 16.85 33.70 Office and Administrative Support Workers, All Other ...... 43–9199 17.33 17.33 34.66 Physicians and Surgeons ...... 29–1060 101.04 101.04 202.08 Physicians and Surgeons, all other ...... 29–1069 98.83 98.83 197.66 Software Developers and Programmers ...... 15–1130 48.11 48.11 96.22 Word Processors and Typists ...... 43–9022 19.22 19.22 38.44

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As indicated, we are adjusting our the notice that is currently sent to extended to include ‘‘other subsidy- employee hourly wage estimates by a beneficiaries who have a POS edit put eligible individuals’’ so that both full factor of 100 percent. This is necessarily in place to monitor opioid access and partial subsidy individuals are a rough adjustment, both because fringe (which will count as the initial notice treated uniformly. As such, the SEP benefits and overhead costs vary described in the preamble of this final limitation in this final rule will also be significantly from employer to rule and defined in § 423.153(f)(4)) and extended to include both full and partial employer, and because methods of does not capture the second notice that subsidy individuals. Once an individual estimating these costs vary widely from at-risk beneficiaries will receive is identified as a potential at-risk study to study. Nonetheless, there is no confirming their determination as such beneficiary, that individual will not be practical alternative and we believe that or the alternate second notice that permitted to use this election period to doubling the hourly wage to estimate potentially at-risk beneficiaries will make a change in enrollment until such total cost is a reasonably accurate receive to inform them that they were identification is terminated in estimation method. not determined to be at risk. accordance with § 423.153(f). Since 2013, there have been 4,617 Contingent with a Part D sponsor 2. Wages for Individuals POS edits submitted into MARx by plan opting to implement a drug management To derive average costs for sponsors for 3,961 unique beneficiaries program, Part D sponsors will identify, individuals, we used data from the May as a result of the drug utilization review and submit to CMS, an individual’s 2016 National Occupational policy. Given that there has not been a ‘‘potential’’ at-risk status and, if Employment and Wage Estimates for steady increase or decrease in edits, we applicable, confirmed at-risk status. The our salary estimate. We believe that the are using an average of 923 edits per Part D sponsor will include notification burden will be addressed under All year (4,617 POS edits/5 years) to assess of the limitation of the duals’ SEP in the Occupations (occupation code 00–0000) the burden under § 423.153(f). If we required initial notice to the beneficiary at $23.86/hour since the group of assume that the number of edits or that he or she has been identified as a individual respondents varies widely access to coverage limitations will likely potential at-risk beneficiary. from working and nonworking double due to the addition of pharmacy As explained previously, Part D plan individuals and by respondent age, and prescriber ‘‘lock-in’’ to OMS by this sponsors are already expected to send a location, years of employment, and rulemaking, to approximately 1,846 notice to some beneficiaries when the educational attainment, etc. such limitations, we then estimate a sponsor decides to implement a Unlike our private sector adjustment total of 3,693 initial and second notices beneficiary-specific POS claim edit to to the respondent hourly wage, we are (1,846 limitations × 2) corresponding to monitor opioid access. This notice is not adjusting this figure for fringe such edits/limitations. We estimate it covered under currently approved OMB benefits and overhead since the will take an average of 5 minutes (0.083 control number 0938–0964 (CMS– individuals’ activities would occur hours) at $39.22/hour for an insurance 10141), and will count as the initial outside the scope of their employment. claim and policy processing clerk to notice described in the preamble of this prepare each notice. We estimate an final rule and defined in § 423.153(f)(4)). B. Information Collection Requirements annual burden of 307 hours (3,693 This initial notice will include language (ICRs) notices × 0.083 hour) at a cost of to notify an individual of the inability × 1. ICRs Regarding the Implementation of $12,040.54 (307 hours $39.22/hour) or to use the duals’ SEP. Therefore, the the Comprehensive Addiction and $3.26 per notice ($12,040.54/3,693 burden associated with the notification Recovery Act of 2016 (CARA) notices). of the inability to use the duals’ SEP is Provisions (§ 423.153(f)) Part D plan sponsors are required to currently approved under OMB control upload these new notice templates into number 0938–0964 (CMS–10141). Excluding beneficiary appeals, the their internal claims systems. We This final rule also codifies an following requirements and burden will estimate that 219 Part D plan sponsors existing provision whereby an be submitted to OMB for approval under (31 PDP parent organizations and 188 individual can make an election within control number 0938–0964 (CMS– MA–PD parent organizations, based on 3 months of a gain, loss, or change to 10141). We did not receive any public plan year 2017 plan participation) will Medicaid or LIS eligibility, or comments pertaining to our proposed be subject to this requirement. We notification of such a change, whichever burden estimates, therefore we are estimate that it will take on average 5 is later. finalizing them as proposed. hours at $81.90/hour for a computer An individual who is determined to As discussed in section II.A. of this programmer to upload all of the notices be a potential at-risk or an at-risk rule, § 423.153(f) implements provisions into their claims systems. This results in individual will be able to use this SEP of section 704 of CARA which allows a total one-time burden of 1,095 hours to change plans. Also, if a potential at- Part D plan sponsors to establish a drug (5 hours per sponsor × 219 sponsors) at risk or at-risk individual is eligible for management program that includes a cost of $89,680.50 (1,095 hours × another election period (for example, ‘‘lock-in’’ as a tool to manage an at-risk $81.90/hour) or $409.50 per sponsor AEP, OEP, or other SEP), this SEP beneficiary’s access to coverage of ($89,680.50/219 sponsors). limitation will not prohibit the frequently abused drugs. The rule In aggregate, the burden to upload and individual from making an election. stipulates that Part D plan sponsors are prepare the additional second notice is Providing a limitation for dually- and required to notify at-risk beneficiaries 1,402 hours (307 hours + 1,095 hours) other LIS-eligible at-risk beneficiaries about their plan’s drug management at a cost of $101,722 ($12,041 + after the initial notification will program. Part D plan sponsors are $89,681). decrease sponsor burden in processing already expected to send a notice to Revisions to § 423.38(c)(4) will limit disenrollment and enrollment requests some beneficiaries when the sponsor the SEP for dual- or other LIS-eligible for dual- and LIS-eligible beneficiaries decides to implement a beneficiary- individuals who are identified as a who wish to change plans as outlined specific POS claim edit for opioids potential at-risk beneficiary subject to later in this section. (currently approved under OMB control the requirements of a drug management We estimate that 1,846 beneficiaries number 0938–0964 (CMS–10141). program, as outlined in § 423.153(f). As will meet the criteria to be identified as However, the approval only accounts for codified in § 423.38(c)(4), this SEP is an at-risk beneficiary and have a

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limitation implemented. About 76 administrative processing infrastructure must affirmatively request IRE review of percent of the 1,846 beneficiaries are or human resources needed to process an adverse plan level appeal decision estimated to be LIS (1,403 = 1,846 enrollments and disenrollments. made under a plan sponsor’s drug beneficiaries × 0.76). Approximately 10 Therefore, there is no change in burden management program, and will have percent of LIS-eligible enrollees use the for sponsors to implement this rights to an expedited redetermination. duals’ SEP to make changes annually component of the provision. The filing of an appeal is an information (140 = 1,403 × 0.10). Thus we estimate, This final rule also provides that the collection requirement that is associated at most, 140 changes per year will no review of at-risk determinations made with an administrative action pertaining longer take place because of the duals’ under the processes at § 423.153(f) be to specific individuals or entities (5 CFR SEP enrollment limitation. There are adjudicated under the existing Part D 1320.4(a)(2) and (c)). Consequently, the currently 219 Part D sponsors. This benefit appeals process and timeframes burden for preparing and filing the amounts to an average of 0.6 changes set forth in part 423 subparts M and U. appeal is exempt from the requirements per sponsor per year (140 changes/219 Consistent with existing rules for of the PRA; however, the burden for sponsors). In 2016, there were more redeterminations, an enrollee who appeals is included in the regulatory than 3.5888 million Part D plan wishes to dispute an at-risk impact analysis of this final rule. switches, and as such, a difference of determination will have 60 days from In aggregate, these components of this 0.6 enrollments or disenrollments per the date of the notice of the provision will result in an annual net sponsor will not impact the determination to make such request, cost of $101,722 (see Tables F2 and F3).

TABLE 14—ESTIMATED BURDEN FOR THE CARA PROVISIONS [In hours]

3-year 2019 2020 2021 average

Preparation and Upload Notices ...... 1,402 0 0 467.3 SEP Limitation * ...... 0 0 0 0 Appeals ** ...... N/A N/A N/A N/A

Total ...... 1,402 0 0 467.3 * This rule does not impose any new or revised information collection requirements/burden. ** Exempt from the PRA.

TABLE 15—ESTIMATED BURDEN FOR THE CARA PROVISIONS [In hours]

3-year 2019 2020 2021 average

Preparation and Upload Notices ...... $101,722 0 0 $33,907.3 SEP Limitation * ...... 0 0 0 0 Appeals ** ...... N/A N/A N/A N/A

Total ...... 101,722 0 0 33,907.3 * This rule does not impose any new or revised information collection requirements/burden. ** Exempt from the PRA.

2. ICRs Regarding Coordination of ‘‘opt in’’) election process that would be With regard to the default enrollment Enrollment and Disenrollment Through available to all MA organizations for notice, we note that there is not a MA Organizations and Effective Dates of their commercial, Medicaid or other standardized notice that previously Coverage and Change of Coverage non-Medicare plan members, may result existed, nor is a new standardized (§§ 422.66 and 422.68) in a minimal reduction in burden; notice being created; this enrollment however, this potential reduction is not notice serves the same purpose as the Enrollment requirements and burden quantifiable, and therefore, de minimus. notice required for beneficiary-initiated are currently approved by OMB under We note that this enrollment enrollments, in that it informs the control number 0938–0753 (CMS–R– mechanism is optional and that it beneficiary of the enrollment start date 267). Since this rule will not impose any existed prior to this regulation. As and of other information necessary to new or revised requirements/burden outlined in the proposed rule, we are access plan benefits and services. and we did not receive any public codifying an existing process that has As is the case currently for the comments pertaining to the burden been in place for more than a decade. seamless conversion enrollment discussion that was set out in our In terms of enrollment operations, the process, MA organizations choosing to proposed rule, we are not making any default enrollment process has elements offer a default enrollment process will changes under the 0938–0753 control similar to beneficiary-initiated request approval from CMS and, if number. (Note: While CMS–R–267 has enrollments (determining eligibility, approved, implement a process with expired, we are proposing to reinstate processing the enrollment transaction notification and processing elements the collection through this final rule.) and notifying the beneficiary) and, as similar to those carried out for We acknowledge that the establishment, such, the overall burden for enrollment beneficiary initiated enrollments, through subregulatory guidance, of a processing is not changing and is including issuance of a plan-developed new and simplified positive (that is, captured in our existing PRA package. notice to inform individuals of the

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enrollment and of other important plan and cost sharing between the only four instances (373 SNPs × 0.01) in information. individual’s current Medicaid managed which CMS would conduct passive As discussed in section II.A.7. of this care plan and the dual eligible MA enrollment each year. We did not rule, we are finalizing our proposal to special needs plan and the process for receive any comments related to the revise §§ 422.66 and 422.68 by: accessing care under the MA plan; an overall number of respondents or our Codifying the requirements for default explanation of the individual’s ability to claim that the provision is exempt from enrollment that are currently set out in decline the enrollment, up to and the PRA. subregulatory guidance,78 revising including the day prior to the Because we are not changing the current practice to limit the use of this enrollment effective date, and either eligibility criteria for integrated D–SNPs type of enrollment mechanism, and enroll in Original Medicare or choose that may receive passive enrollments in clarifying the effective date for ICEP another MA plan; and a general this final rule, our estimated number of elections. This will provide an MA description of alternative Medicare affected entities remains four. Since we organization the option to enroll its health and drug coverage options estimate fewer than 10 respondents, the Medicaid managed care enrollees who available to an individual in his or her information collection requirements and are newly eligible for Medicare into an Initial Coverage Election Period. burden related to the final provisions integrated D–SNP administered by the • Section 422.66(c)(2)(iv) is revised to under § 422.60(g) are exempt (5 CFR same MA organization that operates the clarify that the mandatory notice is in 1320.3(c)) from the requirements of the Medicaid managed care plan. While the addition to the information and PRA. provision restricts its use to individuals documents required to be provided to 4. ICRs Regarding the Part D Tiering in the organization’s Medicaid managed new enrollees under § 422.111. Exceptions (§ 423.578(a) and (c)) care plan that can be enrolled into an 3. ICRs Regarding Passive Enrollment integrated D–SNP, the estimated burden While the requirement to send a Flexibilities To Protect Continuity of for an organization that desires to use written denial notice is subject to the Integrated Care for Dually Eligible default enrollment and obtain CMS PRA, the requirement and burden are Beneficiaries (§ 422.60(g)) approval will not change. For those MA currently approved by OMB under organizations that want to use this As discussed in section II.A.7. of this control number 0938–0976 (CMS– enrollment mechanism and request and rule, we are finalizing a limited 10146). We did not receive any PRA- obtain CMS approval, the administrative expansion of passive enrollment related public comments and are requirements will remain unchanged authority under § 422.60(g). More finalizing the proposed provisions from the current practice. specifically, the new provisions at without modification. Since this rule As indicated in the preamble to this § 422.60(g) will allow CMS, in will not impose any new or revised final rule, we are finalizing the consultation with a state Medicaid requirements/burden, we are not proposed changes with the following agency, to implement passive making any changes under the 0938– modifications, none of which we believe enrollment procedures in situations 0976 control number. As discussed in will result in any impact to the where criteria identified in section II.A.9 of this rule, we are Medicare Trust Funds. § 422.60(g)(1)(iii) and (g)(2) are met. We finalizing the proposed changes to • Section 422.66(c)(2)(i) is revised to are finalizing these provisions as § 423.578(a) and (c) without clarify that we will allow default proposed, with one exception. modification. The changes establish a enrollment into a FIDE–SNP Specifically, we are modifying revised framework for treatment of administered by an MA organization § 422.60(g)(4) to require, under new tiering exception requests based on under the same parent organization as § 422.60(g)(4)(i)(B), that plans receiving whether the requested drug is a brand the organization that operates the passive enrollments under name or generic drug or biological Medicaid managed care plan in which § 422.60(g)(1)(iii) send two notices to product, and where the same type of the individual remains enrolled. enrollees. We also clarify that for drug alternatives are located on the • Section 422.66(c)(2)(i) is revised to passive enrollments under plan’s formulary. The changes also clarify that, for an organization to be § 422.60(g)(1)(i) and (ii), only one notice clarify the appropriate cost-sharing approved for default enrollment, it must will continue to be required. assigned to approved tiering exception have an overall quality rating, from the Accordingly, we are modifying requests when preferred alternative most recently issued ratings, under the § 422.60(g)(4) to require, under new drugs are on multiple lower-cost tiers. rating system described in §§ 422.160 paragraph (g)(4)(i)(B), that plans At the coverage determination level, if through 422.166, of at least 3 stars or is receiving passive enrollments under a plan issues a decision that is partially a low enrollment contract or new MA § 422.60(g)(1)(iii) send two notices to or fully adverse to the enrollee, it is plan as defined in § 422.252. In enrollees. New § 422.60(g)(4)(i)(A) will already required to send written notice addition, the MA organization must not retain the original requirement that one of that decision. The current be under an enrollment suspension. notice be provided to passive enrollee requirement to send written notice of an • Section 422.66(c)(2)(ii) is revised to under § 422.60(g)(1)(iii). However, we adverse coverage determination is not include an approval period not to note that we are making no changes to changed by this rule. We do not expect exceed 5 years, subject to CMS authority the criteria for determining plan that any of the changes will significantly to rescind or suspend approval if the eligibility for passive enrollment under impact the overall volume or the plan is non-compliant. § 422.60(g)(1)(iii). • approval rate of tiering exceptions Section 422.66(c)(2)(iv) is revised to In the proposed rule, we estimated requests, which represent a consistently state that the notice issued by the MA that approximately 1 percent of the 373 low percentage of total request volume. organization will include information active D–SNPs would meet the criteria on the differences in premium, benefits and operate in a market where all of the 5. ICRs Regarding Establishing conditions of passive enrollment are Limitations for the Part D Special 78 Chapter 2 of the Medicare Managed Care met and where CMS, in consultation Enrollment Period for Dual Eligible Manual found at https://www.cms.gov/Medicare/ Beneficiaries (§ 423.38(c)(4)) Eligibility-and-Enrollment/MedicareMang with a state Medicaid agency, CareEligEnrol/index.html?redirect=/MedicareMang implements passive enrollment. We Enrollment processing and CareEligEnrol/. therefore estimated that there would be notification requirements are codified at

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§ 423.32(c) and (d) and are not being not change any respondent they would no longer need to provide revised as part of this rulemaking. requirements or burden pertaining to such fills. Permitting Part D sponsors to Therefore, no new or additional any of CMS’ Star Ratings-related PRA immediately substitute certain generic information collection requirements are packages including: OMB control drugs or to make other formulary being imposed. Moreover, the number 0938–0732 for CAHPS (CMS– changes sooner than has been required enrollment processing and notification R–246), OMB control number 0938– would allow Part D sponsors to take requirements and burden are currently 0701 for HOS (CMS–10203), OMB action sooner, but would not increase approved by OMB under control control number 0938–1028 for HEDIS nor decrease paperwork burden. number 0938–0964 (CMS–10141). Since (CMS–10219), OMB control number While the proposed provisions would this rule will not impose any new or 0938–1054 for Part C Reporting additionally require general notice that revised requirements/burden, we are not Requirements (CMS–10261), and OMB certain generic substitutions could take making any changes under the 0938– control number 0938–0992 for Part D place immediately, this notice would 0964 control number. We did not Reporting Requirements (CMS–10185). appear in documents that Part D receive any comments pertaining to the We received no comments on our sponsors are already providing to their burden discussion within our proposed proposed burden discussion and enrollees, such as formularies and rule. therefore are finalizing this provision EOCs. CMS will provide this language As discussed in section II.A.10. of this without modification. Since this rule in the model documents it distributes as rule, we are finalizing the proposed will not impose any new or revised part of the yearly revisions to those provision with modifications. The requirements/burden, we are not documents. The marketing and revisions do not affect any of our making changes under any of the beneficiary communications general currently approved requirements and aforementioned control numbers. notice requirements and burden are burden under OMB control number currently approved by OMB under 0938–0964. 7. ICRs Related to Expedited control number 0938–0964 (CMS– In section II.A.10. of this final rule, Substitutions of Certain Generics and 10141). Similarly, § 423.128(d)(2)(ii) we are revising § 423.38(c) to limit the Other Midyear Formulary Changes already requires websites to include SEP for dual- and LIS-eligible (§§ 423.100, 423.120, and 423.128) information about drug removals and individuals (other than potential at-risk The general notice requirements and changes to cost-sharing. In other words, or at-risk beneficiaries) so that it is only burden are currently approved by OMB the general notice requirement would available onetime-per-calendar-quarter under control number 0938–0964 not require efforts in addition to routine election during the first nine months of (CMS–10141). We are finalizing the updates to beneficiary communications the year. In addition, we are establishing proposed provision with a modification materials and websites. In theory, if Part new SEPs at § 423.38(c)(9) and (c)(10) that has no impact on our information D sponsors that would have been denied for beneficiaries who have a change in collection requirements or associated requests to make generic changes could their dual or LIS-eligible status or have burden estimates (see section II.A.14. of do so under the proposed provision, been assigned into a plan by CMS or a this rule for details). Since this rule they would have somewhat more of a State, respectively. would not impose any new or revised burden since the provision does require In instances where an individual is requirements/burden, we are not notice including direct notice to affected not able to utilize the dual SEP because making any changes under the 0938– enrollees. However, our practice has of this rule’s limitations, we anticipate 0964 control number. been to approve all generic substitutions that there will be no change in burden. In section II.A.14. of the proposed that would meet the requirements of Under current requirements, if a rule, we proposed to expedite certain this provision—which again means that beneficiary uses the dual SEP to generic substitutions and other midyear the provisions will just permit those disenroll from their plan, the plan will formulary changes by, for instance, substitutions to take place sooner. send a notice to the beneficiary to permitting Part D sponsors to acknowledge the voluntary immediately substitute newly approved 8. ICRs Regarding the Restoration of the disenrollment request. If the beneficiary generic drugs as specified and, for other MA Open Enrollment Period (§§ 422.60, is subject to the dual SEP limitation, the formulary changes, to provide 30 rather 422.62, 422.68, 423.38, and 423.40) plan will send a notice to deny their than 60 days notice and, as applicable, The following requirements and voluntary disenrollment request. The provide a month’s supply rather than a burden will be submitted to OMB for requirement to acknowledge the 60-day supply. Also, we proposed to approval under control number 0938– beneficiary request and address the except applicable generic substitutions 0753 (CMS–R–267). Since we did not resolution will be the same in both from the transition process. We are receive any public comments pertaining scenarios, but the content of the notice finalizing the provisions as proposed, to our burden estimates, we are will be different. As indicated earlier, with the following changes. We are finalizing them as proposed, with the the requirements and burden associated specifying that Part D sponsors may exception of our wage and cost with the provision of both notices are substitute during the plan year generics estimates for beneficiaries. (Note: While currently approved by OMB under that have are released after the date that CMS–R–267 has expired, we are control number 0938–0964 (CMS– they initially submit their formulary; proposing to reinstate the collection 10141). that substituted generics must be offered through this final rule.) on the same or lower cost-sharing tier As discussed in section II.B.1. of this 6. ICRs Regarding Medicare Advantage rather than at the same or lower cost- rule, we are finalizing our proposal to and Prescription Drug Plan Quality sharing; and that Part D sponsors must codify the requirements for open Rating System (§§ 422.162, 422.164, provide, when required, an ‘‘approved’’ enrollment and disenrollment 422.166, 422.182, 422.184, and 422.186) month’s supply—that is, the month’s opportunities at §§ 422.60, 422.62, As discussed in section II.A.11. of this supply approved in a plan’s bid. 422.68, 423.38, and 423.40. This action rule, we are finalizing our proposal to Excepting generic substitutions that will eliminate the existing MADP and codify the existing measures and would otherwise require transition fills establish an MA Open Enrollment methodology for the Part C and D Star from the transition process would lessen Period (OEP). This new OEP revises a Ratings program. The provisions will the burden for Part D sponsors because previous OEP which will allow MA-

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enrolled individuals the opportunity to Once the enrollment change is changes under the 0938–0935 control make a one-time election during the first completed, we estimate that it will take number. 3 months of the calendar year to switch 1 minute at $69.08/hour for a business Section 422.514(b) provides Medicare MA plans, or disenroll from an MA plan operations specialist to electronically Advantage (MA) organizations, and obtain coverage through Original generate and submit a notice to convey including provider sponsored Medicare. Although no new data will be the enrollment or disenrollment organizations, with the opportunity to collected, the burden associated with decision for each of the 558,000 request a waiver of CMS’s minimum this requirement will be the time and beneficiaries. The total burden to enrollment requirements at § 422.514(a) effort that it takes an MA organization complete the notices is 9,300 hours during the first 3 years of the contract. to process an increased number of (558,000 notices × 1 min/60) at a cost of Section 422.514(b) also requires that enrollment and disenrollment requests $642,444 (9,300 hour × $69.08/hour) or MA organizations reapply for the by individuals using this OEP, which is $1.15 per notice ($642,444/558,000 minimum enrollment waiver in the first available in 2019. notices) or $1,372.74 per organization second and third years of their contract. To estimate the potential increase in ($642,444/468 MA organizations). However, since CMS has not received or the number of enrollments and The burden associated with the approved any waivers outside of the disenrollments from the new OEP, we electronic submission of enrollment application process, this rule removes considered the percentage of MA- information to CMS is estimated at 1 the requirement for MA organizations to enrollees who used the old OEP that minute at $69.08/hour for a business reapply for the minimum enrollment was available from 2007 through 2010. operations specialist to submit the waiver during years 2 and 3 of the For 2010, the final year the OEP existed enrollment information to CMS during contract under § 422.514(b)(2) and (3). before the MADP took effect, we found the open enrollment period. The total The revision to § 422.514(b)(2) now that approximately 3 percent of burden is estimated at 9,300 hours clarifies that CMS will only accept a individuals used the OEP. While the (558,000 notices × 1 min/60) at a cost of waiver through the application process parameters of the old OEP and new OEP $642,444 (9,300 hour × $69.08/hour) or and that we will allow the minimum differ slightly, we believe that this $1.15 per notice ($642,444/558,000 enrollment waiver, if approved by CMS, percentage is the best approximation to notices) or $1,372.74 per organization to remain effective for the first 3 years determine the burden associated with ($642,444/468 MA organizations). of the contract. this change. In January 2017, there were Additionally, MA organizations will 10. ICRs Regarding Disclosure approximately 18,600,000 individuals have to retain a copy of the notice in the 79 Requirements (§§ 422.111 and 423.128) enrolled in MA plans. Using the 3 beneficiary’s records. The burden percent adjustment, we expect that associated with this task is estimated at CMS will submit the following 558,000 individuals (18.6 million MA 5 minutes at $34.66/hour for an office requirements and burden to OMB for × beneficiaries 0.03), will use the OEP and administrative support worker to approval under control number 0938– to make an enrollment change. perform record retention for the open 1051 (CMS–10260). We did not receive We estimate it will take a beneficiary enrollment period. In aggregate we any comments pertaining to our approximately 30 minutes (0.5 hours) at estimate an annual burden of 46,500 proposed requirements or burden $23.86/hour to complete an enrollment hours (558,000 beneficiaries × 5 min/60) estimates. With the exception of the request. The burden for all beneficiaries at a cost of $1,606,110 (46,500 hour × added language in § 422.111(h)(2)(iii), is estimated at 279,000 hours (558,000 $34.66/hour) or $3,431.86 per we are finalizing them as proposed. × beneficiaries 0.5 hour) at a cost of organization ($1,606,110/468 MA × a. Timing of Disclosure (§§ 422.111(a)(3) $6,656,940 (279,000 hour $23.86/ organizations). and 423.128(a)(3)) hour) or $11.93 per beneficiary We estimate a total annual burden for ($6,656,940/558,000 beneficiaries). all MA organizations to be 111,600 As discussed in section II.B.4 of this There are currently 468 MA rule, we are finalizing our proposal to 80 hours (46,500 hour + 9,300 hour + 9,300 organizations in 2017. Not all MA hour + 46,500 hour) at a cost of revise the timing of disclosing the organizations are required to be open for $6,103,218 ($3,212,220 + $642,444 + information required under § 422.111(a) enrollment during the OEP. However, $642,444 + $1,606,110). Per and (b) and the timing of such for those that are, we estimate that this organization, we estimate an annual disclosures under § 423.128(a) and (b) enrollment period will result in burden of 238 hours (111,600 hour/468 which provide for the disclosure of plan approximately 1,192 enrollments per MA organizations) at a cost of $13,041 content information to beneficiaries. organization (558,000 individuals/468 ($6,103,218/468 organizations). For Sections 422.111(a)(3) and 423.128(a)(3) organizations) during the OEP each beneficiaries we estimate a total annual require that MA plans and Part D year. burden of 279,000 hours at a cost of sponsors provide the information in We estimate it will take $6,656,940 and a per beneficiary burden §§ 422.111(b) and 423.128(b) by the first approximately 5 minutes at $69.08/hour of 30 minutes at a cost of $11.93. day of the annual enrollment period. for a business operations specialist to This is a change from current practice, 9. ICRs Regarding the Medicare determine eligibility and effectuate the which requires that plans provide the Advantage Plan Minimum Enrollment changes for open enrollment. The information 15 days before that period. burden for all organizations is estimated Waiver (§ 422.514(b)) × Importantly, plans must continue to at 46,500 hours (558,000 beneficiaries The requirements and burden distribute the ANOC 15 days prior to the 5 min/60) at a cost of $3,212,220 (46,500 × associated with the submission of the AEP. In other words, the revised hour $69.08/hour) or $6,864 per minimum enrollment waiver in the provision provides the option of either organization ($3,212,220/468 MA application are currently approved by submitting the EOC with the ANOC or organizations). OMB under control number 0938–0935 waiting until the first day of the AEP, or (CMS–10237). We received no sooner, for distribution. The provision 79 Medicare Beneficiary Database (MBD), December 29, 2016. https://www.cms.gov/. comments on our proposed provisions simply gives plans that may need some 80 Medicare Beneficiary Database (MBD), and are finalizing them without change. flexibility the ability to rearrange December 29, 2016. https://www.cms.gov/. Consequently, we are not making any schedules and defer a deadline.

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Consequently, there is no change in million beneficiaries in MA, section mailings is $6,629,382 ($0.138/pounds × burden. 1876 cost,81 and prescription drug 1.5 pound × 32,026,000 EOCs). contracts for contract year 2019. At this In aggregate, we estimate an annual b. Method of Disclosure time, we have no mechanism for savings of $54,668,382 ($24,019,500 + (§§ 422.111(h)(2) and 423.128(d)(2)) measuring the number of beneficiaries $24,019,500 + $6,629,382). Sections 422.111(h)(2)(i) and who have asked to receive this 11. ICRs Regarding Communication/ 423.128(d)(2)(i) require that plans document electronically by opting into maintain a website which contains the Marketing Materials and Activities a plan’s electronic delivery system. (Parts 422 and 423, Subpart V) information listed in §§ 422.111(b) and However, we expect this number to be 423.128(b). Section 422.111(h)(2)(ii) not significant. CMS will submit the following requirements and burden to OMB for states that the posting of the EOC, Based on reports from the approval under control number 0938– Summary of Benefits, and provider internetSociety.org and Pew Research 1051 (CMS–10260). As indicated, public network information on the plan’s Center,82 we estimate that 33 percent of comments were received and are website ‘‘does not relieve the MA these beneficiaries who are in MA and organization of its responsibility under summarized below along with our Prescription Drug contracts will prefer § 422.111(a) to provide hard copies to response. We are not making any to opt in to receive hard copies instead enrollees.’’ There is no parallel to changes to the proposed provisions, and of electronic copies. Thus, the savings § 422.111(h)(2)(ii) in § 423.128 for Part D we are finalizing them as proposed. comes from the 67 percent of sponsors. Further, § 423.128(a) requires However, we have made technical beneficiaries who are in MA and the disclosures ‘‘in the manner specified changes to correct errors identified in Prescription Drug contracts that will not by CMS.’’ the proposed rule’s burden analysis. To In § 422.111(h)(2)(ii), we had opt in to having printed copies mailed address a mathematical error, we have to them, namely 32,026,000 proposed to modify the sentence stating × updated the total number of materials that the posting of the EOC, Summary beneficiaries (47,800,000 beneficiaries submitted from 80,110 to 79,584. We of Benefits, and provider network 0.67). have also addressed an additional information on the plan’s website does The major expenses in printing an mathematical error for the material no not relieve the plan of its responsibility EOC include paper, toner, and mailing longer submitted under the 6000 code to provide hard copies of these costs. The typical EOC has 150 pages. from 1,407 to 1,667. As a result of these documents to beneficiaries ‘‘upon Typical wholesale costs of paper are corrections, the total number of request.’’ In this final rule, we removed between $2.50 and $5.00 for a ream of materials that will no longer be the ‘‘Summary of Benefits’’ from that 500 sheets. We assume $2.50 per ream submitted has changed from 39,824 to sentence and added ‘‘The summary of of 500 sheets. Since each EOC has 150 39,298, the total number of hours has benefits. Posting does not relieve the pages, we are estimating a cost of $0.75 changed from 19,912 to 19,649, and the MA organization of its responsibility per EOC [$2.50/(150 pages per EOC/500 cost saved has changed from $1,398,372 under paragraph (a) of this section to sheets per ream)]. Thus, we estimate to $1,357,353. In addition, we removed provide hard copies to enrollees as CMS that the total savings from paper is the PACE and Medicare-Medicaid Plans directs’’ to § 422.111(h)(2)(iii) excepting $24,019,500 (32,026,000 EOCs × $0.75 from the chart as they will not be the Summary of Benefits from electronic per EOC). impacted by this regulation. delivery of certain required documents. Toner costs can range from $50 to As discussed in section II.B.5. of this We also added the phrase ‘‘in the $200 and each toner can last 4,000 to rule, we are finalizing our proposal to manner specified by CMS’’ in 10,000 pages. We conservatively assume narrow the definition of ‘‘marketing § 422.111(a). a cost of $50 for 10,000 pages. Each materials’’ under §§ 422.2260 and The changes give MA plans the toner will print 66.67 EOCs (10,000 423.2260 to only include materials and flexibility to provide the information in pages per toner/150 pages per EOC) at activities that aim to influence § 422.111(b) electronically when a cost of $0.005 per page ($50/10,000 enrollment decisions. We believe the specified by CMS as a permissible pages) or $0.75 per EOC ($0.005 per revised definition appropriately delivery option, and better aligns with page × 150 pages). Thus, we estimate safeguards potential and current MA/ the provisions under § 423.128. We that the total savings on toner is PDP enrollees from inappropriate continue to specify hardcopy mailing, as $24,019,500 (32,026,000 EOCs × $0.75 steering of beneficiary choice, while not opposed to electronic delivery, for most per EOC). including materials that pose little risk documents that convey the type of Regarding mailing costs, since a ream to current or potential enrollees and are information described in paragraph (b). of paper with 2,000 8.5 inches by 11 not traditionally considered CMS intends that provider and inches pages weighs 20 pounds or 320 ‘‘marketing.’’ The narrowed definition pharmacy directories, and EOC ounces it then follows that 1 sheet of reduces the burden to MA organizations documents are those for which paper weighs 0.16 ounces (320 ounces/ and Part D sponsors by reducing the electronic posting and delivery of a hard 2,000 pages). Therefore, a typical EOC of number of materials required to be copy upon request are permissible. 150 pages weighs 24 ounces (0.016 submitted to us for review. Electronic delivery reduces plan burden ounces/page × 150 pages) or 1.5 pounds. To estimate the savings, we reviewed by eliminating printing (paper and Since commercial mailing rates are 13.8 the most recent 12-month period of toner) and mailing costs, when cents per pound, the total savings in marketing material submissions from applicable. Additionally, the IT systems the Health Plan Management System, of the plans are already set up to format July 2016 through and including June 81 Per 42 CFR 417.427, cost plans must comply and print these documents. with § 422.111 and § 423.128. 2017. Consistent with the figures in our To estimate the cost of printing these 82 Global internet Report, 2017, internet Society, currently approved information documents, we note that the CMS http://www.internetsociety.org/globalinternetreport/ collection request, we continue to Trustee’s report, accessible at https:// 2016/?gclid=EAIaIQobChMI-tz1nN_W1QIVgoKz estimate that it takes a plan 30 minutes Ch1EVggBEAAYASAAEgLpj_D_BwE and ‘‘Tech www.cms.gov/Research-Statistics-Data- Adoption Climbs Among Older Adults,’’ Pew at $69.08/hour for a business operations and-Systems/Statistics-Trends-and- Research Center, http://www.pewinternet.org/2017/ specialist to submit the marketing Reports/ReportsTrustFunds/, lists 47.8 05/17/tech-adoption-climbs-among-older-adults/. materials. To complete the savings

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analysis, we also must estimate the the current regulatory marketing marketing material type. The relevant number of marketing materials that definition. codes and counts are summarized in would have been submitted to us under Marketing materials are coded using Table 16. 4- or 5- digit numbers, based on BILLING CODE 4120–01–P

VerDate Sep<11>2014 21:39 Apr 13, 2018 Jkt 244001 PO 00000 Frm 00258 Fmt 4701 Sfmt 4700 E:\FR\FM\16APR2.SGM 16APR2 daltland on DSKBBV9HB2PROD with RULES2 Federal Register / Vol. 83, No. 73 / Monday, April 16, 2018 / Rules and Regulations 16697 8 3 6 Cost 379,629 (in$) Saved 19307.86 57,578.18 $1,357,35 56,369.28 535,853.5 54,020.56 49,397.66 205,236.6 (Per Rate $69.08 $69.08 $69.08 $69.08 $69.08 $69.08 $69.08 $69.08 $69.08 Wage Hour) 9 .5 s 816 d 782 The 19,64 7,757 5,495 Save 2,971 714.5 279.5 Total Hour 0.5 0.5 0.5 0.5 0.5 0.5 0.5 0.5 0.5 nse per Respo Hours ANALYSIS 559 will 1,632 1,429 1,564 5,942 d of be 15,514 10,991 39,298 longer that Number Submitte no Materials BURDEN 0 0 of 981 ials 1,169 1,667 ded 5,162 er Exclu 32,974 Numb 40,286 Mater SUBMISSION that Excluded of scripts forms advertising Material(s)* MATERIAL Description n/a n/a General Enrollment Enrollment includes benefits includes information n/a n/a n/a of MARKETING Code Total Under Materials Submitted 16: Marketing Number 16,495 1,564 1,429 79,584 6,794 559 5,942 43,965 2,836 Total TABLE Rider related and Drug Description Creditable Coverage/LEP Grievances urveys Advertisements ANOC/EOC/LIS Presentations/Scripts/S Disenrollment Formulary Enrollment documents ngCode Marketi 1000 1100 5000 8000 6000 3000 4000 2000

BILLING CODE 4120–01–C By reducing the number of marketing documents (79,584 current¥40,286 materials submitted to CMS by 39,298 excluded) we estimate a savings of

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19,649 hours (39,298 materials * 0.5 currently the case, formularies will Comment: A commenter requested hours per material) at a cost savings of continue to be submitted to us for that the descriptions in the chart $1,357,353 (19,649 hours * 69.08 per review in capacities outside of include all materials that fall under the hour). Some key points in the marketing (currently approved under general marketing code listed. calculations are as follows: OMB control number 0938–0763 (CMS– Response: In developing the chart, • There were a total of 79,584 R–262)). Formularies, however, will no CMS used the marketing code marketing materials submitted to CMS longer fall under the new regulatory descriptions reflected in HPMS. The during the 12-month period sampled. definition of marketing and hence will description is meant to give the reader These materials already exclude PACE not be submitted separately for review a sense of what materials fall under the program marketing materials (30000 as marketing materials. Code) which are governed by a different • Marketing code 6000 includes sales code as opposed to an all-inclusive list. authority and not affected by this final scripts which are predominantly used to Listing all material types would not be rule. The 79,584 figure also excludes encourage enrollment, and will likely practical. Readers can reference the codes 15000, 16000, and 17000 still fall under the scope of the new marketing section of HPMS for a list of Medicare-Medicaid Plan (MMP) marketing definition. As such, we must all codes and material types. materials. The MMP materials are not subtract 1,169 documents (code 6013) 12. ICRs Related to Preclusion List being counted as the decision for review from the 79,584 total marketing Requirements for Individuals and rests with the states and CMS. materials. Entities in MA, Cost Plans, and PACE • Section 1851(h) of the Act is clear • Marketing code 8000 includes (§ 422.222) and Prescribers in Part D that ‘‘applications,’’ which CMS also creditable coverage and late enrollment refers to as enrollment or election forms, penalty (LEP) notices that will fall (§ 423.120(c)(6)) must be reviewed. Thus the 981 outside of the new regulatory definition a. Preclusion List Requirements for materials submitted under marketing of marketing and no longer require Part C (§ 422.222) code 1070, enrollment forms, must be submission. Over the 12-month period subtracted from the 79,584. sampled, this represents 559 material The following requirements and • Marketing code 1100 includes the submissions. burden will be submitted to OMB for combined ANOC/EOC as well as the We received the following comments. approval under control number 0938– D–SNP standalone ANOC. CMS intends A summary of the comments and our 0685 (CMS–855A, –855B, and –855I). to split the ANOC and EOC and will response follow: We did not receive any comments still require the ANOC be submitted as Comment: A commenter wanted CMS pertaining to our proposed a marketing material, whereas the EOC to include PACE marketing materials in requirements, therefore we are finalizing will no longer be considered marketing the marketing chart. them as proposed. and not require submission. To account Response: PACE marketing materials were intentionally omitted because Consistent with the proposed rule (82 for the ANOC submission, CMS FR 56488), we estimate that 120,000 MA estimates that 5,162 ANOCs will still PACE marketing is not impacted by providers and suppliers have yet to require submission. changes to subpart V under both parts • We do not expect any disenrollment 422 and 423. enroll in Medicare via the CMS–855 or grievance forms (the 2000 and 3000 Comment: A commenter requested application. Based on internal CMS codes) to be required submissions under that Table 16 (currently Table F4) reflect statistics we estimate that 6,000 Part A this final rule. the inclusion of materials that will fall providers and certain Part B certified • Marketing code 4000 covers all under the purview of CMS review based suppliers would have completed the advertisements which constitute 55 on this final regulation. CMS–855A application, 24,000 Part B percent (43,965) of the 79,584 materials. Response: The intent of the chart is to organizational suppliers would have The majority of these advertisements provide an estimate of the aggregate completed the CMS–855B application, deal with benefits and enrollment. We savings that will result from the and 90,000 physicians and non- estimate 25 percent of the 43,965 code regulatory changes to Subpart V, rather physician practitioners would have 4000 documents (that is, 10,991 than to provide a comprehensive list of completed the CMS–855I application. documents) will fall outside of the new the materials that will or will not We believe that savings will accrue for regulatory definition of marketing and require submission as a result of this providers and suppliers from the no longer require submission. Thus, we final rule. As noted in response to elimination of our MA/Part C must subtract these 32,974 comments in section II.B.5. of this rule, enrollment requirement under (43,965¥10,991) from the 79,584. CMS intends on issuing subregulatory § 422.222. Table 17 summarizes the • Marketing code 5000 covers guidance to provide more detailed burden associated with the completion formulary drugs. Although, as is information on material status. of each form.

TABLE 17—CMS–855 APPLICATION SAVINGS [Time and costs]

Number of Hours for respondents Hours for Hours for an authorized Submission type no longer completion a physician official to Hours for Time savings Cost savings required to by office to review review and completion * (hours) ($) enroll personnel and sign sign

CMS–855A ...... 6,000 5 n/a 1 6 36,000 $1,641,960 CMS–855B ...... 24,000 4 n/a 1 5 120,000 5,759,040 CMS–855I ...... 90,000 2.5 0.5 n/a 3 270,000 16,676,100

Total ...... 120,000 11.5 0.5 2 14 426,000 24,077,100 * The per response time estimate is consistent with what is currently approved by OMB.

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In projecting the savings, we assume are not making any changes under the will be submitted to OMB for approval that a medical and health services 0938–1152 control number. under control number 0938–0964 manager will serve as the provider’s or This final rule revises § 422.310 by (CMS–10141). We did not receive any supplier’s ‘‘authorized official’’ and will adding a new paragraph (d)(5) which comments pertaining to our proposed sign the CMS–855A or CMS–855B requires that, for the data described in requirements, therefore we are finalizing application on the provider’s or § 422.310(d)(1) as data equivalent to them as proposed. supplier’s behalf. Medicare fee-for-service data (which is As discussed in sections II.D.10. and Therefore, we project the following also known as MA encounter data), MA 11. of this rule, we are finalizing our total hour and savings: organizations must submit a National proposal under § 423.120(c)(6) to • CMS–855A: We estimate a total Provider Identifier in a Billing Provider require that Part D sponsors provide reduction in hour burden of 36,000 field on each MA encounter data record, written notice to the beneficiary of the × hours (6,000 applicants 6 hours). With per CMS guidance. We do not expect prescriber’s presence on the preclusion the cost of each application processed any additional burden from this list and take reasonable efforts to by a medical secretary and signed off by provision, since it is consistent with furnish written notice to the prescriber. a medical and health services manager existing policy. The burden associated with these as being $273.66 [($33.70/hour × 5 provisions will be the time and effort hours) + ($105.16/hour × 1 hour)], we c. Preclusion List Requirements for necessary for Part D adjudication estimate a total savings of $1,641,960 Part D Sponsors systems to be programmed and for (6,000 applications × $273.66). (1) Enrollment in Medicare Part D model notices to be created, generated, • CMS–855B: We estimate a total (§ 423.120(c)(6)) and disseminated. However, we are not reduction in hour burden of 120,000 finalizing the provision that required hours (24,000 applicants × 5 hours). The following requirements and Part D sponsors cover a provisional With the cost of each application burden will be submitted to OMB for supply of a drug before they reject a processed by a medical secretary and approval under control number 0938– claim based on a prescriber’s inclusion signed off by a medical and health 1135 (CMS–855O). We did not receive on the preclusion list. services manager as being $239.96 any comments pertaining to our For 2019, we estimate that it will take [($33.70/hour × 4 hours) + ($105.16/ proposed requirements, therefore we are all 30 sponsors and PBMs with Part D hour × 1 hour)], we estimate a total finalizing them as proposed. adjudication systems a total of savings of $5,759,040 (24,000 As discussed in the proposed rule (82 approximately 93,600 hours for software applications × $239.96). FR 56474), we believe that savings will developers and programmers to program • CMS–855I: We estimate a total accrue for the prescriber community their systems to comply with the reduction in hour burden of 270,000 from this rule’s elimination of the requirements of § 423.120(c)(6). In 2020 hours (90,000 applicants × 3 hours). requirement under § 423.120(c)(6)) that and 2021, we do not anticipate any With the cost of each application prescribers enroll in Medicare in order system costs since all changes were processed by a medical secretary and to prescribe Part D drugs. implemented in 2019. The sponsors and physician as being $185.29 [($33.70/ In the proposed rule (82 FR 56474), PBMs will need approximately 6 to 12 hour × 2.5 hours) + ($202.08/hour × 0.5 we estimated that approximately months to perform system changes and hours)], we estimate a savings of 420,000 prescribers have yet to enroll in testing. The total time figures are based $16,676,100 (90,000 applications × Medicare via the CMS–855O on a 6-month preparation and testing $185.29). application. Based on updated data we period. There are roughly 1,040 full- Given the foregoing, we estimate that are revising this estimate to time working hours in a 6-month providers and suppliers will experience approximately 340,000 un-enrolled period. Using an estimate of 3 full-time a total reduction in hour burden of prescribers. However, our data shows software developers and programmers at 426,000 hours (270,000 hours + 120,000 that there are 25,000 providers who $96.22/hour results in the hours + 36,000 hours) and a total cost overlap leaving 315,000 unenrolled aforementioned 93,600 hour figure (3 savings of $24,077,100 ($16,676,100 + prescribers in Part D. We also estimate workers × 1,040 hours × 30 sponsors/ $5,759,040 + $1,641,960). We expect that it will take 0.5 hours for a PBMs) at a cost of $9,006,192 (93,600 these reductions and savings to accrue prescriber to complete a CMS–855O hours × $96.22/hour). in 2019 and not in 2020 or 2021. application. Consistent with the May 6, 2015 IFC, Nonetheless, when distributed over the This is based on the following we continue to estimate that 212 parent course of OMB’s 3-year approval period assumptions: organizations will need to create two (2019 to 2021), we expect an annual • A medical secretary will take 0.42 template notices to notify beneficiaries savings of 142,000 hours (426,000 hours at $33.70/hour to prepare the and prescribers that prescriptions will hours/3 years) at $8,025,700 application. be rejected due to the prescriber’s ($24,077,100/3 years) per year. • A physician will take 0.08 hours at inclusion on the Preclusion List. We $202.08/hour to review and sign the project that it will take each b. MA Encounter Data (§ 422.310(d)(5)) application. organization 3 hours at $69.08/hour for The requirements and burden This will result in a per application a business operations specialist to create associated with the collection and cost of $30.32 [(0.42 hours × $33.70/ the two template notices. For 2019, we reporting of encounter data is currently hour) + (0.08 hours × $202.08/hour)] estimate a one-time total burden of 636 approved by OMB under control and a total savings of $10,308,800 hours (212 organizations × 3 hours) at a number 0938–1152 (CMS–10340). (315,000 applications × $30.32) and cost of $43,935 (636 hours × $69.08/ Encounter data is a source to determine 170,000 hours (315,000 applications × hour) or $207.24 per organization providers rendering MA services that 0.5 hours). We believe that these savings ($43,935/212 organizations). As should be on the preclusion list. Since will accrue in 2019. mentioned, there will be no burden this rule’s provision is consistent with associated with 2020 and 2021 since all (2) Part D Sponsor Requirements existing policy the change will not changes were implemented in 2019. impose any new or revised The following notice preparation and We also estimate that it will take an requirements/burden. Consequently, we distribution requirements and burden average of 5 minutes (0.083 hour) at

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$39.22/hour for an insurance claim and a total burden of 6,640 hours (80,000 reenrollment after the expiration of a policy processing clerk to prepare and responses × 0.083 hours) at a cost of reenrollment bar or decision to remove distribute the notices. We estimate that $260,421 (6,640 hours × $39.22/hour) or them from the preclusion list) with an average of 800 prescribers will be on $1,228.40 per organization ($260,421/ 15,000 affected beneficiaries. In the preclusion list in early 2019 with 212 organizations). aggregate, we estimate an annual burden roughly 80,000 Part D beneficiaries In 2020 and 2021, we estimate that of 1,245 hours (15,000 beneficiaries × affected; that is, 80,000 beneficiaries roughly 150 prescribers each year will 0.083 hours) at a cost of $48,829 (1,245 will have been receiving prescriptions be added to the preclusion list, though hour × $39.22/hour) or $325.53 per written by these prescribers and will this will be largely offset by the same prescriber ($48,829/150 prescribers). therefore receive the notice referenced number of prescribers being removed in § 423.120(c)(6). In 2019 we estimate from the list (for example, based on

TABLE 18—ESTIMATED TIME FOR PART D NOTICE PREPARATION AND DISTRIBUTION [Hours]

3-year 2019 2020 2021 average

Part D Sponsor—System Programming ...... 93,600 0 0 31,200 Part D Sponsor—Template Creation ...... 636 0 0 212 Part D Sponsor—Letter Preparation and Distribution ...... 6,640 1,245 1,245 3,043

Total ...... 100,876 1,245 1,245 34.455

TABLE 19—ESTIMATED COST FOR PART D NOTICE PREPARATION AND DISTRIBUTION [Dollars]

3-year 2019 2020 2021 average

Part D Sponsor—System Programming ...... $9,006,192 $0 $0 $3,002,064 Part D Sponsor—Template Creation ...... 43,935 0 0 14,645 Part D Sponsor—Notice Preparation and Distribution ...... 260,421 48,829 48,829 119,360

Total ...... 9,310,548 48,829 48,829 3,136,069

13. ICRs Regarding the Removal of we anticipate that there are 750 QIP licensing and regulatory fees, and any Quality Improvement Project for attestations annually. remittance owed to CMS under Medicare Advantage Organizations Using these assumptions, we estimate § 422.2410 or § 423.2410. As discussed (§ 422.152) that the removal of the QIP provision in section II.C.1. of this final rule, our CMS will submit the following will result in a total annual savings of amendments to §§ 422.2460 and × requirements and burden to OMB for 187.5 hours (750 contracts 0.25 hour) 423.2460 will reduce the MLR reporting × approval under control number 0938– at $12,663.75 (187.5 hours $67.54/ burden by requiring that MA 1023 (CMS–10209). We did not receive hour) or $16.89 per contact ($12,663.75/ organizations and Part D sponsors any comments pertaining to our 750 contracts). report, for each contract year, only the MLR and the amount of any remittance proposed requirements or burden 14. ICRs Regarding Medical Loss Ratio estimates. Consequently, we are owed to us for each contract with Reporting Requirements (§§ 422.2460 credible or partially credible experience. finalizing them as proposed. (Note: and 423.2460) While CMS–10209 has inadvertently For each non-credible contract, MA expired, we are proposing to reinstate The following requirements and organizations and Part D sponsors will the collection through this final rule.) burden will be submitted to OMB for be required to report only that the As discussed in section II.B.11. of this approval under control number 0938– contract is non-credible. rule, we are finalizing our proposal to 1232 (CMS–10476). We received a Our analysis of the estimated remove the Quality Improvement comment pertaining to our proposed administrative costs related to the MLR Project (QIP) requirements (and CMS- requirements or burden estimates. As reporting requirements is based on the direction of QIPs) from the Quality discussed later, we are finalizing them average number of MA and Part D Improvement (QI) Program as proposed. A summary of the public contracts subject to the reporting requirements. The driver of the comment and our response are set out requirements for each contract year. In anticipated savings is the removal of below. the information collection request requirement to attest having a QIP Under current §§ 422.2460 and currently approved by OMB under annually. 423.2460, for each contract year, MA control number 0938–1232 (CMS– To derive our savings, we estimate organizations and Part D sponsors must 10476), we estimate that 616 MA and that it takes 1 MA organization 15 report to CMS the information needed to Part D contracts will be subject to the minutes (0.25 hour) at $67.54/hour for verify the MLR and remittance amount, MLR data submission requirements for a compliance officer to submit a QIP if any, for each contract, such as: each contract year. Our previous attestation. Currently, there are 750 MA Incurred claims, total revenue, estimate of 616 was based on the contracts, and each contract is required expenditures on quality improving number of MA and Part D contracts that to submit a QIP attestation. Therefore, activities, non-claims costs, taxes, we expected would be subject to the

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MLR requirements at the time that we Secretary, and conducting internal We estimate that this rule’s provision published the May 23, 2013 final rule audits. Our currently approved estimate to scale back the MLR reporting (78 FR 31284). We are revising this did not specify (or break out) the requirements will reduce the amount of estimate to reflect the average number of portion of the overall reporting burden time spent on administrative work by 11 MA and Part D contracts subject to the that could be attributed solely to the hours, from 47 hours to 36 hours. We MLR data submission requirements for tasks of preparing and submitting the also estimate the average cost per hour contract years 2014 to 2018. Based on MLR report. In our proposed rule, we of MLR reporting using wage data for this more recent data, we estimate that corrected that oversight by estimating computer and information systems 587 MA and Part D contracts will be that the burden for preparing and managers, as we believe that the tasks subject to the MLR data submission submitting the MLR report is associated with MLR reporting generally requirements for each contract year. The approximately 11.5 hours (or 24.4 fall within the fields of data processing, total number of MA and Part D contracts percent of the estimated 47 total hours computer programming, information is relatively stable from year to year. spent on all administrative work related systems, and systems analysis. Based on Our estimate for the amount of time to the MLR reporting requirements) per computer and information systems that MA organizations and Part D contract. managers wage data from BLS, we sponsors will spend on administrative estimate that MA organizations and Part tasks related to the amended MLR We arrived at the 11.5-hour estimate D sponsors will incur annual MLR reporting requirements is based on the by considering the amount of time it burden estimates that are currently will take an MA organization or Part D reporting costs of approximately $5,045 approved by OMB under control sponsor to perform each of the following per contract on average under this final number 0938–1232 (CMS–10476), but tasks: (1) Review the MLR report filing rule as opposed to $6,587 per contract updated to reflect the revised number of instructions and external materials under the current regulations. contracts discussed earlier and also referenced therein and to input all Consequently, the changes will, on updated for more current wage and cost figures and plan-level data in average, reduce the annual information. This is consistent with the accordance with the instructions; (2) administrative costs by $1,542 per approach used in the proposed rule draft narrative descriptions of contract. Across all MA and Part D regarding burden estimates. In the methodologies used to allocate contracts, we estimate that this rule’s approved information collection expenses; (3) perform an internal review amendment will reduce the annual request, we estimate that, on average, of the MLR report form prior to administrative burden related to MLR MA organizations and Part D sponsors submission; (4) upload and submit the reporting by 6,457 hours along with a will spend 47 hours per contract on MLR report and attestation; and (5) savings of $904,884. Table 20 compares administrative work related to Medicare correct or provide explanations for any the estimated administrative burden MLR reporting, including: Collecting suspected errors or omissions related to current MLR reporting data, populating the MLR reporting discovered by CMS or our contractor requirements, burden with updated forms, conducting a final internal during initial review of the submitted contract and cost information, and the review, submitting the reports to the MLR report. burden under this final rule.

TABLE 20—ESTIMATED ADMINISTRATIVE BURDEN RELATED TO MEDICAL LOSS RATIO (MLR) REPORTING REQUIREMENTS

Estimated Total number Estimated Estimated Estimated Estimated average Type of burden of contracts/ average hours total hours average cost total cost cost per reports per report per hour contract/report

Annual burden under currently approved 616 ...... 47 28,952 $135.58/hr...... $3,925,312 $6,372 collection (OMB control number 0938– 1232) (CMS–10476). Annual burden (with updated number of 587 ...... 47 27,589 $140.14/hr...... $3,866,322 $6,587 contracts and cost) under current regulation. Annual burden under this final rule ...... 587 ...... 36 21,132 $140.14/hr ...... 2,961,438 5,045 Change in burden under this final rule ... No change ..... (11) (6,457) No change ..... (904,884) (1,542) Notes: The source data has been modified to reflect estimated costs for MA organizations and Part D sponsors. Values may not be exact due to rounding.

We received the following comment, Response: We appreciate the support. detailed MLR Reports to assist with and our response follows: We intend to continue to make available their MLR calculations. Comment: A commenter expressed the prior years’ MLR Report on our We are finalizing this provision support for the reduction in the MLR website (CMS.gov) as well as in the without modification. reporting burden, and requested that we Health Plan Management System continue to produce and make available (HPMS). Therefore, the commenter can C. Summary of Information Collection form CMS–10476 as it is useful to assist continue to utilize the prior years’ more Requirements and Burden submitters with their MLR calculations.

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TABLE 21—ANNUAL RECORDKEEPING AND REPORTING REQUIREMENTS

Total Regulatory section(s) in OMB control Burden annual Labor cost Total cost title 42 of the CFR No.* Respondents Responses per burden of reporting ($) response (hours)

422.60, 422.62, 422.68, 423.38, and 0938–0753 468 ...... 558,000 ...... 5 min...... 46,500 $69.08/hr ...... $3,212,220 423.40 eligibility determination. 422.60, 422.62, 422.68, 423.38, and 0938–0753 468 ...... 558,000 ...... 1 min...... 9,300 $69.08/hr ...... 642,444 423.40 notification. 422.60, 422.62, 422.68, 423.38, and 0938–0753 468 ...... 558,000 ...... 1 min...... 9,300 $69.08/hr ...... 642,444 423.40 report to CMS. 422.60, 422.62, 422.68, 423.38, and 0938–0753 468 ...... 558,000 ...... 5 min...... 46,500 $34.66/hr ...... 1,606,110 423.40 record keeping. 422.152 QIP ...... 0938–1023 468 ...... (750) ...... (15 min) ...... (188) $67.54/hr ...... (12,664) 422.222 enrollment ** ...... 0938–0685 120,000 ...... (120,000) ...... varies ...... (426,000) varies ...... (24,077,100) 422.2260 and 423.2260 marketing 0938–1051 527 ...... (39,298) ...... (30 min)...... (19,649) $69.08/hr ...... (1,357,353) materials. 422.2460 and 423.2460 MLR report- 0938–1232 587 ...... (587) ...... (11 hr)...... (6,457) $140.14/hr ...... (904,884) ing. 423.120(c)(6 enrollment) ** ...... 0938–1135 340,000 ...... (340,000) ...... varies ...... (170,000) varies ...... (10,308,800) 423.120(c)(6) create model notices ... 0938–0964 212 ...... 212 ...... 3 hr ...... 636 $69.08/hr ...... 43,935 423.120(c)(6) Prepare and test sys- 0938–0964 90 ...... 90 ...... 1040 ...... 93,600 $96.22 ...... 9,006,192 tem changes. 423.120(c)(6) 2019 prepare and dis- 0938–0964 212 ...... 80,000 ...... 0.083 hr...... 6,640 $39.22/hr ...... 260,421 tribute the notices. 423.120(c)(6) 2020 and 2021 prepare 0938–0964 212 ...... 15,000 ...... 0.083 hr...... 1,245 $39.22/hr ...... 48,829 and distribute the notices. 423.153(f) notice preparation ...... 0938–0964 219 ...... 3,693 ...... 0.083 hr ...... 307 $39.22/hr ...... 12,041 423.153(f) notice upload ...... 0938–0964 219 ...... 3,693 ...... 5 hr ...... 1,095 $81.90/hr ...... 89,681

Subtotal: Private Sector Burden varies ...... varies ...... varies ...... (407,171) varies ...... (21,096,484) 422.62, 423.38, and 423.40 complete 0938–0753 18,600,000 ...... 558,000 ...... 30 min...... 279,000 $23.86 ...... 6,656,940 enrollment.

Subtotal: Burden on Beneficaries 18,600,000 ...... 558,000 ...... 30 min ...... 279,000 $23.86 ...... 6,656,940 422.111(a)(3) and (h)(2)(ii) and 0938–1051 n/a ...... (32,026,000) ...... n/a ...... n/a n/a ...... (24,019,500) 423.128(a)(3) EOC paper. 422.111(a)(3) and (h)(2)(ii) and 0938–1051 n/a ...... (32,026,000) ...... n/a ...... n/a n/a ...... (24,019,500) 423.128(a)(3) EOC toner. 422.111(a)(3) and (h)(2)(ii) and 0938–1051 n/a ...... (32,026,000) ...... n/a ...... n/a n/a ...... (6,629,382) 423.128(a)(3) EOC mailing.

Subtotal: Non-Labor Burden ...... n/a ...... (32,026,000) ...... n/a ...... n/a n/a ...... (54,668,382)

Total ...... varies ...... varies ...... varies ...... (128,171) varies ...... (69,107,926) * OMB control numbers and corresponding CMS ID numbers: 0938–0753 (CMS–R–267), 0938–1023 (CMS–10209), 0938–0685 (CMS–855A, –855B, and –855I), 0938–1051 (CMS–10260), 0938–1232 (CMS–10476), 0938–1135 (CMS–855O, and 0938–0964 (CMS–10141). ** The requirements and burden were set out in the NPRM text, but the figures were inadvertently excluded from the burden summary table. This table reflects the following changes from the proposed rule: • The marketing provision (section II.B.5. of this rule) has changes due to numerical errors and more accurate estimates as documented in the marketing provision. • The minimum wage was changed from $7.25 an hour to $23.86 an hour. This is explained earlier in the opening section. • Two rows were deleted from the Table 21 for the CARA provision (section II.B.14. of this rule) since they are properly addressed in the section IV. of this rule (Regulatory Impact Analysis) and do not belong in the this section (Collection of Information). • One row was added to the preclusion provision (section III.B.12. of this rule) to reflect an omitted row on the burden to programmers to implement changes. The totals and subtotals were updated accordingly. • Added enrollment figures under §§ 422.222 and 423.120(c)(6).

IV. Regulatory Impact Analysis B. Overall Impact The Regulatory Flexibility Analysis (RFA), as amended, requires agencies to A. Statement of Need We examined the impact of this final analyze options for regulatory relief of rule as required by Executive Order This final rule approaches to improve small businesses, if a rule has a 12866 on Regulatory Planning and the quality, accessibility and significant impact on a substantial Review (September 30, 1993), Executive affordability of the Medicare Part C and number of small entities. For purposes Order 13563 on Improving Regulation of the RFA, small entities include small Part D programs and to improve the and Regulatory Review (January 18, businesses, nonprofit organizations, and CMS customer experience. While 2011), the Regulatory Flexibility Act small governmental jurisdictions. satisfaction with these programs remain (RFA) (September 19, 1980, Pub. L. 96– This final rule affects Medicare high, these proposals are responsive to 354), Section 1102(b) of the Social Advantage plans and Part D sponsors input we received from stakeholders Security Act, Section 202 of the (NAICS category 524114 with a while administering the program, as Unfunded Mandates Reform Act of 1995 minimum threshold for small business well as through a Request for (March 22, 1995; Pub. L. 104–4), size of $38.5 million (http:// Information process earlier this year. Executive Order 13132 on Federalism www.sba.gov/content/small-business- Additionally, this regulation includes a size-standards). This final rule (August 4, 1999), the Congressional number of provisions that will help additionally effects hospitals (NAICS Review Act (5 U.S.C. 804(2)), and address the opioid epidemic and subsector 622), and a variety of provider Executive Order 13771 on Reducing mitigate the impact of increasing drug categories including physicians, Regulation and Controlling Regulatory prices in the Part D program. specialists, and laboratories (subsector Costs (January 30, 2017). 621).

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To clarify the flow of payments projected 2019 monetary need, the estimate the cost associated with between these entities and the Federal impact would be still less. regulatory review. There are currently government, note that Medicare In considering the requirements of the 468 MA plans and Part D Sponsors. Advantage Organizations (MAO) submit RFA certain other aspects of this rule We assume each plan will have one proposed plan designs, called bids, in have bearing. The impact of this rule is designated staff member who will read June 2018 for operation in contract year positive, that is, the rule has a net the entire rule. 2019. These bids project payments to savings and in fact almost all provisions Using the wage information from the hospitals, providers and staff as well as reduce burden. BLS for medical and health service the cost of administration and profits. We also note that economic burden, managers (Code 11–9111), we estimate These bids in turn determine the when it exists, is not a significant that the cost of reviewing this rule is payments of the Medicare Trust Fund to problem for MAOs (whether small or $105.16 per hour, including overhead the MAOs who reimburse providers and big) since the MAOs pass all burden on and fringe benefits (https://www.bls.gov/ other stakeholders for their services. to the Trust Fund through the bid and oes/2016/may/naics4_621100.htm). Consequently, our analysis will focus on therefore a further alternative to relieve Assuming an average reading speed, we MAOs. burden is not needed. estimate that it will take approximately There are various types of health Consequently, the Secretary has 15.6 hours for each person to review plans including, HMOs (Part D sponsors determined that this final rule will not this final rule. For each MA plan that and MA plans), Demonstrations, Cost have a significant economic impact on reviews the rule, the estimated cost is Plans, Prescription Drug Plans (PDP) a substantial number of small entities therefore, $1,640 (15.6 hours × $105.16). and PACE plans. 42% of all Medicare and the requirements of the RFA have Therefore, we estimate that the total cost health plan organizations are not-for- been met. of reviewing this regulation is $767,520 profit and 32% of all Part D sponsors In addition, section 1102(b) of the Act ($1,640 × 468 reviewers). and MA plans are not for profit (These requires us to prepare a regulatory In accordance with the provisions of figures were determined by examining analysis for any final rule under Title Executive Order 12866, this rule was records from the most recent year for XVIII, Title XIX, or Part B of the Act that reviewed by the Office of Management which we have complete data, 2016). may have significant impact on the and Budget. There are a variety of ways to assess operations of a substantial number of whether MAOs meet the $38.5 million small rural hospitals. We are not C. Anticipated Effects threshold for small businesses. The preparing an analysis for section 1102(b) 1. Comprehensive Addiction and assessment can be done by examining of the Act because the Secretary certifies Recovery Act of 2016 (CARA) net worth, net income, cash flow from that this final rule will not have a Provisions operations and projected claims as significant impact on the operations of indicated in their bids. Using projected a substantial number of small rural Section 423.153(f) will implement monetary requirements and projected hospitals. provisions of section 704 of CARA, enrollment for 2018 from submitted Section 202 of the Unfunded which allows Part D plan sponsors to bids, 32 percent of the MAOs fell below Mandates Reform Act of 1995 (UMRA) establish a drug management program the $38.5 million threshold for small also requires that agencies assess that includes ‘‘lock-in’’ as a tool to businesses. Additionally, an analysis of anticipated costs and benefits before manage an at-risk beneficiary’s access to 2016 data, the most recent year for issuing any rule whose mandates coverage of frequently abused drugs. which we have actual data on MAO net require spending in any 1 year of $100 Under CARA, potentially at-risk worth, also shows that 32 percent of all million in 1995 dollars, updated beneficiaries are to be identified under MAO falls below the minimum annually for inflation. In 2017, that guidelines developed by CMS with threshold for small businesses. threshold is approximately $148 stakeholder input. Also, the Secretary If a final rule has a substantial impact million. This final rule is not must ensure that the population of at- on a substantial number of small anticipated to have an effect on State, risk beneficiaries can be effectively entities, the final rule must discuss local, or tribal governments, in the managed by Part D plans. CMS steps taken, including alternatives, to aggregate, or on the private sector of considered a variety of options as to minimize burden on small entities. $148 million or more. how to define the clinical guidelines. In While a significant number (more than Executive Order 13132 establishes the NPRM for this rule, we provided the 5 percent) of not-for-profit organizations certain requirements that an agency estimated population of potential at-risk and small businesses are affected by this must meet when it promulgates a final beneficiaries under different guidelines final rule, the impact is not significant. rule that imposes substantial direct that take into account that the To assess impact we use the data in requirement costs on state and local beneficiaries may be overutilizing Table G10 of this section which shows governments, preempts state law, or opioids, coupled with use of multiple that the raw (not discounted) net effect otherwise has federalism implications. prescribers and/or pharmacies to obtain of this final rule over five years is 1.5 Since this final rule does not impose them, based on retrospective review, billion dollars. Comparing this number any substantial costs on state or local which makes the population to the total monetary amounts projected governments, the requirements of appropriate to consider for ‘‘lock-in’’ to be needed just for 2019, based on Executive Order 13132 are not and a description of the various options. plan submitted bids, we find that the applicable. We note that the measurement year for impact of this rule is significantly below If regulations impose administrative the estimates included in the NPRM was the 3 percent–5 percent threshold for costs on MA Plans and Part D Sponsors, 2015. We note that the measurement significant impact. Had we compared such as the time needed to read and year for the revised estimates included the 2019 impact of the final rule to interpret this final rule, we should in Table G22 is 2017.

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TABLE 22—GUIDELINES TO IDENTIFY AT-RISK BENEFICIARIES

Option Average MME Number of opioid prescribers Estimated number of potentially Estimated number of potentially AND opioid dispensing phar- at-risk Part D beneficiaries at-risk Part D beneficiaries macies

Original estimates Revised estimates (2015) (2017) *

1 ...... >=90 ...... 4+ ...... 4+ ...... 33,053 ...... 11,753. >=90 ...... 6+ ...... 1+ ...... Minimum Criteria ...... 2 ...... >=90 ...... 4+ ...... 4+ ...... 52,998 ...... 22,569. >=90 ...... 5+ ...... 1+ ...... 3 ...... >=90 ...... 3+ ...... 3+ ...... 103,832 ...... 44,332 Minimum Criteria. >=90 ...... 5+ ...... 1+ ...... 4 ...... >=90 ...... 3+ ...... 3+ ...... 152,652 ...... 72,246. >=90 ...... 4+ ...... 1+ ...... 5 ...... >=90 ...... 3+ ...... 3+ ...... 319,133 ...... 152,438. >=90 ...... 3+ ...... 1+ ......

Average MME Number of opioid prescribers Estimated number of potentially Estimated number of potentially OR opioid dispensing phar- at-risk Part D beneficiaries at-risk Part D beneficiaries macies

6 ...... Any MME level...... 7+ ...... 7+ ...... 47,427 (add’l above Option 1) 22,841 (add’l above Option 3) Supplemental Criteria. Supplemental Criteria. * Revised estimates use more recent 2017 PDE data (as of January 6, 2018), updated cancer exclusion specifications, and latest opioid drug list and CDC MME conversion factors. Also, buprenorphine products included in prescriber and pharmacy counts.

Under Option 1, CMS proposed to we proposed in Option 3 above as a prescriber and pharmacy lock-in will integrate the CARA lock-in provisions ‘‘floor’’ that Part D plan sponsors must impact the remaining 39 percent of at- with our current Part D Opioid adopt, consistent with the current risk beneficiaries. CMS anticipates Overutilization Policy/Overutilization policy as well as allowing sponsors to between 10 and 30 percent reduction in Monitoring System (OMS). We proposed continue to report additional prescriptions for frequently abused to initially define frequently abused beneficiaries to OMS—and will adopt drugs will be possible through drug drugs as all and only opioids for the the following supplemental criteria, management programs and picked the treatment of pain. The guidelines to which will serve as a ‘‘ceiling’’: Use of average, 20 percent. Therefore, in the identify at-risk beneficiaries will be the opioids (regardless of average daily proposed rule, we stated that we believe current Part D OMS criteria finalized for MME) during the most recent 6 months there could be a 20 percent reduction in 2018 after stakeholder input. Plans that with 7 or more opioid prescribers OR 7 the prescriptions for frequently abused adopt a drug management program will or more opioid dispensing pharmacies. drugs for at-risk beneficiaries. Similar to have to engage in case management of These ceiling criteria were included in the ∼44,000 at-risk beneficiaries the opioid use of all enrollees who meet the additional criteria options that we identified by the floor criteria, we these criteria, which will be reported set forth in the chart above in the assumed that 39 percent of the through OMS and plans must provide a proposed rule; specifically, in Row 2 of additional 23,000 will reduce their response for each case. The integration option 6. We are finalizing as the opioid usage by 20 percent under the of CARA lock-in provisions with our clinical guidelines floor and ceiling program. current policy will allow plans to use criteria that include a program size of We used a proxy to identify costs for pharmacy/prescriber lock in as an approximately 67,000 beneficiaries— these additional 23,000 at-risk additional tool to address the opioid 44,000 of whom Part D sponsors with beneficiaries, which is to pull the overutilization of identified at-risk drug management programs must beneficiaries with opioid scripts with 7 beneficiaries. review and 23,000 of whom such or more pharmacies in the most recent In the proposed rule, we estimated sponsors may review. 6 months who weren’t part of the 44,000 that the CARA provisions would result Therefore, we estimate that the under the floor criteria. However, we got in a net savings of $10 million (the finalized CARA provisions, in 2019, only about 20,000 count. Since we estimated savings of $13 million will result in a net cost of $2,836,652 to couldn’t pull those with 7 or more [rounded up from $12.6 million] less the industry (plan sponsors) with a benefit prescribers easily, we assumed the total estimated costs of $2,836,651 = of reduction in opioid prescriptions remaining 3,000 were those with 7 or $10,163,349) in 2019. However, as noted which will reduce Trust Fund spending more prescribers. For those 20,000, their in the preamble, we are finalizing by $19 million dollars. The following opioid cost was only $31 million and modifications to our proposed policy on are details on each of these estimates. their benzodiazepines cost was $1 implementation of drug management. There are an additional ∼23,000 at- million. Similar to the other 44,000, we These modifications will have risk beneficiaries that we estimate assumed that 39 percent of the 20,000 implications on the projected savings would be added to the drug will reduce their opioid usage by 20 for the CARA provisions. First, we are management programs as a result of the percent under the program. For those 39 expanding the definition of frequently ceiling criteria. We assume, based on percent, the opioid cost for the abused drugs to include opioids and past experience with OMS, that about additional at-risk beneficiaries that benzodiazepines for purposes of Part D 61 percent of at-risk beneficiaries may would be identified by the ceiling drug management programs beginning reduce prescriptions for frequently criteria was only $10 million and their 2019. Second, with respect to clinical abused drugs and will no longer meet benzodiazepine cost was less than $0.4 guidelines, we are finalizing the criteria the clinical criteria. This means that million. In fact, the 39 percent of those

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44,000 at-risk beneficiaries identified by benzodiazepines to this savings Therefore, the combined projected the floor criteria only incurred $1 estimate. dollar savings to the Medicare Trust million of benzodiazepine costs. As a Because we used a proxy to identify Fund for opioids for at-risk beneficiaries result, because the benzodiazepine costs for the additional 23,000 at-risk identified by both the ceiling criteria spending among at-risk beneficiaries beneficiaries and the opioid spend was ($2.3 million) and floor criteria ($16.3 was so small and the potential savings not that significant, we assumed the cost million) is about $19 million (rounded from this program should be much distribution is similar to those 20,000. up from $18.6 million) in 2019. Since smaller than that for opioids, CMS did Since CMS scored the opioid savings for the $19 million is an effect of the rule, $2 million on the 20,000, we scaled it not include the potential savings for it is classified as a benefit. up by 23,000/20,000 to get $2.3 million savings in opioid for the ceiling criteria.

TABLE 23—ESTIMATED BENEFITS TO THE TRUST FUND OF THE CARA PROVISION FOR CALENDAR YEARS 2019 THROUGH 2023

Calendar year ($ in millions) Total Regulation CYs 2019– Provision section(s) 2023 2019 2020 2021 2022 2023 ($ in millions)

Federal Government (Medicare) Impacts

Implementation of the Comprehensive Addiction and Recov- Various ...... 19 19 19 20 20 $97 ery Act of 2016 (CARA) Provisions.

Part D plan sponsors will also be estimate that 219 Part D plan sponsors program edits into their pharmacy required to send at-risk beneficiaries (31 PDP parent organizations and 188 claims systems so that once they restrict multiple notices to notify them of about MA–PD parent organizations) will be an at-risk beneficiaries’ access to their plan’s drug management program. subject to this requirement. We estimate coverage for frequently abused drugs Part D plan sponsors are already that it will take on average 5 hours at through applying pharmacy or expected to send a notice to some $81.90/hour for a computer programmer prescriber lock-in, claims at a non- beneficiaries when the Part D plan to upload the notices into their claims selected pharmacies or associated with sponsors decides to implement a systems. This will result in a total prescriptions for frequently abused beneficiary-specific POS claim edit for burden of 1,095 hours (5 hours × 219 drugs from non-selected prescribers will opioids. Therefore, we anticipate sponsors) at a cost of $89,680.50 (1,095 be rejected. We believe that most Part D limited additional burden for Part D hour × $81.90/hr). In aggregate, the plan sponsors with Medicaid or private plan sponsors to send certain at-risk burden to prepare and upload these lines of business will have existing lock- beneficiaries an additional notice to additional notices was estimated as in programs in those lines of business to indicate their lock-in status. 1,402 hours (307 hours + 1,095 hours) pull efficiencies from. We estimate it Since 2013, there have been 4,617 at a cost of $101,722 ($12,041 + $89,681) will take a total number of 26,280 labor POS edits submitted into MARx by plan in 2019 in section III of this final rule. hours across all 219 Part D plan sponsors for 3,961 unique beneficiaries Part D plan sponsors may also sponsors (31 PDP parent organizations as a result of the drug utilization review renegotiate the contracts with network and 188 MA–PD parent organizations) at policy. That results in approximately pharmacies and network prescribers in a wage of $81.90 an hour for computer 923 edits annually. If we assume that the case of MA–PDs. For Part D plan programmers to program these edits into the number of edits or access to sponsors that contract with pharmacies their existing systems. Thus, the total coverage limitations will double due to only, we estimate it will take 10 hours cost to program these edits is 26,280 the addition of pharmacy and prescriber at $134.50/hour for lawyers to conduct hours × $81.90 = $2,152,332. ‘‘lock-in’’ to OMS, to approximately the PDP contract negotiations with 1,846 such limitations, we estimate network pharmacies. Considering 31 The right of an enrollee to appeal an 3,692 initial and second notices sponsors we estimate a total burden of at-risk determination will also have an (number of limitations (1,846) 310 hours at a cost of $41,695 (310 hour associated cost. As explained, we multiplied by the number of notices (2)) × $134.50/hour). For MA–PDs who also estimate a total hourly burden of 178 total corresponding to such edits/ contract with prescribers, we estimate hours at an annual estimated cost of limitations. For purposes of this that the annual burden for negotiating a $35,183 in 2019. As previously estimate, we assume that all contract with network providers who discussed, we estimate that 1,846 beneficiaries who receive initial notices can prescribe controlled substances to beneficiaries will meet the criteria for will be placed on an access limitation. be 3,760 hours (188 MA–PDs × 20 hours being identified as an at-risk We estimate it will take an average of 5 per sponsor) at a cost of $505,720 (3,760 beneficiary. Based on validated program minutes (0.083 hours) at $39.22/hour for hour × $134.50/hour). The total data for 2015, 24 percent of all adverse an insurance claim and policy estimated burden associated with the coverage determinations were appealed processing clerk to prepare each notice. contract negotiations from both PDP and to level 1. Given the nature of drug The burden of 307 hours (3,692 notices MA–PD sources in 2019 was estimated management programs, the extensive × 0.083 hour) at a cost of $12,040.54 as 4,070 hours (310 hours + 3,760 hours) level of case management conducted by (307 hour × $39.22/hr) in 2019 was at a cost of $547,415 ($41,695 + plans prior to making the at-risk estimated in section III of this rule. $505,720). determination, and the opportunity for Part D plan sponsors are required to We estimate that, in order to an at-risk beneficiary to submit upload these new notice templates into implement pharmacy or prescriber lock- preferences to the plan prior to lock-in their internal claims systems. We in, Part D plan sponsors will have to implementation, we believe it is

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reasonable to assume that this rate of relationships with its FDRs and ensure reduction. OECD has data for a few appeal will be reduced by at least 50 compliance with all applicable laws, more sectors of the industry, including percent for at-risk determinations made rules and regulations. Furthermore, we 295,620 pharmacists, 3,626,060 nurses under a drug management program. will continue to hold sponsoring and 820,251 physicians in the United Therefore, this estimate is based on an organizations accountable for the States. Many of the physicians and assumption that about 12 percent of the failures of its FDRs to comply with nurses are likely represented in the 6 beneficiaries estimated to be subject to Medicare program requirements. million employed by hospitals. an at-risk determination (1,846) will We believe that by deleting this Unfortunately we don’t have data appeal the determination. Hence, we provision we will reduce burden for sources for all sectors of the industry. estimate that there will be 222 level 1 sponsoring organizations and their However, using hospital staff as a appeals (1,846 × 12 percent). We FDRs. We estimate that the burden starting point and OECD’s total figure of estimate it takes 48 minutes (0.8 hours) reduction will be roughly 1 hour for 20 million working in the health and to process a level 1 appeal. There is a each FDR employee who will be social service fields, we estimate the statutory requirement that a physician required to complete the CMS training burden reduction is likely 6 to 8 million with appropriate expertise make the on an annual basis, under the current hours each year. Again, we have no way determination for an appeal of an regulation at §§ 422.503(b)(4)(vi)(C) and to determine exactly how many FDRs adverse initial determination based on 423.504(b)(4)(vi)(C). there are or exactly how many staff will medical necessity. Thus, we estimate an We do not know how many be expected to take the training under hourly burden of 178 hours (222 appeals employees were required to take the the current regulation, but we hope this × 0.8) at a cost of $197.66 per hour for CMS training, nor do we know the exact example demonstrates the reduction in physicians to perform these appeals. numbers of FDRs that were subject to burden this proposal will mean for the Thus the total cost in 2019 is estimated the requirement. Sponsoring industry. as $35,183 = 178 hours × $197.66. organizations have discretion in not We requested comment in order to In aggregate, this provision will result, only which of their contracted develop a more complete monetization in 2019, in a net cost of $2,836,652 organizations meet the definition of an of cost savings. However, we received ($101,722 + $547,415 + $2,152,332 + FDR, but also discretion in which no comments on this burden estimate in $35,183). Additionally, an effect of the employees of that FDR are subject to the the proposed rule. regulatory lock-in is a benefit of reduced training. But we know from public We did receive numerous comments opioid scripts resulting in a reduction of comments that PBMs, hospitals, on the corresponding regulatory $19 million in payments by the Trust pharmacies, labs, physician practice proposal, with overwhelming support Fund. groups and even some billing offices for finalizing the provision as proposed. We received the following comments were routinely subjected to the training. Most commenters who expressed their and our response follows: Unfortunately, the Medicare Learning support for the proposal commented on Comment: A commenter agreed with Network (MLN) Matters® website is not the tremendous burden the current CMS CMS’s estimate that the proposed able to track the number of people that compliance training requirements Medicare lock-in program could prevent took CMS’ training, so we cannot use imposed, and agreed with CMS that the or reduce the human toll of opioid that as a data source. proposal would greatly reduce burden abuse and overuse and generate a CMS has reviewed the Organization on FDRs and sponsoring organizations. savings in 2019 of $13 million to the for Economic Co-operation and Therefore we are finalizing this Trust Fund because of reduced scripts, Development’s (OECD) 2015 statistics provision as proposed without a and that our estimate of savings are which show a total of 20,076,000 people quantitative estimate of impact. employed in the health and social consistent with recent research that 3. Meaningful Differences in Medicare found that lock-in programs have services fields in the United States, although certainly not all of them were Advantage Bid Submissions and Bid reduced spending on opioid Review (§§ 422.254 and 422.256) prescriptions and decreased the number subject to CMS’ training requirement of prescriptions and pharmacies used by (See http://stats.oecd.org/index.aspx? For CY 2018 bids, 2,743 non-D–SNP at-risk individuals in state Medicaid DataSetCode=HEALTH_STAT). non-employer plans (that is, HMO, programs. Hospitals are one sector of the health HMO–POS, Local PPO, PFFS, and Response: We thank the commenter industry that has been particularly vocal RPPO) used in house and/or consulting for their agreement. We do note that about the burden the current training actuaries to address the meaningful modifications to the CARA provisions requirement has placed on them and difference requirement based on CY have been finalized, which has changed their staff. If we use hospitals as an 2018 bid information. The most recent the regulatory impact. We now example to estimate potential burden Bureau of Labor Statistics report states anticipate a projected savings of $17 reduction, the OECD website states that that actuaries made an average of $54.87 million in 2019. there are 5,627 hospitals in the United an hour in 2016, and we estimate that States, employing 6,210,602 people. 2 hours per plan are required to fully 2. Reducing the Burden of the That is an average of 1,103 people per address the meaningful difference Compliance Program Training hospital. There are approximately 4,800 requirement. The estimated hours are Requirements (§§ 422.503 and 423.504) hospitals registered with Original based on assumptions developed in The final provision will amend the Medicare. If we assume that each one of consultation with our Office of the regulation so that first-tier, downstream those hospitals holds at least one Actuary. We additionally allow 100 and related entities (FDR) no longer are contract with a MA health plan and all percent for benefits and overhead costs required to take the CMS compliance of their employees were subjected to the of actuaries, resulting in an hourly wage training, which lasts 1 hour, and so that training (4,800 × 1,103 × 1 hour) that is of $54.87 × 2 = $109.74. Therefore, we MA organizations and Part D sponsors 5,294,400 hours of burden that will be estimate a savings of 2 hours per plan no longer have a requirement to ensure eliminated by this proposal. If we add × 2,743 plans = 5,486 hours reduction in that FDRs have compliance training. pharmacists, pharmacy technicians, hourly burden with a savings in cost of However, it is still the sponsoring billing offices, physician practice 5,486 hours × $109.74 = $602,033.64, organization’s responsibility to manage groups, we will expect further burden rounded down to $0.6 million to be

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saved annually under this proposal. The CMS expects increased competition will financial situation. The primary $0.6 million reflects a savings to lead to potentially lower premiums and/ motivation for our proposal is the industry from reduced use of actuarial or cost-sharing for Medicare improvement of plan innovation for a resources. beneficiaries. CMS does not anticipate growing MA beneficiary population; The number of plan bids received by beneficiaries will need additional time reduction of resources and plan CMS may increase because of a variety to compare differences between plans expenses was not a major factor in this of factors that are not related to the related to the elimination of the particular proposal. The number of plan elimination of the meaningful difference meaningful difference requirement. This bids may increase because of a variety requirement, such as payments, bidding particular change is expected to help of factors that are not related the and service area strategies, serving MA organizations differentiate plan elimination of the meaningful difference unique populations, and in response to offerings more effectively so that requirement, such as new MA entrants, other program constraints or beneficiaries can make decisions more payments, bidding and service area flexibilities. Business decisions made by efficiently. We believe that the tools and strategies, serving unique populations, MA organizations or potential MA information CMS provides for and in response to other program program new entrants that are not beneficiaries to make decisions (for constraints or flexibilities. MA related to the elimination of the example. Medicare Plan Finder, organizations are expected to continue meaningful difference requirement are Medicare and You Handbook, 1–800– designing PBPs that, within a service not included in this impact analysis. As MEDICARE), in addition to our area, are different from one another with noted in the preamble discussion, enforcement of communication and respect to key benefit design several commenters expressed concerns marketing requirements, aim to mitigate characteristics. MA organizations also about the ability of Medicare any potential choice overload. consider beneficiary choice anxiety CMS does not believe this change will beneficiaries to make the nuanced when developing their own portfolio of have a significant impact on health care comparisons among various plan types plan offerings, so that sales and broker providers. The number of plans offered and benefit packages, limited resources personnel and marketing materials can by organizations in each county are not to assist beneficiaries with complicated highlight key differences between their expected to increase significantly as a decisions, and older people and people plan offerings and support informed result of this change and health care with disabilities not using technology to choice. CMS will continue to provide provider contracts with MA the same extent as non-Medicare beneficiaries with tools, such as MPF, to organizations typically include all of the evaluate plan options and assist in beneficiary populations in making plan organization’s plans. In addition, CMS comparisons (for example, MPF). CMS choosing the best option. Beneficiaries does not expect a significant increase in may continue to limit their choices expects that eliminating the meaningful time spent on bid review as a result of difference requirement will improve based on characteristics, such as plan eliminating meaningful difference type, Part D coverage, differences in plan choice for beneficiaries by driving requirement nor does CMS expect this provider network and benefit package provider network, Part B and plan change will increase provider burden. premiums, and unique populations innovation and affordable health care We received the following comments, served (for example, special needs coverage. Several commenters, as and our response follows: discussed in the preamble, noted that Comment: A few commenters plans). As stated in Meaningful eliminating the current meaningful supported this proposal and referenced Differences in Medicare Advantage Bid difference requirement that established the potential savings in a positive Submissions and Bid Review arbitrary differences between plans will manner. (§§ 422.254 and 422.256), we are going allow MA organizations to put the Response: We thank the commenters to use our existing authority at beneficiary at the center of benefit for their support. § 422.2268, and CMS will monitor to design as MA organizations will not be Comment: Some commenters had ensure organizations are not engaging in pressured to make benefit changes to concern that eliminating the meaningful activities that are discriminatory or comply with an arbitrary requirement difference requirement would result in potentially misleading or confusing to that may ultimately result in higher a large number of plan options and Medicare beneficiaries. CMS will premiums and/or cost sharing for believe this potential outcome may communicate and work with beneficiaries. This will result in MA challenge or complicate beneficiary organizations that appear to offer a large organizations being able to offer a decision-making; these commenters number of similar plans in the same portfolio of plan options with clear questioned if elimination of the county and discuss any concerns. For differences between benefits, providers, requirement provides enough benefits to example, from a beneficiary’s and premiums that are more easily outweigh the risks. A commenter did perspective, CMS would expect plans understood by beneficiaries. CMS not support this proposal but noted that within the same contract, plan type and expects that eliminating the meaningful the estimated savings from eliminating county be distinguishable by difference requirement will improve the the meaningful difference requirement beneficiaries using such factors as the plan options available for beneficiaries, was significant. This commenter stated inclusion or exclusion of Part D but does not believe the number of concern that this proposal would result coverage, provider network, plan similar plan options offered by the same in beneficiary choice anxiety from the premium, Part B premium buy-down, MA organization in each county will potential increase in plan options. estimated out-of-pocket costs, and necessarily increase significantly or Another commenter did not find the benefit design. CMS intends to issue create more confusion in beneficiary estimated savings significant enough to guidance through the annual Call Letter decision-making related specifically to warrant finalizing this proposal. process and HPMS memoranda to help the number of plan options. As it is Response: The intention of this organizations avoid potential unknown how many organizations will proposal is to improve competition, beneficiary confusion; we expect a choose to add plan options as a result innovation, available benefit offerings, minimal number of contacts with MA of this provision, we are unable to and provide beneficiaries with organizations regarding these concerns. estimate the impact to beneficiaries affordable plans that are tailored for We received less than 10 comments should this lead to more competition. their unique health care needs and on this proposal that specifically

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referenced the estimated savings of this final rule we are replacing the if the number of members in the eliminating the meaningful difference current insurance schedule in the physician’s group at global risk under requirement and the only concern noted regulation with updated stop-loss the MA plan is less than 25,000. The about the estimated savings was that it insurance requirements that will allow average number of members in the was not significant. Therefore, we are insurance with higher deductibles. This under-25,000 group estimated under the finalizing this provision without updated schedule will result in a current regulation is 6,000 members. modification. significant reduction to the cost of Ideally, to obtain an average, we should obtaining stop-loss insurance. The 4. Physician Incentive Plans—Update weight the panel sizes in the chart at higher deductibles are consistent with Stop-Loss Protection Requirements § 422.208(f)(2)(iii) by the number of the increase in medical costs due to (§ 422.208) physician practices and the number of inflation. As we discussed in the proposed rule, To determine the cost of different capitated patients per practice per plan. some physician contracts with MA stop-loss insurance policies, we used However, this information is not organizations provide that the MA claim distributions from original available. Therefore, we used the organization pay the physician a Medicare enrollees. Then, we assumed median of the panel sizes listed in the capitated amount to assume financial an average loading for administrative chart at § 422.208(f)(2)(iii), which is responsibility for services (for example, and profit of 20 percent. Using these about 8,000. Since the per member per hospital costs) that they do not assumptions, we estimate that plans and year (PMPY) stop-loss premiums are personally render. CMS refers to physicians would save an average of greater for a smaller number of patients, capitations to physicians that include $100 per globally capitated member per we lowered this 8,000 to 6,000 to reflect services the physicians do not render as year in total costs. The derivation of this the fact that the distribution of capitated ‘‘global capitation.’’ When physicians $100 figure is described below. patients is skewed to the left. We use are globally capitated to the extent that Under the current regulation at this rough estimate of 6,000 for its they can lose more than 25 percent of § 422.208(f)(2)(iii), stop-loss insurance estimates. their income, they are required to be for the provider (at the MA covered by stop-loss insurance. With organization’s expense) is needed only BILLING CODE 4120–01–P

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BILLING CODE 4120–01–C combined attachment point to the nearest 1,000. To find the For these 6,000 members, the current (deductible). The $37,000 is obtained by premium for a stop-loss insurance with regulation at § 422.208(f)(2)(iii) (the using linear interpolation on the chart at a deductible of $37,000, we use Table chart) shows the physician needs stop- § 422.208(f)(2)(iii), replacing panel sizes 24, which reflects current insurance loss insurance for $37,000 in a with midpoints of ranges and rounding rates, that is, what would be charged

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today. By using linear interpolations on The $204.6 million savings is D sponsors, we do not believe this the columns with $30,000 and $40,000 removed from the plan bid, but not the change will have a significant increase and rounding to the nearest $1,000, we CMS benchmark. If the benchmark in burden or financial impact. Removing see that the PMPY premium for exceeds the bid, Medicare pays the MA this requirement allows state insurance with $37,000 combined organization the bid (capitation rate and Department of Insurance (DOI) attachment points is $2,000 PMPY. This risk adjustment) plus a percentage of the requirements to take precedence in this $2,000 premium reflects the baseline difference between the benchmark and situation. While some MA organizations charge today for a combined deductible the bid, called the rebate. The rebate is and Part D sponsors may choose to of $37,000. based on quality ratings and allows make operational changes to ensure Next, we compute the premium under Medicare to share in the savings to the compliance, these changes are not based the finalized rule. We still assume an plans; our experience with rebates on this rule, but are required to meet average of 6,000 capitated members. shows that the average rebate is on the existing requirements. However, the finalized rule allows order of 2⁄3. We therefore assumed that We received no comments on this higher deductibles corresponding to of the $204.6 million in annual savings, proposal and therefore are finalizing medical inflation. The new deductibles the Medicare Trust fund will reduce this provision without modification. may be found in Table 26. By using × payments by 35 percent $204.6 6. Coordination of Enrollment and linear interpolation on the columns million = $71,610,000; the remaining 65 Disenrollment Through MA headed with 50,000 and 60,000 × percent $204.6 million = $132,990,000 Organizations and Effective Dates of combined attachment points and will be returned to the plans as rebates. Coverage and Change of Coverage rounding, we see that a deductible These rebates will fund extra benefits or (combined attachment point) of $57,000 possibly reduce cost sharing for plan We proposed to revise our regulations corresponds to 6,000 capitated members members. at § 422.66 to permit default enrollment and a premium of $1,500 PMPY. The figures for 2019 were updated for of Medicaid managed care plan The difference in premium between 2020 to 2023 using enrollment and members into an MA special needs plan using (i) § 422.208(f)(iii) to calculate inflation factors found in the CMS for dual eligible beneficiaries. Upon a deductibles (combined attachment trustees report, accessible at: https:// Medicaid managed care plan member point) and (ii) using Table 26 to www.cms.gov/reportstrustfunds. becoming eligible for Medicare, calculate deductibles results in a We received no comments on our qualification for enrollment into the MA savings of $2,000¥$1,500 = $500 impact analysis. However, we did special needs plan for dual eligibles is PMPY. We assume that the average receive comments on the methodology contingent on the following: loading for profit and administrative CMS is using to calculate stop loss • State support for the default costs is roughly 20 percent. So our insurance requirements. We respond to enrollment process, and PMPY savings is 20 percent × 500 = those comments in the preamble and the • The organization’s ability to $100 PMPY. section for the Physician Incentive Plan identify such individuals and issue The $500 PMPY savings is not true regulation update to 42 CFR 422.208. written notification of the enrollment a savings since the plans and physicians We are finalizing the update to the minimum of 60 days in advance of their are simply trading claims for premiums physician incentive regulation stop-loss Medicare eligibility. to the insurance company. Since the net table as proposed. Our proposal represented the partial impact is $0, the $500 is not listed as codification of existing policy on 5. Changes to the Agent/Broker either a savings or transfer. However, seamless conversion enrollment that has Requirements (§§ 422.2272(e) and the reduced $100 PMPY for profit and been specified in subregulatory 423.2272(e)) admin reflects a reduction in guidance since 2006, but with reinsurance service resources and hence We proposed to delete the limitation additional parameters and limits. Under is classified as a savings. However, not placed on MA organizations and Part D the new requirements, seamless all of the $100 PMPY results in sponsors as to how they can respond to conversion default enrollments can only reductions in dollars spent by the Trust an agent/broker who has become occur from the organization’s Medicaid Fund. The details are as follows. unlicensed. We proposed to delete a managed care plan into an integrated D– In 2007, we estimated that 7 percent requirement that the MA plan or Part D SNP with facilitation from the state (in of enrollees were receiving services plan terminate an unlicensed agent or the form of a contract term and under capitated arrangements. Although broker and contact beneficiaries to provision of data). This will result in the we do not have more current data, based notify them if they had been enrolled by discontinuation of the use of the current on CMS observation of managed care the unlicensed agent or broker. We seamless conversion enrollment industry trends, we believe that the already require MA organizations and mechanism by some of the approved percentage is now higher, and we Part D sponsors to use only licensed MA organizations. However, as this assume that 11 percent of enrollees are agents/brokers. We have established the enrollment mechanism is voluntary and now paid under global capitation. There requirement to have a licensed agent or not required for participation in the MA are currently 18.6 million MA broker in a 2008 final rule (73 FR program, we do not believe the changes beneficiaries. We estimate that about 54219). That burden assessment is not will have any impact to the Medicare 18.6 million × 11 percent = 2,046,000 changing due to the proposal to remove Trust Funds. MA members are paid under some paragraph (e) from these sections. The We did not receive comments on the degree of global capitation. Accordingly, impact analysis for the specific burden estimates associated with this using our revised stop loss insurance provision at paragraph (e) of proposal. We did receive comments on requirement in this final rule, we §§ 422.2272 and 423.2272 was the substantive proposal, which we estimate the total aggregate projected established in rule-making in April 2011 address in this final rule. As indicated annual savings, reflecting a reduction in (76 FR 21534). As for the impact of in the preamble to this final rule, we are reinsurance services will be roughly review and compliance activities that finalizing the proposed changes with $100 PMPY × 2,046,000 million remain to plans after removing the the following modifications, none of beneficiaries paid under global narrow scope of compliance actions which we believe will result in any capitation = $204.6 million. available to MA organizations and Part impact to the Medicare Trust Funds.

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• Section 422.66(c)(2)(i) is revised to 7. Restoration of the MA Open fifth of these enrollees will take clarify that we will allow default Enrollment Period (§§ 422.60, 422.62, advantage of the new open enrollment enrollment into a FIDE–SNP 422.68, 423.38 & 423.40) period. administered by an MA organization We expect that increasing the amount We applied these assumptions to the under the same parent organization as of time that MA-enrolled individuals are estimated MA enrollment for 2019, the organization that operates the given to switch plans will result in 20,512,000, which can be obtained from Medicaid managed care plan in which slightly more beneficiaries selecting the CMS Trustee’s Report available at the individual remains enrolled. plans that receive Quality-Bonus • Section 422.66(c)(2)(i) is revised to https://www.cms.gov/reportstrustfunds/. Payments (QBP). This assessment × clarify that, for an organization to be We figured that 24,600 (20,512,000 10 reflects our observation that approved for default enrollment, it must percent × 15 percent × 40 percent × 20 beneficiaries tend to choose plans with have an overall quality rating, from the percent) people are expected to enroll in higher quality ratings when given the most recently issued ratings, under the the open enrollment period. opportunity. The projected costs to the rating system described in §§ 422.160 Government by extending the open The $9 million in additional costs for through 422.166, of at least 3 stars or is enrollment period for the first 3 months 2019 was calculated by multiplying the a low enrollment contract or new MA of the calendar year are $9 million for 24,600 impacted enrollment by the plan as defined in § 422.252. In expected 2019 bonus amount ($637.20). addition, the MA organization must not CY 2019, $10 million in 2020, $10 million in 2021, $11 million in 2022, The Office of the Actuary experiences be under an enrollment suspension. an average rebate percentage of 66 • Section 422.66(c)(2)(ii) is revised to and $12 million in 2023. percent and an 86 percent backing out include an approval period not to In estimating the additional costs for exceed 5 years, subject to CMS authority the projection window 2019–2023, we of the projected Part B premium. Hence, to rescind or suspend approval if the assumed that approximately 24,600 MA- the net costs to the trust funds is plan is non-compliant. enrolled individuals would switch estimated as $9 million = 24,600 × × • Section 422.66(c)(2)(iv) is revised to health plans from one without a QBP to enrollees $637.20 (Bonus payment) state that the notice issued by the MA one with a QBP during the extended 66 percent (rebate percentage) × 86 organization will include information open enrollment period. The 24,600 percent (Reduction in Part B premium), on the differences in premium, benefits enrollee assumption was determined by rounding to $9 million. using a combination of published and cost sharing between the Then, we applied trends from the research and by observing historical individual’s current Medicaid managed Trustees Report to the 2019 estimate in enrollment information. Published care plan and the dual eligible MA order to project the costs for years 2020 research 1 shows that 10 percent of MA special needs plan and the process for to 2023. The data from the Medicare enrollees voluntarily switch MA plans accessing care under the MA plan; an Payments to Private Health Plans, by explanation of the individual’s ability to and that MA enrollees who voluntarily switch plans change to plans with Trust Fund (Table IV.C.2. of the 2017 decline the enrollment, up to and Medicare Trustees Report) was used as including the day prior to the slightly higher star ratings than their the basis for the trends. The trend enrollment effective date, and either original plan, with a modest estimates are presented in the Table 25 enroll in Original Medicare or choose improvement of 0.11 stars, on average. another MA plan; and a general The Office of the Actuary confirmed that demonstrates the calculations and description of alternative Medicare these findings by analyzing CMS displays the cost estimates for each year health and drug coverage options enrollment data and provided further 2019–2023. These costs are classified as available to an individual in his or her detail. We estimate that of the 10 transfers since there is no increase in Initial Coverage Election Period. percent of MA plan enrollees who resources. The costs reflect switching • Section 422.66(c)(2)(iv) is revised to switch plans, 15 percent move to a from health plans without bonuses to clarify that the mandatory notice is in higher rated plan. Of those who go to a health plans with bonuses. Thus the addition to the information and higher rated plan, we estimate 40 healthcare services to the enrollees that documents required to be provided to percent move from a non-QBP plan to switch remain the same (no increase in new enrollees under § 422.111. a QBP plan. We also estimate that one- resources) albeit at a higher cost.

TABLE 25—CALCULATION OF INCREASED DOLLAR SPENDING BY THE MEDICARE TRUST FUNDS FOR THE EXTENDED OPEN ENROLLMENT PERIOD

2019 Net costs base Trend Trend Trend Trend (rounded Year year factor factor factor factor to nearest (million) 2020 2021 2022 2023 million)

2019 ...... 9 ...... 9 2020 ...... 9 1.078 ...... 10 2021 ...... 9 1.078 1.084 ...... 10 2022 ...... 9 1.078 1.084 1.089 ...... 11 2023 ...... 9 1.078 1.084 1.089 1.086 12

To the impact on the Trust Fund, determining eligibility + $0.64 million of enrollees, and submission to CMS use must be added the impact on Part C for notification of enrollees + $0.64 added resources and therefore are plans and Part D sponsors from million for submission of enrollment classified as a cost to the plan. However, enrollment. This impact was estimated information to CMS + $1.6 million for the cost of storage is classified as a in the Collection of Information section storage of enrollment forms). transfer since the costs of storage of as $6.1 million ($3.2 million for Determination of eligibility, notification enrollment by the plan elected during

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the open enrollment period are offset by on a mean hourly salary of $17.33, believes the proposed definitions the savings of cost of storage of which when multiplied by a factor of appropriately safeguard potential and enrollment by the former plan from two to include overhead, and fringe current MA/PDP enrollees from which enrollment is taking place. Thus, benefits, resulting in $34.66 an hour) the inappropriate steering of beneficiary $1.6 million of the $6.1 million is a total estimated savings to plans is choice, while not including materials transfer between plans and sponsors $12,998 (375 hours × $34.66). Since the that pose little risk to current or while the remaining $6.1¥$1.6 = $4.5 changes involve requests for payment potential enrollees and are not million is an actual cost. where the enrollee has already received traditionally considered ‘‘marketing.’’ Hence, the total cost of this open the drug, we do not believe the changes The proposed change will add text to enrollment provision for 2019 is $4.5 will impose undue burden on enrollees. §§ 422.2260 and 423.2260 and provide a million with a transfer of $10.6 million We did not receive comments on the narrower definition than is currently ($9 million to the Trust fund + $1.6 reduction in burden estimates provided for ‘‘marketing materials.’’ million in enrollment actions). associated with this proposal. We did Consequently, this definition decreases We received no comments on the receive comments on the substantive the number of marketing materials that reduction in burden estimates proposal, which we address in this final must be reviewed by CMS before use. associated with this proposal. We rule. As indicated in the preamble to Additionally, the proposal will more received comments on the substantive this final rule, we are finalizing this specifically outline the materials that proposal, which we address in this final provision as proposed. are and are not considered marketing rule. As indicated in the preamble to 9. Elimination of Medicare Advantage materials. this final rule, we are finalizing this We believe the net effects of the Plan Notice for Cases Sent to the IRE provision as proposed. proposed changes will reduce the The changes at § 422.590(f) will result burden to MA organizations and Part D 8. Lengthening Adjudication in a slight reduction of burden to Part Timeframes for Part D Payment Sponsors by reducing the number of C plans by no longer requiring a Notice materials required to be submitted to Redeterminations and IRE of Appeal Status for each case file Reconsiderations CMS for review. forwarded to the IRE. The estimated In section IV.F. of this final rule, we We believe the changes will result in savings of this change is based on estimated the reduced burden to a reduction of burden to Part D plan reduced plan administration costs. industry at $1.4 million. There is also a sponsors since they will have additional Using the number of partially and fully reduced burden to the federal time to adjudicate requests for payment. adverse cases, we estimate Part C plans government since CMS staff are no We also expect a reduction in burden forwarded 47,108 cases to the IRE in longer obligated to review these for the independent review entity (IRE) 2015. We estimate it will take 5 minutes materials. Although all marketing since the additional time for Part D plan (0.083 hours) to complete this notice. materials are submitted for potential sponsors to process these requests will We used an adjusted hourly wage of review by the MA plans to CMS, not all result in fewer untimely payment $34.66 based on the Bureau of Labor materials are reviewed, since some MA redeterminations that must be auto- Statistics May 2016 website for plans, because of a history of forwarded to the IRE. Based on recent occupation code 43–9199, ‘‘All other compliance, have a ‘‘file and use’’ status program data, about 2,000 retrospective office and administrative support which exempts their materials from payment redetermination cases are auto- workers,’’ which gives a mean hourly routine reviews. We estimate that only forwarded to the Part D IRE each plan salary of $17.33, which when multiplied 10 percent of submitted marketing year. We estimate that about 75 percent by a factor of two to include overhead, materials are reviewed by CMS staff. of the payment redetermination cases and fringe benefits, result in $34.66 an Consequently, the savings to the federal that are currently auto-forwarded to the hour. Thus, the reduction in government is 10 percent × $1.4 million Part D IRE due to the plan not being able administrative time spent will be 0.083 = $0.14 million. to meet the adjudication timeframe will hours × 47,108 cases = 3,910 hours with We received no comments on our not be auto-forwarded under the 14 day a consequent savings of 3,910 hours × proposal and therefore we are finalizing timeframe; the longer timeframe will $34.66 per hour = $135,520. This is a this provision without modification. afford Part D plan sponsors an savings to industry since it reduces the 11. Medicare Advantage and Part D additional 7 days to process a payment computer and staff resources needed to request, including obtaining necessary Prescription Drug Plan Quality Rating produce and send out notices. System supporting documentation, and to notify We do not believe the change will the enrollee of its decision. As a result, adversely impact health plan enrollees. There has been a recent trend in the overall plan sponsor burden will be The notice requirement we are number of enrollees that have moved reduced by not having to auto-forward eliminating is duplicative and enrollees from lower Star Ratings contracts that about 1,500 payment redetermination will be notified by the IRE that their do not receive a Quality Bonus Payment cases to the Part D IRE in a given plan case was received by the IRE for review. (QBP) to higher rated contracts that do year and the Part D IRE’s workload will We did not receive comments on the receive a QBP as part of contract be reduced by the same number of burden estimates outlined in the consolidations. The proposal is to cases. proposed rule, therefore we are modify the methodology of the Star We estimate that it takes Part D plan finalizing this provision as proposed. Ratings assigned to consolidating sponsors an average of 15 minutes (0.25 contracts and to codify that hours) to assemble and forward a case 10. Revisions to Parts 422 and 423, methodology. The methodology and file to the IRE, for an estimated savings Subpart V, Communication/Marketing measures are generally from recent of 375 hours (1500 cases × 0.25 hours). Materials and Activities practice and policies finalized under the Using an adjusted hourly wage of $34.66 CMS proposed to narrow the section 1853(b) of the Act Rate based on the Bureau of Labor Statistics definition of ‘‘marketing materials’’ Announcement. With regard to May 2016 website for occupation code under §§ 422.2260 and 423.2260 to only consolidations, the Star Ratings 43–9199, ‘‘All other office and include materials and activities that aim assigned will be based on the administrative support workers,’’ (based to influence enrollment decisions. CMS enrollment weighted average of the

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measure scores of the surviving and that have moved from a non-QBP 2017 Trustees Report. We also made an consumed contract(s) so that the ratings contract to a QBP contract and were assumption that even under the Star reflect the performance of all contracts found to be approximately 830,000 in Rating methodology changes, there will (surviving and consumed) involved in 2016, 530,000 in 2017, and 160,000 in still be 50 percent of the projected the consolidation. We believe that the 2018. We assumed that the number of impacted enrollees that will consolidate proposal will dissuade many plans from enrollees moving from a non-QBP or individually move from a non-QBP consolidating contracts since it will be contract to a QBP contract will be contract to a QBP contract when possible for some plans to lose QBPs 200,000 starting in 2019 and increasing advantageous to the health plan under certain scenarios. If less contracts by 3 percent per year throughout the (lessening the overall savings impact). consolidate to higher Star Ratings, less projection period. The 200,000 starting Combining the assumptions previously QBPs will be paid to plans and this will figure was chosen by observing the described, as well as accounting for the result in Trust Fund transfers. Plans decreasing trend in the historical data as average rebate percentage of 66 percent receiving smaller or no bonuses may well as placing the greatest weight on and backing out the projected Part B reduce benefits, thus transferring the the most recent data point. The 3 premium, the net savings to the trust costs of benefits to the beneficiary, but percent growth rate is approximately the we do not believe this will be projected growth in the MA eligible funds were calculated to be $32 million widespread since plans would lose population during the 2019–2023 for 2019, $35 million in 2020, $37 enrollees if they excessively curtailed period. million in 2021, $40 million in 2022, benefits. Similarly, we calculated the net per and $44 million in 2023. The In order to estimate the savings member per month (PMPM) dollar calculations for the five annual amounts for the projection window impact of the QBP for those enrollees in estimates are presented in Table 26. 2019–2023, we first observed the contracts that consolidated to be $44.73 These savings are classified as transfers number of enrollees that have been in 2018. Again, the PMPM impact was because there is no reduction of impacted by contract consolidations for projected for the 2019–2023 period resources. The savings result from the prior 3 contract years (2016 through using the projected annual trend of 5 enrollee transfers between health plans 2018) using a combination of bid and percent per year which is similar to the with and without QBP. Thus the CMS enrollment/crosswalk data. The projected growth rate for MA healthcare services remain the same (no number of enrollees observed are those expenditures and can be found in the reduction), albeit at a cheaper price.

TABLE 26—CALCULATIONS OF NET SAVINGS PER YEAR TO THE MEDICARE TRUST FUND FOR STAR RATINGS

Backing Number Percent not Average out of Year Enrollment PMPM cost months consolidating rebate Part B Net savings (3% annual trend) (5% annual trend) per year (%) percentage premium (in $millions) (%) (%)

2019 ...... 200,000 ...... 44.73 × 1.05 ...... 12 50 66 86 32 2020 ...... 200,000 × 1.03 ..... 44.73 × 1.05 2 ...... 12 50 66 86 35 2021 ...... 200,000 × 1.03 2 ... 44.73 × 1.05 3 ...... 12 50 66 86 37 2022 ...... 200,000 × 1.03 3 ... 44.73 × 1.05 4 ...... 12 50 66 86 40 2023 ...... 200,000 × 1.03 4 ... 44.73 × 1.05 5 ...... 12 50 66 86 44

We received the following comments after cross-walks. Since the preliminary perspectives from stakeholders, as and our response follows: Star Ratings are published in the fall of discussed in the following sentences. Comment: A commenter urged CMS the prior year, the plans are given time Part D plan sponsors, PBMs, and to provide additional detail underlying to complete the cross-walk procedures manufacturers contend limited its estimate in the regulatory impact before the Medicare Advantage bids are dispensing networks with accreditation analysis of the proposed rule. submitted in the spring of the following requirements generate cost savings and Response: CMS compared the Star year. add value. Specialty pharmacies Ratings for those plans that were cross- contend the added value avoids walked from one contract to a different Summary of Regulatory Changes additional costs. Independent contract. The enrollment estimate of For the reasons set forth in the community pharmacies, and 160,000 in 2018 was calculated by proposed rule and our responses to the beneficiaries contend broader estimating the number of enrollees that related comments summarized earlier, were cross-walked from a non-Quality we are finalizing the provisions as competition and transparency will Bonus Payment plan in 2017 to a proposed at §§ 422.162(b)(3) and generate savings. Quality Bonus Payment plan in 2018. 423.182(b)(3) without modification. Because this provision clarifies An updated estimate would be 12. Any Willing Pharmacy Standard existing any willing pharmacy significantly higher if CMS were to have Terms and Conditions and Better Define requirements, consistent with CMS compared the enrollment from the non- Pharmacy Types estimates, we do not anticipate Quality Bonus Payment plans in the additional government or beneficiary a. Anticipated Effects 2018 star ratings before cross-walks to cost impacts from this provision. the enrollment from Quality Bonus In considering the cost implications of Payment plans in the 2018 star ratings this proposal, we received varied

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TABLE 27—ESTIMATED AGGREGATE COSTS AND SAVINGS TO THE HEALTH CARE SECTOR FOR THE ANY WILLING PHARMACY PROVISION FOR CALENDAR YEARS 2019 THROUGH 2023

Calendar year ($ in millions) Total CYs Provision Regulation 2019–2023 section(s) 2019 2020 2021 2022 2023 ($ in millions)

Federal Government (Medicare) Impacts

Any Willing Pharmacy Standard Terms and Conditions and Various ...... 0 0 0 0 0 0 Better Define Pharmacy Types.

b. Benefits stated and elaborated elsewhere in this sponsors under this proposal, these Final clarification of Any Willing final rule, this policy in no way changes savings could be offset for organizations Pharmacy rules, and clarification of the existing policy regarding Part D plan who make the business decision to definition of retail pharmacy will sponsors’ ability to create and maintain prepare and submit additional bids if account for recent changes in the preferred pharmacy networks. this proposal is finalized. If the EA to pharmacy practice landscape and We are finalizing as proposed our EA threshold was the sole barrier to a ensure that existing statutorily-required timing of contracting requirements at PDP sponsor offering a second EA plan, Any Willing Pharmacy provisions are § 423.505. We are finalizing, as (that is, the sponsor currently only extended to innovative pharmacy modified, our definition of retail offers one enhanced plan), based on the business and care delivery models. pharmacy at § 423.100, having removed CY2018 PDP landscape, we could Rural areas are predominantly served the mention of retail cost sharing. We anticipate a modest increase of by independent community pharmacies. are not finalizing our proposed approximately 125 additional enhanced The National Community Pharmacist’s definition of mail order pharmacy. plans (15 percent increase). As it is unknown how many organizations will Association (NCPA) estimates that 13. Eliminating the Requirement To choose to add a second EA plan as a ‘‘independent pharmacies represent 52 Provide PDP Enhanced Alternative (EA) result of this provision, we are unable percent of all rural retail pharmacies to EA Plan Offerings With Meaningful to estimate the impact to beneficiaries and there are over 1800 independent Differences (§ 423.265) community pharmacies operating as the should this lead to more competition. only retail pharmacy within their rural The revision of 423.265 eliminates the Presumably, increased competition communities.’’ 83 84 Additionally, these requirement for two enhanced benefit could lead to potentially lower pharmacies are increasingly interested plans offered by a PDP organization in premiums and/or cost-sharing for to diversify their business models to a service area to be ‘‘substantially Medicare beneficiaries. dispense specialty drugs. Consequently, different’’. When finalized this will We did not receive comments, we believe this proposal may support result in increased plan flexibilities and specific to the regulatory impact small businesses in rural areas and may a potential increase in beneficiary plan analysis, on this proposal. help maintain beneficiary access to choice. We expect this provision to reduce plan burden and could provide 14. List Requirements for Prescribers in specialty drugs from community Part D and Individuals and Entities in pharmacies. a very modest savings to plans sponsors MA, Cost Plans, and PACE We received the following comments of approximately $60,000. The savings and our response follows: represent an estimate of the time not The costs and savings, as reflected in Comment: A commenter suggested spent by certifying actuaries to ensure the total net savings, associated with our that by eliminating preferred pharmacy that a meaningful difference threshold is preclusion list provisions will be those networks, the proposed any willing met between two PDP EA offerings. identified in the collection of pharmacy policy would cost the Based on the preliminary CY 2018 information section of this final rule: government in excess of $175 million landscape, if all PDP organizations that Specifically, (1) the system costs for even a moderate decrease in the submitted an EA benefit design had also associated with the Part D preclusion number of preferred pharmacies. This submitted the maximum of two EA list; (2) costs associated with the same commenter, along with others, plans, the result will be approximately preparation and sending of written urged us to clarify that we are not 275 EA to EA plan pairings that will be notices to affected Part D prescribers rolling back Part D plan sponsors’ required actuary time spent in and beneficiaries; and (3) the savings ability to create and maintain preferred evaluation of the meaningful difference that will accrue from individuals and pharmacy networks. requirement. We further estimate that it entities no longer required to enroll in Response: We thank the commenters, will take an actuary 2 hours to write a or opt-out of Medicare to prescribe Part however, their concern was predicated meaningful difference requirement. D drugs or furnish Part C services and on the idea that we proposed to Based on the Bureau of Labor Statistics items. The savings and cost by year are eliminate Part D plan sponsors’ ability (BLS) latest wage estimates, https:// summarized in Table 28. As explained to create and maintain preferred www.bls.gov/oes/current/ in the Collection of Information section pharmacy networks. As we explicitly oes152011.htm, the mean hourly wage of this final rule, the savings and cost of for actuaries, occupation code 15–2011 this analysis reflect increased and 83 National Community Pharmacist’s Association is $54.87 which when multiplied by 2 reduced use of resources respectively: letter to CMS Administrator, Seema Verma, June 7, 2017. Available at http://www.ncpa.co/pdf/ncpa- to allow 100 percent for overhead and Providers and suppliers save $10.3 and medicaid-recommend-cms-june-2017.pdf. fringe benefits is $109.74 an hour. Thus $24.1 million from the removal of the 84 National Community Pharmacist’s Association our total estimated burden is 275 EAs × requirement to enroll in Medicare as a comment letter to CMS–4159–P, March 2014. 2 Hours per EA = 550 hours at a cost prerequisite to furnishing health care Available at http://www.ncpa.co/pdf/NCPA- × Comments-to-CMS-Proposed-Rule-2015FINAL- of 550 $109.74 = $60,357. While there items and services to Medicare 3.7.14.pdf. is potential savings for PDP plan Advantage enrollees; this reduces

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resources needed for such enrollment. program edits into plan systems as well notifications to enrollees. The net Part D sponsors or their PBMs spend as produce and send required savings, is $25.1 million as shown. $9.3 million in additional resources to

TABLE 28—SAVINGS AND COST TO INDUSTRY AND PROVIDERS ARISING FROM THE PRECLUSION PROVISION

Item/year 2019 2020 2021 2022 2023

Part D Cost ...... ¥$9,310,548 ¥48,829 ¥48,829 ¥48,829 ¥48,829 Part D Savings ...... 10,308,800 ...... Part C Savings ...... 24,077,100 ...... Net Savings ...... 25,075,352 ¥48,829 ¥48,829 ¥48,829 ¥48,829

Costs associated with an alternative CMS staff it takes to complete a In total, we estimate that the changes approach are found in the Alternatives review—(1) times the adjusted wage for to the MLR reporting requirements will Considered portion of this section. that staff ($102.96) (750 × 1 × $102.96 save the government $490,000 a year. As We will be responsible for the × 0.25 hour), which equals $19,305. noted in the Collection of Information development and monitoring of the Thus, the total savings of this section of this final rule, the changes to preclusion list using our own resources. provision are $31,968, of which the MLR reporting requirement will We do not anticipate a change in the $12,663.75 are savings to the industry, save MA organizations and Part D number of individuals or entities billing as indicated in section III of this final sponsors $904,884 a year. Thus, the for service, for we will only be denying rule, and $19,305 are savings to the total annual savings of this proposal are payment to those parties that meet the federal government. $1,446,417: $490,000 to the government conditions of the preclusion list. Costs We received no comments on the RIA and $904,884 to MA organizations and associated with an alternative approach for this proposal, and therefore, we are Part D sponsors. are found in the Alternatives We do not anticipate that our finalizing the RIA without modification. Considered section of this rule. proposal to modify the regulations at We welcomed public comment on 16. Reducing the Burden of the Medical §§ 422.2430 and 423.2430 to specify that these estimates, for we believed that Loss Ratio Reporting Requirements Medication Therapy Management stakeholder feedback could assist us in (MTM) programs that comply with developing more concrete projections. Our proposal to significantly reduce § 423.153(d) are quality improvement We received no comments on this the amount of MLR data submitted to activities (QIA) will significantly reduce proposal and therefore are finalizing CMS would eliminate the need for CMS stakeholder burden. As explained in this provision without modification. to continue to pay a contractor section II.C.1.b.(2). of this final rule, we approximately $390,000 a year to stated in the May 23, 2013 final rule (78 15. Removal of Quality Improvement perform initial analyses or desk reviews FR 31294) that MTM activities qualify Project for Medicare Advantage of the detailed MLR reports submitted as QIA, provided they meet the Organizations (§ 422.152) by MA organizations and Part D requirements set forth in §§ 422.2430 This provision will result in a total sponsors. These initial analyses or desk and 423.2430. We expect that most if savings of $19,305 to the federal reviews are done by our contractors in not all MTM programs that comply with government. The driver of the savings is order to identify omissions and § 423.153(d) will already satisfy the QIA the removal of burden for federal suspected inaccuracies and to requirements set forth in current employees to review Quality communicate their findings to MA §§ 422.2430 and 423.2430. Therefore, Improvement Project (QIP) attestations. organizations and Part D sponsors in we do not anticipate that the proposal MA organizations are required to order to resolve potential compliance to explicitly include MTM programs in annually attest that they have an issues. QIA will have a significant impact on ongoing QIP in progress, and the In addition, because we will be burden. government reviews these attestation receiving only the minimum amount of We received no comments on our submissions. To estimate amounts, we data from MAOs and Part D sponsors, regulatory impact analysis and are considered how many QIP attestations we expect that we will reduce the finalizing this provision. are performed annually. amount we pay to contractors for We estimated that— software development, data 17. Expedited Substitutions of Certain • This review requires one person management, and technical support Generics and Other Midyear Formulary reviewing for 0.25 hours for a single QIP related to MLR reporting. We currently Changes (§§ 423.100, 423.120, and attestation. We assumed a GS grade 13, pay a contractor $300,000 each year for 423.128) step 5, with a mean wage of $51.48, these services. Although we expect that The provisions will specifically which with an allowance of 100 percent MAOs and Part D sponsors will permit Part D sponsors that meet our for overhead and fringe benefits continue to use the HPMS or a similar requirements to remove brand name becomes $102.96. This is based on the system to submit and attest to their drugs (or change their cost-sharing 2017 publicly available wages found on simplified MLR submissions, we will no status) when replacing them with (or the Office of Personnel Management longer need to maintain and update adding) generics released after their website at https://www.opm.gov/policy- MLR reporting software with validation initial formulary submission date data-oversight/pay-leave/salaries- features, to receive certain data extract without providing advance notice or wages/2017/general-schedule/. files, or to provide support for desk submitting formulary change requests. • We calculated the savings to the review functionality. We estimate that, We would also permit Part D sponsors federal government by multiplying the by eliminating these services, we will to make such changes at any time of the number of anticipated QIP attestation reduce our payments to contractors by year rather than waiting for them to take submissions (750) times the number of approximately $100,000 a year. effect two months after the start of the

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plan year. A related proposal would the timing of substitutions will overlap estimates this proposal will provide a except from our transition policy across plan years a minimal amount of modest savings of $10 million in 2019, applicable generic substitutions and times. We received no comments on our with savings increasing by additions with cost-sharing changes. regulatory impact analysis and are approximately $1 million each year Lastly, we proposed to decrease the finalizing this provision with through 2028. These savings are days of enrollee notice and refill modifications discussed in II.A.14. classified as transfers since there is no required in cases in which (aside from 18. Similar Treatment of Biosimilar and reduction in services; drugs are still generic substitutions and drugs deemed Interchangeable Biological Products and being sold, albeit at a cheaper price unsafe or removed from the market) Generic Drugs for Purposes of LIS Cost because of the use of biosimilar drug removal or changes in cost-sharing Sharing biological products. will affect enrollees. The FDA has noted that generics are a. Savings CMS anticipates some natural shift typically sold at substantial discounts from reference biological products to Codification of lower cost sharing for biosimilar and interchangeable from the branded price. (‘‘Generic biosimilar and interchangeable biological products, but biosimilar Drugs: Questions and Answers,’’ see biological products for LIS enrollees biological products’ price differential FDA website, https://www.fda.gov/ will reduce marketplace confusion and market share are lower than that drugs/resourcesforyou/consumers/ about what level of cost-sharing Part D observed for small molecule generic questionsanswers/ucm100100.htm, enrollees should be charged for drugs. Currently, Zarxio® accessed June 22, 2017.) However, we biosimilar and interchangeable data provide do not believe that significant savings biological products. By establishing cost the only meaningful comparison will necessarily result from these sharing at the lower level for LIS available to date, as very limited data provisions, because historically Part D enrollees, this provision will also exist on the other nine approved (as of sponsors have been able to anticipate improve LIS enrollee incentives to use March 7, 2018) biosimilar biological the generic launches well and migrate products. The market dynamic between biosimilar and interchangeable ® ® the brand scripts to generics smoothly biological products instead of reference Neupogen and Zarxio has behaved once the generic drugs become biological products. As discussed in the consistent with CMS’ anticipation and available. The proposal could provide proposed rule, this will reduce costs for CMS expects other biosimilar biological some administrative relief for Part D Part D enrollees and generate savings for products to follow the similar pattern. sponsors, although the savings won’t be the Part D program. Based on 2017 year-to-date data on the very significant. In addition, we believe that reducing per script price difference between In addition regardless of any first year confusion in the marketplace Neupogen® and Zarxio®, CMS estimated effect, we do not believe there could be surrounding this issue will improve biosimilar biological products to be 16 any significant effect for subsequent enrollee protections while also percent less expensive than their years. Our proposed changes will permit improving enrollee incentives to choose reference biological product. CMS immediate specified generic biosimilar and interchangeable estimates this proposal will result in a substitutions throughout the plan year biological products over reference minor shift of an additional 5 percent of or a 30 rather than a 60 day notice biological products. Improved prescriptions to biosimilar biological period for certain substitutions. Part D incentives to choose lower-cost products by LIS enrollees under this sponsors submit for review each year an alternatives will reduce costs to Part D proposal. Consequently, savings are not entirely new formulary and presumably enrollees and the Part D program. CMS estimated to be significant at this time.

TABLE 29—ESTIMATED SAVINGS TO THE MEDICARE TRUST FUND FOR CALENDAR YEARS 2019 THROUGH 2023 FOR SIMI- LAR TREATMENT OF BIOSIMILAR AND INTERCHANGEABLE BIOLOGICAL PRODUCTS AND GENERIC DRUGS FOR PUR- POSES OF LIS COST SHARING

Calendar year ($ in millions) Total CYs Provision Regulation 2019–2023 section(s) 2019 2020 2021 2022 2023 ($ in millions)

Federal Government (Medicare) Impacts

Similar Treatment of Biosimilar and Interchangeable Biologi- § 423.4 ...... 10 11 12 13 14 60 cal Products and Generic Drugs for Purposes of LIS Cost Sharing.

b. Benefits of Similar Treatment of will also improve Part D enrollee D plan sponsors due to programming Biosimilar and Interchangeable incentives to use biosimilar and changes. Biological Products and Generic Drugs interchangeable biological products Response: We appreciate the for Purposes of LIS Cost Sharing instead of reference biological products. commenters’ perspective, however we Final codification of lower cost As discussed previously, this will believe that the benefit to LIS Part D sharing for biosimilar and reduce costs to Part D enrollees and enrollees outweigh the concerns interchangeable biological products for generate savings for the Part D program. regarding Part D plan sponsor’s LIS enrollees will reduce marketplace We received the following comments, administrative burden. Given the low confusion about what level of cost- and our response follows: number of biosimilar biological sharing LIS enrollees should be charged products on the market, it is not for biosimilar and interchangeable Comment: A couple of commenters noted that our proposed change apparent to us that this would require biological products. By establishing cost significant administrative burden on sharing at the lower level, this provision generates administrative burden for Part

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Part D plans to identify such products cost-savings, because it largely depends month in obtaining this data. Delays in and implement this change. upon which and how many drugs are the availability of this data and the We are finalizing our proposal as dispensed as transition drugs to Part D screening and evaluation of the modified, amending beneficiaries in the LTC setting in the providers and prescribers will result in § 423.782(a)(2)(iii)(A) and future. Also, we are unable to determine delays in the identification and § 423.782(b)(3) instead of § 423.4. which PDEs involve transition supplies inclusion of providers or prescribers on 19. Changes to the Days’ Supply in LTC in order to provide an estimate the preclusion list, which will occur Required by the Part D Transition of future savings based on past after the service, item or drug was Process (§ 423.120) experience with transition supplies in provided to the Medicare beneficiary. LTC in the Part D program. We estimate that it will cost the Trust We do not believe that finalizing this Fund approximately $42.8 million if we section would impose any new burden D. Alternatives Considered do not proactively screen providers and on any stakeholder. Since Part D 1. Any Willing Pharmacy Standard prescribers and delay screening until sponsors and their PBMs already have Terms and Conditions and Better Define after the PDE and encounter data is prescription drug pharmacy claims Pharmacy Types systems programmed to provide available. We estimate an additional 1.4 transition supplies to plan enrollees in The critical policy decision was how million providers or prescribers will not the LTC and outpatient settings, they to strike the right balance to clarify be screened if we only rely on PDE and will only have to make a technical confusion in the marketplace, afford encounter data. The current Medicare change to these systems that consists of Part D plan sponsor flexibility, and provider population consists of changing the required number of days’ incorporate recent innovations in approximately 2 million providers and supply to the approved month’s supply pharmacy business and care delivery historically we have revoked 0.4 percent in their plan benefit package. In models without prematurely and of its existing Medicare enrolled addition, Part D sponsors and their inappropriately interfering with highly providers. However this percentage PBMs would have to cease treating these volatile market forces. could be higher or lower for the population of prescribers solely enrolled enrollees in the LTC setting separately 2. Similar Treatment of Biosimilar and for prescribing. There are approximately from enrollees in the outpatient setting Interchangeable Biological Products and 460,000 part C and D unenrolled for purposes of transition. Generic Drugs for Purposes of LIS Cost providers and prescribers, 120,000 of We also do not believe this provision Sharing would impose any new burden on LTC which are billing Part C. Using the facilities and the pharmacies that serve The critical policy question was how percentage of historical revocations, we them. We believe this regulation will to provide lower cost sharing for estimate approximately 1,840 new eliminate the additional time that LTC biosimilar and interchangeable revocations. Based on the approximate facilities and pharmacies have to biological products for LIS enrollees. 1-month delay in the availability of the transition Part D patients—time we now Classifying biosimilar and PDE and encounter data, 3 months for believe they do not need to effectuate interchangeable biological products as screening, and an additional 3 months the transition. generic drugs only for cost-sharing to evaluate the offenses, we anticipate In the context of requesting that we purposes for LIS enrollees risked approximately a 7-month delay in the not reduce the transition supply from 90 confusion in the marketplace which provider or prescriber’s inclusion on the days to a month, commenters generally could lead to inappropriate utilization preclusion list following the service, indicated that preparing for transitions of biosimilar and interchangeable item, or drug being provided to the created an administrative burden. We biological products and in turn, beneficiary if we do not perform acknowledge and appreciate the efforts increased costs to the Part D program. proactive screening. The 7-month undertaken to smooth transitions, but Adding biosimilar and interchangeable timeframe is dependent on whether the do not believe our provision in and of biological products to regulatory cost- PDE and encounter data is timely. Using itself would create any new burden. sharing provisions for LIS enrollees can a cost avoidance of $3,324 per month While they would have a smaller time appropriately resolve marketplace average per provider and applying it to frame in which to take actions, LTC confusion while also improving Part D the estimated 1,840 new revocations, a facilities and pharmacies would need to enrollee incentives to choose lower cost delay in screening will cost the Trust make the same outreach calls to health alternatives. Fund approximately $42.8 million care providers as has previously been 3. Preclusion List (3,324 × 7 × 1,840). The $3,324 estimate the case—albeit within a shorter period is based on Medicare fee-for-service of time. And while we are We considered a preclusion list that will include providers and suppliers revocation data and may be higher or recommending that LTC pharmacies try lower depending on whether the to anticipate and plan for somewhat who are prescribing Part D drugs and provider is an individual or predicable events such yearly changes who are providing services to Medicare organization and their provider type. to benchmark status necessitating beneficiaries who are receiving their beneficiary moves, it is not Medicare benefit from a MA plan. The E. Accounting Statement inconceivable that to the extent savings and cost estimates associated required, these entities might undertake with that alternative are based on the As required by OMB Circular A–4 contingency planning that could following: Encounter data and (available at https://obamawhitehouse. ultimately lessen the administrative Prescription drug event (PDE) which archives.gov/omb/circulars_a004_a-4/), burdens over the long run. identifies providers who furnish Part C in Table 30 we have prepared an We believe this provision would services and items and prescribe Part D accounting statement showing the produce cost-savings to the Medicare drugs to Medicare beneficiaries. Given savings and transfers associated with Part D program because it requires fewer the frequency with which MA the provisions of this final rule for CYs drugs to be dispensed under transition, organizations and Part D sponsors 2019 through 2023. Table 30 is based on particularly in the LTC setting. typically submit data to CMS, we Table 31 which lists savings, costs, and However, we are unable to estimate the estimate a delay of approximately 1 transfers by provision.

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TABLE 30—ACCOUNTING STATEMENT: CLASSIFICATIONS OF ESTIMATED SAVINGS, COSTS, AND TRANSFERS FROM CALENDAR YEARS 2019 TO 2023 [$in millions]

Savings Discount rate Whom to whom Period covered 7% 3%

Net Annualized Monetized Savings ...... 295.23 296.29 CYs 2019–2023 .... MA Organizations and Part D Sponsors, In- dustry, Govt. Annualized Monetized Savings ...... 302.53 303.59 CYs 2019–2023 .... MA Organizations and Part D Sponsors, In- dustry, Govt. Annualized Monetized Cost ...... (7.30) (7.30) CYs 2019–2023 .... MA Organizations and Part D Sponsors, In- dustry, Govt. Transfers ...... 37.17 37.41 CYs 2019–2023 .... Federal Government, MA plans and Part D Sponsors, Providers and Re-insurers. Note: Monetized figures in 2018 dollars. Positive numbers indicate aggregate level annualized savings at the giving percentage. Transfers are a separate line item. Table 30 is based on Table 31. Minor (cent) errors are due to rounding.

The following Table 31 summarizes provision and formed a basis for the savings, costs, and transfers by accounting table. BILLING CODE 4120–01–P

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BILLING CODE 4120–01–C between $30 and $45 million and are from the provision to treat biosimilar F. Conclusion equivalent to a monetized level amount and interchangeable biological products of about $37 million per year at the 3- as generic drugs for purposes of LIS cost This final rule has a net savings of percent and 7-percent levels. Both sharing + $32 million from the star between $280 to $335 million for each industry and the federal government ratings provision ¥9 million from the of the next 5 years. The savings are save from program efficiencies and open enrollment provision). This equivalent to a level annualized amount reduced work. reduction in Medicare Trust Fund costs of about $295 million per year for both As a result of benefits, savings, and will gradually increase; in 2028, the 7 percent and 3 percent interest rates. transfers of this final rule, the Medicare Trust Fund is expected to reduce costs These net savings are to Part D sponsors, Trust Fund, in 2019, will reduce in by $241.7 million dollars. These savings Part C plans, pharma, providers, aggregate its cost for paying for plan to the Medicare Trust Fund are industry, as well as the federal benefits by $123.6 million dollars ($19 actuarially equivalent to a level amount government. Transfers between the million from the CARA provision + of about $170 million per year in 2018 federal government, Part C plans, Part D $71.6 million from the physician dollars ($171.69 million discounted at sponsors, re-insurers, and providers are incentive plans provision + $10 million the 3% level, and $167.75 million per

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year discounted at the 7% level). These require Part D sponsors to provide all conjunction with the expansion of savings do not include the MLR enrollees with general advance notice benefit flexibilities, will allow provision savings of $490,000 savings a that immediate generic substitutions can organizations to provide benefit year due to not paying a contractor nor take place, under this revision Part D offerings that satisfy the unique needs of the marketing material provision sponsors no longer have to provide beneficiaries, increase enrollee savings of $140,000 a year due to advance notice of the generic satisfaction, reduce overall plan reduced time spent by Federal substitution to enrollees who are expenditures, and result in more employees reviewing marketing currently taking the brand name drug. affordable plans. Beneficiaries will materials. This means that enrollees who would continue to compare plans as they have Additionally, this final rule is might have so chosen may not have the in the past, that is, limit their choices beneficial to beneficiaries. The impact chance to consult with their prescribers based on characteristics, such as plan of this final rule on beneficiaries is before they receive the generic drug. We type, Part D coverage, differences in complicated with some provisions believe these consequences are provider network, Part B and plan beneficial, one provision burdensome, mitigated by the fact that beneficiaries premiums, unique populations served, and the rest neutral. Although have general familiarity with generic and benefits. CMS and MA quantitative formulations of the impacts drug substitutions as part of the larger organizations will continue to provide can sometimes be provided, because of pharmacy market and that additionally beneficiaries with tools, such as MPF the variability of many factors, in many they may still avail themselves of the and communication materials, to cases, impact can only be measured strong Medicare beneficiary protections, evaluate plan options and assist in qualitatively. including the exceptions process. choosing the best plan option. In The following provisions are • Preclusion: The removal of the Part addition, the elimination of the beneficial for beneficiaries for the D and Medicare Advantage enrollment meaningful difference provision is not reasons indicated: requirements for prescribers and necessarily encouraging ‘‘new’’ plans, • CARA: Enrollees will—(1) have providers as a prerequisite for but rather allowing plans to use existing fewer enrollment forms to fill out prescribing drugs and furnishing health capabilities and expanded flexibilities (because they are locked in); (2) there care items and services will result in discussed in the proposed rule to will be fewer enrollee opioid addictions; greater ease for enrollees in obtaining improve innovation within existing and (3) the illnesses arising from opioid needed drugs and health care items and new plans. It is unknown how many addiction will be reduced; we estimate services; organizations will choose to add plan that the Trust Fund, in 2019, will spend • PDP EA to EA meaningful options, decrease premiums and/or cost $19 million less because of reduced difference: Enrollees may experience sharing and by what degree. CMS opioid prescriptions; enrollees are lower Part D supplemental premiums if expects that increased competition will therefore saving coinsurance on these enrolled in an EA plan, as sponsors will provide value to beneficiaries through payments; not be pressured to make benefit more innovative health plans that meet • Passive enrollment flexibilities: changes to comply with a requirement their needs, and affordability through Enrollees are relieved of the burden of that ultimately results in higher benefits and premiums. These factors filling out enrollment forms; plans are supplemental premiums for are difficult to accurately measure relieved of the burden of verifying beneficiaries. We believe that the tools quantitatively and as such, we consider eligibility and storage of these forms. CMS provides for beneficiaries to make the benefits qualitative. CMS also There is a cost to enrollees of the ability decisions (for example. Medicare Plan believes that the tools and information to actively choose a new plan; this cost Finder, Medicare and You Handbook, CMS provides for beneficiaries to make is minimized by the special election 1–800–MEDICARE), in addition to our decisions (for example, Medicare Plan period afforded to enrollees and enforcement of communication and Finder, Medicare and You Handbook, described in the two passive enrollment marketing requirements, aim to mitigate 1–800–MEDICARE), in addition to our notifications. Additionally, if enrollees any potential choice overload should enforcement of communication and remain in the plan they are passively this provision result in additional PDP marketing requirements, aim to mitigate enrolled into, they will continue plan offerings; any potential choice overload. receiving services from an integrated D– • Similar Treatment of Biosimilar Only one provision, OEP, is SNP similar to the plan they previously and Interchangeable Biological Products burdensome to beneficiaries. Enrollees chose. as Generic Drugs: This provision will will have the burden of filling out • Disclosure: Plans have the option to reduce confusion in the marketplace enrollment forms and plans will have deliver required documents using surrounding this issue, will improve the burden of verifying eligibility, alternate methods including electronic enrollee protections while also sending notifications to enrollees and delivery. Enrollees of these plans may improving enrollee incentives to choose CMS, and storing enrollment forms. receive disclosure documents biosimilar and interchangeable This burden has been assessed electronically and have enhanced biological products over reference quantitatively in the Collection of electronic search capabilities available; biological products. Improved Information section as costing $6.1 furthermore, enrollees have greater incentives to choose lower-cost million to plans and $6.7 million to access to their documents at any alternatives will reduce costs to Part D beneficiaries. location with a browser. Plans that opt enrollees. Note, the co-insurance The remaining provisions are neutral to use alternative methods of delivery portion of the estimated reductions in because either the provision codified or (including electronic delivery) must dollars spent by the Trust Fund, $10 clarified existing practice (coordination provide the documents in hard copy million in 2019, reflects quantitative of enrollment/disenrollment, any upon request. estimates of savings to Part D plan willing pharmacy), the provision had no • Expedited generic substitutions and sponsors and reduced costs of enrollees; new or revised information midyear formulary changes: Part D • Part C Meaningful Difference: As requirements (limitations on SEP for sponsors have the option to provide discussed earlier in this section, CMS Part D duals, Part D tiering, changes to enrollees with access to generics sooner expects the elimination of the Part C transition supply), the provision did not than currently permitted. While we will meaningful difference evaluation, in change practice and therefore had no

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impact (minimum enrollment waiver), Health facilities, Health maintenance content and format and be approved by the provision removed duplicative organizations (HMO), Health CMS as described in § 422.2262 of this efforts (removal of quality improvement professionals, Incorporation by chapter. The application must be projects, lengthening adjudication reference, Medicare, Penalties, Privacy, completed by an HMO or CMP eligible timeframes), or the provisions reduced and Reporting and recordkeeping (or soon to become eligible) individual burden on other stakeholders without requirements. and include authorization for disclosure impacting enrollees (removal of quality between HHS and its designees and the 42 CFR Part 460 improvement projects reduced the HMO or CMP. burden on CMS review staff, marketing Aged, Health care, Health records, * * * * * materials reduced the burden on CMS Medicaid, Medicare, and Reporting and review staff, elimination of notices for recordkeeping requirements. ■ 5. Section 417.472 is amended by IRE reduced plan burden, Medical Loss adding paragraph (k) to read as follows: 42 CFR Part 498 Ratio reduced plan burden, compliance § 417.472 Basic contract requirements. training reduction affected staff training, Administrative practice and * * * * * physician incentive plans reduced costs procedure, Health facilities, Health of insurance for MA organizations, professions, Medicare, and Reporting (k) All cost contracts under section agent-broker gives plans more flexibility and recordkeeping requirements. 1876 of the Act must agree to be rated in dealing with unlicensed brokers). For the reasons set forth in the under the quality rating system preamble, the Centers for Medicare & specified at subpart D of part 422, and G. Reducing Regulation and Controlling for cost plans that provide the Part D Regulatory Costs Medicaid Services amends 42 CFR chapter IV as set forth below: prescription benefit, under the quality This rule, as finalized, will be an rating system specified at part 423 Executive Order (E.O.) 13771 regulatory PART 405—FEDERAL HEALTH subpart D, of this chapter. Cost contacts action. Details on the estimated costs INSURANCE FOR THE AGED AND are not required to submit data on or be and cost savings can be found in the DISABLED rated on specific measures determined preceding analysis. Executive Order by CMS to be inapplicable to their 13771 requires that the costs associated ■ 1. The authority citation for part 405 contract or for which data are not with significant new regulations ‘‘shall, continues to read as follows: available, including hospital to the extent permitted by law, be offset Authority: Secs. 205(a), 1102, 1861, readmission and call center measures. by the elimination of existing costs 1862(a), 1869, 1871, 1874, 1881, and 1886(k) ■ 6. Section 417.478 is amended by associated with at least two prior of the Social Security Act (42 U.S.C. 405(a), revising paragraph (e) to read as follows: regulations.’’ We believe that this final 1302, 1395x, 1395y(a), 1395ff, 1395hh, rule is a significant regulatory action as 1395kk, 1395rr and 1395ww(k)), and sec. 353 § 417.478 Requirements of other laws and defined by Executive Order 12866. This of the Public Health Service Act (42 U.S.C. regulations. final rule is considered an E.O. 13771 263a). * * * * * deregulatory action. We estimate that ■ 2. Section 405.924 is amended by (e)(1) The prohibitions, procedures this rule generates annualized cost adding paragraph (a)(5) to read as and requirements relating to payment to savings of $365.55 discounted relative follows: individuals and entities on the to year 2016 at 7 percent over a preclusion list, defined in § 422.2 of this perpetual time horizon. § 405.924 Actions that are initial determinations. chapter, apply to HMOs and CMPs that contract with CMS under section 1876 List of Subjects (a) * * * of the Act. 42 CFR Part 405 (5) An adjustment of premium for hospital or supplementary medical (2) In applying the provisions of Administrative practice and insurance as outlined in §§ 406.32(d), §§ 422.2, 422.222, and 422.224 of this procedure, Health facilities, Health 408.20(e), and 408.22 of this chapter, chapter under paragraph (e)(1) of this professions, Kidney diseases, Medical and 20 CFR 418.1301. section, references to part 422 of this devices, Medicare, Reporting and chapter must be read as references to * * * * * recordkeeping requirements, Rural this part, and references to MA areas, X-rays. PART 417—HEALTH MAINTENANCE organizations as references to HMOs 42 CFR Part 417 ORGANIZATIONS, COMPETITIVE and CMPs. Administrative practice and MEDICAL PLANS, AND HEALTH CARE ■ 7. Section 417.484 is amended by procedure, Grant programs—health, PREPAYMENT PLANS revising paragraph (b)(3) to read as Health care, Health insurance, Health follows: ■ 3. The authority citation for part 417 maintenance organizations (HMO), Loan continues to read as follows: § 417.484 Requirement applicable to programs—health, Medicare, Reporting related entities. and recordkeeping requirements. Authority: Secs. 1102 and 1871 of the Social Security Act (42 U.S.C. 1302 and * * * * * 42 CFR Part 422 1395hh), secs. 1301, 1306, and 1310 of the (b) * * * Administrative practice and Public Health Service Act (42 U.S.C. 300e, (3) That payments must not be made procedure, Health facilities, Health 300e–5, and 300e–9), and 31 U.S.C. 9701. to individuals and entities included on maintenance organizations (HMO), ■ 4. Section 417.430 is amended by the preclusion list, defined in § 422.2 of Medicare, Penalties, Privacy, and revising paragraph (a)(1) to read as this chapter. Reporting and recordkeeping follows: requirements. PART 422—MEDICARE ADVANTAGE § 417.430 Application procedures. PROGRAM 42 CFR Part 423 (a) * * * Administrative practice and (1) The application form must comply ■ 8. The authority citation for part 422 procedure, Emergency medical services, with CMS instructions regarding continues to read as follows:

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Authority: Secs. 1102 and 1871 of the materials that describe the option, and under the rating system described in Social Security Act (42 U.S.C. 1302 and the MA organization’s assurances of §§ 422.160 through 422.166, of at least 1395hh). access to services. 3 stars or is a low enrollment contract ■ 9. Section 422.2 is amended by adding * * * * * or new MA plan as defined in § 422.252. the definition of ‘‘Preclusion list’’ in (d) * * * (iv) Not have any prohibition on new alphabetical order to read as follows: (4) * * * enrollment imposed by CMS. (ii) Organizations that require (v) Have limits on premiums and cost- § 422.2 Definitions. enrollees to give advance notice of sharing appropriate to full-benefit dual * * * * * intent to use the continuation of eligible beneficiaries. Preclusion list means a CMS- enrollment option, must stipulate the (vi) Have the operational capacity to compiled list of individuals and entities notification process in the passively enroll beneficiaries and agree that— communication materials. to receive the enrollments. (1) Meet all of the following (3) Passive enrollment procedures. requirements: * * * * * ■ Individuals will be considered to have (i) The individual or entity is 11. Section 422.60 is amended— elected the plan selected by CMS unless ■ a. In paragraph (a)(2) by removing the currently revoked from Medicare under they— § 424.535. reference ‘‘§ 422.62(a)(3), (a)(4), and (i) Decline the plan selected by CMS, (ii) The individual or entity is (a)(5) if’’ and adding in its place the in a form and manner determined by currently under a reenrollment bar reference ‘‘§ 422.62(a)(3) and (4) if’’; and CMS, or ■ b. Revising paragraph (g). under § 424.535(c). (ii) Request enrollment in another The revision reads as follows: (iii) CMS determines that the plan. underlying conduct that led to the § 422.60 Election process. (4) Beneficiary notification. The MA revocation is detrimental to the best * * * * * organization that receives the passive interests of the Medicare program. In enrollment must provide to the enrollee: making this determination under this (g) Passive enrollment by CMS—(1) Circumstances in which CMS may (i) In the case of a passive enrollment paragraph (1)(iii), CMS considers the described in paragraphs (g)(1)(i) and (ii) following factors: implement passive enrollment. CMS may implement passive enrollment of this section, a notice that describes (A) The seriousness of the conduct the costs and benefits of the plan and underlying the individual’s or entity’s procedures in any of the following situations: the process for accessing care under the revocation. plan and clearly explains the (B) The degree to which the (i) Immediate terminations as provided in § 422.510(b)(2)(i)(B). beneficiary’s ability to decline the individual’s or entity’s conduct could enrollment or choose another plan. This affect the integrity of the Medicare (ii) CMS determines that remaining enrolled in a plan poses potential harm notice must be provided to all potential program. passively-enrolled enrollees, in a form (C) Any other evidence that CMS to the members. and manner determined by CMS, prior deems relevant to its determination; or (iii) CMS determines, after consulting (2) Meet both of the following with the State Medicaid agency that to the enrollment effective date (or as requirements: contracts with the dual eligible special soon as possible after the effective date (i) The individual or entity has needs plan that is described in if prior notice is not practical). engaged in behavior for which CMS paragraph (g)(2)(i) of this section and (ii) In the case of a passive enrollment could have revoked the individual or meets the requirements of paragraph described in paragraph (g)(1)(iii) of this entity to the extent applicable had they (g)(2) of this section, that the passive section, two notices that describe the been enrolled in Medicare. enrollment will promote integrated care costs and benefits of the plan and the (ii) CMS determines that the and continuity of care for a full-benefit process for accessing care under the underlying conduct that would have led dual eligible beneficiary (as defined in plan and clearly explain the to the revocation is detrimental to the § 423.772 of this chapter and entitled to beneficiary’s ability to decline the best interests of the Medicare program. Medicare Part A and enrolled in Part B enrollment or choose another plan. In making this determination under this under title XVIII) who is currently (A) The first notice described in paragraph (2)(ii), CMS considers the enrolled in an integrated dual eligible paragraph (g)(4)(ii) of this section must following factors: special needs plan. be provided, in a form and manner (A) The seriousness of the conduct (2) MA plans that may receive passive determined by CMS, no fewer than 60 involved. enrollments. CMS may implement calendar days prior to the enrollment (B) The degree to which the passive enrollment described in effective date. individual’s or entity’s conduct could paragraph (g)(1)(iii) of this section only (B) The second notice described in affect the integrity of the Medicare into MA–PD plans that meet all the paragraph (g)(4)(ii) of this section must program; and following requirements: be provided, in a form and manner (C) Any other evidence that CMS (i) Operate as a fully integrated dual determined by CMS, no fewer than 30 deems relevant to its determination. eligible special needs plan as defined in days prior to the enrollment effective * * * * * § 422.2, or a specialized MA plan for date. (5) Special election period. In the case ■ 10. Section 422.54 is amended by special needs individuals that meets a high standard of integration, as of a passive enrollment described in this revising paragraphs (c)(1)(i) and paragraph, individuals will be provided (d)(4)(ii) to read as follows: described in § 422.102(e). (ii) Have substantially similar with a special enrollment period § 422.54 Continuation of enrollment for MA provider and facility networks and described in at § 423.38(c)(10) of this local plans. Medicare- and Medicaid-covered chapter. * * * * * benefits as the plan (or plans) from ■ 12. Section § 422.62 is amended by— (c) * * * which the beneficiaries are passively ■ a. Revising paragraphs (a)(3) through (1) * * * enrolled. (5); (i) Obtain CMS’s approval of the (iii) Have an overall quality rating ■ b. Removing paragraphs (a)(6) and (7); continuation area, the communication from the most recently issued ratings, and

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■ c. Revising paragraph (b)(3)(ii). election to enroll in a PDP as specified (F) The MA organization has a The revisions read as follows: in § 423.38(d) of this chapter. minimum overall quality rating from the (b) * * * most recently issued ratings, under the § 422.62 Election of coverage under an MA plan. (3) * * * rating system described in §§ 422.160 (ii) The organization (or its agent, through 422.166, of at least 3 stars or is (a) * * * representative, or plan provider) a low enrollment contract or new MA (3) Open enrollment period for materially misrepresented the plan’s plan as defined in § 422.252; and individuals enrolled in MA—(i) For provisions in communications as 2019 and subsequent years. Except as (G) The MA organization does not outlined in subpart V of this part. provided in paragraphs (a)(3)(ii) and (iii) have any prohibition on new enrollment and (a)(4) of this section, an individual * * * * * imposed by CMS. who is enrolled in an MA plan may ■ 13. Section 422.66 is amended by (ii) CMS approval of default make an election once during the first revising paragraphs (c) and (d)(1) and enrollment. An MA organization must 3 months of the year to enroll in another (5) to read as follows: obtain approval from CMS before MA plan or disenroll to obtain Original implementing any default enrollment as § 422.66 Coordination of enrollment and described in this section. CMS approval Medicare. An individual who chooses to disenrollment through MA organizations. exercise this election may also make a will be for a period not to exceed five coordinating election to enroll in or * * * * * years, although CMS may suspend or disenroll from Part D, as specified in (c) Election by default: Initial rescind approval prior to the expiration § 423.38(e) of this chapter. coverage election period—(1) Basic rule. of this period if CMS determines the (ii) Newly eligible MA individual. For Subject to paragraph (c)(2) of this MA organization is not in compliance 2019 and subsequent years, a newly MA section, an individual who fails to make with the requirements of this section. eligible individual who is enrolled in a an election during the initial coverage (iii) Effective date of default MA plan may change his or her election election period is deemed to have enrollment. Default enrollment in the once during the period that begins the elected original Medicare. dual eligible MA special needs plan is month the individual is entitled to both (2) Default enrollment into MA dual effective the month in which the Part A and Part B and ends on the last eligible special needs plan—(i) individual is first entitled to both Part day of the third month of the Conditions for default enrollment. A and Part B. entitlement. An individual who chooses During an individual’s initial coverage (iv) Notice requirement for default to exercise this election may also make election period, an individual may be enrollments. In addition to the a coordinating election to enroll in or deemed to have elected a MA special information described in § 422.111 and disenroll from Part D, as specified in needs plan for individuals entitled to no fewer than 60 calendar days prior to § 423.38(e) of this chapter. medical assistance under a State plan the enrollment effective date described (iii) Single election limitation. The under Title XIX (including a fully in paragraph (c)(2)(iii) of this section, limitation to one election or change in integrated dual eligible special needs the MA organization must provide to paragraphs (a)(3)(i) and (ii) of this plan as defined in § 422.2) offered by each individual who qualifies for section does not apply to elections or the organization provided all the deemed enrollment under paragraph changes made during the annual following conditions are met: (c)(2) of this section a notice that coordinated election period specified in (A) At the time of the deemed includes the following: election, the individual remains paragraph (a)(2) of this section, or (A) Information on the differences in enrolled in an affiliated Medicaid during a special election period premium, benefits and cost sharing managed care plan. For purposes of this specified in paragraph (b) of this between the individual’s current section, an affiliated Medicaid managed section. Medicaid managed care plan and the care plan is one that is offered by the (4) Open enrollment period for dual eligible MA special needs plan and MA organization that offers the dual institutionalized individuals. After the process for accessing care under the eligible MA special needs plan or is 2005, an individual who is eligible to MA plan; elect an MA plan and who is offered by an entity that shares a parent (B) The individual’s ability to decline institutionalized, as defined in § 422.2, organization with such MA the enrollment, up to and including the is not limited (except as provided for in organization; day prior to the enrollment effective paragraph (d) of this section for MA (B) The state has approved the use of date, and either enroll in Original MSA plans) in the number of elections the default enrollment process in the Medicare or choose another MA plan; or changes he or she may make. Subject contract described in § 422.107 and and to the MA plan being open to enrollees provides the information that is as provided under § 422.60(a)(2), an MA necessary for the MA organization to (C) A general description of eligible institutionalized individual may identify individuals who are in their alternative Medicare health and drug at any time elect an MA plan or change initial coverage election period; coverage options available to an his or her election from an MA plan to (C) The MA organization offering the individual in his or her Initial Coverage Original Medicare, to a different MA MA special needs plan has issued the Election Period. plan, or from Original Medicare to an notice described in paragraph (c)(2)(iv) (d) * * * MA plan. of this section to the individual; (1) Basic rule. An MA plan offered by (5) Annual 45-day period for (D) Prior to the effective date an MA organization must accept any disenrollment from MA plans to described in paragraph (c)(2)(iii) of this individual (regardless of whether the Original Medicare. Through 2018, at any section, the individual does not decline individual has end-stage renal disease) time from January 1 through February the default enrollment and does not who requests enrollment during his or 14, an individual who is enrolled in an elect to receive coverage other than her Initial Coverage Election Period MA plan may elect Original Medicare through the MA organization; while enrolled in a health plan offered once during this 45-day period. An (E) CMS has approved the MA by the MA organization during the individual who chooses to exercise this organization to use default enrollment month immediately preceding the MA election may also make a coordinating under paragraph (c)(2)(ii) of this section; plan enrollment effective date, and who

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meets the eligibility requirements at earlier than January 1, 2020, CMS will maximum beneficiary out of pocket § 422.50. set the annual limit to strike a balance costs and potential changes in premium, * * * * * between limiting maximum beneficiary benefits, and cost sharing, with the goal (5) Election. An individual who out of pocket costs and potential of ensuring beneficiary access to requests seamless continuation of changes in premium, benefits, and cost affordable and sustainable benefit coverage as described in paragraph sharing, with the goal of ensuring packages. (d)(1) of this section may complete a beneficiary access to affordable and (3) Total catastrophic limit. MA simplified election, in a form and sustainable benefit packages. regional plans are required to establish manner approved by CMS that meets (5) With respect to a local PPO plan, a total catastrophic limit on beneficiary the requirements in § 422.60(c)(1). the limit specified under paragraph out-of-pocket expenditures for in- * * * * * (f)(4) of this section applies only to use network and out-of-network benefits of network providers. Such local PPO under the Medicare Fee-for-Service ■ 14. Section 422.68 is amended by plans must include a total catastrophic program (Part A and Part B benefits). revising paragraphs (a), (c), and (f) to limit on beneficiary out-of-pocket (i) This total out-of-pocket read as follows: expenditures for both in-network and catastrophic limit, which would apply § 422.68 Effective dates of coverage and out-of-network Parts A and B services to both in-network and out-of-network change of coverage. that is— benefits under Medicare Fee-for-Service, * * * * * * * * * * may be higher than the in-network (a) Initial coverage election period. An (ii) Not greater than the annual limit catastrophic limit in paragraph (d)(2) of election made during an initial coverage set by CMS using Medicare Fee-for- this section, but may not increase the election period as described in Service data to establish appropriate limit described in paragraph (d)(2) of § 422.62(a)(1) is effective as follows: beneficiary out-of-pocket expenditures. this section and may be no greater than (1) If made prior to the month of Beginning no earlier than January 1, the annual limit set by CMS using entitlement to both Part A and Part B, 2020, CMS will set the annual limit to Medicare Fee-for-Service data. it is effective as of the first day of the strike a balance between limiting (ii) CMS sets the annual limit to strike month of entitlement to both Part A and maximum beneficiary out of pocket a balance between limiting maximum Part B. costs and potential changes in premium, beneficiary out of pocket costs and (2) If made during or after the month benefits, and cost sharing, with the goal potential changes in premium, benefits, of entitlement to both Part A and Part of ensuring beneficiary access to and cost sharing, with the goal of B, it is effective the first day of the affordable and sustainable benefit ensuring beneficiary access to affordable calendar month following the month in packages. and sustainable benefit packages. which the election is made. (6) Cost sharing for Medicare Part A * * * * * * * * * * and B services specified by CMS does ■ 17. Section 422.102 is amended by (c) Open enrollment periods. For an not exceed levels annually determined revising paragraph (d) to read as election, or change in election, made by CMS to be discriminatory for such follows: during an open enrollment period, as services. CMS may use Medicare Fee- § 422.102 Supplemental benefits. described in § 422.62(a)(3) through (5), for-Service data to evaluate the coverage is effective as of the first day possibility of discrimination and to * * * * * of the first calendar month following the establish non-discriminatory out-of- (d) Supplemental benefits packaging. month in which the election is made. pocket limits; beginning no earlier than MA organizations may offer enrollees a January 1, 2020, CMS may also use MA group of services as one optional * * * * * supplemental benefit, offer services (f) Annual 45-day period for encounter data to inform patient individually, or offer a combination of disenrollment from MA plans to utilization scenarios used to help groups and individual services. Original Medicare. Through 2018, an identify MA plan cost sharing standards election made from January 1 through and thresholds that are not * * * * * February 14 to disenroll from an MA discriminatory. ■ 18. Section 422.111 is amended by plan to Original Medicare, as described * * * * * revising paragraphs (a) introductory in § 422.62(a)(5), is effective the first day ■ 16. Section 422.101 is amended by text, (a)(3), and (h)(2)(ii) and adding of the first month following the month revising paragraphs (d)(2) and (3) to paragraph (h)(2)(iii) to read as follows: in which the election is made. read as follows: § 422.111 Disclosure requirements. ■ 15. Section 422.100 is amended— (a) Detailed description. An MA ■ a. In paragraph (f)(2), by removing the § 422.101 Requirements relating to basic benefits. organization must disclose the phrase ‘‘to services. and’’ and adding in information specified in paragraph (b) of its place the phrase ‘‘to services.’’; and * * * * * this section in the manner specified by ■ b. By revising paragraphs (f)(4), (f)(5) (d) * * * CMS— introductory text, (f)(5)(ii), and (f)(6). (2) Catastrophic limit. MA regional The revisions read as follows: plans are required to establish a * * * * * catastrophic limit on beneficiary out-of- (3) At the time of enrollment and at § 422.100 General requirements. pocket expenditures for in-network least annually thereafter, by the first day * * * * * benefits under the Medicare Fee-for- of the annual coordinated election (f) * * * Service program (Part A and Part B period. (4) Except as provided in paragraph benefits) that is no greater than the * * * * * (f)(5) of this section, MA local plans (as annual limit set by CMS using Medicare (h) * * * defined in § 422.2) must have an out-of- Fee-for-Service data to establish (2) * * * pocket maximum for Medicare Parts A appropriate out-of-pocket limits. (ii) Copies of its evidence of coverage and B services that is no greater than the Beginning no earlier than January 1, and information (names, addresses, annual limit set by CMS using Medicare 2020, CMS will set the annual limit to phone numbers, and specialty) on the Fee-for-Service data. Beginning no strike a balance between limiting network of contracted providers. Posting

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does not relieve the MA organization of election period for the 2021 contract the clusters. The Star Ratings levels are its responsibility under paragraph (a) of year and used to assign QBP ratings for assigned to the clusters that minimize this section to provide hard copies to the 2022 payment year. the within-cluster sum of squares. The enrollees upon request. cut points for star assignments are (iii) Posting does not relieve the MA § 422.162 Medicare Advantage Quality Rating System. derived from the range of measure organization of its responsibility under scores per cluster, and the star levels paragraph (a) of this section to provide (a) Definitions. In this subpart the associated with each cluster are hard copies of the Summary of Benefits following terms have the meanings: determined by ordering the means of the CAHPS refers to a comprehensive and to enrollees when CMS determines hard clusters. evolving family of surveys that ask copy delivery of the Summary of Consolidation means when an MA consumers and patients to evaluate the Benefits is in the best interest of the organization that has at least two interpersonal aspects of health care. beneficiary. contracts for health and/or drug services CAHPS surveys probe those aspects of of the same plan type under the same * * * * * care for which consumers and patients parent organization in a year combines are the best or only source of § 422.152 [Amended] multiple contracts into a single contract information, as well as those that ■ for the start of the subsequent contract 19. Section 422.152 is amended by consumers and patients have identified year. removing and reserving paragraphs as being important. CAHPS initially (a)(3) and (d). Consumed contract means a contract stood for the Consumer Assessment of that will no longer exist after a contract ■ 20. Sections 422.160, 422.162, Health Plans Study, but as the products 422.164 and 422.166 are added to year’s end as a result of a consolidation. have evolved beyond health plans the Display page means the CMS website Subpart D to read as follows: acronym now stands for Consumer on which certain measures and scores Assessment of Healthcare Providers and Subpart D—Quality Improvement are publicly available for informational Systems. purposes; the measures that are * * * * * Case-mix adjustment means an presented on the display page are not Sec. adjustment to the measure score made used in assigning Part C and D Star 422.160 Basis and scope of the Medicare prior to the score being converted into Ratings. Advantage Quality Rating System. a Star Rating to take into account certain Domain rating means the rating that 422.162 Medicare Advantage Quality Rating enrollee characteristics that are not groups measures together by dimensions System. under the control of the plan. For 422.164 Adding, updating, and removing of care. example age, education, chronic Dual-eligible (DE) means a beneficiary measures. medical conditions, and functional 422.166 Calculation of Star Ratings. who is enrolled in both Medicare and health status that may be related to the Medicaid. § 422.160 Basis and scope of the Medicare enrollee’s survey responses. HEDIS is the Healthcare Effectiveness Advantage Quality Rating System. Categorical Adjustment Index (CAI) Data and Information Set which is a (a) Basis. This subpart is based on means the factor that is added to or widely used set of performance sections 1851(d), 1852(e), 1853(o) and subtracted from an overall or summary measures in the managed care industry, 1854(b)(3)(iii), (v), and (vi) of the Act Star Rating (or both) to adjust for the developed and maintained by the and the general authority under section average within-contract (or within-plan National Committee for Quality 1856(b) of the Act requiring the as applicable) disparity in performance Assurance (NCQA). HEDIS data include establishment of standards consistent associated with the percentages of clinical measures assessing the with and to carry out Part C. beneficiaries who are dually eligible for effectiveness of care, access/availability (b) Purpose. Ratings calculated and Medicare and enrolled in Medicaid, measures, and service use measures. assigned under this subpart will be used beneficiaries who receive a Low Income Highest rating means the overall by CMS for the following purposes: Subsidy, or have disability status in that rating for MA–PDs, the Part C summary (1) To provide comparative contract (or plan as applicable). rating for MA-only contracts, and the information on plan quality and Clustering refers to a variety of Part D summary rating for PDPs. performance to beneficiaries for their techniques used to partition data into Highly-rated contract means a use in making knowledgeable distinct groups such that the contract that has 4 or more stars for its enrollment and coverage decisions in observations within a group are as highest rating when calculated without the Medicare program. similar as possible to each other, and as the improvement measures and with all (2) To provide quality ratings on a 5- dissimilar as possible to observations in applicable adjustments (CAI and the star rating system to be used in any other group. Clustering of the reward factor). determining quality bonus payment measure-specific scores means that gaps HOS means the Medicare Health (QBP) status and in determining rebate that exist within the distribution of the Outcomes Survey which is the first retention allowances. scores are identified to create groups patient reported outcomes measure that (3) To provide a means to evaluate (clusters) that are then used to identify was used in Medicare managed care. and oversee overall and specific the four cut points resulting in the The goal of the Medicare HOS program compliance with certain regulatory and creation of five levels (one for each Star is to gather valid, reliable, and clinically contract requirements by MA plans, Rating), such that the scores in the same meaningful health status data in the where appropriate and possible to use Star Rating level are as similar as Medicare Advantage (MA) program for data of the type described in possible and the scores in different Star use in quality improvement activities, § 422.162(c). Rating levels are as different as possible. pay for performance, program oversight, (c) Applicability. Except for Technically, the variance in measure public reporting, and improving health. § 422.162(b)(3), the regulations in this scores is separated into within-cluster All managed care organizations with subpart will be applicable beginning and between-cluster sum of squares MA contracts must participate. with the 2019 measurement period and components. The clusters reflect the Low income subsidy (LIS) means the the associated 2021 Star Ratings that are groupings of numeric value scores that subsidy that a beneficiary receives to released prior to the annual coordinated minimize the variance of scores within help pay for prescription drug coverage

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(see § 423.34 of this chapter for first decimal place is 5 or greater, then of the year the preliminary QBP ratings definition of a low-income subsidy the value should be rounded up by 1 were released in the Health Plan eligible individual). and the digit in the first decimal place Management System (HPMS). Measurement period means the deleted. (iii) In subsequent years following the period for which data are collected for (b) Contract ratings—(1) General. first year after the consolidation, CMS a measure or the performance period CMS calculates an overall Star Rating, will determine QBP status based on the that a measures covers. Part C summary rating, and Part D consolidated entity’s Star Ratings Measure score means the numeric summary rating for each MA–PD displayed on Medicare Plan Finder. value of the measure or an assigned contract, and a Part C summary rating (iv) The Star Ratings posted on ‘missing data’ message. for each MA-only contract using the 5- Medicare Plan Finder for contracts that Measure star means the measure’s star rating system described in this consolidate are as follows: numeric value is converted to a Star subpart. Measures are assigned stars at (A) For the first year after Rating. It is displayed to the nearest the contract level and weighted in consolidation, CMS will use enrollment- whole star, using a 1–5 star scale. accordance with § 422.166(a). Domain weighted measure scores using the July Overall rating means a global rating ratings are the unweighted mean of the enrollment of the measurement period that summarizes the quality and individual measure ratings under the of the consumed and surviving contracts performance for the types of services topic area in accordance with for all measures, except the survey- offered across all unique Part C and Part § 422.166(b). Summary ratings are the based and call center measures. The D measures. weighted mean of the individual survey-based measures would use Part C summary rating means a global measure ratings for Part C or Part D in enrollment of the surviving and rating that summarizes the health plan accordance with § 422.166(c), with both consumed contracts at the time the quality and performance on Part C the reward factor and CAI applied as sample is pulled for the rating year. The measures. applicable, as described in § 422.166(f). call center measures would use average Part D summary rating means a global Overall Star Ratings are calculated by enrollment during the study period. rating that summarizes prescription using the weighted mean of the (B) For the second year after drug plan quality and performance on individual measure ratings in consolidation, CMS will use the Part D measures. accordance with § 422.166(d) with both enrollment-weighted measure scores Plan benefit package (PBP) means a the reward factor and CAI applied as using the July enrollment of the set of benefits for a defined MA or PDP applicable, as described in § 422.166(f). measurement year of the consumed and service area. The PBP is submitted by (2) Plan benefit packages. All plan surviving contracts for all measures Part D plan sponsors and MA benefit packages (PBPs) offered under except those from the following data organizations to CMS for benefit an MA contract have the same overall sources: HEDIS, CAHPS, and HOS. analysis, bidding, marketing, and and/or summary Star Ratings as the HEDIS and HOS measure data will be beneficiary communication purposes. contract under which the PBP is offered scored as reported. CMS will ensure that Reliability means a measure of the by the MA organization. Data from all the CAHPS survey sample will include fraction of the variation among the the PBPs offered under a contract are enrollees in the sample frame from both observed measure values that is due to used to calculate the measure and the surviving and consumed contracts. real differences in quality (‘‘signal’’) domain ratings for the contract except (v) This provision governing the Star rather than random variation (‘‘noise’’); for Special Needs Plan (SNP)-specific Ratings of surviving contracts is it is reflected on a scale from 0 (all measures collected at the PBP level; a applicable to contract consolidations differences in plan performance contract level score for such measures is that are approved on or after January 1, measure scores are due to measurement calculated using an enrollment- 2019. error) to 1 (the difference in plan weighted mean of the PBP scores and (c) Data sources. (1) CMS bases Part performance scores is attributable to real enrollment reported as part of the C Star Ratings on the type of data differences in performance). measure specification in each PBP. specified in section 1852(e) of the Act Reward factor means a rating-specific (3) Contract consolidations. (i) In the and on CMS administrative data. Part C factor added to the contract’s summary case of contract consolidations Star Ratings measures reflect structure, or overall ratings (or both) if a contract involving two or more contracts for process, and outcome indices of quality. has both high and stable relative health or drug services of the same plan This includes information of the performance. type under the same parent following types: Clinical data, Statistical significance assesses how organization, CMS assigns Star Ratings beneficiary experiences, changes in likely differences observed in for the first and second years following physical and mental health, benefit performance are due to random chance the consolidation based on the administration information and CMS alone under the assumption that plans enrollment-weighted mean of the administrative data. Data underlying are actually performing the same. measure scores of the surviving and Star Ratings measures may include Surviving contract means the contact consumed contract(s) as provided in survey data, data separately collected that will still exist under a paragraph (b)(3)(iv) of this section. and used in oversight of MA plans’ consolidation, and all of the Paragraph (b)(3)(iii) of this section is compliance with MA requirements, data beneficiaries enrolled in the consumed applied to subsequent years that are not submitted by plans, and CMS contract(s) are moved to the surviving addressed in paragraph (b)(3)(ii) of this administrative data. contracts. section for assigning the QBP rating. (2) MA organizations are required to Traditional rounding rules mean that (ii) For the first year after a collect, analyze, and report data that the last digit in a value will be rounded. consolidation, CMS will determine the permit measurement of health outcomes If rounding to a whole number, look at QBP status of a contract using the and other indices of quality. MA the digit in the first decimal place. If the enrollment-weighted means (using organizations must provide unbiased, digit in the first decimal place is 0, 1, traditional rounding rules) of what accurate, and complete quality data 2, 3, or 4, then the value should be would have been the QBP Ratings of the described in paragraph (c)(1) of this rounded down by deleting the digit in surviving and consumed contracts based section to CMS on a timely basis as the first decimal place. If the digit in the on the contract enrollment in November requested by CMS.

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§ 422.164 Adding, updating, and removing specification updates include those measure score would be calculated for measures. that— Parts C and D separately by taking a (a) General. CMS adds, updates, and (i) Narrow the denominator or weighted sum of net improvement removes measures used to calculate the population covered by the measure; divided by the weighted sum of the Star Ratings as provided in this section. (ii) Do not meaningfully impact the number of eligible measures. CMS lists the measures used for a numerator or denominator of the (1) Identifying eligible measures. particular Star Rating each year in the measure; Annually, the subset of measures to be Technical Notes or similar guidance (iii) Update the clinical codes with no included in the Part C and Part D document with publication of the Star change in the target population or the improvement measures will be Ratings. intent of the measure; announced through the process (b) Review of data quality. CMS (iv) Provide additional clarifications: described for changes in and adoption reviews the quality of the data on which (A) Adding additional tests that of payment and risk adjustment policies performance, scoring and rating of a would meet the numerator in section 1853(b) of the Act. CMS measure is based before using the data requirements; identifies measures to be used in the to score and rate performance or in (B) Clarifying documentation improvement measures if the measures calculating a Star Rating. This includes requirements; meet all of the following: review of variation in scores among MA (C) Adding additional instructions to (i) CMS will include only measures organizations and Part D plan sponsors, identify services or procedures; or available for the current and previous and the accuracy, reliability, and (v) Add alternative data sources. year in the improvement measures and validity of measures and performance (2) Substantive updates. For measures that have numeric value scores in both data before making a final determination that are already used for Star Ratings, in the current and prior year. about inclusion of measures in each the case of measure specification (ii) CMS will exclude any measure for year’s Star Ratings. updates that are substantive updates not which there was a substantive (c) Adding measures. (1) CMS will subject to paragraph (d)(1) of this specification change from the previous continue to review measures that are section, CMS will propose and finalize year. nationally endorsed and in alignment these measures through rulemaking (iii) CMS will exclude any measures with the private sector, such as similar to the process for adding new that are already focused on measures developed by National measures. CMS will initially solicit improvement in MA organization Committee for Quality Assurance feedback on whether to make performance from year to year. (NCQA) and the Pharmacy Quality substantive measure updates through (iv) The Part C improvement measure Alliance (PQA), or endorsed by the the process described for changes in and will include only Part C measure scores; National Quality Forum for adoption adoption of payment and risk the Part D improvement measure will and use in the Part C and Part D Quality adjustment policies in section 1853(b) of include only Part D measure scores. Ratings System. CMS may develop its the Act. Once the update has been made (2) Determining eligible contracts. own measures as well when appropriate to the measure specification by the CMS will calculate an improvement to measure and reflect performance measure steward, CMS may continue score only for contracts that have specific to the Medicare program. collection of performance data for the numeric measure scores for both years (2) In advance of the measurement legacy measure and include it in Star in at least half of the measures period, CMS will announce potential Ratings until the updated measure has identified for use applying the standards new measures and solicit feedback been on display for 2 years. CMS will in paragraphs (f)(1)(i) through (iv) of this through the process described for place the updated measure on the section. changes in and adoption of payment display page for at least 2 years prior to (3) Special rules for calculation of the and risk adjustment policies in section using the updated measure to calculate improvement score. For any measure 1853(b) of the Act and then and assign Star Ratings as specified in used for the improvement measure for subsequently will propose and finalize paragraph (c) of this section. which a contract received 5 stars in each new measures through rulemaking. (e) Removing measures. (1) CMS will of the years examined, but for which the (3) New measures added to the Part C remove a measure from the Star Ratings measure score demonstrates a Star Ratings program will be on the program as follows: statistically significant decline based on display page on www.cms.gov for a (i) When the clinical guidelines the results of the significance testing (at minimum of 2 years prior to becoming associated with the specifications of the a level of significance of 0.05) on the a Star Ratings measure. measure change such that the change score, the measure will be (4) A measure will remain on the specifications are no longer believed to categorized as having no significant display page for longer than 2 years if align with positive health outcomes; or change and included in the count of CMS finds reliability or validity issues (ii) A measure shows low statistical measures used to determine eligibility with the measure specification. reliability. for the measure (that is, for the (d) Updating measures—(1) Non- (2) CMS will announce in advance of denominator of the improvement substantive updates. For measures that the measurement period the removal of measure score). are already used for Star Ratings, CMS a measure based upon its application of (4) Calculation of the improvement will update measures so long as the this paragraph (e) through the process score. The improvement measure will changes in a measure are not described for changes in and adoption be calculated as follows: substantive. CMS will announce non- of payment and risk adjustment policies (i) The improvement change score substantive updates to measures that in section 1853(b) of the Act in advance (the difference in the measure scores in occur (or are announced by the measure of the measurement period. the 2-year period) will be determined steward) during or in advance of the (f) Improvement measure. CMS will for each measure that has been measurement period through the calculate improvement measure scores designated an improvement measure process described for changes in and based on a comparison of the measure and for which a contract has a numeric adoption of payment and risk scores for the current year to the score for each of the 2 years examined. adjustment policies in section 1853(b) of immediately preceding year as provided (ii) Each contract’s improvement the Act. Non-substantive measure in this paragraph (f); the improvement change score per measure will be

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categorized as a significant change or the applicable appeals measures to contracts that submitted 1 month of not a significant change by employing a account for the degree to which the IRE data. two-tailed t-test with a level of data are missing. (K) Contracts are subject to a possible significance of 0.05. (A) The data submitted for the reduction due to lack of IRE data (iii) The net improvement per Timeliness Monitoring Project (TMP) or completeness if both of the following measure category (outcome, access, audit that aligns with the Star Ratings conditions are met: patient experience, process) would be year measurement period is used to (1) The calculated error rate is 20 calculated by finding the difference determine the scaled reduction. percent or more. between the weighted number of (B) The determination of the Part C (2) The projected number of cases not significantly improved measures and appeals measure IRE data reduction is forwarded to the IRE is at least 10 in a significantly declined measures, using done independently of the Part D 3-month period. the measure weights associated with appeals measure IRE data reduction. (L) A confidence interval estimate for the true error rate for the contract is each measure category. (C) The reductions range from a one- calculated using a Score Interval (iv) The improvement measure score star reduction to a four-star reduction; (Wilson Score Interval) at a confidence will then be determined by calculating the most severe reduction for the degree level of 95 percent and an associated z the weighted sum of the net of missing IRE data is a four-star of 1.959964 for a contract that is subject improvement per measure category reduction. divided by the weighted sum of the to a possible reduction. (D) The thresholds used for (M) A contract’s lower bound is number of eligible measures. determining the reduction and the (v) The improvement measure scores compared to the thresholds of the scaled associated appeals measure reduction will be converted to measure-level Star reductions to determine the IRE data are as follows: Ratings by determining the cut points completeness reduction. (1) 20 percent, 1 star reduction. using hierarchical clustering algorithms (N) The reduction is identified by the (2) 40 percent, 2 star reduction. in accordance with § 422.166(a)(2)(i) highest threshold that a contract’s lower (3) 60 percent, 3 star reduction. through (iii). bound exceeds. (vi) The Part D improvement measure (4) 80 percent, 4 star reduction. (2) CMS will reduce a measure rating cut points for MA–PDs and PDPs will be (E) If a contract receives a reduction to 1 star for additional concerns that determined using separate clustering due to missing Part C IRE data, the data inaccuracy, incompleteness, or bias algorithms in accordance with reduction is applied to both of the have an impact on measure scores and §§ 422.166(a)(2)(iii) and contract’s Part C appeals measures. are not specified in paragraphs (g)(1)(i) 423.186(a)(2)(iii) of this chapter. (F) If a contract receives a reduction through (iii) of this section, including a (g) Data integrity. (1) CMS will reduce due to missing Part D IRE data, the contract’s failure to adhere to HEDIS, a contract’s measure rating when CMS reduction is applied to both of the HOS, or CAHPS reporting requirements. contract’s Part D appeals measures. determines that a contract’s measure § 422.166 Calculation of Star Ratings. data are inaccurate, incomplete, or (G) The scaled reduction is applied after the calculation for the appeals (a) Measure Star Ratings—(1) Cut biased; such determinations may be points. CMS will determine cut points based on a number of reasons, including measure-level Star Ratings. If the application of the scaled reduction for the assignment of a Star Rating for mishandling of data, inappropriate each numeric measure score by processing, or implementation of results in a measure-level star rating less than 1 star, the contract will be assigned applying either a clustering or a relative incorrect practices that have an impact distribution and significance testing on the accuracy, impartiality, or 1 star for the appeals measure. (H) The Part C Calculated Error is methodology. For the Part D measures, completeness of the data used for one or CMS will determine MA–PD and PDP more specific measure(s). determined using the quotient of number of cases not forwarded to the cut points separately. (i) CMS will reduce HEDIS measures (2) Clustering algorithm for all to 1 star when audited data are IRE and the total number of cases that should have been forwarded to the IRE. measures except CAHPS measures. (i) submitted to NCQA with a designation The method minimizes differences (The number of cases that should have of ‘‘biased rate’’ or BR based on an within star categories and maximizes been forwarded to the IRE is the sum of auditor’s review of the data or a differences across star categories using the number of cases in the IRE during designation of ‘‘nonreport’’ or NR. the hierarchical clustering method. (ii) CMS will reduce measures based the data collection or data sample (ii) In cases where multiple clusters on data that an MA organization must period and the number of cases not have the same measure score value submit to CMS under § 422.516 to 1 star forwarded to the IRE during the same range, those clusters would be when a contract did not score at least 95 period.) combined, leading to fewer than 5 percent on data validation for the (I) The Part D Calculated Error is clusters. applicable reporting section or was not determined by the quotient of the (iii) The clustering algorithm for the compliant with CMS data validation number of untimely cases not auto- improvement measure scores is done in standards/substandards for data directly forwarded to the IRE and the total two steps to determine the cut points for used to calculate the associated number of untimely cases. the measure-level Star Ratings. measure. (J) The projected number of cases not Clustering is conducted separately for (iii) For the appeals measures, CMS forwarded to the IRE in a 3-month improvement measure scores greater will use statistical criteria to estimate period is calculated by multiplying the than or equal to zero and those with the percentage of missing data for each number of cases found not to be improvement measure scores less than contract (using data from multiple forwarded to the IRE based on the TMP zero. sources such as a timeliness monitoring or audit data by a constant determined (A) Improvement scores of zero or study or audit information) to scale the by the data collection or data sample greater would be assigned at least 3 stars star reductions to determine whether time period. The value of the constant for the improvement Star Rating. the data at the independent review will be 1.0 for contracts that submitted (B) Improvement scores less than zero entity (IRE) are complete. CMS will use 3 months of data; 1.5 for contracts that would be assigned either 1 or 2 stars for scaled reductions for the Star Ratings for submitted 2 months of data; and 3.0 for the improvement Star Rating.

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(3) Relative distribution and (A) Its average CAHPS measure score (c) Part C summary ratings. (1) CMS significance testing for CAHPS is at or above the 60th percentile and will calculate the Part C summary measures. The method combines the measure does not have low ratings using the weighted mean of the evaluating the relative percentile reliability; or measure-level Star Ratings for Part C, distribution with significance testing (B) Its average CAHPS measure score weighted in accordance with paragraph and accounts for the reliability of scores is at or above the 80th percentile and (e) of this section with an adjustment to produced from survey data; no measure the measure has low reliability; or reward consistently high performance Star Rating is produced if the reliability (C) Its average CAHPS measure score and the application of the CAI under of a CAHPS measure is less than 0.60. is statistically significantly higher than paragraph (f) of this section. Low reliability scores are defined as the national average CAHPS measure (2)(i) A contract must have scores for those with at least 11 respondents, score and above the 30th percentile. at least 50 percent of the measures reliability greater than or equal to 0.60 (v) A contract is assigned 5 stars if required to be reported for the contract but less than 0.75, and also in the lowest both of the following criteria in type to have the summary rating 12 percent of contracts ordered by paragraphs (a)(3)(v)(A) and (B) of this calculated. reliability. The following rules apply: section are met plus at least one of the (ii) The Part C improvement measure (i) A contract is assigned 1 star if both criteria in paragraphs (a)(3)(v)(C) or (D) is not included in the count of the of the criteria in paragraphs (a)(3)(i)(A) of this section is met: minimum number of rated measures. and (B) of this section are met plus at (A) Its average CAHPS measure score (3) The summary ratings are on a 1- least one of the criteria in paragraphs is at or above the 80th percentile; and to 5-star scale ranging from 1 (worst (a)(3)(i)(C) or (D) of this section is met: (B) Its average CAHPS measure score rating) to 5 (best rating) in half-star (A) Its average CAHPS measure score is statistically significantly higher than increments using traditional rounding is lower than the 15th percentile; and the national average CAHPS measure rules. (B) Its average CAHPS measure score score; (d) Overall MA–PD rating. (1) The (C) The reliability is not low; or is statistically significantly lower than overall rating for a MA–PD contract will (D) Its average CAHPS measure score the national average CAHPS measure be calculated using a weighted mean of is more than one standard error above score; the Part C and Part D measure-level Star the 80th percentile. (C) The reliability is not low; or (4) 5-Star Scale. Measure scores are Ratings, weighted in accordance with (D) Its average CAHPS measure score converted to a 5-star scale ranging from paragraph (e) of this section and with an is more than one standard error below 1 (worst rating) to 5 (best rating), with adjustment to reward consistently high the 15th percentile. whole star increments for the cut points. performance and the application of the (ii) A contract is assigned 2 stars if it (b) Domain Star Ratings. (1)(i) CMS CAI, under paragraph (f) of this section. does not meet the 1-star criteria and groups measures by domains solely for (2)(i) An MA–PD must have both Part meets at least one of these three criteria: purposes of public reporting the data on C and Part D summary ratings and (A) Its average CAHPS measure score Medicare Plan Finder. They are not scores for at least 50 percent of the is lower than the 30th percentile and the used in the calculation of the summary measures required to be reported for the measure does not have low reliability; or overall ratings. Domains are used to contract type to have the overall rating or group measures by dimensions of care calculated. (B) Its average CAHPS measure score that together represent a unique and (ii) The Part C and D improvement is lower than the 15th percentile and the important aspect of quality and measures are not included in the count measure has low reliability; or performance. of measures needed for the overall (C) Its average CAHPS measure score (ii) The 5 domains for the MA Star rating. is statistically significantly lower than Ratings are: Staying Healthy: (iii) Any measures that share the same the national average CAHPS measure Screenings, Tests and Vaccines; data and are included in both the Part score and below the 60th percentile. Managing Chronic (Long Term) C and Part D summary ratings will be (iii) A contract is assigned 3 stars if it Conditions; Member Experience with included only once in the calculation meets at least one of these three criteria: Health Plan; Member Complaints and for the overall rating. (A) Its average CAHPS measure score Changes in the Health Plan’s (iv) The overall rating is on a 1- to 5- is at or above the 30th percentile and Performance; and Health Plan Customer star scale ranging from 1 (worst rating) lower than the 60th percentile, and it is Service. The 4 domains for the Part D to 5 (best rating) in half-increments not statistically significantly different Star Ratings are: Drug Plan Customer using traditional rounding rules. from the national average CAHPS Service; Member Complaints and (v) Low enrollment contracts (as measure score; or Changes in the Drug Plan’s Performance; defined in § 422.252) and new MA plans (B) Its average CAHPS measure score Member Experience with the Drug Plan; (as defined in § 422.252) do not receive is at or above the 15th percentile and and Drug Safety and Accuracy of Drug an overall and/or summary rating. They lower than the 30th percentile, the Pricing. are treated as qualifying plans for the reliability is low, and the score is not (2) CMS calculates the domain ratings purposes of QBPs as described in statistically significantly lower than the as the unweighted mean of the Star § 422.258(d)(7) and as announced national average CAHPS measure score; Ratings of the included measures. through the process described for or (i) A contract must have scores for at changes in and adoption of payment (C) Its average CAHPS measure score least 50 percent of the measures and risk adjustment policies in section is at or above the 60th percentile and required to be reported for that contract 1853(b) of the Act. lower than the 80th percentile, the type for that domain to have a domain (e) Measure weights—(1) General reliability is low, and the score is not rating calculated. rules. Subject to paragraphs (e)(2) and statistically significantly higher than the (ii) The domain ratings are on a 1- to (3) of this section, CMS will assign national average CAHPS measure score. 5-star scale ranging from 1 (worst rating) weights to measures based on their (iv) A contract is assigned 4 stars if it to 5 (best rating) in whole star categorization as follows. does not meet the 5-star criteria and increments using traditional rounding (i) Improvement measures receive the meets at least one of these three criteria: rules. highest weight of 5.

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(ii) Outcome and Intermediate D summary) with the improvement (B) To determine a contract’s final outcome measures receive a weight of 3. measure. adjustment category, contract (iii) Patient experience and complaint (ii) Relative performance of the enrollment is determined using measures receive a weight of 2. weighted variance (or weighted variance enrollment data for the month of (iv) Access measures receive a weight ranking) will be categorized as being December for the measurement period of 2. high (at or above 70th percentile), of the Star Ratings year. The count of (v) Process measures receive a weight medium (between the 30th and 69th beneficiaries for a contract is restricted of 1. percentile) or low (below the 30th to beneficiaries that are alive for part or (2) Rules for new measures. New percentile). Relative performance of the all of the month of December of the measures to the Star Ratings program weighted mean (or weighted mean applicable measurement year. A will receive a weight of 1 for their first ranking) will be categorized as being beneficiary is categorized as LIS/DE if year in the Star Ratings program. In high (at or above the 85th percentile), the beneficiary was designated as full or subsequent years, the measure will be relatively high (between the 65th and partially dually eligible or receiving a assigned the weight associated with its 84th percentiles), or other (below the LIS at any time during the applicable category. 65th percentile). measurement period. Disability status is (3) Special rule for Puerto Rico. (iii) The combination of the relative determined using the variable original Contracts that have service areas that are variance and relative mean is used to reason for entitlement (OREC) for wholly located in Puerto Rico will determine the value of the reward factor Medicare using the information from the receive a weight of zero for the Part D to be added to the contract’s summary Social Security Administration and adherence measures for the summary and overall ratings as follows: Railroad Retirement Board record and overall rating calculations and will (A) A contract with low variance and systems. have a weight of 3 for the adherence a high mean will have a reward factor (C) MA–PD contracts may be adjusted measures for the improvement measure equal to 0.4. up to three times with the CAI; one for (B) A contract with medium variance calculations. the overall Star Rating and one for each and a high mean will have a reward (f) Completing the Part C summary of the summary ratings (Part C and Part factor equal to 0.3. and overall rating calculations. CMS D). (C) A contract with low variance and will adjust the summary and overall (D) An MA-only contract may be a relatively high mean will have a rating calculations to take into account adjusted only once for the CAI for the reward factor equal to 0.2. the reward factor (if applicable) and the Part C summary rating. (D) A contract with medium variance (E) The CAI values are rounded and categorical adjustment index (CAI) as and a relatively high mean will have a provided in this paragraph (f). displayed with 6 decimal places. reward factor equal to 0.1. (ii) In determining the CAI values, a (1) Reward factor. This rating-specific (E) A contract with all other measure will be excluded from factor is added to both the summary and combinations of variance and relative adjustment if the measure meets any of overall ratings of contracts that qualify mean will have a reward factor equal to the following: for the reward factor based on both high 0.0. (A) The measure is already case-mix and stable relative performance for the (iv) The reward factor is determined adjusted for socioeconomic status. rating level. and applied before application of the (B) The focus of the measurement is (i) The contract’s performance will be CAI adjustment under paragraph (f)(2) not a beneficiary-level issue but rather assessed using its weighted mean and of this section; the reward factor is a plan or provider-level issue. its ranking relative to all rated contracts based on unadjusted scores. (C) The measure is scheduled to be in the rating level (overall for MA–PDs; (2) Categorical Adjustment Index. retired or revised. Part C summary for MA–PDs and MA- CMS applies the categorical adjustment (D) The measure is applicable only to only; and Part D summary for MA–PDs index (CAI) as provided in this SNPs. and PDPs) for the same Star Ratings paragraph (f)(2) to adjust for the average (iii) The Star Ratings measures that year. The contract’s stability of within-contract disparity in remain after the exclusion criteria, performance will be assessed using the performance associated with the paragraph (f)(2)(ii) of this section, have weighted variance and its ranking percentages of beneficiaries who receive been applied will be adjusted for the relative to all rated contracts in the a low income subsidy or are dual determination of the CAI. CMS will rating type (overall for MA–PDs; Part C eligible (LIS/DE) or have disability announce the measures identified for summary for MA–PDs and MA-only; status. The factor is calculated as the adjustment in the calculations of the and Part D summary for MA–PDs and mean difference in the adjusted and CAI under this paragraph (f)(2) through PDPs). The weighted mean and unadjusted ratings (overall, Part C, Part the process described for changes in and weighted variance are compared D for MA–PDs, Part D for PDPs) of the adoption of payment and risk separately for MA–PD and standalone contracts that lie within each final adjustment policies in section 1853(b) of Part D contracts (PDPs). The measure adjustment category for each rating type. the Act. weights are specified in paragraph (e) of (i) The CAI is added to or subtracted (iv) The adjusted measures scores for this section. Since highly-rated from the contract’s overall and summary the selected measures are determined contracts may have the improvement ratings and is applied after the reward using the results from regression models measure(s) excluded in the factor adjustment (if applicable). of beneficiary-level measure scores that determination of their final highest (A) The adjustment factor is adjust for the average within-contract rating, each contract’s weighted monotonic (that is, as the proportion of difference in measure scores for MA or variance and weighted mean are LIS/DE and disabled increases in a PDP contracts. calculated both with and without the contract, the adjustment factor increases (A) A logistic regression model with improvement measures. For an MA– in at least one of the dimensions) and contract fixed effects and beneficiary PD’s Part C and D summary ratings, its varies by a contract’s categorization into level indicators of LIS/DE and disability ranking is relative to all other contracts’ a final adjustment category that is status is used for the adjustment. weighted variance and weighted mean determined by a contract’s proportion of (B) The adjusted measure scores are for the rating type (Part C summary, Part LIS/DE and disabled beneficiaries. converted to a measure-level Star Rating

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using the measure thresholds for the (A) The maximum value for the (ii) Low-performing icon. (A) A Star Ratings year that corresponds to the modified LIS/DE indicator value per contract receives a low performing icon measurement period of the data contract would be capped at 100 as a result of its performance on the Part employed for the CAI determination. percent. C or Part D summary ratings. The low (v) The rating-specific CAI values will (B) All estimated modified LIS/DE performing icon is calculated by be determined using the mean values for Puerto Rico would be evaluating the Part C and Part D differences between the adjusted and rounded to 6 decimal places when summary ratings for the current year unadjusted Star Ratings (overall, Part C expressed as a percentage. and the past 2 years. If the contract had summary, Part D summary for MA–PDs (C) The model’s coefficient and any combination of Part C or Part D and Part D summary for PDPs) in each intercept are updated annually and summary ratings of 2.5 or lower in all final adjustment category. published in the Technical Notes. 3 years of data, it is marked with a low (A) For the annual development of the (g) Applying the improvement performing icon. A contract must have CAI, the distribution of the percentages measure scores. (1) CMS runs the a rating in either Part C or Part D for all for LIS/DE and disabled using the calculations twice for the highest level 3 years to be considered for this icon. enrollment data that parallels the rating for each contract-type (overall (B) CMS may disable the Medicare previous Star Ratings year’s data would rating for MA–PD contracts and Part C Plan Finder online enrollment function be examined to determine the number of summary rating for MA-only contracts), (in Medicare Plan Finder) for Medicare equal-sized initial groups for each with all applicable adjustments (CAI health and prescription drug plans with attribute (LIS/DE and disabled). and the reward factor), once including the low performing icon; beneficiaries (B) The initial categories are created the improvement measure(s) and once will be directed to contact the plan using all groups formed by the initial without including the improvement directly to enroll in the low-performing LIS/DE and disabled groups. measure(s). In deciding whether to plan. (C) The mean difference between the include the improvement measures in a (2) Plan preview of the Star Ratings. adjusted and unadjusted summary or contract’s final highest rating, CMS CMS will have plan preview periods overall ratings per initial category applies the following rules: before each Star Ratings release during would be calculated and examined. The (i) If the highest rating for each which MA organizations can preview initial categories would then be contract-type is 4 stars or more without their Star Ratings data in HPMS prior to collapsed to form the final adjustment the use of the improvement measure(s) display on the Medicare Plan Finder. categories. The collapsing of the initial and with all applicable adjustments ■ 21. Section 422.204 is amended by categories to form the final adjustment (CAI and the reward factor), a removing paragraph (b)(5) and adding categories would be done to enforce comparison of the highest rating with paragraph (c) to read as follows: monotonicity in at least one dimension and without the improvement (LIS/DE or disabled). measure(s) is done. The higher rating is § 422.204 Provider selection and (D) The mean difference within each used for the rating. credentialing. final adjustment category by rating-type (ii) If the highest rating is less than 4 * * * * * (overall, Part C, Part D for MA–PD, and stars without the use of the (c) An MA organization must follow Part D for PDPs) would be the CAI improvement measure(s) and with all a documented process that ensures values for the next Star Ratings year. applicable adjustments (CAI and the compliance with the preclusion list (vi) CMS develops the model for the reward factor), the rating will be provisions in § 422.222. modified contract-level LIS/DE calculated with the improvement ■ 22. Amend § 422.206 by revising percentage for Puerto Rico using the measure(s). paragraph (b)(2)(i) to read as follows: following sources of information: (2) The Part C summary rating for (A) The most recent data available at MA–PDs will include the Part C § 422.206 Interference with health care the time of the development of the improvement measure and the Part D professionals’ advice to enrollees model of both 1-year American summary rating for MA–PDs will prohibited. Community Survey (ACS) estimates for include the Part D improvement * * * * * the percentage of people living below measure. (b) * * * the Federal Poverty Level (FPL) and the (h) Posting and display of ratings. For (2) * * * ACS 5-year estimates for the percentage all ratings at the measure, domain, (i) To CMS, with its application for a of people living below 150 percent of summary and overall level, posting and Medicare contract, within 10 days of the FPL. The data to develop the model display of the ratings is based on there submitting its bid proposal or, for policy will be limited to the 10 states, drawn being sufficient data to calculate and changes, in accordance with all from the 50 states plus the District of assign ratings. If a contract does not applicable requirements under subpart Columbia with the highest proportion of have sufficient data to calculate a rating, V of this part. people living below the FPL, as the posting and display would be the * * * * * identified by the 1-year ACS estimates. flag ‘‘Not enough data available.’’ If the ■ 23. Section 422.208 is amended: (B) The Medicare enrollment data measurement period is prior to one year ■ a. In paragraph (a) by adding the from the same measurement period as past the contract’s effective date, the definitions of ‘‘Combined Stop-Loss the Star Ratings’ year. The Medicare posting and display would be the flag Insurance Deductible Table (Table PIP– enrollment data would be aggregated ‘‘Plan too new to be measured’’. 11)’’, ‘‘Global capitation’’, ‘‘Net benefit from MA contracts that had at least 90 (1) Medicare Plan Finder Performance premium’’, ‘‘Non-Risk Patient percent of their enrolled beneficiaries icons. Icons are displayed on Medicare Equivalents (NPE)’’, and ‘‘Separate Stop- with mailing addresses in the 10 highest Plan Finder to note performance as Loss Insurance Deductible Table (Table poverty states. provided in this paragraph (h)(1): PIP–2)’’ in alphabetical order; (vii) A linear regression model is (i) High-performing icon. The high ■ b. By revising paragraph (f)(2)(iii); and developed to estimate the percentage of performing icon is assigned to an MA- ■ c. By adding paragraphs (f)(2)(iv) LIS/DE for a contacts that solely serve only contract for achieving a 5-star Part through (vi) and (f)(3). the population of beneficiaries in Puerto C summary rating and an MA–PD The additions and revisions read as Rico. contract for a 5-star overall rating. follows:

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§ 422.208 Physician incentive plans: to identify the maximum deductible(s) and institutional services in the requirements and limitations. for the required stop-loss coverage. Separate Stop-Loss Insurance (a) * * * Tables PIP–11 and PIP–12 apply to only Deductible Table (Table PIP–12). Combined Stop-Loss Insurance multi-specialty physician groups in (C) The NBP is computed by dividing Deductible Table (Table PIP–11) means global capitation arrangements with per- the total amount of stop loss claims (90 the table described and developed using patient stop-loss insurance. For all other percent of claims above the deductible) the methodology in paragraph (f)(2)(iv) physician incentive plan arrangements, for that panel size by the panel size. of this section. the MA organization must assure that (v)(A) Insurance using separate Global capitation means a specific the physician or physician group deductibles for professional and type of ‘‘capitation’’ that includes both entering into the physician incentive institutional claims is permissible so professional and institutional services. plan arrangement is covered by long as the separate deductibles for Services covered by global capitation actuarially equivalent stop-loss institutional services and professional may also include prescription drug protection that meets the requirements services are determined using Table 2 as benefits and supplemental benefits as of this regulation. described in paragraph (f)(2)(vi)(B) of well as basic benefits (as those terms are (B) Using Table PIP–11, the this section. Table PIP–2 is developed defined in § 422.100(c)). For purposes of deductible is identified for the panel and updated by CMS using the Tables PIP–11 and PIP–12 global size that is the number of risk patients methodology in paragraph (f)(2)(vi). capitation includes all Parts A and B plus non-risk patient equivalents. Non- CMS publishes Table PIP–2 in guidance services except hospice. risk patient equivalents may add a (such as an attachment to the Rate Net benefit premium means the total maximum of $100,000 to the deductible. Announcement issued under section amount of stop-loss claims (90 percent The deductible for the stop-loss 1853(b) of the Act) in advance of the bid of claims above the deductible) for that insurance required to be provided for due date for the upcoming year if CMS panel size divided by the panel size. It the physician or physician group is then determines that an update would be is determined for each panel size and based on the lesser of: prudent for that year. shown in Table PIP–11, described in (1) The deductible for the risk patient (B) The maximum deductibles for paragraph (f)(2)(iv) of this section. It is panel size plus $100,000; and each category of services (institutional (2) The deductible for the panel size then used in Table PIP–12, described in and professional claims) are identified that is the total of the number of risk paragraph (f)(2)(vi) of this section, to by using the net benefit premium (NBP) patients plus non-risk patient identify all separate institutional and determined in Table PIP–11 as the separate professional deductible equivalents. (iv) Table 1 is developed and updated starting point in Table PIP–12. Any combinations that meet the stop-loss by CMS using the methodology in this combination of institutional and requirements for multi-specialty paragraph. CMS publishes Table PIP–11 professional attachment points for physician groups participating in PIPs. in guidance (such as an attachment to which the NBP in Table PIP–12 is Non-Risk Patient Equivalents (NPE) the Rate Announcement issued under greater than the NBP determined in means the estimate of annual claims for section 1853(b) of the Act) in advance Table PIP–11 is permissible. physician rendered services for non-risk of the bid due date for the upcoming Interpolation may be used to find the patients served by the physician or year if CMS determines that an update NBP values in Table PIP–12 that are physician group divided by what the would be prudent for that year. closest to the NBP identified in Table PMPY capitation for physician rendered (A) The stop-loss tables are calculated PIP–11. services would be if the beneficiary using claims data for a statistically valid (vi) Table PIP–12 is developed using were part of the risk arrangement. Both sample of beneficiaries enrolled in Fee- a methodology similar to that for Table Medicare and non-Medicare patients are for-Service Medicare Parts A and B from PIP–11. included in this calculation. the most available recent year. The (A) Claims data are obtained as * * * * * sample includes only claims for described in paragraph (f)(2)(iv)(A). Separate Stop-Loss Insurance beneficiaries eligible for both Part A and (B) Professional and institutional Deductible Table (Table PIP–2) means Part B for whom Medicare is the claims are defined and categorized the table described and developed using primary insurer and excludes hospice based on industry standards and based the methodology in paragraph (f)(2)(vi) claims. The estimate of medical group on payments for Part A and Part B of this section. income is derived from payments for all services. * * * * * Part A and Part B services (excluding (C) The central limit theorem is used (f) * * * hospice) in the sampled claims data (to to obtain the distribution of claim (2) * * * emulate a multi-specialty practice). The means and deductibles are obtained at (iii)(A) Stop-loss protection must central limit theorem is used to obtain the 98 percent confidence level. cover at least 90 percent of costs of the distribution of claim means for a (3) Special insurance. If there is a referral services above the deductible or multi-specialty group of any given panel different type of stop-loss policy an actuarial equivalent amount of the size. The distribution of claim means is obtained by the physician group, it must costs of referral services that exceed the used to obtain, with 98 percent be actuarially equivalent to the coverage per-patient deductible limit. The single confidence, the point at which a multi- shown in Tables PIP–11 and PIP–12. combined deductible for the required specialty group of a given panel size Actuarially equivalent deductibles are stop-loss protection for the various would, through referral services, lose no acceptable if the insurance is actuarially panel sizes for contract years beginning more than 25 percent of potential certified by an attesting actuary who on or after January 1, 2019 is payments. This point is the deductible fulfills all of the following requirements: determined using the Combined Stop- in Table PIP–11 for the given panel size. (i) Develops the deductibles to be Loss Insurance Deductible Table (Table (B) The ‘net benefit premium’ (NBP) actuarially equivalent to those coverages PIP–11). For panel sizes not shown on column in Table PIP–11 is not used for in the Tables. Table PIP–11 and for values not shown computation of combined insurance but (ii) Makes the computations in on Table PIP–12, linear interpolation is used to determine the separate accordance with generally accepted (between the table values) may be used deductibles for professional services actuarial principles and practices.

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(iii) Meets the qualification standards § 422.256 [Amended] entities included on the preclusion list, established by the American Academy ■ 27. Section 422.256 is amended by defined in § 422.2. of Actuaries and follow the practice removing paragraph (b)(4). (2) The authorized individual must standards established by the Actuarial thoroughly describe how the entity and Standards Board. § 422.258 [Amended] MA plan meet, or will meet, all the * * * * * ■ 28. Section 422.258 is amended in requirements described in this part, paragraph (d)(7) introductory text by including providing documentation that ■ 24. Section 422.222 is revised to read removing the phrase ‘‘section 1852(e) of payment for health care services or as follows: the Act)’’ and adding in its place the items is not being and will not be made § 422.222 Preclusion list. phrase ‘‘section 1852(e) of the Act) to individuals and entities included on specified in subpart D of this part 422’’. the preclusion list, defined in § 422.2. (a)(1) An MA organization must not ■ * * * * * make payment for a health care item or 29. Section 422.260 is amended by service furnished by an individual or revising paragraph (a) and revising the § 422.502 [Amended] definition of ‘‘Quality bonus payment entity that is included on the preclusion ■ 32. Section 422.502 is amended in list, defined in § 422.2. (QBP) determination methodology’’ in paragraph (b) to read as follows: paragraphs (b)(1) and (2) by removing (2) CMS sends written notice to the the phrase ‘‘14 months’’ and adding in individual or entity via letter of their § 422.260 Appeals of quality bonus its place ‘‘12 months’’ each time it inclusion on the preclusion list. The payment determinations appears. notice must contain the reason for the (a) Scope. The provisions of this ■ 33. Section 422.503 is amended— inclusion and inform the individual or section pertain to the administrative ■ a. In paragraph (b)(4)(ii), by removing entity of their appeal rights. An review process to appeal quality bonus the phrase ‘‘financial and marketing individual or entity may appeal their payment status determinations based on activities’’ and adding in its place inclusion on the preclusion list, defined section 1853(o) of the Act. Such ‘‘financial and communication in § 422.2, in accordance with 42 CFR determinations are made based on the activities’’; and part 498. overall rating for MA–PDs and Part C ■ b. Revising paragraph (b)(4)(vi)(C). (b) An MA organization that does not summary rating for MA-only contracts The revision reads as follows: comply with paragraph (a) of this for the contract assigned under subpart section may be subject to sanctions D of this part. § 422.503 General provisions. under § 422.750 and termination under (b) * * * * * * * * § 422.510. Quality bonus payment (QBP) (b) * * * determination methodology means the (4) * * * ■ 25. Section 422.224 is revised to read quality ratings system specified in (vi) * * * as follows: subpart D of this part 422 for assigning (C)(1) Each MA organization must § 422.224 Payment to individuals and quality ratings to provide comparative establish and implement effective entities excluded by the OIG or included on information about MA plans and training and education for its the preclusion list. evaluating whether MA organizations compliance officer and organization qualify for a QBP. (Low enrollment employees, the MA organization’s chief (a) An MA organization may not pay, contracts and new MA plans are defined executive and other senior directly or indirectly, on any basis, for in § 422.252.) administrators, managers and governing items or services furnished to a * * * * * body members. Medicare enrollee by any individual or ■ 30. Section 422.310 is amended by (2) Such training and education must entity that is excluded by the Office of occur at a minimum annually and must the Inspector General (OIG) or is adding paragraph (d)(5) to read as follows: be made a part of the orientation for a included on the preclusion list, defined new employee and new appointment to in § 422.2. § 422.310 Risk adjustment data. a chief executive, manager, or governing (b) If an MA organization receives a * * * * * body member. request for payment by, or on behalf of, (d) * * * * * * * * an individual or entity that is excluded (5) For data described in paragraph ■ 34. Section 422.504 is amended by— by the OIG or an individual or entity (d)(1) of this section as data equivalent ■ a. Revising paragraphs (a) that is included on the preclusion list, to Medicare fee-for-service data, which introductory text and (a)(6). defined in § 422.2, the MA organization is also known as MA encounter data, ■ b. Removing paragraph (a)(16). must notify the enrollee and the MA organizations must submit a NPI in ■ c. Redesignating paragraphs (a)(17) excluded individual or entity or the a billing provider field on each MA and (18) as paragraphs (a)(16) and (17), individual or entity included on the encounter data record, per CMS respectively. preclusion list in writing, as directed by guidance. ■ d. Revising newly redesignated contract or other direction provided by * * * * * paragraph (a)(17). CMS, that payments will not be made. ■ ■ e. Revising paragraph (i)(2)(v). Payment may not be made to, or on 31. Section 422.501 is amended by The revisions read as follows: behalf of, an individual or entity that is revising paragraphs (c)(1)(iv) and (2) to read as follows: excluded by the OIG or is included on § 422.504 Contract provisions. the preclusion list. § 422.501 Application requirements. * * * * * § 422.254 [Amended] * * * * * (a) Agreement to comply with (c) * * * regulations and instructions. The MA ■ 26. Section 422.254 is amended by (1) * * * organization agrees to comply with all removing paragraph (a)(4) and (iv) Documentation that payment for the applicable requirements and redesignating paragraph (a)(5) as health care services or items is not being conditions set forth in this part and in paragraph (a)(4). and will not be made to individuals and general instructions. Compliance with

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the terms of this paragraph (a) is § 422.510 Termination of contract by CMS. whether an organization is capable of material to the performance of the MA (a) * * * bearing risk, CMS considers factors such contract. The MA organization agrees— (4) * * * as the organization’s management * * * * * (viii) Substantially fails to comply experience as described in paragraph (6) To comply with all applicable with the requirements in subpart V of (b)(1) of this section and stop-loss provider and supplier requirements in this part. insurance that is adequate and subpart E of this part, including * * * * * acceptable to CMS; and provider certification requirements, (xiii) Fails to meet the preclusion list (3) The contract applicant is able to anti-discrimination requirements, requirements in accordance with establish a marketing and enrollment provider participation and consultation § 422.222 and 422.224. process that allows it to meet the requirements, the prohibition on (xiv) The MA organization has applicable enrollment requirement interference with provider advice, limits committed any of the acts in specified in paragraph (a) of this section on provider indemnification, rules § 422.752(a) that support the imposition before completion of the third contract governing payments to providers, limits of intermediate sanctions or civil money year. on physician incentive plans, and the penalties under subpart O of this part. * * * * * preclusion list requirements in (xv) Following the issuance of a § 422.590 [Amended] §§ 422.222 and 422.224. notice to the MA organization no later * * * * * than August 1, CMS must terminate, ■ 39. Section 422.590 is amended by (17) To maintain a Part C summary effective December 31 of the same year, removing paragraph (f) and plan rating score of at least 3 stars under an individual MA plan if that plan does redesignating paragraphs (g) and (h) as the 5-star rating system specified in not have a sufficient number of paragraphs (f) and (g), respectively. subpart D of this part. A Part C summary enrollees to establish that it is a viable § 422.664 [Amended] plan rating is calculated as provided in independent plan option. ■ § 422.166. (b) * * * 40. Section 422.664 is amended in paragraph (b)(1) by removing the phrase * * * * * (1) * * * ‘‘July 15’’ and adding in its place (i) * * * (iv) In the event that CMS issues a (2) * * * termination notice to an MA ‘‘September 1’’. (v) They will ensure that payments organization on or before August 1 with ■ 41. Section 422.750 is amended by are not made to individuals and entities an effective date of the following revising paragraph (a)(3) to read as included on the preclusion list, defined December 31, the MA organization must follows: issue notification to its Medicare in § 422.2. § 422.750 Types of intermediate sanctions * * * * * enrollees at least 90 days prior to the and civil money penalties. effective date of the termination. § 422.506 [Amended] (a) * * * * * * * * (3) Suspension of communication ■ 35. Section 422.506 is amended— ■ 38. Section 422.514 is amended by activities to Medicare beneficiaries by ■ a. By removing paragraph (a)(3); revising paragraph (b) to read as follows: an MA organization, as defined by CMS. ■ b. By redesignating paragraphs (a)(4) * * * * * and (5) as paragraphs (a)(3) and (4); § 422.514 Minimum enrollment ■ c. In newly redesignated paragraph requirements. ■ 42. Section 422.752 is amended by (a)(4) introductory text by removing the * * * * * revising paragraphs (a)(11) and (13) and reference ‘‘paragraph (a)(4)’’ and adding (b) Minimum enrollment waiver. For a (b) to read as follows: in its place the reference ‘‘paragraph contract applicant that does not meet § 422.752 Basis for imposing intermediate (a)(3)’’. the applicable requirement of paragraph sanctions and civil money penalties. ■ d. By removing and reserving (a) of this section at application for an (a) * * * paragraph (b). MA contract, CMS may waive the (11) Fails to comply with ■ 36. Section 422.508 is amended by minimum enrollment requirement for communication restrictions described in adding paragraph (a)(3) to read as the first 3 years of the contract. To subpart V of this part or applicable follows: receive a waiver, a contract applicant implementing guidance. must demonstrate to CMS’s satisfaction * * * * * § 422.508 Modification or termination of that it is capable of administering and contract by mutual consent. (13) Fails to comply with §§ 422.222 managing an MA contract and is able to and 422.224, that requires the MA (a) * * * manage the level of risk required under (3) If the organization submits a organization not to make payment to the contract during the first 3 years of excluded individuals and entities, nor request to end the term of its contract the contract. Factors that CMS takes into after the deadline provided in to individuals and entities on the consideration in making this evaluation preclusion list, defined in § 422.2. § 422.506(a)(2)(i), the contract may be include the extent to which— terminated by mutual consent in (b) Suspension of enrollment and (1) The contract applicant communications. If CMS makes a accordance with paragraphs (a) through management and providers have (d) of this section. CMS may mutually determination that could lead to a previous experience in managing and contract termination under § 422.510(a), consent to the contract termination if providing health care services under a the contract termination does not CMS may impose the intermediate risk-based payment arrangement to at sanctions at § 422.750(a)(1) and (3). negatively affect the administration of least as many individuals as the * * * * * the Medicare program. applicable minimum enrollment for the * * * * * entity as described in paragraph (a) of Subpart V—Medicare Advantage ■ 37. Section 422.510 is amended by this section; or Communication Requirements revising paragraphs (a)(4)(viii) and (xiii) (2) The contract applicant has the and adding paragraphs (a)(4)(xiv) and financial ability to bear financial risk ■ 43. The subpart heading for Subpart V (xv) and (b)(1)(iv) to read as follows: under an MA contract. In determining is revised to read as set forth above.

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■ 44. Section 422.2260 is revised to read ■ 46. Section 422.2264 is revised to read organization’s member identification as follows: as follows: card, unless the provider names, and/or logos are related to the member § 422.2260 Definitions. § 422.2264 Guidelines for CMS review. selection of specific provider As used in this subpart— In reviewing marketing material or organizations (for example, physicians, Communications means activities and election forms under § 422.2262, CMS hospitals). use of materials to provide information determines that the materials— (6) Use a plan name that does not to current and prospective enrollees. (a) Provide, in a format (and, where include the plan type. The plan type Communication materials means all appropriate, print size), and using should be included at the end of the information provided to current and standard terminology that may be plan name. prospective enrollees. Marketing specified by CMS, the following (7) For markets with a significant non- materials are a subset of communication information to Medicare beneficiaries English speaking population, provide material. interested in enrolling: vital materials unless in the language of Marketing means activities and use of (1) Adequate written description of these individuals. Specifically, MA materials that meet the following: rules (including any limitations on the organizations must translate materials (1) Conducted by the MA organization providers from whom services can be into any non-English language that is or downstream entities. obtained), procedures, basic benefits the primary language of at least 5 (2) Intended to draw a beneficiary’s and services, and fees and other charges. percent of the individuals in a plan attention to a MA plan or plans. (2) Adequate written description of (3) Intended to influence a benefit package (PBP) service area. any supplemental benefits and services. (b) In marketing, MA organizations beneficiary’s decision-making process (b) Notify the general public of its may not do any of the following: when selecting an MA plan for enrollment period in an appropriate (1) Provide cash or other monetary enrollment or deciding to stay enrolled manner, through appropriate media, rebates as an inducement for enrollment in a plan (that is, retention-based throughout its service area and if or otherwise. marketing). applicable, continuation areas. (2) Offer gifts to potential enrollees, Marketing materials include, but are (c) Include in written materials notice unless the gifts are of nominal (as not limited to the following: that the MA organization is authorized (1) Materials such as brochures; defined in the CMS Marketing by law to refuse to renew its contract posters; advertisements in media such Guidelines) value, are offered to all with CMS, that CMS also may refuse to as newspapers, magazines, television, potential enrollees without regard to renew the contract, and that termination radio, billboards, or the internet; and whether or not the beneficiary enrolls, or non-renewal may result in social media content. and are not in the form of cash or other (2) Materials used by marketing termination of the beneficiary’s monetary rebates. representatives such as scripts or enrollment in the plan. (3) Market non-health care related outlines for telemarketing or other (d) Ensure that materials are not products to prospective enrollees during presentations. materially inaccurate or misleading or any MA or Part D sales activity or (3) Presentation materials such as otherwise make material presentation. This is considered cross- slides and charts. misrepresentations. selling and is prohibited. Materials that do not include the ■ 47. Section 422.2268 is amended by— (4) Market any health care related following are not considered marketing ■ a. Revising the section heading; product during a marketing materials:— ■ b. Removing the introductory text; appointment beyond the scope agreed (1) Information about the plan’s and upon by the beneficiary, and benefit structure or cost sharing; ■ c. Revising paragraphs (a) and (b). documented by the plan, prior to the (2) Information about measuring or The revisions read as follows: appointment. ranking standards (for example, star (5) Market additional health related ratings); § 422.2268 Standards for MA organization lines of plan business not identified communications and marketing. (3) Mention benefits or cost sharing, prior to an individual appointment but do not meet the definition of (a) In conducting communication without a separate scope of appointment marketing in this section; activities, MA organizations may not do identifying the additional lines of (4) Unless otherwise specified by any of the following: business to be discussed. CMS based on their use or purpose, (1) Provide information that is (6) Distribute marketing materials for materials that are required under inaccurate or misleading. which, before expiration of the 45-day § 422.111; or (2) Engage in activities that could period, the MA organization receives (5) Any materials specifically mislead or confuse Medicare from CMS written notice of disapproval designated by CMS as not meeting the beneficiaries, or misrepresent the MA because it is inaccurate or misleading, definition of the proposed marketing organization. or misrepresents the MA organization, definition based on their use or purpose. (3) Claim the MA organization is its marketing representatives, or CMS. ■ 45. Section 422.2262 is amended by recommended or endorsed by CMS or (7) Conduct sales presentations or revising paragraph (d) to read as Medicare or that CMS or Medicare distribute and accept MA plan follows: recommends that the beneficiary enroll enrollment forms in provider offices or in the MA plan. It may explain that the other areas where health care is § 422.2262 Review and distribution of organization is approved for delivered to individuals, except in the marketing materials. participation in Medicare. case where such activities are * * * * * (4) Employ MA plan names that conducted in common areas in health (d) Enrollee communication suggest that a plan is not available to all care settings. materials. Enrollee communication Medicare beneficiaries. This prohibition (8) Conduct sales presentations or materials may be reviewed by CMS and does not apply to MA plan names in distribute and accept plan applications CMS may determine, upon review of effect on July 31, 2000. at educational events. such materials, that the materials must (5) Display the names and/or logos of (9) Display the names and/or logos of be modified, or may no longer be used. co-branded network providers on the provider co-branding partners on

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marketing materials, unless the ■ b. In paragraph (d)(2)(i), removing the (b) For contract year 2018 and for materials clearly indicate that other phrase ‘‘in § 422.2420(b) or (c)’’ and each subsequent contract year, each MA providers are available in the network. adding in its place the phrase ‘‘in organization must submit to CMS, in a (10) Knowingly target or send paragraph (b) or (c) of this section’’. timeframe and manner specified by unsolicited marketing materials to any ■ 52. Section 422.2430 is amended— CMS, the following information: MA enrollee during the Open ■ a. By redesignating paragraph (a) (1) Fully credible and partially Enrollment Period. introductory text and paragraphs (a)(1) credible contracts. For each contract (11) Engage in any other marketing and (2) as paragraphs (a)(1), (2), and (3), under this part that has fully credible or activity prohibited by CMS in its respectively; partially credible experience, as marketing guidance. ■ b. By adding a new paragraph (a) determined in accordance with (12) Engage in any discriminatory subject heading and revising newly § 422.2440(d), the MA organization activity such as attempting to recruit redesignated paragraph (a)(1); must report to CMS the MLR for the Medicare beneficiaries from higher ■ c. By adding paragraph (a)(4); contract and the amount of any income areas without making ■ d. In paragraph (b)(1), by removing the remittance owed to CMS under comparable efforts to enroll Medicare word ‘‘costs’’ and adding in its place the § 422.2410. beneficiaries from lower income areas. phrase ‘‘costs other than those that are (2) Non-credible contracts. For each (13) Solicit door-to-door for Medicare related to fraud reduction’’; contract under this part that has non- beneficiaries or through other ■ e. In paragraph (b)(5), by adding the credible experience, as determined in unsolicited means of direct contact, phrase ‘‘(and that are not related to accordance with § 422.2440(d), the MA including calling a beneficiary without fraud reduction activities under organization must report to CMS that the beneficiary initiating the contact. paragraph (a)(4)(ii) of this section)’’ after the contract is non-credible. (14) Use providers or provider groups ‘‘capabilities’’; and (c) Total revenue included as part of ■ to distribute printed information f. By removing and reserving the MLR calculation must be net of all comparing the benefits of different paragraph (b)(8). projected reconciliations. health plans unless the providers, The revision and addition read as (d) The MLR is reported once, and is provider groups, or pharmacies accept follows: not reopened as a result of any payment and display materials from all health § 422.2430 Activities that improve health reconciliation processes. plans with which the providers, care quality. § 422.2480 [Amended] provider groups, or pharmacies contract. (a) Activity requirements. (1) ■ 54. Section 422.2480 is amended— The use of publicly available Activities conducted by an MA ■ a. In the introductory text, by comparison information is permitted if organization to improve quality must removing the phrase ‘‘reviews of reports approved by CMS in accordance with either— the Medicare marketing guidance. (i) Fall into one of the categories in submitted’’ and adding in its place (15) Provide meals to potential paragraph (a)(2) of this section and meet ‘‘review of data submitted’’; and ■ b. In paragraph (d) introductory text enrollees, which is prohibited, all of the requirements in paragraph by removing the phrase ‘‘Reports regardless of value. (a)(3) of this section; or submitted’’ and adding in its place the * * * * * (ii) Be listed in paragraph (a)(4) of this section. phrase ‘‘Data submitted’’. § 422.2272 [Amended] * * * * * § 422.2490 [Amended] ■ 48. Section § 422.2272 is amended by (4)(i) For an MA contract that ■ 55. Section 422.2490 is amended in removing paragraph (e). includes MA–PD plans (described in paragraph (a) by removing the phrase § 422.2420(a)(2)), Medication Therapy ‘‘information contained in reports § 422.2274 [Amended] Management Programs meeting the ■ submitted’’ and adding in its place the 49. Section 422.2274 is amended by— requirements of § 423.153(d) of this phrase ‘‘information submitted’’. ■ a. Redesignating paragraph (b)(1)(iii) chapter. as paragraph (b)(1)(iv). (ii) Fraud reduction activities, PART 423—VOLUNTARY MEDICARE ■ b. Redesignating paragraph (b)(2)(iii) including fraud prevention, fraud PRESCRIPTION DRUG BENEFIT as paragraph (b)(1)(iii). detection, and fraud recovery. ■ c. Removing paragraph (b)(2); * * * * * ■ 56. The authority citation for part 423 ■ d. Redesignating paragraph (b)(3) as ■ 53. Section 422.2460 is revised to read continues to read as follows: paragraph (b)(2); and as follows: Authority: Secs. 1102, 1106, 1860D–1 ■ e. In newly redesignated paragraph through 1860D–42, and 1871 of the Social (b)(2)(ii)(A) by removing the reference § 422.2460 Reporting requirements. Security Act (42 U.S.C. 1302, 1306, 1395w– ‘‘paragraph (b)(3)(iii)’’ and adding in its (a) For each contract year, from 2014 101 through 1395w–152, and 1395hh). place the reference ‘‘paragraph through 2017, each MA organization ■ 58. Section 423.32 is amended by: (b)(2)(iii)’’. must submit to CMS, in a timeframe and ■ a. Revising paragraph (b) introductory manner specified by CMS, a report that § 422.2410 [Amended] text; and includes but is not limited to the data ■ b. Redesignating paragraphs (b)(i) and ■ 50. Section 422.2410 is amended in needed by the MA organization to (ii) as (b)(1) and (2). paragraph (a) by removing the phrase calculate and verify the MLR and The revision reads as follows: ‘‘an MLR’’ and adding in its place the remittance amount, if any, for each phrase ‘‘the information required under contract, under this part, such as § 423.32 Enrollment process. § 422.2460’’. incurred claims, total revenue, * * * * * expenditures on quality improving (b) Enrollment form or CMS-approved § 422.2420 [Amended] activities, non-claims costs, taxes, enrollment mechanism. The enrollment ■ 51. Section 422.2420 is amended— licensing and regulatory fees, and any form or CMS-approved enrollment ■ a. By removing and reserving remittance owed to CMS under mechanism must comply with CMS paragraph (b)(2)(ix); and § 422.2410. instructions regarding content and

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format and must have been approved by 2019 and subsequent years, an At-risk beneficiary means a Part D CMS as described in § 423.2262. individual who makes an election as eligible individual— * * * * * described in § 422.62(a)(3) of this (1) Who is— ■ 59. Section 423.38 is amended by— chapter, may make an election to enroll (i) Identified using clinical guidelines ■ a. Revising paragraphs (c) in or disenroll from Part D coverage. An (as defined in this section); introductory text, (c)(4), and (c)(8)(i)(C); individual who elects Original Medicare (ii) Not an exempted beneficiary; and ■ b. Adding paragraphs (c)(9) and (10); during the MA open enrollment period (iii) Determined to be at-risk for ■ c. Revising paragraph (d); and may elect to enroll in a PDP during this misuse or abuse of such frequently ■ d. Adding paragraph (e). time. abused drugs by a Part D plan sponsor The revisions and additions read as ■ 60. Section 423.40 is amended by under its drug management program in follows: revising paragraph (d) and adding accordance with the requirements of paragraph (e) to read as follows: § 423.153(f); or § 423.38 Enrollment periods. (2) With respect to whom a Part D * * * * * § 423.40 Effective dates. plan sponsor receives a notice upon the (c) Special enrollment periods. A Part * * * * * beneficiary’s enrollment in such D eligible individual may enroll in a (d) PDP enrollment period to sponsor’s plan that the beneficiary was PDP or disenroll from a PDP and enroll coordinate with the MA annual identified as an at-risk beneficiary (as in another PDP or MA–PD plan (as disenrollment period. Through 2018, an defined in the paragraph (1) of this provided at § 422.62(b) of this chapter), enrollment made from January 1 definition) under the prescription drug as applicable, under any of the through February 14 by an individual plan in which the beneficiary was most following circumstances: who has disenrolled from an MA plan recently enrolled and such * * * * * as described in § 422.62(a)(5) of this identification had not been terminated (4)(i) Except as provided in paragraph chapter will be effective the first day of upon disenrollment. (ii), the individual is a full-subsidy the month following the month in * * * * * eligible individual or other subsidy- which the enrollment in the PDP is Clinical guidelines, for the purposes eligible individual as defined in made. of a drug management program under § 423.772, who is making an allowable (e) PDP enrollment period to § 423.153(f), are criteria— coordinate with the MA open onetime-per-calendar-quarter election (1) To identify potential at-risk enrollment period. For 2019 and between January through September. beneficiaries who may be determined to subsequent years, an enrollment made (ii) An individual described in be at-risk beneficiaries under such by an individual who elects Original paragraph (i) is not eligible for this programs; and special enrollment period if he or she Medicare during the MA open (2) That are developed in accordance has been notified that he or she has been enrollment period as described in with the standards in § 423.153(f)(16) identified as a ‘‘potential at-risk § 422.62(a)(3) of this chapter, will be and, beginning with contract year 2020, beneficiary’’ or ‘‘at-risk beneficiary’’ as effective the first day of the month will be published in guidance annually. defined in § 423.100 and such following the month in which the identification has not been terminated election is made. * * * * * in accordance with § 423.153(f)). ■ 61. Section § 423.100 is amended— Exempted beneficiary means with respect to a drug management program, * * * * * ■ a. By revising the definition of (8) * * * ‘‘Affected enrollee’’; an enrollee who— (i) * * * ■ b. By adding in alphabetical order (1) Has elected to receive hospice care (C) The PDP (or its agent, definitions for ‘‘At risk beneficiary’’, or is receiving palliative or end-of-life representative, or plan provider) ‘‘Clinical guidelines’’, ‘‘Exempted care; materially misrepresented the plan’s beneficiary’’, and ‘‘Frequently abused (2) Is a resident of a long-term care provisions in communications as drug’’; facility, of a facility described in section outlined in subpart V of this part. ■ c. By removing the definition of 1905(d) of the Act, or of another facility for which frequently abused drugs are * * * * * ‘‘Other authorized prescriber’’; dispensed for residents through a (9) The individual is making an ■ d. By adding in alphabetical order contract with a single pharmacy; or election within 3 months after a gain, definitions for ‘‘Potential at-risk loss, or change to Medicaid or LIS beneficiary’’, ‘‘Preclusion list’’, and (3) Is being treated for active cancer- eligibility, or notification of such a ‘‘Program size’’; and related pain. change, whichever is later. ■ e. By revising the definition of ‘‘Retail Frequently abused drug means a (10) The individual is making an pharmacy’’. controlled substance under the Federal election within 3 months after The revisions and additions read as Controlled Substances Act that the notification of a CMS or State-initiated follows: Secretary determines is frequently enrollment action or that enrollment abused or diverted, taking into account § 423.100 Definitions. action’s effective date, whichever is all of the following factors: later. * * * * * (1) The drug’s schedule designation (d) Enrollment period to coordinate Affected enrollee means a Part D by the Drug Enforcement with MA annual 45-day disenrollment enrollee who is currently taking a Administration. period. Through 2018, an individual covered Part D drug that is either being (2) Government or professional enrolled in an MA plan who elects removed from a Part D plan’s formulary, guidelines that address that a drug is Original Medicare from January 1 or whose preferred or tiered cost-sharing frequently abused or misused. through February 14, as described in status is changing and such drug (3) An analysis of Medicare or other § 422.62(a)(5) of this chapter, may also removal or cost-sharing change affects drug utilization or scientific data. elect a PDP during this time. the Part D enrollee’s access to the drug * * * * * (e) Enrollment period to coordinate during the current plan year. Potential at-risk beneficiary means a with MA open enrollment period. For * * * * * Part D eligible individual—

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(1) Who is identified using clinical part of the process to develop clinical a fill of a non-formulary drug during the guidelines (as defined in this section); guidelines. time period specified in paragraph or * * * * * (b)(3)(ii) of this section (including Part (2) With respect to whom a Part D Retail pharmacy means any licensed D drugs that are on a plan’s formulary plan sponsor receives a notice upon the pharmacy that is open to dispense but require prior authorization or step beneficiary’s enrollment in such prescription drugs to the walk-in therapy under a plan’s utilization sponsor’s plan that the beneficiary was general public from which Part D management rules) by providing a one- identified as a potential at-risk enrollees could purchase a covered Part time, temporary supply of at least an beneficiary (as defined in paragraph (1) D drug without being required to receive approved month’s supply of medication, of this definition) under the prescription medical services from a provider or unless the prescription is written by a drug plan in which the beneficiary was institution affiliated with that prescriber for less than an approved most recently enrolled and such pharmacy. month’s supply and requires the Part D identification had not been terminated * * * * * sponsor to allow multiple fills to upon disenrollment. ■ 62. Section 423.120 is amended by— provide up to a total of an approved Preclusion list means a CMS compiled ■ a. Redesignating paragraph (b)(3)(i) month’s supply of medication. list of prescribers who— introductory text and paragraphs * * * * * (1) Meet all of the following (b)(3)(i)(A) through (D) as paragraphs (5) * * * requirements: (b)(3)(i)(A) introductory text and (iv) A Part D sponsor may (i) The prescriber is currently revoked (b)(3)(i)(A)(1) through (4); immediately remove a brand name drug from the Medicare program under ■ b. Adding a new paragraph (as defined in § 423.4) from its Part D § 424.535 of this chapter. (b)(3)(i)(B); formulary or change the brand name (ii) The prescriber is currently under ■ c. Revising paragraph (b)(3)(iii); drug’s preferred or tiered cost-sharing a reenrollment bar under § 424.535(c) of ■ d. In paragraph (b)(5)(i) introductory without meeting the deadlines and refill this chapter. text, by removing the figure ‘‘60’’ and requirements of paragraph (b)(5)(i) of (iii) CMS determines that the adding in its place the figure ‘‘30’’ and this section provided that the Part D underlying conduct that led to the by adding the phrase ‘‘(for purposes of sponsor does all of the following: revocation is detrimental to the best this paragraph (b)(5) these entities are (A) At the same time that it removes interests of the Medicare program. In referred to as ‘‘CMS and other specified such brand name drug or changes its making this determination under this entities’’) after the word ‘‘pharmacists’’; preferred or tiered cost-sharing, it adds ■ paragraph (1)(iii), CMS considers the e. In paragraph (b)(5)(i)(A), by a therapeutically equivalent (as defined following factors: removing the phrase ‘‘60 days’’ and in § 423.100) generic drug (as defined in (A) The seriousness of the conduct adding in its place the phrase ‘‘30 § 423.4) to its formulary on the same or underlying the prescriber’s revocation; days’’; lower cost-sharing tier and with the ■ f. In paragraph (b)(5)(i)(B), by (B) The degree to which the same or less restrictive utilization removing the phrase ‘‘60 day supply’’ management criteria. prescriber’s conduct could affect the and adding in its place the phrase ‘‘an integrity of the Part D program; and (B) The Part D sponsor previously approved month’s supply’’; could not have included such (C) Any other evidence that CMS ■ g. In paragraph (b)(5)(iii), by removing deems relevant to its determination; or therapeutically equivalent generic drug the phrase ‘‘, CMS, State Pharmaceutical on its formulary when it submitted its (2) Meet both of the following Assistance Programs (as defined in requirements: initial formulary for CMS approval § 423.454), entities providing other consistent with paragraph (b)(2) of this (i) The prescriber has engaged in prescription drug coverage (as described section because such generic drug was behavior for which CMS could have in § 423.464(f)(1)), authorized not yet available on the market. revoked the prescriber to the extent prescribers, network pharmacies, and (C) Before making any permitted applicable if he or she had been pharmacists’’ and adding in its place the generic substitutions, the Part D sponsor enrolled in Medicare. phrase ‘‘and CMS and other specified provides general notice to all current (ii) CMS determines that the entities’’; and prospective enrollees in its ■ underlying conduct that would have led h. Adding paragraph (b)(5)(iv); formulary and other applicable ■ i. In paragraph (b)(6), by removing the to the revocation is detrimental to the beneficiary communication materials phrase ‘‘under paragraph (b)(5)(iii) of best interests of the Medicare program. advising them that— this section’’ and adding in its place the In making this determination under this (1) Such changes may be made at any phrase ‘‘under paragraphs (b)(5)(iii) and paragraph, CMS considers all of the time when a new generic is added in following factors: (iv) of this section’’; and ■ j. Revising paragraphs (c)(5) and (6). place of a brand name drug, and there (A) The seriousness of the conduct may be no advance direct notice to the involved. The additions and revisions read as follows: affected enrollees; (B) The degree to which the (2) If such a substitution should prescriber’s conduct could affect the § 423.120 Access to covered Part D drugs. occur, affected enrollees will receive integrity of the Part D program. * * * * * direct notice including information on (C) Any other evidence that CMS (b) * * * the specific drugs involved and steps deems relevant to its determination. (3) * * * they may take to request coverage * * * * * (i) * * * determinations and exceptions under Program size means the estimated (B) Not apply in cases in which a Part §§ 423.566 and 423.578; and population of potential at-risk D sponsor substitutes a generic drug for (D) Before making any permitted beneficiaries in drug management a brand name drug as permitted under generic substitutions, the Part D sponsor programs (described in § 423.153(f)) paragraph (b)(5)(iv) of this section. provides advance general notice to CMS operated by Part D plan sponsors that * * * * * and other specified entities. the Secretary determines can be (iii) Ensure the provision of a (E) The Part D sponsor provides effectively managed by such sponsors as temporary fill when an enrollee requests notice of any such formulary changes to

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affected enrollees and CMS and other individual who is identified by name in ■ 63. Section 423.128 is amended by specified entities consistent with the the request and who is included on the revising paragraphs (a)(3) and (d)(2)(iii) requirements of paragraphs (b)(5)(i) (as preclusion list, defined in § 423.100. to read as follows: applicable) and (ii) of this section. This (iii) A Part D plan sponsor may not would include direct notice to the submit a prescription drug event (PDE) § 423.128 Dissemination of Part D plan information. affected enrollees. record to CMS unless it includes on the (a) * * * * * * * * PDE record the active and valid individual NPI of the prescriber of the (3) At the time of enrollment and at (c) * * * least annually thereafter, by the first day (5)(i) A Part D plan sponsor must drug, and the prescriber is not included on the preclusion list, defined in of the annual coordinated election reject, or must require its pharmacy period. benefit manager (PBM) to reject, a § 423.100, for the date of service. (iv)(A) A Part D sponsor or its PBM * * * * * pharmacy claim for a Part D drug unless must not reject a pharmacy claim for a (d) * * * the claim contains the active and valid Part D drug under paragraph (c)(6)(i) of (2) * * * National Provider Identifier (NPI) of the this section or deny a request for (iii) Provides current and prospective prescriber who prescribed the drug. reimbursement under paragraph Part D enrollees with notice that is (ii) The sponsor must communicate at (c)(6)(ii) of this section unless the timely under § 423.120(b)(5) regarding point-of sale whether or not a submitted sponsor has provided the written notice any removal or change in the preferred NPI is active and valid in accordance to the beneficiary required by paragraph or tiered cost-sharing status of a Part D with this paragraph (c)(5)(ii). (c)(6)(iv)(B) of this section. drug on its Part D plan’s formulary. (A) If the sponsor communicates that (B) Upon receipt of a pharmacy claim * * * * * the NPI is not active and valid, the or beneficiary request for ■ sponsor must permit the pharmacy to— 64. Section 423.153 is amended by reimbursement for a Part D drug that a adding a sentence at the end of (1) Confirm that the NPI is active and Part D sponsor would otherwise be valid; or paragraph (a) and adding paragraph (f) required to reject or deny in accordance to read as follows: (2) Correct the NPI. with paragraph (c)(6)(i) or (ii) of this (B) If the pharmacy confirms that the section, a Part D sponsor or its PBM § 423.153 Drug utilization management, NPI is active and valid or corrects the must do the following: quality assurance, and medication therapy NPI, the sponsor must pay the claim if (1) Subject to all other Part D rules management programs (MTMPs). it is otherwise payable. and plan coverage requirements, (a) * * * A Part D plan sponsor may (iii) A Part D sponsor must not later provide an advance written notice to establish a drug management program recoup payment from a network any beneficiary who has received a for at-risk beneficiaries enrolled in their pharmacy for a claim that does not prescription from a prescriber on the prescription drug benefit plans to contain an active and valid individual preclusion list as soon as possible but to address overutilization of frequently prescriber NPI on the basis that it does ensure that the beneficiary receives the abused drugs, as described in paragraph not contain one, unless the sponsor— notice no later than 30 days after (f) of this section. (A) Has complied with paragraph publication of the most recent * * * * * (c)(5)(ii) of this section; preclusion list. (f) Drug management programs. A (B) Has verified that a submitted NPI (2) Ensure that reasonable efforts are drug management program must meet was not in fact active and valid; and made to notify the prescriber of a all the following requirements: (C) The agreement between the parties beneficiary who was sent a notice under (1) Written policies and procedures. A explicitly permits such recoupment. paragraph (c)(6)(iv)(B)(1) of this section. sponsor must document its drug (iv) With respect to requests for (v)(A) CMS sends written notice to the management program in written policies reimbursement submitted by Medicare prescriber via letter of his or her and procedures that are approved by the beneficiaries, a Part D sponsor may not inclusion on the preclusion list. The applicable P&T committee and reviewed make payment to a beneficiary notice must contain the reason for the and updated as appropriate. These dependent upon the sponsor’s inclusion on the preclusion list and policies and procedures must address acquisition of an active and valid inform the prescriber of his or her all aspects of the sponsor’s drug individual prescriber NPI, unless there appeal rights. management program, including but not is an indication of fraud. If the sponsor (B) A prescriber may appeal his or her limited to the following: is unable to retrospectively acquire an inclusion on the preclusion list under (i) The appropriate credentials of the active and valid individual prescriber this section in accordance with 42 CFR clinical staff conducting case NPI, the sponsor may not seek recovery part 498. management required under paragraph of any payment to the beneficiary solely (vi) CMS has the discretion not to (f)(2) of this section, including that the on that basis. include a particular individual on (or if staff must have a current and (6)(i) Except as provided in paragraph warranted, remove the individual from) unrestricted license to practice within (c)(6)(iv) of this section, a Part D the preclusion list should it determine the scope of his or her profession in a sponsor must reject, or must require its that exceptional circumstances exist State, Territory, Commonwealth of the PBM to reject, a pharmacy claim for a regarding beneficiary access to United Stated (that is, Puerto Rico), or Part D drug if the individual who prescriptions. In making a the District of Columbia. prescribed the drug is included on the determination as to whether such (ii) The necessary and appropriate preclusion list, defined in § 423.100. circumstances exist, CMS takes into contents of files for case management (ii) Except as provided in paragraph account— required under paragraph (f)(2) of this (c)(6)(iv) of this section, a Part D (A) The degree to which beneficiary section, which must include sponsor must deny, or must require its access to Part D drugs would be documentation of the substance of PBM to deny, a request for impaired; and prescriber and beneficiary contacts. reimbursement from a Medicare (B) Any other evidence that CMS (iii) Monitoring reports and beneficiary if the request pertains to a deems relevant to its determination. notifications about incoming enrollees Part D drug that was prescribed by an * * * * * who meet the definition of an at-risk

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beneficiary or a potential at-risk (A) Prescribed for the beneficiary by (5) Initial notice to a beneficiary. (i) beneficiary in § 423.100 and responding one or more prescribers; After conducting the case management to requests from other sponsors for (B) Dispensed to the beneficiary by required by paragraph (f)(2) of this information about at-risk beneficiaries one or more network pharmacies; or section, a Part D sponsor that intends to and potential at-risk beneficiaries who (C) Both. limit the access of a potential at-risk recently disenrolled from the sponsor’s (iii)(A) If the sponsor implements an beneficiary, or subject to the exception prescription drug benefit plan. edit as specified in paragraph (f)(3)(i) of in paragraph (f)(8)(ii) of this section, of (2) Case management/clinical this section, the sponsor must not cover an at-risk beneficiary (as defined in contact/prescriber verification—(i) frequently abused drugs for the subparagraph (2) of the definition in General rule. The sponsor’s clinical staff beneficiary in excess of the edit, unless § 423.100), to coverage for frequently must conduct case management for each the edit is terminated or revised based abused drugs under paragraph (f)(3) of potential at-risk beneficiary for the on a subsequent determination, this section must provide an initial purpose of engaging in clinical contact including a successful appeal. written notice to the beneficiary. with the prescribers of frequently (B) If the sponsor limits the at-risk (ii) The notice must do all of the abused drugs and verifying whether a beneficiary’s access to coverage as following: potential at-risk beneficiary is an at-risk specified in paragraph (f)(3)(ii) of this (A) Use language approved by the beneficiary. Except as provided in section, the sponsor must cover Secretary. paragraph (f)(2)(ii) of this section, the frequently abused drugs for the (B) Be in a readable and sponsor must do all of the following: beneficiary only when they are obtained understandable form. (A) Send written information to the from the selected pharmacy(ies) or (C) Provide all of the following beneficiary’s prescribers that the prescriber(s) or both, as applicable— information: (1) An explanation that the beneficiary met the clinical guidelines (1) In accordance with all other beneficiary’s current or immediately and is a potential at risk beneficiary. coverage requirements of the prior Part D plan sponsor has identified (B) Elicit information from the beneficiary’s prescription drug benefit the beneficiary as a potential at-risk prescribers about any factors in the plan, unless the limit is terminated or beneficiary. beneficiary’s treatment that are relevant revised based on a subsequent determination, including a successful (2) A description, of all State and to a determination that the beneficiary Federal public health resources that are is an at-risk beneficiary, including appeal; and (2) Except as necessary to provide designed to address prescription drug whether prescribed medications are reasonable access in accordance with abuse to which the beneficiary has appropriate for the beneficiary’s medical paragraph (f)(12) of this section. access, including mental health and conditions or the beneficiary is an (4) Requirements for limiting access to other counseling services and exempted beneficiary. coverage for frequently abused drugs. (i) information on how to access such (C) In cases where prescribers have A sponsor may not limit the access of services, including any such services not responded to the inquiry described an at-risk beneficiary to coverage for covered by the plan under its Medicare in paragraph (f)(2)(i)(B) of this section, frequently abused drugs under benefits, supplemental benefits, or make reasonable attempts to paragraph (f)(3) of this section, unless Medicaid benefits (if the plan integrates communicate with the prescribers the sponsor has done all of the coverage of Medicare and Medicaid telephonically and/or by another following: benefits). effective communication method (A) Conducted case management as (3) An explanation of the beneficiary’s designed to elicit a response from the required by paragraph (f)(2) of this right to a redetermination if the sponsor prescribers within a reasonable period section and updated it, if necessary. issues a determination that the after sending the written information. (B) Except in the case of a pharmacy beneficiary is an at-risk beneficiary and (ii) Exception for identification by limitation imposed pursuant to the standard and expedited prior plan. If a beneficiary was paragraph (f)(3)(ii)(B) of this section, redetermination processes described at identified as a potential at-risk or an at- obtained the agreement of at least one § 423.582 and § 423.584. risk beneficiary by his or her most prescriber of frequently abused drugs for (4) A request that the beneficiary recent prior plan and such identification the beneficiary that the specific submit to the sponsor within 30 days of has not been terminated in accordance limitation is appropriate. the date of this initial notice any with paragraph (f)(14) of this section, (C) Provided the notices to the information that the beneficiary believes the sponsor meets the requirements in beneficiary in compliance with is relevant to the sponsor’s paragraph (f)(2)(i) of this section, so long paragraphs (f)(5) and (6) of this section. determination, including which as the sponsor obtains case management (ii)(A) Except as provided in prescribers and pharmacies the information from the previous sponsor paragraph (f)(2)(ii)(B) of this section beneficiary would prefer the sponsor to and such information is still clinically regarding a prescriber limitation, if the select if the sponsor implements a adequate and up to date. sponsor has complied with the limitation under paragraph (f)(3)(ii) of (3) Limitation on access to coverage requirement of paragraph (f)(2)(i)(C) of this section. for frequently abused drugs. Subject to this section about attempts to reach (5) An explanation of the meaning the requirements of paragraph (f)(4) of prescribers, and the prescribers were not and consequences of being identified as this section, a Part D plan sponsor may responsive after 3 attempts by the an at-risk beneficiary, including the do any or all of the following: sponsor to contact them within 10 following: (i) Implement a point-of-sale claim business days, then the sponsor has met (i) An explanation of the sponsor’s edit for frequently abused drugs that is the requirement of paragraph (f)(4)(i)(B) drug management program, the specific specific to an at-risk beneficiary. of this section for eliciting information limitation the sponsor intends to place (ii) In accordance with paragraphs from the prescribers. on the beneficiary’s access to coverage (f)(10) and (11) of this section, limit an (B) The sponsor may not implement a for frequently abused drugs under the at-risk beneficiary’s access to coverage prescriber limitation pursuant to program. for frequently abused drugs to those that paragraph (f)(3)(ii)(A) of this section if (ii) The timeframe for the sponsor’s are— no prescriber was responsive. decision.

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(iii) If applicable, any limitation on (3) The prescriber(s) or pharmacy(ies) beneficiary’s prescriber(s) of frequently the availability of the special enrollment or both, if and as applicable, from which abused drugs with a copy of the notice period described in § 423.38. the beneficiary must obtain frequently required in accordance with paragraph (6) Clear instructions that explain abused drugs in order for them to be (f)(7)(i) of this section. how the beneficiary can contact the covered by the sponsor. (8) Notices: Timing and exceptions. (i) sponsor, including how the beneficiary (4) An explanation of the beneficiary’s Subject to paragraph (f)(8)(ii) of this may submit information to the sponsor right to a redetermination under section, a Part D sponsor must provide in response to the request described in § 423.580, including— the second notice described in paragraph (f)(5)(ii)(C)(4) of this section. (i) A description of both the standard paragraph (f)(6) of this section or the (7) Contact information for other and expedited redetermination alternate second notice described in organizations that can provide the processes; and paragraph (f)(7) of this section, as beneficiary with assistance regarding (ii) The beneficiary’s right to, and applicable, on a date that is not less the sponsor’s drug management conditions for, obtaining an expedited than 30 days and not more than the program. redetermination. earlier of the date the sponsor makes the (8) Other content that CMS (5) An explanation that the relevant determination or 60 days after determines is necessary for the beneficiary may submit to the sponsor, the date of the initial notice described beneficiary to understand the if the beneficiary has not already done in paragraph (f)(5) of this section. information required in this notice. so, the prescriber(s) and pharmacy(ies), (ii) A gaining plan sponsor may forgo (iii) The Part D plan sponsor must as applicable, from which the providing the initial notice and may make reasonable efforts to provide the beneficiary would prefer to obtain immediately provide a second notice beneficiary’s prescriber(s) of frequently frequently abused drugs. described in paragraph (f)(6) of this abused drugs with a copy of the notice (6) Clear instructions that explain section to an at-risk beneficiary as required under paragraph (f)(5)(i) of this how the beneficiary may contact the defined in subparagraph (2) of the section. sponsor, including how the beneficiary definition in § 423.100), if the sponsor is (iv) If the Part D plan sponsor may submit information to the sponsor implementing either of the following: subsequently intends to make a change in response to the request described in (A) A beneficiary-specific point-of- to the terms of an ongoing limitation(s) paragraph (f)(6)(ii)(C)(5) of this section. sale claim edit as described in (7) Other content that CMS established under paragraph (f)(3) of paragraph (f)(3)(i) of this section, if the determines is necessary for the this section, including the intention to edit is the same as the one that was beneficiary to understand the impose an additional limitation on the implemented in the immediately prior at-risk beneficiary, the sponsor must information required in this notice. (iii) The Part D plan sponsor must plan. comply with the requirements of (B) A limitation on access to coverage make reasonable efforts to provide the paragraph (f)(3) of this section, as well as described in paragraph (f)(3(ii) of this beneficiary’s prescriber(s) of frequently as all applicable requirements for section, if such limitation would require abused drugs with a copy of the notice beneficiary notices described in the beneficiary to obtain frequently required by paragraph (f)(6)(i) of this abused drugs from the same location of paragraphs (f)(5) through (8) of this section. section. (7) Alternate second notice. (i) If, after pharmacy and/or the same prescriber, as (6) Second notice. (i) Upon making a providing an initial notice to a potential applicable, that was selected under the determination that a beneficiary is an at- at-risk beneficiary under paragraph (f)(4) immediately prior plan under paragraph risk beneficiary and to limit the of this section, a Part D sponsor (f)(9) of this section. beneficiary’s access to coverage for determines that the potential at-risk (9) Beneficiary preferences. Except as frequently abused drugs under beneficiary is not an at-risk beneficiary, described in paragraph (f)(10) of this paragraph (f)(3) of this section, a Part D the sponsor must provide an alternate section, if a beneficiary submits sponsor must provide a second written second written notice to the beneficiary. preferences for prescribers or notice to the beneficiary. (ii) The alternate second notice must pharmacies or both from which the (ii) The second notice must do all of do all of the following: beneficiary prefers to obtain frequently the following: (A) Use language approved by the abused drugs, the sponsor must do the (A) Use language approved by the Secretary. following: Secretary. (B) Be in a readable and (i) Review such preferences. (B) Be in a readable and understandable form. (ii) If the beneficiary is— understandable form. (C) Provide all of the following (A) Enrolled in a stand-alone (C) Provide all of the following information: prescription drug benefit plan and information: (1) The sponsor has determined that specifies a prescriber(s) or network (1) An explanation that the the beneficiary is not an at-risk pharmacy(ies) or both, select or change beneficiary’s current or immediately beneficiary. the selection of prescriber(s) or network prior Part D plan sponsor has identified (2) The sponsor will not limit the pharmacy(ies) or both for the the beneficiary as an at-risk beneficiary. beneficiary’s access to coverage for beneficiary based on beneficiary’s (2) An explanation that the frequently abused drugs. preference(s). beneficiary is subject to the (3) If applicable, the SEP limitation no (B) Enrolled in a Medicare Advantage requirements of the sponsor’s drug longer applies. prescription drug benefit plan and management program, including— (4) Clear instructions that explain specifies a network prescriber(s) or (i) The limitation the sponsor is how the beneficiary may contact the network pharmacy(ies) or both, select or placing on the beneficiary’s access to sponsor. change the selection of prescriber(s) or coverage for frequently abused drugs (5) Other content that CMS pharmacy(ies) or both for the and the effective and end date of the determines is necessary for the beneficiary based on the beneficiary’s limitation; and beneficiary to understand the preference(s). (ii) If applicable, any limitation on the information required in this notice. (iii) The sponsor must inform the availability of the special enrollment (iii) The Part D sponsor must make beneficiary of the selection or change period described in § 423.38. reasonable efforts to provide the in—

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(A) The second notice; or (B) For purposes of this paragraph abused drugs for the beneficiary that the (B) If the second notice is not feasible (f)(12) of this section, in the case of a limitation should be extended. due to the timing of the beneficiary’s group practice, all prescribers of the (3) The plan sponsor has provided submission, in a subsequent written group practice must be treated as one another notice to the beneficiary in notice, issued no later than 14 days after prescriber. compliance with paragraph (f)(6) of this receipt of the submission. (13) Confirmation of selections(s). (i) section. (10) Exception to beneficiary Before selecting a prescriber or (4) If the prescribers were not preferences. (i) If the Part D sponsor pharmacy under this paragraph, a Part responsive after 3 attempts by the determines that the selection or change D plan sponsor must notify the sponsor to contact them within 10 of a prescriber or pharmacy under prescriber or pharmacy, as applicable, business days, then the sponsor has met paragraph (f)(9) of this section would that the beneficiary has been identified the requirement of paragraph contribute to prescription drug abuse or for inclusion in the drug management (f)(14)((ii)(B)(2) of this section. drug diversion by the at-risk beneficiary, program for at-risk beneficiaries and (5) The sponsor may not extend a the sponsor may change the selection that the prescriber or pharmacy or both prescriber limitation implemented without regard to the beneficiary’s is(are) being selected as the beneficiary’s pursuant to paragraph (f)(3)(ii)(A) of this preferences if there is strong evidence of designated prescriber or pharmacy or section if no prescriber was responsive. inappropriate action by the prescriber, both for frequently abused drugs. For (15) Data disclosure. (i) CMS pharmacy, or beneficiary. prescribers, this notification occurs identifies potential at-risk beneficiaries (ii) If the sponsor changes the during case management as described in to the sponsor of the prescription drug selection, the sponsor must provide the paragraph (f)(2) or when the prescriber plan in which the beneficiary is beneficiary with— provides agreement pursuant to (A) At least 30 days advance written enrolled. paragraph (f)(4)(i)(B) of this section. notice of the change; and (ii) A Part D sponsor that operates a (B) A rationale for the change. (ii) The sponsor must receive drug management program must (11) Reasonable access. In making the confirmation from the prescriber(s) or disclose any data and information to selections under paragraph (f)(12) of this pharmacy(ies) or both, as applicable, CMS and other Part D sponsors that section, a Part D plan sponsor must that the selection is accepted before CMS deems necessary to oversee Part D ensure that the beneficiary continues to conveying this information to the at-risk drug management programs at a time, have reasonable access to frequently beneficiary, unless the pharmacy has and in a form and manner specified by abused drugs, taking into account all agreed in advance in a network CMS. The data and information relevant factors, including but not agreement with the sponsor to accept all disclosures must do all of the following: limited to— such selections and the agreement (A) Provide information to CMS (i) Geographic location; specifies how the pharmacy will be within 30 days of receiving a report (ii) Beneficiary preference; notified by the sponsor of its selection. about a potential at-risk beneficiary (iii) The beneficiary’s predominant (14) Termination of identification as from CMS. usage of a prescriber or pharmacy or an at-risk beneficiary. The identification (B) Provide information to CMS about both; of an at-risk beneficiary as such must any potential at-risk beneficiary that (iv) The impact on cost-sharing; terminate as of the earlier of the meets paragraph (1) of the definition in (v) Reasonable travel time; following: § 423.100 that a sponsor identifies (vi) Whether the beneficiary has (i) The date the beneficiary within 30 days from the date of the most multiple residences; demonstrates through a subsequent recent CMS report identifying potential (vii) Natural disasters and similar determination, including but not limited at-risk beneficiaries; situations; and to, a successful appeal, that the (viii) The provision of emergency (C) Provide information to CMS about beneficiary is no longer likely, in the services. any potential at-risk beneficiary that (12) Selection of prescribers and absence of the limitation under this meets paragraph (2) of the definition in pharmacies. (i) A Part D plan sponsor paragraph, to be an at-risk beneficiary; § 423.100 that a sponsor identifies must select, as applicable— or within 30 days from the date of the most (A) One, or, if the sponsor reasonably (ii)(A) The end of a one year period recent CMS report identifying potential determines it necessary to provide the calculated from the effective date of the at-risk beneficiaries. beneficiary with reasonable access, limitation, as specified in the notice (D) Provide information to CMS as more than one, network prescriber who provided under paragraph (f)(6) of this soon as possible but no later than 7 days is authorized to prescribe frequently section, unless the limitation was of the date of the initial notice or second abused drugs for the beneficiary, unless extended pursuant to paragraph notice that the sponsor provided to a the plan is a stand-alone PDP, or the (f)(14)(ii)(B) of this section. beneficiary, or as soon as possible but selection of an out-of-network provider (B) The end of a two year period no later than 7 days of a termination is necessary; and calculated from the effective date of the date, as applicable, about a beneficiary- (B) One, or, if the sponsor reasonably limitation, as specified in a notice specific opioid claim edit or a limitation determines it necessary to provide the provided under paragraph (f)(6) of this on access to coverage for frequently beneficiary with reasonable access, section, subject to the following abused drugs. more than one, network pharmacy that requirements: (E) Transfer case management may dispense such drugs to such (1) The plan sponsor determines at information upon request of a gaining beneficiary, unless the selection of an the end of the one year period that there sponsor as soon as possible but not later out-of-network pharmacy is necessary. is a clinical basis to extend the than 2 weeks from the gaining sponsor’s (ii)(A) For purposes of this paragraph limitation; request when— (f)(12) of this section, in the case of a (2) Except in the case of a pharmacy (1) An at-risk beneficiary or potential pharmacy that has multiple locations limitation imposed pursuant to at-risk beneficiary disenrolls from the that share real-time electronic data, all paragraph (f)(3)(ii)(B) of this section, the sponsor’s plan and enrolls in another such locations of the pharmacy must plan sponsor has obtained the prescription drug plan offered by the collectively be treated as one pharmacy. agreement of a prescriber of frequently gaining sponsor; and

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(2) The edit or limitation that the (R) RxTransferRequest. 1856(b) of the Act requiring the sponsor had implemented for the (S) RxTransferResponse. establishment of standards consistent beneficiary had not terminated before (T) RxTransferConfirm. with and to carry out Part D. disenrollment. (U) RxFillIndicatorChange. (b) Purpose. Ratings calculated and (16) Clinical guidelines. Potential at- (V) Recertification. assigned under this subpart will be used risk beneficiaries and at-risk (W) REMSIinitiationRequest. by CMS for the following purposes: beneficiaries are identified by CMS or a (X) REMSIinitiationResponse. (1) To provide comparative Part D sponsor using clinical guidelines (Y) REMSRequest. information on plan quality and that — (Z) REMSResponse. performance to beneficiaries for their (i) Are developed with stakeholder * * * * * use in making knowledgeable consultation; (4) Medication history. Medication enrollment and coverage decisions in (ii) Are based on the acquisition of history to provide for the the Medicare program. frequently abused drugs from multiple communication of Medicare Part D (2) To provide quality ratings on a 5- prescribers, multiple pharmacies, the medication history information among star rating system. level of frequently abused drugs used, or Medicare Part D sponsors, prescribers (3) To provide a means to evaluate any combination of this factors; and dispensers: and oversee overall and specific (iii) Are derived from expert opinion (i) Until January 1, 2020, Either the compliance with certain regulatory and and an analysis of Medicare data; and National Council for Prescription Drug contract requirements by Part D plans, (iv) Include a program size estimate. Programs Prescriber/Pharmacist where appropriate and possible to use ■ 65. Section 423.160 is amended by— Interface SCRIPT Standard, data of the type described in ■ a. Revising paragraph (b)(1)(iv); Implementation Guide Version 8, § 423.182(c). ■ b. Adding paragraph (b)(1)(v); Release 1 (Version 8.1), October 2005 (c) Applicability. Except for ■ c. Adding paragraph (b)(2)(iv); (incorporated by reference in paragraph § 423.182(b)(3), the regulations in this ■ d. Revising paragraph (b)(4); and (c)(1)(i) of this section, or the National subpart will be applicable beginning ■ e. Adding paragraph (c)(1)(vii). Council for Prescription Drug Programs with the 2019 measurement period and The revisions and additions read as SCRIPT Standard, Implementation the associated 2021 Star Ratings that are follows: Guide Version 10.6, approved released prior to the annual coordinated November 12, 2008 (incorporated by election period for the 2021 contract § 423.160 Standards for electronic reference in paragraph (c)(1)(v) of this year. prescribing. section. * * * * * (ii) On or after January 1, 2020, the § 423.182 Part D Prescription Drug Plan Quality Rating System. (b) * * * National Council for Prescription Drug (1) * * * Programs SCRIPT Standard, (a) Definitions. In this subpart the (iv) From March 1, 2015 until October Implementation Guide Version 2017071, following terms have the meanings: 31, 2019, the standards specified in approved July 28, 2017 (incorporated by CAHPS refers to a comprehensive and paragraphs (b)(2)(iii), (b)(3), (b)(4)(i), reference in paragraph (c)(1)(vii) of this evolving family of surveys that ask (b)(5)(iii), and (b)(6). section). consumers and patients to evaluate the interpersonal aspects of health care. (v) On or after January 1, 2020, the * * * * * standards specified in paragraphs CAHPS surveys probe those aspects of (c) * * * care for which consumers and patients (b)(2)(iv) and (b)(3), (b)(4)(ii), (b)(5)(iii), (1) * * * are the best or only source of and (b)(6) of this section. (vii) National Council for Prescription information, as well as those that (2) * * * Drug Programs SCRIPT Standard, consumers and patients have identified (iv) The National Council for Implementation Guide Version 2017071, as being important. CAHPS initially Prescription Drug Programs SCRIPT approved July 28, 2017. stood for the Consumer Assessment of standard, Implementation Guide * * * * * Version 2017071 approved July 28, 2017 Health Plans Study, but as the products ■ (incorporated by reference in paragraph 66. Sections 423.180, 423.182, have evolved beyond health plans the (c)(1)(vii) of this section), to provide for 423.184 and 423.186 are added to acronym now stands for Consumer the communication of a prescription or subpart D to read as follows: Assessment of Healthcare Providers and related prescription-related information Systems. Subpart D—Cost Control and Quality Case-mix adjustment means an between prescribers and dispensers for Improvement Requirements the following: adjustment to the measure score made (A) GetMessage. * * * * * prior to the score being converted into (B) Status. Sec a Star Rating to take into account certain (C) Error. 423.180 Basis and scope of the Part D enrollee characteristics that are not (D) NewRxRequest. Prescription Drug Plan Quality Rating under the control of the plan. For (E) NewRx. System. example age, education, chronic (F) RxChangeRequest. 423.182 Part D Prescription Drug Plan medical conditions, and functional (G) RxChangeResponse. Quality Rating System. health status that may be related to the 423.184 Adding, updating, and removing (H) RxRenewal Request. enrollee’s survey responses. measures. Categorical Adjustment Index (CAI) (I) Resupply. 423.186 Calculation of Star Ratings. (J) RxRenewalResponse. means the factor that is added to or (K) Verify. § 423.180 Basis and scope of the Part D subtracted from an overall or summary (L) CancelRx. Prescription Drug Plan Quality Rating Star Rating (or both) to adjust for the (M) CancelRxResponse. System. average within-contract (or within-plan (N) RxFill. (a) Basis. This subpart is based on as applicable) disparity in performance (O) DrugAdministration. sections 1851(d), 1852(e), 1853(o) and associated with the percentages of (P) NewRxRequest. 1854(b)(3)(iii), (v), and (vi) of the Act beneficiaries who are dually eligible for (Q) NewRxResponseDenied. and the general authority under section Medicare and enrolled in Medicaid,

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beneficiaries who receive a Low Income Low-income subsidy (LIS) means the rounded down by deleting the digit in Subsidy, or have disability status in that subsidy that a beneficiary receives to the first decimal place. If the digit in the contract (or plan as applicable). help pay for prescription drug coverage first decimal place is 5 or greater, then Clustering refers to a variety of (see § 423.34 for definition of a low- the value should be rounded up by 1 techniques used to partition data into income subsidy eligible individual). and the digit in the first decimal place distinct groups such that the Measurement period means the deleted. observations within a group are as period for which data are collected for (b) Contract ratings—(1) General. similar as possible to each other, and as a measure or the performance period CMS calculates an overall Star Rating, dissimilar as possible to observations in that a measures covers. Part C summary rating, and Part D any other group. Clustering of the Measure score means the numeric summary rating for each MA–PD measure-specific scores means that gaps value of the measure or an assigned contract and a Part D summary rating for that exist within the distribution of the ‘missing data’ message. each PDP contract using the 5-star rating scores are identified to create groups Measure star means the measure’s system described in this subpart. For (clusters) that are then used to identify numeric value is converted to a Star PDP contracts, the Part D summary the four cut points resulting in the Rating. It is displayed to the nearest rating is the highest rating. Measures are creation of five levels (one for each Star whole star, using a 1–5 star scale. assigned stars at the contract level and Rating), such that the scores in the same Overall rating means a global rating weighted in accordance with Star Rating level are as similar as that summarizes the quality and § 423.186(a). Domain ratings are the possible and the scores in different Star performance for the types of services unweighted mean of the individual Rating levels are as different as possible. offered across all unique Part C and Part measure ratings under the topic area in Technically, the variance in measure D measures. accordance with § 423.186(b). Summary scores is separated into within-cluster Part C summary rating means a global ratings are the weighted mean of the and between-cluster sum of squares rating that summarizes the health plan individual measure ratings for Part C or components. The clusters reflect the quality and performance on Part C Part D in accordance with § 423.186(c), groupings of numeric value scores that measures. with both the reward factor and CAI minimize the variance of scores within Part D summary rating means a global applied as applicable, as described in the clusters. The Star Ratings levels are rating that summarizes prescription § 423.186(f). Overall Star Ratings are assigned to the clusters that minimize drug plan quality and performance on calculated by using the weighted mean the within-cluster sum of squares. The Part D measures. of the individual measure ratings in cut points for star assignments are Plan benefit package (PBP) means a accordance with § 423.186(d) with both derived from the range of measure set of benefits for a defined MA or PDP the reward factor and CAI applied as scores per cluster, and the star levels service area. The PBP is submitted by applicable, as described in § 423.186(f). associated with each cluster are Part D plan sponsors and MA (2) Plan benefit packages. All plan determined by ordering the means of the organizations to CMS for benefit benefit packages (PBPs) offered under clusters. analysis, bidding, marketing, and an MA contract or PDP plan sponsor Consolidation means when an MA beneficiary communication purposes. have the same overall and/or summary organization that has at least two Reliability means a measure of the Star Ratings as the contract under which contracts for health and/or drug services fraction of the variation among the the PBP is offered by the MA of the same plan type under the same observed measure values that is due to organization or PDP plan sponsor. Data parent organization in a year combines real differences in quality (‘‘signal’’) from all the PBPs offered under a multiple contracts into a single contract rather than random variation (‘‘noise’’); contract are used to calculate the for the start of the subsequent contract it is reflected on a scale from 0 (all measure and domain ratings for the year. differences in plan performance contract. Consumed contract means a contract measure scores are due to measurement (3) Contract consolidations. (i) In the that will no longer exist after a contract error) to 1 (the difference in plan case of contract consolidations year’s end as a result of a consolidation. performance scores is attributable to real involving two or more contracts for Display page means the CMS website differences in performance). health and/or drug services of the same on which certain measures and scores Reward factor means a rating-specific plan type under the same parent are publicly available for informational factor added to the contract’s summary organization, CMS assigns Star Ratings purposes; the measures that are or overall ratings (or both) if a contract for the first and second years following presented on the display page are not has both high and stable relative the consolidation based on the used in assigning Part C and D Star performance. enrollment-weighted mean of the Ratings. Statistical significance assesses how measure scores of the surviving and Domain rating means the rating that likely differences observed in consumed contract(s) as provided in groups measures together by dimensions performance are due to random chance paragraph (b)(3)(ii) of this section. of care. alone under the assumption that plans (ii) The Star Ratings posted on Dual-eligible (DE) means a beneficiary are actually performing the same. Medicare Plan Finder for contracts that who is enrolled in both Medicare and Surviving contract means the contact consolidate are as follows: Medicaid. that will still exist under a (A) For the first year after Highest rating means the overall consolidation, and all of the consolidation, CMS will use enrollment- rating for MA–PDs, the Part C summary beneficiaries enrolled in the consumed weighted measure scores using the July rating for MA-only contracts, and the contract(s) are moved to the surviving enrollment of the measurement period Part D summary rating for PDPs. contracts. of the consumed and surviving contracts Highly-rated contract means a Traditional rounding rules mean that for all measures, except the survey- contract that has 4 or more stars for its the last digit in a value will be rounded. based and call center measures. The highest rating when calculated without If rounding to a whole number, look at survey-based measures would use the improvement measures and with all the digit in the first decimal place. If the enrollment of the surviving and applicable adjustments (CAI and the digit in the first decimal place is 0, 1, consumed contracts at the time the reward factor). 2, 3 or 4, then the value should be sample is pulled for the rating year. The

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call center measures would use average measures developed by National feedback on whether to make enrollment during the study period. Committee for Quality Assurance substantive measure updates through (B) For the second year after (NCQA) and the Pharmacy Quality the process described for changes in and consolidation, CMS will use the Alliance (PQA) or endorsed by the adoption of payment and risk enrollment-weighted measure scores National Quality Forum for adoption adjustment policies in section 1853(b) of using the July enrollment of the and use in the Part D Quality Ratings the Act. Once the update has been made measurement year of the consumed and System. CMS may develop its own to the measure specification by the surviving contracts for all measures measures as well when appropriate to measure steward, CMS may continue except those from CAHPS. CMS will measure and reflect performance collection of the performance data for ensure that the CAHPS survey sample specific to the Medicare program. the legacy measure and include it in will include enrollees in the sample (2) In advance of the measurement Star Ratings until the updated measure frame from both the surviving and period, CMS will announce potential has been on display for 2 years. CMS consumed contracts. new measures and solicit feedback will place the updated measure on the (iii) This provision governing the Star through the process described for display page for at least 2 years prior to Ratings of surviving contracts is changes in and adoption of payment using the updated measure to calculate applicable to contract consolidations and risk adjustment policies in section and assign Star Ratings as specified in that are approved on or after January 1, 1853(b) of the Act and then paragraph (c) of this section. 2019. subsequently will propose and finalize (e) Removing measures. (1) CMS will (c) Data sources. (1) Part D Star new measures through rulemaking. remove a measure from the Star Ratings Ratings measures reflect structure, (3) New measures added to the Part D program as follows: process, and outcome indices of quality. Star Ratings program will be on the (i) When the clinical guidelines This includes information of the display page on www.cms.gov for a associated with the specifications of the following types: Beneficiary minimum of 2 years prior to becoming measure change such that the experiences, benefit administration a Star Ratings measure. specifications are no longer believed to information, clinical data, and CMS (4) A measure will remain on the align with positive health outcomes, or administrative data. Data underlying display page for longer than 2 years if (ii) A measure shows low statistical Star Ratings measures may include CMS finds reliability or validity issues reliability. survey data, data separately collected with the measure specification. (2) CMS will announce in advance of and used in oversight of Part D plans’ (d) Updating measures—(1) Non- the measurement period the removal of compliance with contract requirements, substantive updates. For measures that a measure based upon its application of data submitted by plans, and CMS are already used for Star Ratings, CMS this paragraph (e) through the process administrative data. will update measures so long as the described for changes in and adoption (2) Part D sponsors are required to changes in a measure are not of payment and risk adjustment policies collect, analyze, and report data that substantive. CMS will announce non- in section 1853(b) of the Act in advance permit measurements of health substantive updates to measures that of the measurement period. outcomes and other indices of quality. occur (or are announced by the measure (f) Improvement measure. CMS will Part D sponsors must provide unbiased, steward) during or in advance of the calculate improvement measure scores accurate, and complete quality data measurement period through the based on a comparison of the measure described in paragraph (c)(1) of this process described for changes in and scores for the current year to the section to CMS on a timely basis as adoption of payment and risk immediately preceding year as provided requested by CMS. adjustment policies in section 1853(b) of in this paragraph (f); the improvement the Act. Non-substantive measure measure score would be calculated for § 423.184 Adding, updating, and removing specification updates include those Parts C and D separately by taking a measures. that— weighted sum of net improvement (a) General. CMS adds, updates, and (i) Narrow the denominator or divided by the weighted sum of the removes measures used to calculate the population covered by the measure; number of eligible measures. Star Ratings as provided in this section. (ii) Do not meaningfully impact the (1) Identifying eligible measures. CMS lists the measures used for a numerator or denominator of the Annually, the subset of measures to be particular Star Rating each year in the measure; included in the Part D improvement Technical Notes or similar guidance (iii) Update the clinical codes with no measure will be announced through the document with publication of the Star change in the target population or the process described for changes in and Ratings. intent of the measure; adoption of payment and risk (b) Review of data quality. CMS (iv) Provide additional clarifications: adjustment policies in section 1853(b) of reviews the quality of the data on which (A) Adding additional qualifiers that the Act. CMS identifies measures to be performance, scoring and rating of a would meet the numerator used in the improvement measure if the measure is based before using the data requirements; measures meet all the following: to score and rate performance or in (B) Clarifying documentation (i) CMS will include only measures calculating a Star Rating. This includes requirements; available for the current and previous review of variation in scores among MA (C) Adding additional instructions; or year in the improvement measures and organizations and Part D plan sponsors, (v) Add alternative data sources. that have numeric value scores in both and the accuracy, reliability, and (2) Substantive updates. For measures the current and prior year. validity of measures and performance that are already used for Star Ratings, in (ii) CMS will exclude any measure for data before making a final determination the case of measure specification which there was a substantive about inclusion of measures in each updates that are substantive updates not specification change from the previous year’s Star Ratings. subject to paragraph (d)(1) of this year. (c) Adding measures. (1) CMS will section, CMS will propose and finalize (iii) The Part D improvement measure continue to review measures that are these measures through rulemaking will include only Part D measure scores. nationally endorsed and in alignment similar to the process for adding new (2) Determining eligible contracts. with the private sector, such as measures. CMS will initially solicit CMS will calculate an improvement

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score only for contracts that have biased; such determinations may be (H) The projected number of cases not numeric measure scores for both years based on a number of reasons, including forwarded to the IRE in a 3-month in at least half of the measures mishandling of data, inappropriate period is calculated by multiplying the identified for use applying the standards processing, or implementation of number of cases found not to be in paragraphs (f)(1)(i) through (iii) of incorrect practices that have an impact forwarded to the IRE based on the TMP this section. on the accuracy, impartiality, or or audit data by a constant determined (3) Special rules for calculation of the completeness of the data used for one or by the data collection or data sample improvement score. For any measure more specific measure(s). time period. The value of the constant used for the improvement measure for (i) CMS will reduce measures based will be 1.0 for contracts that submitted which a contract received 5 stars in each on data that a Part D organization must 3 months of data; 1.5 for contracts that of the years examined, but for which the submit to CMS under § 423.514 to 1 star submitted 2 months of data; and 3.0 for measure score demonstrates a when a contract did not score at least 95 contracts that submitted 1 month of statistically significant decline based on percent on data validation for the data. the results of the significance testing (at applicable reporting section or was not (I) Contracts are subject to a possible a level of significance of 0.05) on the compliant with CMS data validation reduction due to lack of IRE data change score, the measure will be standards/sub-standards for data completeness if both of the following categorized as having no significant directly used to calculate the associated conditions are met: change and included in the count of measure. (1) The calculated error rate is 20 measures used to determine eligibility (ii) For the appeals measures, CMS percent or more; and for the measure (that is, for the will use statistical criteria to estimate (2) The projected number of cases not denominator of the improvement the percentage of missing data for each forwarded to the IRE is at least 10 in a measure score). contract (using data from multiple 3-month period. (4) Calculation of the improvement sources such as a timeliness monitoring (J) A confidence interval estimate for score. The improvement measure will study or audit information) to scale the the true error rate for the contract is be calculated as follows: star reductions to determine whether calculated using a Score Interval (i) The improvement change score the data at the independent review (Wilson Score Interval) at a confidence (the difference in the measure scores in entity (IRE) are complete. CMS will use level of 95 percent and an associated z the 2-year period) will be determined scaled reductions for the Star Ratings for of 1.959964 for a contract that is subject for each measure that has been the applicable appeals measures to to a possible reduction. designated an improvement measure account for the degree to which the IRE (K) A contract’s lower bound is and for which a contract has a numeric data are missing. compared to the thresholds of the scaled score for each of the 2 years examined. (A) The data submitted for the reductions to determine the IRE data (ii) Each contract’s improvement timeliness monitoring project (TMP) or completeness reduction. change score per measure will be audit that aligns with the Star Ratings (L) The reduction is identified by the categorized as a significant change or year measurement period is used to highest threshold that a contract’s lower not a significant change by employing a determine the scaled reduction. bound exceeds. two-tailed t-test with a level of (B) The determination of the Part C (2) CMS will reduce a measure rating significance of 0.05. appeals measure IRE data reduction is to 1 star for additional concerns that (iii) The net improvement per done independently of the Part D data inaccuracy, incompleteness, or bias measure category (outcome, access, appeals measure IRE data reduction. have an impact on measure scores and patient experience, process) would be (C) The reductions range from a one- are not specified in paragraphs (g)(1)(i) calculated by finding the difference star reduction to a four-star reduction; and (ii) of this section, including a between the weighted number of the most severe reduction for the degree contract’s failure to adhere to CAHPS significantly improved measures and of missing IRE data is a four-star reporting requirements. significantly declined measures, using reduction. the measure weights associated with (D) The thresholds used for § 423.186 Calculation of Star Ratings. each measure category. determining the reduction and the (a) Measure Star Ratings—(1) Cut (iv) The improvement measure score associated appeals measure reduction points. CMS will determine cut points will then be determined by calculating are as follows: for the assignment of a Star Rating for the weighted sum of the net (1) 20 percent, 1 star reduction. each numeric measure score by improvement per measure category (2) 40 percent, 2 star reduction. applying either a clustering or a relative divided by the weighted sum of the (3) 60 percent, 3 star reduction. distribution and significance testing number of eligible measures. (4) 80 percent, 4 star reduction. methodology. For the Part D measures, (v) The improvement measure scores (E) If a contract receives a reduction CMS will determine MA–PD and PDP will be converted to measure-level Star due to missing Part D IRE data, the cut points separately. Ratings by determining the cut points reduction is applied to both of the (2) Clustering algorithm for all using hierarchical clustering algorithms contract’s Part D appeals measures. measures except CAHPS measures. in accordance with § 423.186(a)(2)(i) (F) The scaled reduction is applied (i) The method minimizes differences through (iii). after the calculation for the appeals within star categories and maximizes (vi) The Part D improvement measure measure-level Star Ratings. If the differences across star categories using cut points for MA–PDs and PDPs will be application of the scaled reduction the hierarchical clustering method. determined using separate clustering results in a measure-level star rating less (ii) In cases where multiple clusters algorithms in accordance with than 1 star, the contract will be assigned have the same measure score value §§ 422.166(a)(2)(iii) and 1 star for the appeals measure. range, those clusters would be 423.186(a)(2)(iii). (G) The Part D Calculated Error is combined, leading to fewer than 5 (g) Data integrity. (1) CMS will reduce determined by the quotient of the clusters. a contract’s measure rating when CMS number of untimely cases not auto- (iii) The clustering algorithm for the determines that a contract’s measure forwarded to the IRE and the total improvement measure scores is done in data are inaccurate, incomplete, or number of untimely cases. two steps to determine the cut points for

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the measure-level Star Ratings. national average CAHPS measure score; to 5 (best rating) in whole star Clustering is conducted separately for or increments using traditional rounding improvement measure scores greater (C) Its average CAHPS measure score rules. than or equal to zero and those with is at or above the 60th percentile and (c) Part D summary ratings. (1) CMS improvement measure scores less than lower than the 80th percentile, the will calculate the Part D summary zero. reliability is low, and the score is not ratings using the weighted mean of the (A) Improvement scores of zero or statistically significantly higher than the measure-level Star Ratings for Part D, greater would be assigned at least 3 stars national average CAHPS measure score. weighted in accordance with paragraph for the improvement Star Rating. (iv) A contract is assigned 4 stars if it (e) with an adjustment to reward (B) Improvement scores less than zero does not meet the 5-star criteria and consistently high performance described would be assigned either 1 or 2 stars for meets at least one of these three criteria: and the application of the CAI, under the improvement Star Rating. (A) Its average CAHPS measure score paragraph (f) of this section. (3) Relative distribution and is at or above the 60th percentile and (2)(i) A contract must have scores for significance testing for CAHPS the measure does not have low at least 50 percent of the measures measures. The method combines reliability; or required to be reported for the contract evaluating the relative percentile (B) Its average CAHPS measure score type to have a summary rating distribution with significance testing is at or above the 80th percentile and calculated. and accounts for the reliability of scores the measure has low reliability; or (ii) The Part D improvement measure produced from survey data; no measure (C) Its average CAHPS measure score is not included in the count of the Star Rating is produced if the reliability is statistically significantly higher than minimum number of rated measures. of a CAHPS measure is less than 0.60. the national average CAHPS measure (3) The summary ratings are on a 1 to Low reliability scores are defined as score and above the 30th percentile. 5 star scale ranging from 1 (worst rating) those with at least 11 respondents, (v) A contract is assigned 5 stars if to 5 (best rating) in half-star increments reliability greater than or equal to 0.60 both of the following criteria in using traditional rounding rules. but less than 0.75, and also in the lowest paragraphs (a)(3)(v)(A) and (B) of this (d) Overall MA–PD rating. (1) The 12 percent of contracts ordered by section are met plus at least one of the overall rating for a MA–PD contract will reliability. The following rules apply: criteria in paragraphs (a)(3)(v)(C) or (D) be calculated using a weighted mean of (i) A contract is assigned 1 star if both of this section is met: the Part C and Part D measure-level Star of the criteria in paragraphs (a)(3)(i)(A) (A) Its average CAHPS measure score Ratings, weighted in accordance with and (B) of this section are met plus at is at or above the 80th percentile; and paragraph (e) of this section and with an least one of the criteria in paragraphs (B) Its average CAHPS measure score adjustment to reward consistently high (a)(3)(i)(C) or (D) of this section is met: is statistically significantly higher than performance described and the (A) Its average CAHPS measure score the national average CAHPS measure application of the CAI, under paragraph is lower than the 15th percentile; and score; (f) of this section. (B) Its average CAHPS measure score (C) The reliability is not low; or (2)(i) An MA–PD must have both Part is statistically significantly lower than (D) Its average CAHPS measure score C and Part D summary ratings and the national average CAHPS measure is more than one standard error above scores for at least 50 percent of the score; the 80th percentile. measures required to be reported for the (C) The reliability is not low; or (4) 5-Star Scale. Measure scores are contract type to have the overall rating (D) Its average CAHPS measure score converted to a 5-star scale ranging from calculated. is more than one standard error below 1 (worst rating) to 5 (best rating), with (ii) The Part C and D improvement measures are not included in the count the 15th percentile. whole star increments for the cut points. (ii) A contract is assigned 2 stars if it (b) Domain Star Ratings. (1)(i) CMS of measures needed for the overall does not meet the 1-star criteria and groups measures by domains solely for rating. (iii) Any measures that share the same meets at least one of these three criteria: purposes of public reporting the data on data and are included in both the Part (A) Its average CAHPS measure score Medicare Plan Finder. They are not C and Part D summary ratings will be is lower than the 30th percentile and the used in the calculation of the summary included only once in the calculation measure does not have low reliability; or overall ratings. Domains are used to group measures by dimensions of care for the overall rating. or (iv) The overall rating is on a 1 to 5 (B) Its average CAHPS measure score that together represent a unique and star scale ranging from 1 (worst rating) is lower than the 15th percentile and the important aspect of quality and to 5 (best rating) in half-increments measure has low reliability; or performance. using traditional rounding rules. (C) Its average CAHPS measure score (ii) The 4 domains for the Part D Star (e) Measure weights—(1) General is statistically significantly lower than Ratings are: Drug Plan Customer rules. Subject to paragraphs (e)(2) and the national average CAHPS measure Service; Member Complaints and (3) of this section, CMS will assign score and below the 60th percentile. Changes in the Drug Plan’s Performance; weights to measures based on their (iii) A contract is assigned 3 stars if it Member Experience with the Drug Plan; categorization as follows. meets at least one of these three criteria: and Drug Safety and Accuracy of Drug (i) Improvement measures receive the (A) Its average CAHPS measure score Pricing. highest weight of 5. is at or above the 30th percentile and (2) CMS calculates the domain ratings (ii) Outcome and Intermediate lower than the 60th percentile, and it is as the unweighted mean of the Star outcome measures receive a weight of 3. not statistically significantly different Ratings of the included measures. (iii) Patient experience and complaint from the national average CAHPS (i) A contract must have scores for at measures receive a weight of 2. measure score; or least 50 percent of the measures (iv) Access measures receive a weight (B) Its average CAHPS measure score required to be reported for that contract of 2. is at or above the 15th percentile and type for that domain to have a domain (v) Process measures receive a weight lower than the 30th percentile, the rating calculated. of 1. reliability is low, and the score is not (ii) The domain ratings are on a 1 to (2) Rules for new measures. New statistically significantly lower than the 5 star scale ranging from 1 (worst rating) measures to the Star Ratings program

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will receive a weight of 1 for their first 84th percentiles), or other (below the LIS at any time during the applicable year in the Star Ratings program. In 65th percentile). measurement period. Disability status is subsequent years, the measure will be (iii) The combination of the relative determined using the variable original assigned the weight associated with its variance and relative mean is used to reason for entitlement (OREC) for category. determine the reward factor to be added Medicare using the information from the (3) Special rule for Puerto Rico. to the contract’s summary and overall Social Security Administration and Contracts that have service areas that are ratings as follows: Railroad Retirement Board record wholly located in Puerto Rico will (A) A contract with low variance and systems. receive a weight of zero for the Part D a high mean will have a reward factor (C) A MA–PD contract may be adherence measures for the summary equal to 0.4. adjusted up to three times with the CAI: and overall rating calculations and will (B) A contract with medium variance One for the overall Star Rating and one have a weight of 3 for the adherence and a high mean will have a reward for each of the summary ratings (Part C measures for the improvement measure factor equal to 0.3. and Part D). calculations. (C) A contract with low variance and (D) A PDP contract may be adjusted (f) Completing the Part D summary a relatively high mean will have a only once for the CAI for the Part D and overall rating calculations. CMS reward factor equal to 0.2. summary rating. (D) A contract with medium variance will adjust the summary and overall (E) The CAI values are rounded and and a relatively high mean will have a rating calculations to take into account displayed with 6 decimal places. reward factor equal to 0.1. the reward factor (if applicable) and the (ii) In determining the CAI values, a (E) A contract with all other categorical adjustment index (CAI) as measure will be excluded from combinations of variance and relative provided in this paragraph (f). adjustment if the measure meets any of mean will have a reward factor equal to (1) Reward factor. This rating-specific the following: 0.0. (A) The measure is already case-mix factor is added to both the summary and (iv) The reward factor is determined overall ratings of contracts that qualify adjusted for socioeconomic status. and applied before application of the (B) The focus of the measurement is for the reward factor based on both high CAI adjustment under paragraph (f)(2) not a beneficiary-level issue but rather and stable relative performance for the of this section; the reward factor is a plan or provider-level issue. rating level. based on unadjusted scores. (C) The measure is scheduled to be (i) The contract’s performance will be (2) Categorical adjustment index. retired or revised. assessed using its weighted mean and CMS applies the categorical adjustment (D) The measure is applicable only to its ranking relative to all rated contracts index (CAI) as provided in this SNPs. in the rating level (overall for MA–PDs paragraph(f)(2) to adjust for the average (iii) The Star Ratings measures that and Part D summary for MA–PDs and within-contract disparity in remain after the exclusion criteria, PDPs) for the same Star Ratings year. performance associated with the paragraph (f)(2)(ii) of this section, have The contract’s stability of performance percentages of beneficiaries who receive been applied will be adjusted for the will be assessed using the weighted a low income subsidy or are dual determination of the CAI. CMS will variance and its ranking relative to all eligible (LIS/DE) or have disability announce the measures identified for rated contracts in the rating type status. The factor is calculated as the adjustment in the calculations of the (overall for MA–PDs and Part D mean difference in the adjusted and CAI under this paragraph (f)(2) through summary for MA–PDs and PDPs). The unadjusted ratings (overall, Part D for the process described for changes in and weighted mean and weighted variance MA–PDs, Part D for PDPs) of the adoption of payment and risk are compared separately for MA–PD and contracts that lie within each final adjustment policies in section 1853(b) of standalone Part D contracts (PDPs). The adjustment category for each rating type. the Act. measure weights are specified in (i) The CAI is added to or subtracted (iv) The adjusted measures scores for paragraph (e) of this section. Since from the contract’s overall and summary the selected measures are determined highly-rated contracts may have the ratings and is applied after the reward using the results from regression models improvement measure(s) excluded in factor adjustment (if applicable). of beneficiary level measure scores that the determination of their final highest (A) The adjustment factor is adjust for the average within-contract rating, each contract’s weighted monotonic (that is, as the proportion of difference in measure scores for MA or variance and weighted mean will be LIS/DE and disabled increases in a PDP contracts. calculated both with and without the contract, the adjustment factor increases (A) A logistic regression model with improvement measures. For an MA– in at least one of the dimensions) and contract fixed effects and beneficiary PD’s Part C and D summary ratings, its varies by a contract’s categorization into level indicators of LIS/DE and disability ranking is relative to all other contracts’ a final adjustment category that is status is used for the adjustment. weighted variance and weighted mean determined by a contract’s proportion of (B) The adjusted measure scores are for the rating type (Part C summary, Part LIS/DE and disabled beneficiaries. converted to a measure-level Star Rating D summary) with the improvement (B) To determine a contract’s final using the measure thresholds for the measure. adjustment category, contract Star Ratings year that corresponds to the (ii) Relative performance of the enrollment is determined using measurement period of the data weighted variance (or weighted variance enrollment data for the month of employed for the CAI determination. ranking) will be categorized as being December for the measurement period (v) The rating-specific CAI values will high (at or above 70th percentile), of the Star Ratings year. The count of be determined using the mean medium (between the 30th and 69th beneficiaries for a contract is restricted differences between the adjusted and percentile) or low (below the 30th to beneficiaries that are alive for part or unadjusted Star Ratings (overall, Part D percentile). Relative performance of the all of the month of December of the summary for MA–PDs and Part D weighted mean (or weighted mean applicable measurement year. A summary for PDPs) in each final ranking) will be categorized as being beneficiary is categorized as LIS/DE if adjustment category. high (at or above the 85th percentile), the beneficiary was designated as full or (A) For the annual development of the relatively high (between the 65th and partially dually eligible or receiving a CAI, the distribution of the percentages

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for LIS/DE and disabled (using the calculations twice for the highest rating (in Medicare Plan Finder) for Medicare enrollment data that parallels the for each contract-type (overall rating for health and prescription drug plans with previous Star Ratings year’s data) would MA–PD contracts and Part D summary the low performing icon; beneficiaries be examined to determine the number of rating for PDPs), with all applicable will be directed to contact the plan equal-sized initial groups for each adjustments (CAI and the reward factor), directly to enroll in the low-performing attribute (LIS/DE and disabled). once including the improvement plan. (B) The initial categories are created measure(s) and once without including (2) Plan preview of the Star Ratings. using all groups formed by the initial the improvement measure(s). In CMS will have plan preview periods LIS/DE and disabled groups. deciding whether to include the before each Star Ratings release during (C) The mean difference between the improvement measures in a contract’s which Part D plan sponsors can preview adjusted and unadjusted summary or highest rating, CMS applies the their Star Ratings data in HPMS prior to overall ratings per initial category following rules: display on the Medicare Plan Finder. would be calculated and examined. The (i) If the highest rating for each ■ 67. Section 423.265 is amended by initial categories would then be contract-type is 4 stars or more without revising paragraph (b)(2) to read as collapsed to form the final adjustment the use of the improvement measure(s) follows. categories. The collapsing of the initial and with all applicable adjustments categories to form the final adjustment (CAI and the reward factor), a § 423.265 Submission of bids and related categories would be done to enforce comparison of the highest rating with information. monotonicity in at least one dimension and without the improvement * * * * * (LIS/DE or disabled). measure(s) is done. The higher rating is (b) * * * (D) The mean difference within each used for the rating. (2) Substantial differences between final adjustment category by rating-type (ii) If the highest rating is less than 4 bids—(i) General rule. Except as (overall, Part D for MA–PD, and Part D stars without the use of the provided in paragraph (b)(2)(ii) of this for PDPs) would be the CAI values for improvement measure(s) and with all section, potential Part D sponsors’ bid the next Star Ratings year. applicable adjustments (CAI and the submissions must reflect differences in (vi) CMS develops the model for the reward factor), the rating will be benefit packages or plan costs that CMS modified contract-level LIS/DE calculated with the improvement determines to represent substantial percentage for Puerto Rico using the measure(s). differences relative to a sponsor’s other following sources of information: (2) The Part D summary rating for bid submissions. In order to be (A) The most recent data available at MA–PDs will include the Part D considered ‘‘substantially different,’’ the time of the development of the improvement measure. each bid must be significantly different model of both 1-year American (h) Posting and display of ratings. For from the sponsor’s other bids with Community Survey (ACS) estimates for all ratings at the measure, domain, respect to beneficiary out-of-pocket the percentage of people living below summary and overall level, posting and costs or formulary structures. the Federal Poverty Level (FPL) and the display of the ratings is based on there (ii) Exception. A potential Part D ACS 5-year estimates for the percentage being sufficient data to calculate and sponsor’s enhanced bid submission of people living below 150 percent of assign ratings. If a contract does not does not have to reflect the substantial the FPL. The data to develop the model have sufficient data to calculate a rating, differences as required in paragraph will be limited to the 10 states, drawn the posting and display would be the (b)(2)(i) of this section relative to any of from the 50 states plus the District of flag ‘‘Not enough data available.’’ If the its other enhanced bid submissions. Columbia with the highest proportion of measurement period is prior to one year * * * * * people living below the FPL, as past the contract’s effective date, the identified by the 1-year ACS estimates. posting and display would be the flag ■ 68. Section 423.272 is amended by (B) The Medicare enrollment data ‘‘Plan too new to be measured’’. revising paragraph (b)(3)(ii) to read as from the same measurement period as (1) Medicare Plan Finder performance follows: icons. Icons are displayed on Medicare the Star Rating’s year. The Medicare § 423.272 Review and negotiation of bid enrollment data would be aggregated Plan Finder to note performance as and approval of plans submitted by from MA contracts that had at least 90 provided in this paragraph (h)(1): potential Part D sponsors. (i) High-performing icon. The high percent of their enrolled beneficiaries * * * * * with mailing addresses in the 10 highest performing icon is assigned to a Part D plan sponsor for achieving a 5-star Part (b) * * * poverty states. (3) * * * (vii) A linear regression model is D summary rating and an MA–PD (ii) Transition period for PDP developed to estimate the percentage of contract for a 5-star overall rating. sponsors with new acquisitions. After a LIS/DE for a contacts that solely serve (ii) Low-performing icon. (A) A 2-year transition period, as determined the population of beneficiaries in Puerto contract receives a low performing icon by CMS, CMS approves a bid offered by Rico. as a result of its performance on the Part (A) The maximum value for the C or Part D summary ratings. The low a PDP sponsor (or by a parent modified LIS/DE indicator value per performing icon is calculated by organization to that PDP sponsor) that contract would be capped at 100 evaluating the Part C and Part D recently purchased (or otherwise percent. summary ratings for the current year acquired or merged with) another Part D (B) All estimated modified LIS/DE and the past 2 years. If the contract had sponsor if it finds that the benefit values for Puerto Rico would be any combination of Part C or Part D package or plan costs represented by rounded to 6 decimal places when summary ratings of 2.5 or lower in all that bid are substantially different from expressed as a percentage. 3 years of data, it is marked with a low benefit packages or plan costs (C) The model’s coefficient and performing icon. A contract must have represented by another bid submitted by intercept are updated annually and a rating in either Part C or Part D for all the same Part D sponsor (or parent published in the Technical Notes. 3 years to be considered for this icon. organization to that Part D sponsor), as (g) Applying the improvement (B) CMS may disable the Medicare provided under § 423.265(b)(2). measure scores. (1) CMS runs the Plan Finder online enrollment function * * * * *

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§ 423.503 [Amended] (26) Maintain a Part D summary plan ■ 75. Section 423.558 is amended by ■ 69. Section 423.503 is amended in rating score of at least 3 stars under the adding paragraph (a)(4) to read as paragraphs (b)(1) and (2) by removing 5-star rating system specified in subpart follows: 186 of this part 423. A Part D summary the phrase ‘‘14 months’’ and adding in § 423.558 Scope. its place ‘‘12 months’’ each time it plan rating is calculated as provided in appears. § 423.186. (a) * * * (4) Review of at-risk determinations ■ 70. Section 423.504 is amended by * * * * * made under a drug management revising paragraphs (b)(4)(ii) and § 423.507 [Amended] program in accordance with (b)(4)(vi)(C) to read as follows. ■ 72. Section 423.507 is amended by § 423.153(f). § 423.504 General provisions. removing and reserving paragraph (b). * * * * * * * * * * ■ 73. Section 423.508 is amended by ■ 76. Section 423.560 is amended by— (b) * * * revising paragraph (a) to read as follows: ■ a. Revising the definition of ‘‘Appeal’’; (4) * * * ■ b. Adding the definition of ‘‘At-risk (ii) Personnel and systems sufficient § 423.508 Modification or termination of determination’’ in alphabetical order; for the Part D plan sponsor to organize, contract by mutual consent. ■ c. Revising the definitions of implement, control, and evaluate (a) General rule. A contract may be ‘‘Grievance’’, ‘‘Reconsideration’’, and financial and communication activities, modified or terminated at any time by ‘‘Redetermination’’; and the furnishing of prescription drug written mutual consent. If the PDP ■ d. Adding the definition of ‘‘Specialty services, the quality assurance, medical sponsor submits a request to end the tier’’ in alphabetical order. therapy management, and drug and or term of its contract after the deadline The revisions and additions read as utilization management programs, and provided in § 423.507(a)(2)(i), the follows: the administrative and management contract may be terminated by mutual aspects of the organization. consent in accordance with paragraphs § 423.560 Definitions. * * * * * (b) through (f) of this section. CMS may * * * * * (vi) * * * mutually consent to the contract Appeal means any of the procedures (C)(1) Each Part D plan sponsor must termination if the contract termination that deal with the review of adverse establish and implement effective does not negatively affect the coverage determinations made by the training and education for its administration of the Medicare Part D Part D plan sponsor on the benefits compliance officer and organization program. under a Part D plan the enrollee believes employees, the Part D sponsor’s chief * * * * * he or she is entitled to receive, executive and other senior including delay in providing or ■ administrators, managers and governing 74. Section 423.509 is amended by approving the drug coverage (when a body members. revising paragraph (a)(4)(v)(A) and delay would adversely affect the health (2) Such training and education must adding paragraphs (a)(4)(xiii) and (xiv) of the enrollee), or on any amounts the occur at a minimum annually and must and (b)(1)(v) to read as follows: enrollee must pay for the drug coverage, be made a part of the orientation for a § 423.509 Termination of contract by CMS. as defined in § 423.566(b). Appeal also new employee, and new appointment to includes the review of at-risk (a) * * * a chief executive, manager, or governing determinations made under a drug (4) * * * body member. management program in accordance * * * * * (v) * * * with § 423.153(f). These procedures ■ 71. Section 423.505 is amended— (A) Requirements in subpart V of this include redeterminations by the Part D ■ a. By revising paragraph (b)(18); part. plan sponsor, reconsiderations by the ■ b. In paragraph (b)(25), by removing * * * * * independent review entity, ALJ the word ‘‘marketing’’ and adding in its (xiii) The Part D plan sponsor has hearings, reviews by the Medicare place the word ‘‘communication’’; and committed any of the acts in § 423.752 Appeals Council (Council), and judicial ■ c. By revising paragraph (b)(26). that support the imposition of reviews. The revisions read as follows: intermediate sanctions or civil money At-risk determination means a § 423.505 Contract provisions. penalties under § 423.750. decision made under a plan sponsor’s * * * * * (xiv) Following the issuance of a drug management program in (b) * * * notice to the sponsor no later than accordance with § 423.153(f) that (18) To agree to have a standard August 1, CMS must terminate, effective involves the identification of an contract with reasonable and relevant December 31 of the same year, an individual as an at-risk beneficiary for terms and conditions of participation individual PDP if that plan does not prescription drug abuse; a limitation, or whereby any willing pharmacy may have a sufficient number of enrollees to the continuation of a limitation, on an access the standard contract and establish that it is a viable independent at-risk beneficiary’s access to coverage participate as a network pharmacy plan option. for frequently abused drugs (that is, a including all of the following: (b) * * * beneficiary specific point-of-sale edit or (i) Making standard contracts (1) * * * the selection of a prescriber and/or available upon request from interested (v) In the event that CMS issues a pharmacy and implementation of lock- pharmacies no later than September 15 termination notice to a Part D plan in, or); and information sharing for of each year for contracts effective sponsor on or before August 1 with an subsequent plan enrollments. January 1 of the following year. effective date of the following December * * * * * (ii) Providing a copy of a standard 31, the Part D plan sponsor must issue Grievance means any complaint or contract to a requesting pharmacy notification to its Medicare enrollees at dispute, other than one that involves a within 7 business days after receiving least 90 days prior to the effective date coverage determination or at-risk such a request from the pharmacy. of the termination. determination, expressing * * * * * * * * * * dissatisfaction with any aspect of the

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operations, activities, or behavior of a coverage determination or at-risk enrollee’s condition is medically Part D plan sponsor, regardless of determination, the right to a necessary, consistent with the whether remedial action is requested. reconsideration or expedited physician’s or other prescriber’s * * * * * reconsideration by an independent statement under paragraph (a)(4) of this Reconsideration means a review of an review entity (IRE) contracted by CMS, section. adverse coverage determination or at- as specified in § 423.600. (1) The tiering exceptions procedures risk determination by an independent (iv) If the IRE affirms the plan’s must address situations where a review entity (IRE), the evidence and adverse coverage determination or at- formulary’s tiering structure changes findings upon which it was based, and risk determination, in whole or in part, during the year and an enrollee is using any other evidence the enrollee submits the right to an ALJ hearing if the amount a drug affected by the change. or the IRE obtains. in controversy meets the requirements (2) Part D plan sponsors must Redetermination means a review of an in § 423.1970. establish criteria that provide for a adverse coverage determination or at- (v) If the ALJ or attorney adjudicator tiering exception, consistent with risk determination by a Part D plan affirms the IRE’s adverse coverage paragraphs (a)(3) through (6) of this sponsor, the evidence and findings determination or at-risk determination, section. upon which it is based, and any other in whole or in part, the right to request * * * * * evidence the enrollee submits or the Council review of the ALJ’s or attorney (4) A prescribing physician or other Part D plan sponsor obtains. adjudicator’s decision, as specified in prescriber must provide an oral or Specialty tier means a formulary cost- § 423.1974. written supporting statement that the sharing tier dedicated to very high cost (vi) If the Council affirms the ALJ’s or preferred drug(s) for the treatment of the Part D drugs and biological products attorney adjudicator’s adverse coverage enrollee’s condition— that exceed a cost threshold established determination or at-risk determination, * * * * * by the Secretary. in whole or in part, the right to judicial (5) If the physician or other prescriber ■ 77. Section 423.562 is amended by review of the decision if the amount in provides an oral supporting statement, revising paragraph (a)(1)(ii), adding controversy meets the requirements in the Part D plan sponsor may require the paragraph (a)(1)(v), and revising § 423.1976. physician or other prescriber to paragraph (b)(4) to read as follows: * * * * * subsequently provide a written supporting statement. The Part D plan ■ 78. Section 423.564 is amended by § 423.562 General provisions. sponsor may require the prescribing revising paragraph (b) to read as follows: (a) * * * physician or other prescriber to provide (1) * * * § 423.564 Grievance procedures. additional supporting medical (ii) Use a single, uniform exceptions * * * * * documentation as part of the written and appeals process which includes (b) Distinguished from appeals. follow-up. procedures for accepting oral and Grievance procedures are separate and (6) Limitations on tiering exceptions: written requests for coverage distinct from appeal procedures, which A Part D plan sponsor is permitted to determinations and redeterminations address coverage determinations as design its tiering exceptions procedures that are in accordance with defined in § 423.566(b) and at-risk such that an exception is not approvable § 423.128(b)(7) and (d)(1)(iv). determinations made under a drug in the following circumstances: (i) To cover a brand name drug, as management program in accordance * * * * * defined in § 423.4, at a preferred cost- with § 423.153(f). Upon receiving a (v) If the Part D plan sponsor has sharing level that applies only to complaint, a Part D plan sponsor must established a drug management program alternative drugs that are— under § 423.153(f), appeal procedures promptly determine and inform the (A) Generic drugs, for which an that meet the requirements of this enrollee whether the complaint is application is approved under section subpart for issues that involve at-risk subject to its grievance procedures or its 505(j) of the Federal Food, Drug, and determinations.). Determinations made appeal procedures. Cosmetic Act; or in accordance with the processes at * * * * * (B) Authorized generic drugs as § 423.153(f) are collectively referred to ■ 79. Section 423.578 is amended by— defined in section 505(t)(3) of the as an at-risk determination, defined at ■ a. Revising paragraphs (a) Federal Food, Drug, and Cosmetic Act. § 423.560, made under a drug introductory text, (a)(1), (2), (4) (ii) To cover a biological product management program. introductory text, (5) and (6); licensed under section 351 of the Public * * * * * ■ b. Removing paragraph (a)(7); and Health Service Act at a preferred cost- (b) * * * ■ c. Revising paragraph (c)(3). sharing level that does not contain any (4) If dissatisfied with any part of a The revisions read as follows: alternative drug(s) that are biological coverage determination or an at-risk products. determination under a drug § 423.578 Exceptions process. (iii) If a Part D plan sponsor maintains management program in accordance (a) Requests for exceptions to a plan’s a specialty tier, as defined in § 423.560, with § 423.153(f), all of the following tiered cost-sharing structure. Each Part the sponsor may design its exception appeal rights: D plan sponsor that provides process so that Part D drugs and (i) The right to a redetermination of prescription drug benefits for Part D biological products on the specialty tier the adverse coverage determination or drugs and manages this benefit through are not eligible for a tiering exception. at-risk determination by the Part D plan the use of a tiered formulary must * * * * * sponsor, as specified in § 423.580. establish and maintain reasonable and (c) * * * (ii) The right to request an expedited complete exceptions procedures subject (3) When a tiering exceptions request redetermination, as provided under to CMS’ approval for this type of is approved. Whenever an exceptions § 423.584. coverage determination. The Part D plan request made under paragraph (a) of this (iii) If, as a result of the sponsor grants an exception whenever it section is approved— redetermination, a Part D plan sponsor determines that the requested non- (i) The Part D plan sponsor may not affirms, in whole or in part, its adverse preferred drug for treatment of the require the enrollee to request approval

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for a refill, or a new prescription to sponsor may adopt a policy for § 423.636(a)(2)) no later than 14 continue using the Part D prescription accepting oral requests. calendar days from the date it receives drug after the refills for the initial (b) Timeframe for filing a request. the request for redetermination. prescription are exhausted, as long as— Except as provided in paragraph (c) of (2) If the Part D plan sponsor affirms, (A) The enrollee’s prescribing this section, a request for a in whole or in part, its adverse coverage physician or other prescriber continues redetermination must be filed within 60 determination, it must notify the to prescribe the drug; calendar days from the date of the enrollee in writing of its (B) The drug continues to be notice of the coverage determination or redetermination no later than 14 considered safe for treating the the at-risk determination under a drug calendar days from the date it receives enrollee’s disease or medical condition; management program in accordance the request for redetermination. and with § 423.153(f). * * * * * (C) The enrollment period has not * * * * * (f) Who must conduct the review of an expired. If an enrollee renews his or her adverse coverage determination or at- membership after the plan year, the plan ■ 82. Section 423.584 is amended by risk determination. (1) A person or may choose to continue coverage into revising paragraph (a) to read as follows: persons who were not involved in the subsequent plan year. § 423.584 Expediting certain making the coverage determination or (ii) The Part D plan sponsor must redeterminations. provide coverage for the approved an at-risk determination under a drug prescription drug at the cost-sharing (a) Who may request an expedited management program in accordance level that applies to preferred redetermination. An enrollee or an with § 423.153(f) must conduct the alternative drugs. If the plan’s formulary enrollee’s prescribing physician or other redetermination. contains alternative drugs on multiple prescriber may request that a Part D * * * * * tiers, cost-sharing must be assigned at plan sponsor expedite a redetermination (g) * * * the lowest applicable tier, under the that involves the issues specified in (3) * * * requirements in paragraph (a) of this § 423.566(b) or an at-risk determination (i) For adverse drug coverage section. made under a drug management redeterminations, or redeterminations program in accordance with * * * * * related to a drug management program § 423.153(f). (This does not include in accordance with § 423.153(f), ■ 80. Section 423.580 is revised to read requests for payment of drugs already describe both the standard and as follows: furnished.) expedited reconsideration processes, § 423.580 Right to a redetermination. * * * * * including the enrollee’s right to, and An enrollee who has received a ■ 83. Section 423.590 is amended by conditions for, obtaining an expedited coverage determination (including one revising paragraphs (a), (b)(1) and (2), reconsideration and the rest of the that is reopened and revised as the paragraph (f) subject heading, and appeals process; described in § 423.1978) or an at-risk paragraphs (f)(1) and (g)(3)(i) to read as * * * * * determination under a drug follows: ■ 84. Section 423.602 is amended by management program in accordance revising paragraph (b)(2) to read as with § 423.153(f) may request that it be § 423.590 Timeframes and responsibility for making redeterminations. follows: redetermined under the procedures described in § 423.582, which address (a) Standard redetermination— § 423.602 Notice of reconsideration requests for a standard redetermination. request for covered drug benefits or determination by the independent review The prescribing physician or other review of an at-risk determination. (1) If entity. prescriber (acting on behalf of an the Part D plan sponsor makes a * * * * * enrollee), upon providing notice to the redetermination that is completely (b) * * * enrollee, may request a standard favorable to the enrollee, the Part D plan (2) If the reconsideration redetermination under the procedures sponsor must notify the enrollee in determination is adverse (that is, does described in § 423.582. An enrollee or writing of its redetermination (and not completely reverse the adverse an enrollee’s prescribing physician or effectuate it in accordance with coverage determination or other prescriber (acting on behalf of an § 423.636(a)(1) or (3) as expeditiously as redetermination by the Part D plan enrollee) may request an expedited the enrollee’s health condition requires, sponsor), inform the enrollee of his or redetermination as specified in but no later than 7 calendar days from her right to an ALJ hearing if the amount § 423.584. the date it receives the request for a in controversy meets the threshold ■ 81. Section 423.582 is amended by standard redetermination. requirement under § 423.1970; revising paragraphs (a) and (b) to read (2) If the Part D plan sponsor makes * * * * * as follows: a redetermination that affirms, in whole ■ 85. Section 423.636 is amended by or in part, its adverse coverage revising paragraph (a)(2) and adding § 423.582 Request for a standard determination or at-risk determination, redetermination. paragraphs (a)(3) and (b)(3) to read as it must notify the enrollee in writing of follows: (a) Method and place for filing a its redetermination as expeditiously as request. An enrollee or an enrollee’s the enrollee’s health condition requires, § 423.636 How a Part D plan sponsor must prescribing physician or other but no later than 7 calendar days from effectuate standard redeterminations, prescriber (acting on behalf of the the date it receives the request for a reconsiderations, or decisions. enrollee) must ask for a redetermination standard redetermination. (a) * * * by making a written request with the (b) * * * (2) Requests for payment. If, on Part D plan sponsor that made the (1) If the Part D plan sponsor makes redetermination of a request for coverage determination or the at-risk a redetermination that is completely payment, the Part D plan sponsor determination under a drug favorable to the enrollee, the Part D plan reverses its coverage determination, the management program in accordance sponsor must issue its redetermination Part D plan sponsor must authorize with § 423.153(f). The Part D plan (and effectuate it in accordance with payment for the benefit within 14

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calendar days from the date it receives expedited redetermination for benefits ■ 90. Section § 423.756 is amended by the request for redetermination, and by the Part D plan sponsor is reversed revising paragraph (c)(3)(ii) introductory make payment no later than 30 calendar in whole or in part by the independent text to read as follows: days after the date the plan sponsor review entity, or at a higher level of receives the request for redetermination. appeal, the Part D plan sponsor must § 423.756 Procedures for imposing (3) Review of an at-risk determination. intermediate sanctions and civil money authorize or provide the benefit under penalties. If, on redetermination of an at-risk dispute as expeditiously as the determination made under a drug enrollee’s health condition requires but * * * * * management program in accordance no later than 24 hours from the date it (c) * * * with § 423.153(f), the Part D plan receives notice reversing the (3) * * * sponsor reverses its at-risk determination. The Part D plan sponsor (ii) In instances where intermediate determination, the Part D plan sponsor must inform the independent review sanctions have been imposed, CMS may must implement the change to the at- entity that the Part D plan sponsor has require a Part D plan sponsor to market risk determination as expeditiously as effectuated the decision. or to accept enrollments or both for a the enrollee’s health condition requires, (2) Review of an at-risk determination. limited period of time in order to assist but no later than 7 calendar days from If the expedited redetermination of an CMS in making a determination as to the date it receives the request for at-risk determination made under a drug whether the deficiencies that are the redetermination. management program in accordance bases for the intermediate sanctions (b) * * * with § 423.153(f) by the Part D plan have been corrected and are not likely (3) Review of an at-risk determination. sponsor is reversed in whole or in part to recur. If, on appeal of an at-risk determination by the independent review entity, or at * * * * * made under a drug management a higher level of appeal, the Part D plan ■ 91. Section 423.782 is amended by program in accordance with sponsor must implement the change to § 423.153(f), the determination by the revising paragraphs (a)(2)(iii)(A) and the at-risk determination as (b)(3) to read as follows: Part D plan sponsor is reversed in whole expeditiously as the enrollee’s health or in part by the independent review condition requires but no later than 24 § 423.782 Cost-sharing subsidy. entity, or at a higher level of appeal, the hours from the date it receives notice (a) * * * Part D plan sponsor must implement the reversing the determination. The Part D (2) * * * change to the at-risk determination plan sponsor must inform the (iii) * * * within 72 hours from the date it receives independent review entity that the Part notice reversing the determination. The (A) A copayment amount of not more D plan sponsor has effectuated the than $1 for a generic drug, biological Part D plan sponsor must inform the decision. independent review entity that the Part product for which an application under D plan sponsor has effectuated the § 423.652 [Amended] section 351(k) of the Public Health decision. ■ Service Act (42 U.S.C. 262(k)) is 87. Section 423.652 is amended in approved, or preferred drugs that are ■ 86. Section 423.638 is revised to read paragraph (b)(1) by removing the phrase multiple source (as defined under as follows: ‘‘July 15’’ and adding in its place section 1927(k)(7)(A)(i) of the Act) or $3 ‘‘September 1’’. § 423.638 How a Part D plan sponsor must for any other drug in 2006, or for years effectuate expedited redeterminations or ■ 88. Section 423.750 is amended by after 2006 the amounts specified in this reconsiderations. revising paragraph (a)(3) to read as paragraph (a)(2)(iii)(A) for the (a) Reversals by the Part D plan follows: percentage increase in the Consumer sponsor—(1) Requests for benefits. If, on § 423.750 Types of intermediate sanctions Price Index, rounded to the nearest an expedited redetermination of a and civil money penalties. multiple of 5 cents or 10 cents, request for benefits, the Part D plan (a) * * * respectively; or sponsor reverses its coverage (3) Suspension of communication * * * * * determination, the Part D plan sponsor activities to Medicare beneficiaries by a (b) * * * must authorize or provide the benefit Part D plan sponsor, as defined by CMS. (3) For covered Part D drugs above the under dispute as expeditiously as the out-of-pocket limit (under enrollee’s health condition requires, but * * * * * ■ 89. Section 423.752 is amended by § 423.104(d)(5)(iii)) in 2006, copayments no later than 72 hours after the date the not to exceed $2 for a generic drug, Part D plan sponsor receives the request revising paragraphs (a)(9) and (b) to read as follows: biological product for which an for redetermination. application under section 351(k) of the (2) Review of an at-risk determination. § 423.752 Basis for imposing intermediate Public Health Service Act (42 U.S.C. If, on an expedited redetermination of sanctions and civil money penalties. 262(k)) is approved, or preferred drugs an at-risk determination made under a that are multiple source drugs (as drug management program in (a) * * * (9) Fails to comply with defined under section 1927(k)(7)(A)(i) of accordance with § 423.153(f), the Part D communication restrictions described in the Act) and $5 for any other drug. For plan sponsor reverses its at-risk subpart V of this part or applicable years beginning in 2007, the amounts determination, the Part D plan sponsor implementing guidance. specified in this paragraph (b)(3) for the must implement the change to the at- previous years increased by the annual risk determination as expeditiously as * * * * * (b) Suspension of enrollment and percentage increase in average per the enrollee’s health condition requires, capita aggregate expenditures for but no later than 72 hours after the date communications. If CMS makes a determination that could lead to a covered Part D drugs, rounded to the the Part D plan sponsor receives the nearest multiple of 5 cents. request for redetermination. contract termination under § 423.509(a), (b) Reversals other than by the Part D CMS may impose the intermediate * * * * * plan sponsor—(1) Requests for benefits. sanctions at § 423.750(a)(1) and (3). ■ 92. Section 423.1970 is amended by If the expedited determination or * * * * * revising paragraph (b) to read as follows:

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§ 423.1970 Right to an ALJ hearing. place the phrase ‘‘the coverage determination or at-risk determination * * * * * determination or at-risk determination, considered’’. (b) Calculating the amount in redetermination,’’. § 423.2126 [Amended] controversy in specific circumstances. § 423.2036 [Amended] (1) If the basis for the appeal is the ■ 103. Section 423.2126 is amended in refusal by the Part D plan sponsor to ■ 97. Section 423.2036 is amended in paragraph (b) by removing the phrase provide drug benefits, CMS uses the paragraph (e) by removing the phrase ‘‘a ‘‘coverage determination to be projected value of those benefits to coverage determination’’ and adding in considered in the appeal’’ and adding in compute the amount remaining in its place the phrase ‘‘a coverage its place the phrase ‘‘coverage controversy. The projected value of a determination or at-risk determination’’. determination or at-risk determination Part D drug or drugs must include any to be considered in the appeal’’. § 423.2038 [Amended] costs the enrollee could incur based on the number of refills prescribed for the ■ 98. Section 423.2038 is amended in Subpart V—Part D Communication drug(s) in dispute during the plan year. paragraph (c) by removing the phrase Requirements (2) If the basis for the appeal is an at- ‘‘may be made, and’’ and adding in its ■ 104. The subpart V heading is revised risk determination made under a drug place the phrase ‘‘may be made, or an to read as set forth above. management program in accordance enrollee’s at-risk determination should ■ 105. Section 423.2260 is revised to with § 423.153(f), CMS uses the be reversed, and’’. read as follows: projected value of the drugs subject to § 423.2046 [Amended] the drug management program to § 423.2260 Definitions. compute the amount remaining in ■ 99. Section 423.2046 is amended in As used in this subpart— controversy. The projected value of the paragraph (a)(1)(iii) by removing the Communications means activities and drugs subject to the drug management phrase ‘‘the coverage determination’’ use of materials to provide information program shall include the value of any and adding in its place the phrase ‘‘the to current and prospective enrollees. refills prescribed for the drug(s) in coverage determination or at-risk Communication materials means all dispute during the plan year. determination’’. information provided to current and prospective enrollees. Marketing * * * * * § 423.2056 [Amended] materials are a subset of communication § 423.2018 [Amended] ■ 100. Section 423.2056 is amended— materials. ■ 93. Section 423.2018 is amended— ■ a. In paragraph (a)(1) by removing the Marketing means activities and use of ■ a. In paragraph (a)(1), by removing the phrase ‘‘appealed coverage materials that meet the following: phrase ‘‘appealed coverage determination’’ and adding in its place (1) Conducted by the Part D sponsor determination was made’’ and adding in the phrase ‘‘appealed coverage or downstream entities. its place the phrase ‘‘appealed coverage determination or at-risk determination’’, (2) Intended to draw a beneficiary’s determination or at-risk determination and attention to a Part D plan or plans. was made’’; and ■ b. In paragraph (e) by removing the (3) Intended to influence a ■ b. In paragraph (a)(2), by removing the phrase ‘‘the coverage determination to beneficiary’s decision-making process phrase ‘‘after the coverage be considered in the appeal’’ and adding when selecting a Part D plan for determination to be considered’’ and in its place ‘‘the coverage determination enrollment or deciding to stay enrolled adding in its place the phrase ‘‘after the or at-risk determination to be in a plan (that is, retention-based coverage determination or at-risk considered in the appeal’’. marketing). Marketing materials—(1) Include, but determination to be considered’’. § 423.2062 [Amended] are not limited to following: (i) Materials such as brochures; § 423.2020 [Amended] ■ 101. Section 423.2062 is amended in posters; advertisements in media such ■ paragraph (b) by removing the phrase 94. Section 423.2020 is amended in as newspapers, magazines, television, ‘‘coverage determination being paragraph (c)(1) by removing the phrase radio, billboards, or the internet; and considered and does not have ‘‘the coverage determination, and’’ and social media content. precedential effect’’ and adding in its adding in its place the phrase ‘‘the (ii) Materials used by marketing place the phrase ‘‘coverage coverage determination or at-risk representatives such as scripts or determination or at-risk determination determination, and’’. outlines for telemarketing or other being considered and does not have § 423.2022 [Amended] presentations. precedential effect’’. (iii) Presentation materials such as ■ 95. Section 423.2022 is amended by— § 423.2122 [Amended] slides and charts. ■ a. Removing the first appearance of (2) Materials that do not include the the paragraph (b) subject heading and ■ 102. Section 423.2122 is amended— following are not considered marketing paragraph (b)(1) introductory text; and ■ a. In paragraph (a)(1) by removing the materials:— ■ b. In paragraph (b)(1)(i) by removing phrase ‘‘the coverage determination.’’ (i) Information about the plan’s the phrase ‘‘the coverage determination, and adding in its place the phrase ‘‘the benefit structure or cost sharing; redetermination,’’ and adding in its coverage determination or at-risk (ii) Information about measuring or place the phrase ‘‘the coverage determination’’; ranking standards (for example, star determination or at-risk determination, ■ b. In paragraph (a)(3) by removing the ratings); redetermination,’’. phrase ‘‘a coverage determination is (iii) Mention benefits or cost sharing, made’’ and adding in its place ‘‘a but do not meet the definition of § 423.2032 [Amended] coverage determination or at-risk marketing in this section ■ 96. Section 423.2032 is amended in determination is made’’ and by (iv) Unless otherwise specified by paragraph (a) by removing the phrase removing the phrase ‘‘after the coverage CMS based on their use or purpose, ‘‘the coverage determination, determination considered’’ and adding materials that are required under redetermination,’’ and adding in its in its place ‘‘after the coverage § 423.128; or

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(v) Any materials specifically recommends that the beneficiary enroll other areas where health care is designated by CMS as not meeting the in the Part D plan. It may explain that delivered to individuals, except in the definition of the proposed marketing the organization is approved for case where such activities are definition based on their use or purpose. participation in Medicare. conducted in common areas in health ■ 106. Section 423.2262 is amended by (4) Employ Part D plan names that care settings. revising paragraph (d) to read as suggest that a plan is not available to all (8) Conduct sales presentations or follows: Medicare beneficiaries. distribute and accept plan applications (5) Display the names and/or logos of at educational events. § 423.2262 Review and distribution of co-branded network providers or (9) Display the names and/or logos of marketing materials. pharmacies on the sponsor’s member provider co-branding partners on (d) Enrollee communication identification card, unless the names, marketing materials, unless the materials. Enrollee communication and/or logos are related to the member materials clearly indicate that other materials may be reviewed by CMS and selection of specific provider providers are available in the network. CMS may determine, upon review of organizations (for example, physicians, (10) Knowingly target or send such materials, that the materials must hospitals). unsolicited marketing materials to any be modified, or may no longer be used. (6) Use a plan name that does not Part D enrollee, whose prior year ■ 107. Section 423.2264 is revised to include the plan type. The plan type enrollment was in an MA plan, during read as follows: should be included at the end of the the Open Enrollment Period. plan name. (11) Engage in any other marketing § 423.2264 Guidelines for CMS review. (7) For markets with a significant non- activity prohibited by CMS in its In reviewing marketing material or English speaking population, provide marketing guidance. election forms under § 423.2262, CMS vital materials, unless in the language of (12) Engage in any discriminatory determines that the materials— these individuals. Specifically, Part D activity such as attempting to recruit (a) Provide to Medicare beneficiaries sponsors must translate materials into Medicare beneficiaries from higher interested in enrolling, adequate written any non-English language that is the income areas without making description of rules (including any primary language of at least 5 percent of comparable efforts to enroll Medicare limitations on the providers from whom the individuals in a plan benefit beneficiaries from lower income areas. services can be obtained), procedures, package (PBP) service area. (13) Solicit door-to-door for Medicare basic benefits and services, and fees and (b) In marketing, Part D sponsors may beneficiaries or through other other charges in a format (and, where not do any of the following: unsolicited means of direct contact, appropriate, print size) and using (1) Provide cash or other monetary including calling a beneficiary without standard terminology that may be rebates as an inducement for enrollment the beneficiary initiating the contact. (14) Use providers or provider groups specified by CMS. or otherwise. (b) Notify the general public of its (2) Offer gifts to potential enrollees, to distribute printed information enrollment period in an appropriate unless the gifts are of nominal (as comparing the benefits of different health plans unless the providers, manner, through appropriate media, defined in the CMS Marketing provider groups, or pharmacies accept throughout its service area. Guidelines) value, are offered to all (c) Include in written materials notice potential enrollees without regard to and display materials from all health that the Part D sponsor is authorized by whether or not the beneficiary enrolls, plans with which the providers, law to refuse to renew its contract with and are not in the form of cash or other provider groups, or pharmacies contract. The use of publicly available CMS, that CMS also may refuse to monetary rebates. comparison information is permitted if renew the contract, and that termination (3) Market non-health care/non- approved by CMS in accordance with or non-renewal may result in prescription drug plan related products the Medicare marketing guidance. termination of the beneficiary’s to prospective enrollees during any Part D sales activity or presentation. This is (15) Provide meals to potential enrollment in the Part D plan. In enrollees, which is prohibited, considered cross-selling and is addition, the Part D plan may reduce its regardless of value. service area and no longer be offered in prohibited. the area where a beneficiary resides. (4) Market any health care related § 423.2272 [Amended] product during a marketing (d) Ensure that materials are not ■ 109. Section 423.2272 is amended by appointment beyond the scope agreed materially inaccurate or misleading or removing paragraph (e). otherwise make material upon by the beneficiary, and misrepresentations. documented by the plan, prior to the § 423.2274 [Amended] ■ 108. Section 423.2268 is revised to appointment. ■ 110. Section 423.2274 is amended— read as follows: (5) Market additional health related ■ a. By redesignating paragraph lines of plan business not identified (b)(1)(iii) as paragraph (b)(1)(iv); § 423.2268 Standards for Part D Sponsor prior to an individual appointment ■ b. By redesignating paragraph communications and marketing. without a separate scope of appointment (b)(2)(iii) as paragraph (b)(1)(iii); (a) In conducting communication identifying the additional lines of ■ c. By removing paragraph (b)(2); activities, Part D sponsors may not do business to be discussed. ■ d. By redesignating paragraphs (b)(3) any of the following: (6) Distribute marketing materials for and (4) as paragraphs (b)(2) and (3); (1) Provide information that is which, before expiration of the 45-day ■ e. In newly redesignated paragraph inaccurate or misleading. period, the Part D sponsor receives from (b)(2)(ii)(A) by removing the reference (2) Engage in activities that could CMS written notice of disapproval ‘‘paragraph (b)(3)(iii)’’ and adding in its mislead or confuse Medicare because it is inaccurate or misleading, place the reference :paragraph beneficiaries, or misrepresent the Part D or misrepresents the Part D sponsor, its (b)(2)(iii)’’; and sponsor. marketing representatives, or CMS. ■ f. In newly redesignated paragraph (3) Claim the Part D sponsor is (7) Conduct sales presentations or (b)(2)(iii), by removing the phrase ‘‘from recommended or endorsed by CMS or distribute and accept Part D plan an MA plan,’’ and adding the phrase Medicare or that CMS or Medicare enrollment forms in provider offices or ‘‘from a Part D sponsor,’’ in its place.

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§ 423.2410 [Amended] (ii) Fraud reduction activities, PART 460—PROGRAMS OF ALL- ■ 111. Section 423.2410 is amended in including fraud prevention, fraud INCLUSIVE CARE FOR THE ELDERLY paragraph (a) by removing the phrase detection, and fraud recovery. (PACE) ‘‘an MLR’’ and adding in its place the * * * * * ■ phrase ‘‘the information required under ■ 117. The authority citation for part 114. Section 423.2460 is revised to 460 continues to read as follows: § 423.2460’’. read as follows: Authority: Secs. 1102, 1871, 1894(f), and § 423.2420 [Amended] § 423.2460 Reporting requirements. 1934(f) of the Social Security Act (42 U.S.C. ■ 112. Section 423.2420 is amended— (a) For each contract year, from 2014 1302, 1395, 1395eee(f), and 1396u–4(f)). ■ a. By removing and reserving through 2017, each Part D sponsor must ■ 118. Section 460.40 is amended by paragraph (b)(2)(viii); submit to CMS, in a timeframe and revising paragraph (j) to read as follows: ■ b. By revising paragraph (d)(2)(i); and manner specified by CMS, a report that ■ c. By removing the first paragraph § 460.40 Violations for which CMS may includes but is not limited to the data impose sanctions. designated as (d)(2)(ii). needed by the Part D sponsor to The revision reads as follows: calculate and verify the MLR and * * * * * remittance amount, if any, for each (j) Makes payment to any individual § 423.2420 Calculation of medical loss or entity that is included on the ratio. contract, under this part, such as incurred claims, total revenue, preclusion list, defined in § 422.2 of this * * * * * chapter. (d) * * * expenditures on quality improving ■ (2) activities, non-claims costs, taxes, 119. Section 460.50 is amended by (i) Allocation to each category must be licensing and regulatory fees, and any revising paragraph (b)(1)(ii) to read as based on a generally accepted remittance owed to CMS under follows: accounting method that is expected to § 423.2410. § 460.50 Termination of PACE program yield the most accurate results. Specific (b) For contract year 2018 and for agreement. identification of an expense with an each subsequent contract year, each Part * * * * * activity that is represented by one of the D sponsor must submit to CMS, in a (b) * * * categories in paragraph (b) or (c) of this timeframe and manner specified by (1) * * * section will generally be the most CMS, the following information: (ii) The PACE organization failed to accurate method. (1) Fully credible and partially comply substantially with conditions * * * * * credible contracts. For each contract for a PACE program or PACE ■ 113. Section 423.2430 is amended— under this part that has fully credible or organization under this part, or with ■ a. By redesignating paragraphs (a) partially credible experience, as terms of its PACE program agreement, introductory text and paragraphs (a)(1) determined in accordance with including making payment to an and (2) as paragraphs (a)(1), (2), and (3), § 423.2440(d), the Part D sponsor must individual or entity that is included on respectively; report to CMS the MLR for the contract the preclusion list, defined in § 422.2 of ■ b. By republishing the paragraph (a) and the amount of any remittance owed this chapter. subject heading and revising newly to CMS under § 423.2410. * * * * * redesignated paragraph (a)(1); (2) Non-credible contracts. For each ■ c. By adding paragraph (a)(4); contract under this part that has non- § 460.68 [Amended] ■ d. In paragraph (b)(1), by removing the credible experience, as determined in ■ word ‘‘costs’’ and adding in its place the 120. Section 460.68 is amended by accordance with § 423.2440(d), the Part removing paragraph (a)(4). phrase ‘‘costs other than those that are D sponsor must report to CMS that the related to fraud reduction’’; contract is non-credible. § 460.70 [Amended] ■ e. In paragraph (b)(5), by adding the (c) Total revenue included as part of phrase ‘‘(and that are not related to ■ 121. Section 460.70 is amended by the MLR calculation must be net of all removing paragraph (b)(1)(iv). fraud reduction activities under projected reconciliations. paragraph (a)(4)(ii) of this section)’’ after (d) The MLR is reported once, and is § 460.71 [Amended] ‘‘capabilities’’; and ■ not reopened as a result of any payment ■ 122. Section 460.71 is amended by f. By removing and reserving reconciliation processes. paragraph (b)(8). removing paragraph (b)(7). The revisions and additions read as § 423.2480 [Amended] ■ 123. Section 460.86 is revised to read follows: as follows: ■ 115. Section 423.2480 is amended— § 423.2430 Activities that improve health ■ a. In the introductory text, by § 460.86 Payment to individuals and care quality. removing the phrase ‘‘reviews of reports entities excluded by the OIG or included on (a) Activity requirements. (1) submitted’’ and adding in its place the preclusion list. Activities conducted by a Part D ‘‘review of data submitted’’; and (a) A PACE organization may not pay, sponsor to improve quality must ■ b. In paragraph (d) introductory text, directly or indirectly, on any basis, for either— by removing the phrase ‘‘Reports items or services (other than emergency (i) Fall into one of the categories in submitted under’’ and adding in its or urgently needed services as defined paragraph (a)(2) of this section and meet place the phrase ‘‘Data submitted in § 460.100) furnished to a Medicare all of the requirements in paragraph under’’. enrollee by any individual or entity that (a)(3) of this section; or is excluded by the OIG or is included on § 423.2490 [Amended] (ii) Be listed in paragraph (a)(4) of this the preclusion list, defined in § 422.2 of section. ■ 116. Section 423.2490 is amended in this chapter. * * * * * paragraph (a) by removing the phrase (b) If a PACE organization receives a (4)(i) Medication Therapy ‘‘information contained in reports request for payment by, or on behalf of, Management Programs meeting the submitted’’ and adding in its place the an individual or entity that is excluded requirements of § 423.153(d). phrase ‘‘information submitted’’. by the OIG or is included on the

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preclusion list, defined in § 422.2 of this ■ 125. Section 498.3 is amended by (2) If CMS or the individual or entity chapter, the PACE organization must adding paragraph (b)(20) to read as under paragraph (n)(1) of this section is notify the enrollee and the excluded follows: dissatisfied with a reconsidered individual or entity or the individual or determination under paragraph (n)(1) of entity that is included on the preclusion § 498.3 Scope and applicability. this section, or a revised reconsidered list in writing, as directed by contract or * * * * * determination under § 498.30, CMS or other direction provided by CMS, that (b) * * * the individual or entity is entitled to a payments will not be made. Payment (20) An individual or entity is to be hearing before an ALJ. may not be made to, or on behalf of, an included on the preclusion list as (3) If CMS or the individual or entity individual or entity that is excluded by defined in § 422.2 or § 423.100 of this under paragraph (n)(2) of this section is the OIG or is included on the preclusion chapter. dissatisfied with a hearing decision as list. * * * * * described in paragraph (n)(2) of this section, CMS or the individual or entity PART 498—APPEALS PROCEDURES ■ 126. Section 498.5 is amended by may request Board review and the FOR DETERMINATIONS THAT AFFECT adding paragraph (n) to read as follows: individual or entity has a right to seek PARTICIPATION IN THE MEDICARE judicial review of the Board’s decision. PROGRAM AND FOR § 498.5 Appeal rights. DETERMINATIONS THAT AFFECT THE * * * * * Dated: March 29, 2018. PARTICIPATION OF ICFs/IID AND (n) Appeal rights of individuals and Seema Verma, CERTAIN NFs IN THE MEDICAID entities on preclusion list. (1) Any Administrator, Centers for Medicare & PROGRAM individual or entity that is dissatisfied Medicaid Services. with an initial determination or revised Dated: April 2, 2018. ■ 124. The authority citation for part initial determination that they are to be Alex M. Azar II, 498 continues to read as follows: included on the preclusion list (as Secretary, Department of Health and Human Authority: Secs. 1102, 1128I and 1871 of defined in § 422.2 or § 423.100 of this Services. the Social Security Act (42 U.S.C. 1302, chapter) may request a reconsideration [FR Doc. 2018–07179 Filed 4–6–18; 4:15 pm] 1320a–7j, and 1395hh). in accordance with § 498.22(a). BILLING CODE 4120–01–P

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