Federal Register/Vol. 82, No. 227/Tuesday, November 28, 2017/Proposed Rules

56336 Federal Register / Vol. 82, No. 227 / Tuesday, November 28, 2017 / Proposed Rules

DEPARTMENT OF HEALTH AND Please allow sufficient time for mailed Inspection of Public Comments: All HUMAN SERVICES comments to be received before the comments received before the close of close of the comment period. the comment period are available for Centers for Medicare & Medicaid 3. By express or overnight mail. You viewing by the public, including any Services may send written comments to the personally identifiable or confidential following address ONLY: Centers for business information that is included in 42 CFR Parts 405, 417, 422, 423, and Medicare & Medicaid Services, a comment. We post all comments 498 Department of Health and Human received before the close of the [CMS–4182–P] Services, Attention: CMS–4182–P, Mail comment period on the following Web Stop C4–26–05, 7500 Security site as soon as possible after they have RIN 0938–AT08 Boulevard, Baltimore, MD 21244–1850. been received: http:// 4. By hand or courier. Alternatively, www.regulations.gov. Follow the search Medicare Program; Contract Year 2019 you may deliver (by hand or courier) instructions on that Web site to view Policy and Technical Changes to the your written comments ONLY to the public comments. Medicare Advantage, Medicare Cost following addresses prior to the close of Comments received timely will also Plan, Medicare Fee-for-Service, the the comment period: be available for public inspection as Medicare Prescription Drug Benefit a. For delivery in Washington, DC— they are received, generally beginning Programs, and the PACE Program Centers for Medicare & Medicaid approximately 3 weeks after publication AGENCY: Centers for Medicare & Services, Department of Health and of a document, at the headquarters of Medicaid Services (CMS), HHS. Human Services, Room 445–G, Hubert the Centers for Medicare & Medicaid Services, 7500 Security Boulevard, ACTION: Proposed rule. H. Humphrey Building, 200 Independence Avenue SW., Baltimore, Maryland 21244, Monday SUMMARY: This proposed rule would Washington, DC 20201. through Friday of each week from 8:30 revise the Medicare Advantage program (Because access to the interior of the a.m. to 4 p.m. To schedule an (Part C) regulations and Prescription Hubert H. Humphrey Building is not appointment to view public comments, Drug Benefit program (Part D) readily available to persons without phone 1–800–743–3951. regulations to implement certain Federal government identification, Table of Contents provisions of the Comprehensive commenters are encouraged to leave Addiction and Recovery Act (CARA) their comments in the CMS drop slots I. Executive Summary and the 21st Century Cures Act; located in the main lobby of the A. Purpose B. Summary of the Major Provisions improve program quality, accessibility, building. A stamp-in clock is available 1. Implementation of the Comprehensive and affordability; improve the CMS for persons wishing to retain a proof of Addiction and Recovery Act of 2016 customer experience; address program filing by stamping in and retaining an (CARA) Provisions integrity policies related to payments extra copy of the comments being filed.) 2. Updating the Part D E-Prescribing based on prescriber, provider and b. For delivery in Baltimore, MD— Standards (§ 423.160) supplier status in Medicare Advantage, Centers for Medicare & Medicaid 3. Revisions to Timing and Method of Medicare cost plan, Medicare Part D and Services, Department of Health and Disclosure Requirements 4. Preclusion List the PACE programs; provide a proposed Human Services, 7500 Security a. Part D update to the official Medicare Part D Boulevard, Baltimore, MD 21244–1850. b. Part C electronic prescribing standards; and If you intend to deliver your C. Summary of Costs and Benefits clarify program requirements and comments to the Baltimore address, call II. Provisions of the Proposed Regulations certain technical changes regarding telephone number (410) 786–7195 in A. Supporting Innovative Approaches to treatment of Medicare Part A and Part advance to schedule your arrival with Improving Quality, Accessibility, and B appeal rights related to premiums one of our staff members. Affordability Comments erroneously mailed to the 1. Implementation of the Comprehensive adjustments. Addiction and Recovery Act of 2016 DATES: To be assured consideration, addresses indicated as appropriate for (CARA) Provisions comments must be received at one of hand or courier delivery may be delayed a. Medicare Part D Drug Management the addresses provided below, no later and received after the comment period. Programs than 5 p.m. on January 16, 2018. For information on viewing public b. Stakeholder Input Informing This Notice comments, see the beginning of the of Proposed Rulemaking ADDRESSES: In commenting, please refer SUPPLEMENTARY INFORMATION section. c. Integration of CARA and the Current Part to file code CMS–4182–P. Because of D Opioid DUR Policy and OMS staff and resource limitations, we cannot FOR FURTHER INFORMATION CONTACT: (1) Current Part D Opioid DUR Policy and accept comments by facsimile (FAX) Theresa Wachter, (410) 786–1157, OMS transmission. Part C Issues. (2) Proposed Requirements for Part D Drug You may submit comments in one of Marie Manteuffel, (410) 786–3447, Management Programs (§§ 423.100, four ways (please choose only one of the Part D Issues. 423.153) (i) Definitions (§ 423.100) ways listed): Kristy Nishimoto, (206) 615–2367, Beneficiary Enrollment and Appeals (A) Definition of ‘‘Potential At-Risk 1. Electronically. You may submit Beneficiary’’ and ‘‘At-Risk Beneficiary’’ electronic comments on this regulation Issues. (§ 423.100) to http://www.regulations.gov. Follow Raghav Aggarwal, (410) 786–0097, (B) Definition of ‘‘Frequently Abused the ‘‘Submit a comment’’ instructions. Part C and D Payment Issues. Drug’’, ‘‘Clinical Guidelines’’, ‘‘Program 2. By regular mail. You may mail Vernisha Robinson-Savoy, (267) 970– Size’’, and ‘‘Exempted Beneficiary’’ written comments to the following 2395, Part C and D Compliance Issues. (§ 423.100) address ONLY: Centers for Medicare & Frank Whelan, (410) 786–1302, (ii) Requirements of Drug Management Programs (§§ 423.153, 423.153(f))) Medicaid Services, Department of Preclusion List Issues. Shelly Winston, (410) 786–3694, Part (iii) Written Policies and Procedures Health and Human Services, Attention: (§ 423.153(f)(1)) CMS–4182–P, P.O. Box 8013, Baltimore, D E-Prescribing Program. (iv) Case Management/Clinical Contact/ MD 21244–8013. SUPPLEMENTARY INFORMATION: Prescriber Verification (§ 423.153(f)(2))

VerDate Sep<11>2014 20:14 Nov 27, 2017 Jkt 244001 PO 00000 Frm 00002 Fmt 4701 Sfmt 4702 E:\FR\FM\28NOP2.SGM 28NOP2 sradovich on DSK3GMQ082PROD with PROPOSALS2 Federal Register / Vol. 82, No. 227 / Tuesday, November 28, 2017 / Proposed Rules 56337

(v) Limitations on Access to Coverage for 8. Passive Enrollment Flexibilities To B. Improving the CMS Customer Frequently Abused Drugs Protect Continuity of Integrated Care for Experience (§ 423.153(f)(3)) Dually Eligible Beneficiaries (§ 422.60(g)) 1. Restoration of the Medicare Advantage (vi) Requirements for Limiting Access to 9. Part D Tiering Exceptions (§§ 423.560, Open Enrollment Period (§§ 422.60, Coverage for Frequently Abused Drugs 423.578(a) and (c)) 422.62, 422.68, 423.38, and 423.40) (§ 423.153(f)(4)) a. Background 2. Reducing the Burden of the Compliance (vii) Beneficiary Notices and Limitation of b. General Rules Program Training Requirements the Special Enrollment Period c. Limitations on Tiering Exceptions (§§ 422.503 and 423.504) (§§ 423.153(f)(5), 423.153(f)(6), 423.38) d. Alternative Drugs for Treatment of the 3. Medicare Advantage Plan Minimum (A) Initial Notice to Beneficiary and Enrollee’s Condition Enrollment Waiver (§ 422.514(b)) Sponsor Intent To Implement Limitation e. Approval of Tiering Exception Requests 4. Revisions to Timing and Method of on Access to Coverage for Frequently f. Additional Technical Changes and Disclosure Requirements (§§ 422.111 and Abused Drugs (§ 423.153(f)(5)) Corrections 423.128) (B) Limitation on the Special Enrollment 10. Establishing Limitations for the Part D 5. Revisions to Parts 422 and 423, Subpart Period for LIS Beneficiaries With an At- Special Election Period (SEP) for Dually V, Communication/Marketing Materials Risk Status (§ 423.38) Eligible Beneficiaries (§ 423.38) and Activities (C) Second Notice to Beneficiary and 11. Medicare Advantage and Part D a. Revising the Scope of Subpart V To Sponsor Implementation of Limitation Prescription Drug Plan Quality Rating Include Communications and on Access to Coverage for Frequently System Communications Materials Abused Drugs by Sponsor a. Introduction b. Amending the Regulatory Definition of (§ 423.153(f)(6)) b. Background Marketing and Marketing Materials (D) Alternate Second Notice When Limit c. Basis, Purpose and Applicability of the c. Prohibition of Marketing During the To Access to Coverage for Frequently Quality Star Ratings System Open Enrollment Period Abused Drugs by Sponsor Will Not d. Definitions d. Technical Changes to Other Regulatory Occur (§ 423.153(f)(7)) e. Contract Ratings Provisions as a Result of the Changes to (E) Timing of Notices (§ 423.153(f)(8)) f. Contract Consolidations Subpart V (F) Exceptions to Timing of the Notices g. Data Sources 6. Lengthening Adjudication Timeframes (§ 423.153(f)(8)) h. Adding, Updating, and Removing for Part D Payment Redeterminations (viii) Provisions Specific to Limitation on Measures and IRE Reconsiderations (§§ 423.590 Access to Coverage of Frequently Abused i. Measure Set for Performance Periods and 423.636) Beginning on or After January 1, 2019 Drugs to Selected Pharmacies and 7. Elimination of Medicare Advantage Plan j. Improvement Measures Prescribers (§ 423.153(f)(4) and (f)(9) Notice for Cases Sent to the IRE k. Data Integrity Through (13)) (§ 422.590) l. Measure-Level Star Ratings (A) Special Requirement To Limit Access 8. E-Prescribing and the Part D Prescription m. Hierarchical Structure of the Ratings to Coverage of Frequently Abused Drugs Drug Program; Updating Part D E- n. Domain Star Ratings to Selected Prescriber(s) (§ 423.153(f)(4)) o. Part C and D Summary Ratings Prescribing Standards (B) Selection of Pharmacies and Prescribers p. Overall Rating a. Legislative Background (§ 423.153(f)(9) Through (13)) q. Measure Weights b. Regulatory History (1) Beneficiary Preferences (§ 423.153(f)(9)) r. Application of the Improvement Measure c. Proposed Adoption of NCPDP SCRIPT (2) Exception to Beneficiary Preferences Scores Version 2017071 as the Official Part D E- (§ 423.153(f)(10)) s. Reward Factor (Formerly Referred to as Prescribing Standard, Retirement of (3) Reasonable Access (§§ 423.100, Integration Factor) NCPDP SCRIPT 10.6, Implementing 423.153(f)(11), 423.153(f)(12)) t. Categorical Adjustment Index Related Conforming Changes Elsewhere (4) Confirmation of Pharmacy and u. High and Low Performing Icons in § 423.160 and Correction of a Prescriber Selection (§ 423.153(f)(13)) v. Plan Preview of Star Ratings Typographical Error Which Occurred (ix) Drug Management Program Appeals w. Technical Changes When NCPDP SCRIPT 10.6 Was Initially (§§ 423.558, 423.560, 423.562, 423.564, 12. Any Willing Pharmacy Standards Adopted 423.580, 423.582, 423.584, 423.590, Terms and Conditions and Better Define 9. Reduction of Past Performance Review 423.602, 423.636, 423.638, 423.1970, Pharmacy Types (§§ 423.100, 423.505) Period for Applications Submitted by 423.2018, 423.2020, 423.2022, 423.2032, a. Any Willing Pharmacy Required for All Current Medicare Contracting 423.2036, 423.2038, 423.2046, 423.2056, Pharmacy Business Models Organizations (§§ 422.502 and 423.503) 423.2062, 423.2122, and 423.2126) b. Revise the Definition of Retail Pharmacy 10. Part D Prescriber Preclusion List (x) Termination of a Beneficiary’s Potential and To Add a Definition of Mail-Order a. Background At-Risk or At-Risk Status Pharmacy (1) 2014 Final Rule (§ 423.153(f)(14)) c. Treatment of Accreditation and Other (2) 2015 Interim Final Rule (xi) Data Disclosure and Sharing of Similar Any Willing Pharmacy (3) Preparations for Enforcement of Information for Subsequent Sponsor Requirements in Standard Terms and Prescriber Enrollment Requirement Enrollments (§ 423.153(f)(15)) Conditions b. Proposed Provisions (xii) Summary d. Timing of Contracting Requirements (1) Prescriber NPI Validation on Part D 2. Flexibility in the Medicare Advantage 13. Changes to the Days’ Supply Required Claims Uniformity Requirements by the Part D Transition Process (a) Provisions of § 423.120(c)(5) 3. Segment Benefits Flexibility 14. Expedited Substitutions of Certain (b) Medicare Access and CHIP 4. Maximum Out-of-Pocket Limit for Generics and Other Midyear Formulary Reauthorization Act of 2015 (MACRA) Medicare Parts A and B Services Changes (§§ 423.100, 423.120, and (i) Preclusion List (§§ 422.100 and 422.101) 423.128) (b) Replacement of Enrollment 5. Cost Sharing Limits for Medicare Parts 15. Treatment of Follow-On Biological Requirement With Preclusion List A and B Services (§§ 417.454 and Products as Generics for Non-LIS Requirement 422.100) Catastrophic and LIS Cost Sharing (ii) Updates to Preclusion List 6. Meaningful Differences in Medicare 16. Eliminating the Requirement To (3) Provisional Coverage Advantage Bid Submissions and Bid Provide PDP Enhanced Alternative (EA) (4) Appeals Review (§§ 422.254 and 422.256) to EA Plan Offerings With Meaningful c. Specific Regulatory Changes 7. Coordination of Enrollment and Differences (§ 423.265) 11. Part C/Medicare Advantage Cost Plan Disenrollment Through MA 17. Request for Information Regarding the and PACE Preclusion List (§ 422.224) Organizations and Effective Dates of Application of Manufacturer Rebates and 12. Removal of Quality Improvement Coverage and Change of Coverage Pharmacy Price Concessions to Drug Project for Medicare Advantage (§§ 422.66 and 422.68) Prices at the Point of Sale Organizations (§ 422.152)

VerDate Sep<11>2014 20:14 Nov 27, 2017 Jkt 244001 PO 00000 Frm 00003 Fmt 4701 Sfmt 4702 E:\FR\FM\28NOP2.SGM 28NOP2 sradovich on DSK3GMQ082PROD with PROPOSALS2 56338 Federal Register / Vol. 82, No. 227 / Tuesday, November 28, 2017 / Proposed Rules

13. Reducing Provider Burden—Comment 7. ICRs Regarding the Medicare Advantage Changes (§§ 423.100, 423.120, and Solicitation Plan Minimum Enrollment Waiver 423.128) C. Implementing Other Changes (§ 422.514(b)) D. Expected Benefits 1. Reducing the Burden of the Medicare 8. ICRs Regarding Revisions to Parts 422 E. Alternatives Considered Part C and Part D Medical Loss Ratio and 423, Subpart V, Communication/ F. Accounting Statement and Table Requirements (§§ 422.2420 and Marketing Materials and Activities G. Conclusion 423.2430) 9. ICRs Regarding Medical Loss Ratio a. Background Reporting Requirements (§§ 422.2460 Acronyms b. Proposed Regulatory Changes to the and 423.2460) ACA Affordable Care Act Calculation of the Medical Loss Ratio 10. ICRs Regarding Establishing ACS American Community Survey (§§ 422.2420, 422.2430, 423.2420, and Limitations for the Part D Special AEP Annual Election Period 423.2430) Enrollment Period for Dual Eligible ANDA Abbreviated New Drug Application (1) Fraud Reduction Activities Beneficiaries (§ 423.38(c)(4)) ANOC Annual Notice of Change (§§ 422.2420, 422.2430, 423.2420, and 11. ICRs Regarding Expedited Substitutions AMA American Medical Association 423.2430) of Certain Generics and Other Midyear AO Accrediting Organization (2) Medication Therapy Management Formulary Changes (§§ 423.100, 423.120, ASPE Office of the Assistant Secretary for (MTM) (§§ 422.2430 and 423.2430) and 423.128) Planning and Evaluation (3) Additional Technical Changes to 12. ICRs Related to Preclusion List AWP Any Willing Pharmacy Calculation of the Medical Loss Ratio Requirements for Prescribers in Part D CAI Categorical Adjustment Index and Individuals and Entities in Medicare (§§ 422.2420 and 423.2420) CARA Comprehensive Addiction and Advantage, Cost Plans and PACE c. Proposed Regulatory Changes to Recovery Act 13. ICRs Regarding the Part D Tiering Medicare MLR Reporting Requirements CCIP Chronic Care Improvement Program Exceptions (§§ 423.560, 423.578(a), and (§§ 422.2460 and 423.2460) CMS Centers for Medicare & Medicaid (c)) d. Proposed Technical Changes to Services 14. ICRs Regarding the Implementation of Medicare MLR Review and Non- CPT Current Procedural Terminology the Comprehensive Addiction and Compliance and the Release of MLR Data DAB Departmental Appeals Board Recovery Act of 2016 (CARA) Provisions (§§ 422.2410, 422.2480, 422.2490, DE Dual Eligible (§§ 423.38 and 423.153(f)) 423.2410, 423.2480, and 423.2490) DIR Direct or Indirect Remuneration 2. Medicare Advantage Contract Provisions IV. Regulatory Impact Analysis A. Statement of Need DME Durable Medical Equipment (§ 422.504) DSMO Designated Standards Maintenance 3. Late Contract Non-Renewal Notifications B. Overall Impact C. Anticipated Effects Organization (§§ 422.506, 422.508, and 423.508) 1. CARA Provisions D–SNP Dual-Eligible Special Needs Plan 4. Contract Request for a Hearing 2. Reducing the Burden of the Compliance EDM Enhanced Disease Management (§§ 422.664(b) and 423.652(b)) Program Training Requirements EHR Electronic Health Record 5. Physician Incentive Plans—Update Stop- (§§ 422.503 and 423.504) EOC Evidence of Coverage Loss Protection Requirements (§ 422.208) 3. Meaningful Differences in Medicare EP Eligible Professionals 6. Changes to the Agent/Broker Advantage Bid Submissions and Bid FFS Fee-for-Service Compensation Requirements Review (§§ 422.254 and 422.256) ePA Electronic Prior Authorization (§§ 422.2274 and 423.2274) 4. Physician Incentive Plans—Update Stop- eRx Electronic Prescription (e-prescribing) 7. Changes to the Agent/Broker Loss Protection Requirements (§ 422.208) FDA Food and Drug Administration Requirements (§§ 422.2272(e) and 5. Changes to the Agent/Broker FIDE Fully Integrated Dual Eligible 423.2272(e)) Requirements (§§ 422.2272(e) and FMV Fair Market Value 8. Codification of Certain Medicare 423.2272(e)) FPL Federal Poverty Level Premium Adjustments as Initial 6. Coordination of Enrollment and HPMS Health Plan Management System Determinations (§ 405.924) Disenrollment Through MA ICD–10 ICD–10–CM 9. Eliminate Use of the Term ‘‘Non- Organizations and Effective Dates of IRE Independent Review Entity Renewal’’ To Refer to a CMS-Initiated Coverage and Change of Coverage LIS Low Income Subsidy Termination (§§ 422.506, 422.510, 7. Lengthening Adjudication Timeframes LPPO Local Preferred Provider 423.507, and 423.509) for Part D Payment Redeterminations Organization III. Collection of Information Requirements and IRE Reconsiderations LTC Long Term Care A. Wages 8. Elimination of Medicare Advantage Plan MA Medicare Advantage B. Proposed Information Collection Notice for Cases Sent to the IRE MADP Medicare Advantage Disenrollment Requirements (ICRs) 9. Medicare Advantage and Prescription Period 1. ICRs Regarding Passive Enrollment Drug Plan Quality Rating System MA–PD Medicare Advantage Prescription Flexibilities To Protect Continuity of 10. Changes to the Days’ Supply Required Drug Integrated Care for Dually Eligible by the Part D Transition Process MAO Medicare Advantage Organizations Beneficiaries (§ 422.60(g)) 11. Treatment of Follow-On Biological MIPPA Medicare Improvements for Patients 2. ICRs Regarding Restoration of the Products as Generics for Non-LIS and Providers Act Medicare Advantage Open Enrollment Catastrophic and LIS Catastrophic Cost MLR Medical Loss Ratio Period (§§ 422.60, 422.62, 422.68, Sharing MOOP Maximum Out-of-Pocket 423.38, and 423.40) 12. Eliminating the Requirement To NCPDP National Council of Prescription 3. ICRs Regarding Coordination of Provide PDP Enhanced Alternative (EA) Drug Programs Enrollment and Disenrollment Through to EA Plan Offerings With Meaningful NCQA National Committee for Quality MA Organizations and Effective Dates of Differences (§ 423.265) Assurance Coverage and Change of Coverage 13. Removal of Quality Improvement NDC National Drug Code (§§ 422.66 and 422.68) Project for Medicare Advantage NSO National Standard Organization 4. ICRs Regarding Revisions to Timing and Organizations (§ 422.152) OIG Office of Inspector General Method of Disclosure Requirements 14. Preclusion List Requirements for OEP Open Enrollment Period (§§ 422.111 and 423.128) Prescribers in Part D and Providers and OMHA Office of Medicare Hearings and 5. ICRs Regarding the Removal of Quality Suppliers in Medicare Advantage, Cost Appeals Improvement Project for Medicare Plans and PACE OOPC Out-of-Pocket Cost Advantage Organizations (§ 422.152) 15. Any Willing Pharmacy Standard Terms PA Prior Authorization 6. ICRs Regarding Medicare Advantage and Conditions and Better Define PBM Pharmacy Benefit Manager Quality Rating System (§§ 422.162, Pharmacy Types PBP Plan Benefit Package 422.164, 422.166, 422.182, 422.184, and 16. Expedited Substitutions of Certain PDP Prescription Drug Plan 422.186) Generics and Other Midyear Formulary PHSA Public Health Service Act

VerDate Sep<11>2014 20:14 Nov 27, 2017 Jkt 244001 PO 00000 Frm 00004 Fmt 4701 Sfmt 4702 E:\FR\FM\28NOP2.SGM 28NOP2 sradovich on DSK3GMQ082PROD with PROPOSALS2 Federal Register / Vol. 82, No. 227 / Tuesday, November 28, 2017 / Proposed Rules 56339

PIP Physician Incentive Plan into law on July 22, 2016, which drugs for Part D eligible individuals. PQA Pharmacy Quality Alliance amended the Social Security Act and These changes would become effective PSO Provider Sponsored Organization includes new authority for Medicare January 1, 2019. The NCPDP SCRIPT PSP Provider Specific Plan Part D drug management programs, standards are used to exchange QBP Quality Bonus Payment QI Quality Improvement effective on or after January 1, 2019. information between prescribers, QIA Quality Improvement Activities Through this provision, CMS proposes a dispensers, intermediaries and Medicare QIP Quality Improvement Project framework under which Part D plan prescription drug plans. REMS Risk Evaluation and Mitigation sponsors may establish a drug Although e-prescribing is optional for Strategies management program for beneficiaries physicians and pharmacies, the RFI Request for Information at risk for prescription drug abuse or Medicare Part D statute and regulations RHC Rural Health Center misuse, or ‘‘at-risk beneficiaries.’’ CMS require drug plans participating in the RI Rewards and Incentives proposes that, under such programs, prescription benefit to support RPPO Regional Preferred Provider sponsors may limit at-risk beneficiaries’ Organization electronic prescribing, and physicians RRB Railroad Retirement Board access to coverage of controlled and pharmacies who elect to transmit e- SE Standard Error substances that CMS determines are prescriptions and related SEP Special Enrollment/Election Period ‘‘frequently abused drugs’’ to a selected communications electronically must SES Socio-Economic Status prescriber(s) and/or network utilize the adopted standards. The SNP Special Needs Plan pharmacy(ies). CMS also proposes to proposed updated NCPDP SCRIPT SSA Social Security Administration limit the use of the special enrollment standards have been requested by the TMP Timeliness Monitoring Project period (SEP) for dually- or other low industry and could provide a number of I. Executive Summary income subsidy (LIS)-eligible efficiencies which the industry and beneficiaries who are identified as at- CMS supports. A. Purpose risk or potentially at-risk for In order to facilitate this change, we The primary purpose of this proposed prescription drug abuse under such a propose to update § 423.160, and also rule is to make revisions to the Medicare drug management program. Finally, this make a number of conforming technical Advantage (MA) program (Part C) and provision proposes to codify the current changes to other sections of part 423. In Part D Opioid Drug Utilization Review Prescription Drug Benefit Program (Part addition, we are proposing to correct a (DUR) Policy and Overutilization D) regulations based on our continued typographical error that occurred in the Monitoring System (OMS) by integrating experience in the administration of the regulatory text listing the applicability this current policy with our proposals Part C and Part D programs and to dates of the standards by changing the for implementing the drug management implement certain provisions of the reference in § 423.160(b)(1)(iv) to program provisions. The current policy Comprehensive Addiction and Recovery reference (b)(2)(iii) instead of (b)(2)(ii) to involves Part D prescription drug Act and the 21st Century Cures Act. The correctly cite to the present use of the benefit plans engaging in case proposed changes are necessary to—(1) currently adopted NCPDP SCRIPT management with prescribers when an Support Innovative Approaches to Standard Version 10. Improving Quality, Accessibility, and enrollee is found to be taking a very Affordability; (2) Improve the CMS high dose of opioids and obtaining them 3. Revisions to Timing and Method of Customer Experience; and (3) from multiple prescribers and multiple Disclosure Requirements pharmacies who may not know about Implement Other Changes. In addition, We are proposing to allow the each other. Through the adoption of this this rule proposes technical changes electronic delivery of certain policy, from 2011 through 2016, there related to treatment of Part A and Part information normally provided in hard was a 61 percent decrease (over 17,800 B premium adjustments and updates the copy documents such as the Evidence of beneficiaries) in the number of Part D Script standard used for Part D Coverage (EOC). Additionally, we are beneficiaries identified as potential very electronic prescribing. While the Part D proposing to change the timeframe for high risk opioid overutilizers.1 Thus, program has high satisfaction among delivery of the EOC in particular to the this proposal expands upon an existing, users, we continually evaluate program first day of the Annual Election Period innovative, successful approach to policies and regulations to remain (AEP) rather than fifteen days prior to reduce opioid overutilization in the Part responsive to current trends and newer that date. Allowing plans to provide the D program by improving quality of care technologies. Specifically, this EOC electronically would alleviate plan through coordination while maintaining regulation meets the Administration’s burden related to printing and mailing, access to necessary pain medications. priorities to reduce burden and provide and simultaneously would reduce the the regulatory framework to develop 2. Updating the Part D E-Prescribing number of paper documents that MA and Part D products that better meet Standards (§ 423.160) beneficiaries receive from plans. This the individual beneficiary’s healthcare would allow beneficiaries to focus on needs. Additionally, this regulation This provision proposes an update to the electronic standards to be used by materials, like the Annual Notice of includes a number of provisions that Change (ANOC), that drive decision will help address the opioid epidemic Medicare Part D prescription drug plans. This includes the proposed making. Changing the date by which and mitigate the impact of increasing plans must provide the EOC to members drug prices in the Part D program. adoption of the NDPDP SCRIPT Standard Version 2017071, and would allow plans more time to finalize B. Summary of the Major Provisions retirement of the current NCPDP the formatting and ensure the accuracy of the information, as well as further 1. Implementation of the SCRIPT Version 10.6, as the official electronic prescribing standard for distance it from the ANOC, which must Comprehensive Addiction and Recovery still be delivered 15 days prior to the Act of 2016 (CARA) Provisions transmitting prescriptions and prescription-related information using AEP. We see this proposed change as an This proposed regulatory provision electronic media for covered Part D overall reduction of impact that our would implement statutory provisions regulations have on plans and of the Comprehensive Addiction and 1 CY 2018 Final Parts C&D Call Letter, April 3, beneficiaries. In aggregate, we estimate Recovery Act of 2016 (CARA), enacted 2017. a savings (to plans for not producing

VerDate Sep<11>2014 20:14 Nov 27, 2017 Jkt 244001 PO 00000 Frm 00005 Fmt 4701 Sfmt 4702 E:\FR\FM\28NOP2.SGM 28NOP2 sradovich on DSK3GMQ082PROD with PROPOSALS2 56340 Federal Register / Vol. 82, No. 227 / Tuesday, November 28, 2017 / Proposed Rules

and mailing hard-copy EOCs) of revoked the prescriber to the extent in Medicare in accordance with section approximately $51 million. applicable if he or she had been 1861 of the Act must be enrolled in enrolled in Medicare, and CMS Medicare in order to provide health care 4. Preclusion List determines that the underlying conduct items or services to a Medicare enrollee a. Part D that led, or would have led, to the who receives his or her Medicare benefit revocation is detrimental to the best through an MA organization. As a This proposed rule would rescind the interests of the Medicare program. We replacement, we propose that an MA current provisions in § 423.120(c)(6) recognize, however, the need to organization shall not make payment for that require physicians and eligible minimize interruptions to Part D an item or service furnished by an professionals (as defined in section beneficiaries’ access to needed individual or entity that is on the 1848(k)(3)(B) of the Act) to enroll in or medications. Therefore, we also propose ‘‘preclusion list.’’ The preclusion list, validly opt-out of Medicare in order for to prohibit plan sponsors from rejecting which would be defined in § 422.2, a Part D drug prescribed by the claims or denying beneficiary requests would consist of certain individuals and physician or eligible professional to be for reimbursement for a drug on the entities that are currently revoked from covered. As a replacement, we propose basis of the prescriber’s inclusion on the the Medicare program under § 424.535 that a Part D plan sponsor must reject, preclusion list, unless the sponsor has and are under an active reenrollment or must require its pharmacy benefit first covered a 90-day provisional bar, or have engaged in behavior for manager to reject, a pharmacy claim for supply of the drug and provide which CMS could have revoked the a Part D drug if the individual who individualized written notice to the individual or entity to the extent prescribed the drug is included on the beneficiary that the drug is being applicable if he or she had been ‘‘preclusion list,’’ which would be covered on a provisional basis. enrolled in Medicare, and CMS defined in § 423.100 and would consist b. Part C determines that the underlying conduct of certain prescribers who are currently that led, or would have led, to the revoked from the Medicare program This proposed rule would rescind the revocation is detrimental to the best under § 424.535 and are under an active current provisions in § 422.222 stating interests of the Medicare program. reenrollment bar, or have engaged in that providers or suppliers that are types behavior for which CMS could have of individuals or entities that can enroll C. Summary of Costs and Benefits

Provision Savings

Implementation of the Comprehensive Addiction Besides the benefits of preventing opioid dependency in beneficiaries we estimate a net sav- and Recovery Act of 2016. ings in 2019 of $13 million to the Trust Fund because of reduced scripts, modestly increasing to a savings of $14 million in 2023. The cost to industry is estimated at about $2.8 million per year. Revisions to Timing and Method of Disclosure We estimate 67% of the current 47.8 million beneficiaries will prefer use of the internet vs. Requirements. hard copies. This will result in savings of $55 million in 2019 and growing due to inflation to $67 million in 2023.

II. Provisions of the Proposed access to coverage of controlled pharmacy(ies) and/or prescriber(s) after Regulations substances that CMS determines are case management and notice to the ‘‘frequently abused drugs’’ to a selected beneficiary. To do so, the beneficiary A. Supporting Innovative Approaches to prescriber(s) and/or network would have to meet clinical guidelines Improving Quality, Accessibility, and pharmacy(ies). While such programs, that factor in that the beneficiary is Affordability commonly referred to as ‘‘lock-in taking a high-risk dose of opioids over 1. Implementation of the programs,’’ have been a feature of many a sustained time period and that the Comprehensive Addiction and Recovery state Medicaid programs for some time, beneficiary is obtaining them from Act of 2016 (CARA) Provisions prior to the enactment of CARA, there multiple prescribers and multiple was no statutory authority to allow Part pharmacies. This proposed rule would a. Medicare Part D Drug Management D plan sponsors to require beneficiaries also implement a limitation on the use Programs to obtain controlled substances from a of the special enrollment period (SEP) The Comprehensive Addiction and certain pharmacy or prescriber in the for low income subsidy (LIS)-eligible Recovery Act of 2016 (CARA), enacted Medicare Part D program. beneficiaries who are identified as into law on July 22, 2016, amended the In summary, this proposed rule would potential at-risk beneficiaries. Social Security Act and includes new implement the CARA Part D drug b. Stakeholder Input Informing This authority for the establishment of drug management program provisions by Notice of Proposed Rulemaking management programs in Medicare Part integrating them with the current Part D D, effective on or after January 1, 2019. Opioid Drug Utilization Review (DUR) Section 704(g)(2) of CARA required us In accordance with section 704(g)(3) of Policy and Overutilization Monitoring to convene stakeholders to provide CARA and revised section 1860D–4(c) System (OMS) (‘‘current policy’’). As input on specific topics so that we could of the Act, CMS must establish through explained in more detail later in this take such input into account in notice and comment rulemaking a section, this integration would mean promulgating regulations governing Part framework under which Part D plan that Part D sponsors implementing a D drug management programs. sponsors may establish a drug drug management program could limit Stakeholders include Medicare management program for beneficiaries an at-risk beneficiary’s access to beneficiaries with Part A or Part B, at-risk for prescription drug abuse, or coverage of opioids beginning 2019 advocacy groups representing Medicare ‘‘at-risk beneficiaries.’’ Under such a through a point-of-sale (POS) claim edit beneficiaries, physicians, pharmacists, Part D drug management program, and/or by requiring the beneficiary to and other clinicians (particularly other sponsors may limit at-risk beneficiaries’ obtain opioids from a selected lawful prescribers of controlled

VerDate Sep<11>2014 20:14 Nov 27, 2017 Jkt 244001 PO 00000 Frm 00006 Fmt 4701 Sfmt 4702 E:\FR\FM\28NOP2.SGM 28NOP2 sradovich on DSK3GMQ082PROD with PROPOSALS2 Federal Register / Vol. 82, No. 227 / Tuesday, November 28, 2017 / Proposed Rules 56341

substances), retail pharmacies, Part D limitations they have implemented to real-time safety alerts at the pharmacy plan sponsors and their delegated MARx, CMS’ system for payment and aimed at coordinated care; retrospective entities (such as pharmacy benefit enrollment transactions. While plan identification of high risk opioid managers), and biopharmaceutical sponsors would have the option to overutilizers who may need case manufacturers. implement a drug management program, management; and regular actionable We hosted a Listening Session on the our proposal codifies a framework that patient safety reports based on quality CARA drug management program would place requirements upon such metrics to sponsors. provisions via a public conference call programs. We foresee that all plan The goal of the current policy and on November 14, 2016 that was sponsors will implement such drug OMS is to reduce opioid overutilization announced in the October 26, 2016 management programs based on our in Part D. In conjunction with related Federal Register (81 FR 74388). We experience that all plan sponsors’ are Part D opioid overutilization policies sought stakeholder input on specific complying with the current policy as that address prospective opioid use, the topics enumerated in sections 704(a)(1) laid out in guidance, the fact that our current policy has played a key role in and 704(g)(2)(B) of the CARA and other proposal largely incorporates the CARA reducing high risk opioid related topics of concern to the drug management provisions into overutilization in the Part D program by stakeholders. existing CMS and sponsor operations, 61 percent (representing over 17,800 In developing this proposed rule, we and especially, in light of the national beneficiaries) from 2011 (pre-policy considered the stakeholders’ comments opioid epidemic and the declaration pilot) through 2016, even as the number provided during the Listening Session, that the opioid crisis is a nationwide of beneficiaries enrolled in Part D as well as written comments submitted Public Health Emergency. increased overall during this period afterward, including those submitted in Because we propose to integrate the from 31.5 million to 43.6 million response to the Request for Information CARA Part D drug management program enrollees, or a 38 percent increase.3 associated with the publication of the provisions with the current policy and The purpose of the current policy is Plan Year 2018 Medicare Parts C&D codify them both, we describe the to provide Part D plan sponsors with Final Call Letter. We refer to this input current policy in section II.A.1.c.(1) of specific guidance about compliance in this preamble using the terms this proposed rule, noting where our with § 423.153(b)(2) as to opioid ‘‘stakeholders,’’ ‘‘commenters’’ and proposal incorporates changes to the overutilization, which requires a Part D ‘‘comments.’’ current policy in order to comply with plan sponsor to have a reasonable and c. Integration of CARA and the Current CARA and achieve operational appropriate drug utilization Part D Opioid DUR Policy and OMS consistency. Where we do not note a management program that maintains change, our intent is to codify the policies and systems to assist in As noted in section II.A.1. of this current policy, and we seek specific preventing overutilization of prescribed proposed rule previously, we are comment as to whether we have medications. We adopted the current proposing to implement the CARA Part overlooked any feature of the current policy on January 1, 2013, and it has D drug management program provisions policy that should be codified. CMS evolved over time in scope in several by integrating them with our current communications regarding the current ways with stakeholder feedback and policy that is not currently codified, but policy can be found at the CMS Web support, including through the addition would be under this proposal. In using site, ‘‘Improving Drug Utilization of the OMS in July 2013, primarily via the term ‘‘current policy’’, we refer to Review Controls in Part D’’ at https:// the annual Parts C&D Call Letter the aspect of our current Part D opioid www.cms.gov/Medicare/Prescription- process. overutilization policy that is based on Drug-Coverage/ The current policy has two aspects. retrospective DUR.2 Specifically, we are PrescriptionDrugCovContra/ First, in the CY 2013 final Call Letter proposing a regulatory framework for RxUtilization.html. and subsequent supplemental guidance, Part D plan sponsors to voluntarily Then we set forth our proposal for we provided guidance about our adopt drug management programs codification of the regulatory framework expectations for Part D plan sponsors to through which they address potential for drug management programs in retrospectively identify beneficiaries overutilization of frequently abused section II.A.1.c.(2) of this proposed rule, who are at high risk for potential opioid drugs identified retrospectively through which includes provisions specific to overutilization and provide appropriate the application of clinical guidelines/ lock-in, which is not a feature of the case management aimed at coordinated criteria that identify potential at-risk current policy. care.4 More specifically, we currently beneficiaries and conduct case expect Part D plan sponsors’ Pharmacy management which incorporates (1) Current Part D Opioid DUR Policy and Therapeutics (P&T) committees to clinical contact and prescriber and OMS establish criteria consistent with CMS verification that a beneficiary is an at- CMS is actively engaged in addressing guidance to retrospectively identify risk beneficiary. If deemed necessary, a the opioid epidemic and committed to potential opioid overutilizers at high sponsor could limit at-risk beneficiaries’ implementing effective tools in risk for an adverse event enrolled in access to coverage for such drugs Medicare Part D. We will work across their plans who may warrant case through pharmacy lock-in, prescriber all stakeholder, beneficiary and management because they are receiving lock-in, and/or a beneficiary-specific advocacy groups, health plans, and opioid prescriptions from multiple point-of-sale (POS) claim edit. Finally, other federal partners to help address prescribers and pharmacies. Enrollees sponsors would report to CMS the status this devastating epidemic. CMS has and results of their case management to worked with plan sponsors and other 3 Final CY 2018 Parts C&D Call Letter, April 3, OMS and any beneficiary coverage stakeholders to implement Medicare 2017. Part D opioid overutilization policies 4 An excerpt from the Final 2013 Call Letter, the 2 Please refer to the CMS Web site, ‘‘Improving with multiple initiatives to address supplemental guidance, and additional information Drug Utilization Review Controls in Part D’’ at opioid overutilization in Medicare Part about the policy and OMS are available on the CMS https://www.cms.gov/Medicare/Prescription-Drug- Web page, ‘‘Improving Drug Utilization Controls in Coverage/PrescriptionDrugCovContra/ D through a medication safety approach. Part D’’ at https://www.cms.gov/Medicare/ RxUtilization.html which contains CMS These initiatives include better Prescription-Drug/PrescriptionDrugCovContra/ communications regarding the current policy. formulary and utilization management; RxUtilization.html.

VerDate Sep<11>2014 20:14 Nov 27, 2017 Jkt 244001 PO 00000 Frm 00007 Fmt 4701 Sfmt 4702 E:\FR\FM\28NOP2.SGM 28NOP2 sradovich on DSK3GMQ082PROD with PROPOSALS2 56342 Federal Register / Vol. 82, No. 227 / Tuesday, November 28, 2017 / Proposed Rules

with cancer or in hospice are excluded include maximum daily doses, CMS Because case management is very from the current policy, because the developed specific criteria to identify resource intensive for sponsors and benefit of their high opioid use may beneficiaries at high risk through PBMs, we have limited the scope of the outweigh the risk associated with such retrospective review of their opioid use current policy in terms of the number of use. This exclusion was supported by in order to assist Part D sponsors in beneficiaries identified by OMS, and stakeholder feedback on the current identifying such beneficiaries. These when expanding that number, we have policy. criteria incorporate a morphine made changes incrementally through Once such enrollees are identified milligram equivalent (MME) 6 approach, annual Parts C&D Call Letter process. through retrospective prescription drug which is a method to uniformly (2) Proposed Requirements for Part D claims review, we expect the Part D calculate the total daily dosage of Drug Management Programs (§§ 423.100 plan sponsors to diligently assess each opioids across all of a patient’s opioid and 423.153) case, and if warranted, have their prescription drug claims. Beginning clinical staff conduct case management with plan year 2018, we adjusted these We first propose several definitions with the beneficiary’s opioid prescribers criteria to align with the Centers for for terms we propose to use in until the case is resolved. According to Disease Control (CDC) Guideline for establishing requirements for Part D the supplemental guidance,5 case Prescribing Opioids for Chronic Pain drug management programs. management entails: (CDC Guideline) 7 issued in March 2016 (i) Definitions (§ 423.100) • The personnel communicating with in terms of using 90 MME as a threshold prescribers have appropriate to identify beneficiaries who appear to (A) Definition of ‘‘Potential At-Risk Beneficiary’’ and ‘‘At-Risk Beneficiary’’ credentials. be at high risk due to their opioid use. (§ 423.100) • Written inquiries to the prescribers In its guideline, after considering of the opioid medications about the information from relevant studies and Section 1860D–4(c)(5)(C) of the Act appropriateness, medical necessity and experts, the CDC identifies 50 MME contains a definition for ‘‘at-risk safety of the apparent high dosage for daily dose as a threshold for increased beneficiary’’ that we propose to codify their patient. risk of opioid overdose, and to generally at § 423.100. In addition, although the • Attempts to schedule telephone avoid increasing the daily dosage to 90 section 1860D–4(c)(5) of the Act does conversations with the prescribers MME. Our criteria, which we will not explicitly define a ‘‘potential at-risk (separately or together) within a discuss more fully later in the preamble, beneficiary,’’ it contemplates a reasonable period from the issuance of also incorporate a multiple prescriber beneficiary who is potentially at-risk. the written inquiry notification, if and pharmacy count to focus on Accordingly, we propose to define these necessary. beneficiaries who appear to be not only two terms at § 423.100 as follows: • The clinician-to-clinician overutilizing opioids but who also are at Potential at-risk beneficiary means a communication includes information increased risk due to potential Part D eligible individual—(1) Who is about the existence of multiple coordination of care issues, such that identified using clinical guidelines (as prescribers and the beneficiary’s total the providers who are prescribing or defined in § 423.100); or (2) With opioid utilization, and the plan’s dispensing opioids to these beneficiaries respect to whom a Part D plan sponsor clinician elicits the information may not know that other providers are receives a notice upon the beneficiary’s necessary to identify any complicating also doing so. enrollment in such sponsor’s plan that factors in the beneficiary’s treatment The second aspect of the current the beneficiary was identified as a that are relevant to the case management policy came into place in July 2013, potential at-risk beneficiary (as defined effort. when CMS launched the OMS as a tool in paragraph (1) of this definition) under • After discussion or communication to monitor Part D plan sponsors’ the prescription drug plan in which the about the appropriate level of opioid effectiveness in complying with beneficiary was most recently enrolled, use, the consensus reached by the § 423.153(b)(2) to address opioid such identification had not been prescribers is implemented by the overutilization. Through the OMS, CMS terminated upon disenrollment, and the sponsor, with a beneficiary-specific sends sponsors quarterly reports about new plan has adopted the identification. opioid POS claim edit, as deemed their Part D enrollees who meet the At-risk beneficiary means a Part D appropriate by the prescribers, to criteria for being at high risk of opioid eligible individual—(1) who is—(i) prevent further Part D coverage of an overutilization. Then, we expect Identified using clinical guidelines (as unsafe level of drug. sponsors to address each case through defined in § 423.100); (ii) Not an • In cases of non-responsive the case management process previously exempted beneficiary; and (iii) prescribers, the sponsor may also described and respond to CMS through Determined to be at-risk for misuse or implement a beneficiary-specific opioid the OMS using standardized responses. abuse of such frequently abused drugs POS claim edit to prevent further In addition, we expect sponsors to under a Part D plan sponsor’s drug coverage of an unsafe level of drug and provide information to their regional management program in accordance to encourage the prescribers to CMS representatives and the MARx with the requirements of § 423.153(f); or participate in case management. system about beneficiary-specific opioid (2) With respect to whom a Part D plan Thus, we expect case management to POS claim edits that they intend to or sponsor receives a notice upon the confirm that the beneficiary’s opioid use have implemented.8 beneficiary’s enrollment in such is medically necessary or resolve an sponsor’s plan that the beneficiary was overutilization issue. 6 Please note that CMS will use the term ‘‘MME’’ identified as an at-risk beneficiary (as As part of the current policy, and going forward instead of morphine equivalent dose defined in paragraph (1) of this because the Food and Drug (MED), which CMS has used to date. CMS used the term MED in a manner that was equivalent to MME. definition) under the prescription drug Administration (FDA)-approved We will update CMS documents that currently refer plan in which the beneficiary was most labeling for opioids generally does not to MED as soon as practicable. 7 Please see https://www.cdc.gov/drugoverdose/ https://www.cms.gov/Medicare/Prescription-Drug- 5 September 6, 2012 HPMS memo, ‘‘Supplemental prescribing/guideline.html. Coverage/PrescriptionDrugCovContra/ Guidance Related to Improving Drug Utilization 8 Please refer to the CMS Web site, ‘‘Improving RxUtilization.html which contains CMS Review Controls in Part D.’’ Drug Utilization Review Controls in Part D’’ at communications regarding the current policy.

VerDate Sep<11>2014 20:14 Nov 27, 2017 Jkt 244001 PO 00000 Frm 00008 Fmt 4701 Sfmt 4702 E:\FR\FM\28NOP2.SGM 28NOP2 sradovich on DSK3GMQ082PROD with PROPOSALS2 Federal Register / Vol. 82, No. 227 / Tuesday, November 28, 2017 / Proposed Rules 56343

recently enrolled, such identification similar guidance, which would be declared opioid overuse a national had not been terminated upon subject to public comment, if necessary epidemic, both of which are relevant disenrollment, and the new plan has to address midyear entries to the drug factors.11 More than 33,000 people died adopted the identification. The market or evolving government or from opioid overuse in 2015, which is distinction between a ‘‘potential at-risk professional guidelines. This approach the highest number per year on record. beneficiary’’ and an ‘‘at-risk would be consistent with our approach From 2000 to 2015, more than half a beneficiary’’ is important for a few under the current policy and necessary million people died from drug reasons that we will explain later in this for Part D drug management programs to overdoses, and 91 Americans die every preamble. Also, we added the phrase, be responsive to changing public health day from an opioid overdose. Nearly ‘‘and the new plan has adopted the issues over time. half of all opioid overdose deaths identification’’ to both definitions for While this is the approach we propose involve a prescription opioid. Given cases where a beneficiary has been for future designations of frequently that opioids, including prescription identified as a potential at-risk or at-risk abused drugs, we are including a opioids, are the main driver of drug beneficiary by the immediately prior discussion of the designation for plan overdose deaths in the U.S., it is plan to indicate that the beneficiary’s year 2019 in this preamble. For plan reasonable for the Secretary to conclude status in the subsequent plan is not year 2019, consistent with current that opioids are frequently abused and automatic. policy, we propose that opioids are misused. frequently abused drugs. Our proposal Third, government or professional (B) Definition of ‘‘Frequently Abused to designate opioids as frequently guidelines support determining that Drug’’, ‘‘Clinical Guidelines’’, ‘‘Program abused drugs illustrates how the opioids are frequently abused or Size’’, and ‘‘Exempted Beneficiary’’ proposed definition could work in misused. Consistent with current policy, (§ 423.100) practice: we propose to designate all opioids as Because we use these terms in the First, the Secretary determines frequently abused drugs except proposed definitions of ‘‘potential at- opioids are frequently abused or buprenorphine for medication-assisted risk beneficiary’’ and ‘‘at-risk diverted, because they are controlled treatment (MAT) and injectables. The beneficiary,’’ we propose to define substances, and drugs and other CDC MME Conversion Factor file 12 ‘‘frequently abused drug,’’ ‘‘clinical substances that are considered does not include all formulations of guidelines’’, ‘‘program size’’, and controlled substances under the buprenorphine for MAT so that access ‘‘exempted beneficiary’’ at § 423.100 as Controlled Substances Act (CSA) are so is not limited, and injectables are not follows: considered precisely because they have included due to low claim volume. • Frequently Abused Drug abuse potential. The Drug Enforcement Therefore, CMS cannot determine the Administration (DEA) divides MME. CMS will consider revisions to Section 1860D–4(c)(5)(G) of the Act controlled substances into five the CDC MME Conversion Factor file defines ‘‘frequently abused drug’’ as a schedules based on whether they have when updating the list of opioids drug that is a controlled substance that a currently accepted medical use in designated as frequently abused drugs the Secretary determines to be treatment in the United States, their in future guidance. frequently abused or diverted. relative abuse potential, and their Fourth, an analysis of Medicare data Consistent with the statutory definition, likelihood of causing dependence when supports designating opioids as we propose to define ‘‘Frequently abused. Most prescription opioids are ‘‘frequently abused drugs,’’ at least abused drug’’ at § 423.100 to mean a Schedule II, where the DEA places initially. Over 727,000 Part D controlled substance under the federal substances with a high potential for beneficiaries had an average MME of at Controlled Substances Act that the abuse with use potentially leading to least 90 mg during the 6-month period Secretary determines is frequently severe psychological or physical from July 1, 2015 to December 31, 2015 abused or diverted, taking into account dependence.9 A few opioids are (‘‘90 mg MME + users’’), a number the following factors: (1) The drug’s Schedule III or IV, where the DEA which excludes beneficiaries with schedule designation by the Drug places substances that have a potential cancer or in hospice, whom we propose Enforcement Administration; (2) for abuse. to exempt from drug management Government or professional guidelines Second, on October 26, 2017, the programs, as we discuss later. As noted that address that a drug is frequently President directed that executive earlier, the CDC recommends abused or misused; and (3) An analysis agencies use all appropriate emergency prescribers generally avoid increasing of Medicare or other drug utilization or authorities and other relevant the daily opioid dosage to 90 MME. scientific data. This definition is authorities to address drug addiction Given that so many beneficiaries have intended to provide enough specificity and opioid abuse, and the Acting an average MME above this threshold, it for stakeholders to know how the Secretary of Health and Human Services is reasonable that the Secretary consider Secretary will determine a frequently declared a nationwide Public Health this data to be a relevant factor in abused drug, while preserving flexibility Emergency to address the opioid determining that opioids are frequently to update which drugs CMS considers to crisis.10 In addition, the CDC has abused or diverted. be frequently abused drugs based on Most stakeholders recommended relevant factors, such as actions by the 9 The abuse rate is a determinate factor in the designating opioids as frequently Drug Enforcement Administration and/ DEA’s scheduling of the drug; for example, abused drugs. In this regard, we note or trends observed in Medicare or Schedule I drugs have a high potential for abuse scientific data. and the potential to create severe psychological and/or physical dependence. As the drug schedule departments-and-agencies, and the HHS Web site We plan to publish and update a list changes— Schedule II, Schedule III, etc., so does https://www.hhs.gov/about/news/2017/10/26/hhs- of frequently abused drugs for purposes the abuse potential— Schedule V drugs represents acting-secretary-declares-public-health-emergency- of Part D drug management programs. the least potential for abuse. See DEA Web site address-national-opioid-crisis.html. We propose that future designations of about Drug Scheduling: https://www.dea.gov/ 11 See CDC Web site https://www.cdc.gov/ druginfo/ds.shtml. drugoverdose/index.html for all statistics in this frequently abused drugs by the 10 See White House Web site https:// paragraph. Secretary primarily be included in the www.whitehouse.gov/the-press-office/2017/10/26/ 12 See https://www.cdc.gov/drugoverdose/ annual Parts C&D Call Letter or in presidential-memorandum-heads-executive- resources/data.html.

VerDate Sep<11>2014 20:14 Nov 27, 2017 Jkt 244001 PO 00000 Frm 00009 Fmt 4701 Sfmt 4702 E:\FR\FM\28NOP2.SGM 28NOP2 sradovich on DSK3GMQ082PROD with PROPOSALS2 56344 Federal Register / Vol. 82, No. 227 / Tuesday, November 28, 2017 / Proposed Rules

that our current policy applies only to substances. For this reason our proposal that the population of enrollees in drug opioids and that we are integrating the would not identify benzodiazepines as management programs could be drug management provisions of CARA frequently abused drugs. However, we effectively managed by plans. We with our current policy. Therefore, solicit additional comment on our propose to define ‘‘program size’’ in designating opioids as frequently proposed approach to frequently abused § 423.100 to mean the estimated abused drugs, at least in the initial drugs. Also, we propose that, if population of potential at-risk implementation of drug management finalized, this rule would supersede our beneficiaries in drug management programs, would have the added benefit current policy, and sponsors would no programs (described in § 423.153(f)) of allowing CMS and stakeholders to longer be allowed to implement the operated by Part D plan sponsors that gain experience with the use of lock-in current policy for non-opioid the Secretary determines can be in the Part D program, before potentially medications. We seek feedback on effectively managed by such sponsors as designating other controlled substances allowing sponsors to continue to part of the process to develop clinical as frequently abused drugs. implement the current policy for non- guidelines. Some commenters expressed support opioid medications with respect to This proposed approach to for including other or all controlled beneficiary-specific claim edits. developing and updating the clinical substances, such as benzodiazepines, • guidelines would also be flexible sedatives, and certain muscle relaxants Clinical Guidelines and Program Size enough to allow for updates to the as frequently abused drugs; however, we Section 1860D–4(c)(5)(C)(i)(I) of the guidelines outside of the regulatory are not persuaded. Opioids are unique Act requires at-risk beneficiaries to be process to address trends in Medicare in that there is generally no maximum identified using clinical guidelines that with respect to the misuse and/or dose for them in the FDA labeling. Also, indicate misuse or abuse of frequently diversion of frequently abused drugs. in the proposed Contract Year 2016 abused drugs and that are developed in We have determined this approach is Parts C&D Call Letter, we solicited consultation with stakeholders. We appropriate to enable CMS to assist Part feedback on expanding the current propose to include a definition of D drug management programs in being policy to other drugs, and the comments ‘‘clinical guidelines’’ that cross responsive to public health issues over were mixed. A few commenters references standards that we are time. This approach would also be suggested that we expand the current proposing at § 423.153(f) for how the consistent with how the OMS criteria policy to benzodiazepines and muscle guidelines would be established and have been established over time through relaxants when used with opioids. In updated. Specifically, we propose to the annual Medicare Parts C&D Call respond to the feedback, we did not define clinical guidelines for purposes Letter process, which we plan to expand the current policy beyond the of a Part D drug management program continue except for 2019. opioid class but indicated that we as criteria to identify potential at-risk For plan year 2019, we propose the would investigate. Subsequently, the beneficiaries who may be determined to clinical guidelines in this preamble to CDC Guideline was published and it be at-risk beneficiaries under such be the OMS criteria established for plan specifically recommends that clinicians programs, and that are developed in year 2018, which meet the proposed avoid prescribing opioid pain accordance with the proposed standards standards for the clinical guidelines for medication and benzodiazepines in § 423.153(f)(16) and published in the following reasons: First, as concurrently whenever possible due to guidance annually. described earlier, the OMS criteria increased risk for overdose. Therefore, We also propose to add incorporate a 90 MME threshold cited in we added a concurrent benzodiazepine- § 423.153(f)(16) to state that potential at- a CDC Guideline, which was developed opioid flag to OMS in October 2016 to risk beneficiaries and at-risk by experts as the level that prescribers alert Part D sponsors that concurrent use beneficiaries are identified by CMS or should avoid reaching with their may be an issue that should be the Part D sponsor using clinical patients. This threshold does not addressed during case management, and guidelines that: (1) Are developed with function as a prescribing limit for the we will continue to do so.13 stakeholder consultation; (2) Are based Part D program; rather, it identifies Other than conveying the concurrent on the acquisition of frequently abused potentially risky and dangerous levels of benzodiazepine use information to drugs from multiple prescribers, opioid prescribing in terms of misuse or sponsors, we have not expanded the multiple pharmacies, the level of abuse. Second, the OMS criteria also current policy to address non-opioid frequently abused drugs, or any incorporate a multiple prescriber and medications. However, we have stated combination of these factors; (3) Are pharmacy count. A high MED level that if a sponsor chooses to implement derived from expert opinion and an combined with multiple prescribers the current policy for non-opioid analysis of Medicare data; and (4) and/or pharmacies may also indicate the medications, we would expect the Include a program size estimate. This abuse or misuse of opioids due to the sponsor to employ the same level of proposed approach to developing and possible lack of care coordination diligence and documentation with updating the clinical guidelines is among the providers for the patient. respect to non-opioid medications that intended to provide enough specificity Third, the OMS criteria have been we expect for opioid medications.14 We for stakeholders to know how CMS revised over time based on analysis of have taken this approach to the current would determine the guidelines by Medicare data and with stakeholder policy so that we could focus on the identifying the standards we would input via the annual Parts C&D Call opioid epidemic and also due to the apply in determining them. Letter process. Indeed, many difficulty in establishing overuse This proposed approach indicates that stakeholders recommended the use of guidelines for non-opioid controlled the program size would be determined the CDC Guideline as part of the clinical as part of the process to develop the guidelines the Secretary must develop, 13 Please refer to the memo, ‘‘Medicare Part D clinical guidelines—a process into with some noting that they would need Overutilization Monitoring System (OMS) Update: which stakeholders would provide to be used in a way that accounts for use Addition of the Concurrent Opioid-Benzodiazepine input. Section 1860D–4(c)(5)(C)(iii) of of multiple providers, which the OMS Use Flag’’ dated October 21, 2016. 14 See ‘‘Supplemental Guidance Related to the Act states that the Secretary shall criteria do. Fourth, these criteria are Improving Drug Utilization Review Controls in Part establish policies, including the familiar to Part D sponsors—they will D,’’ dated September 6, 2012. guidelines and exemptions, to ensure already have experience with them by

VerDate Sep<11>2014 20:14 Nov 27, 2017 Jkt 244001 PO 00000 Frm 00010 Fmt 4701 Sfmt 4702 E:\FR\FM\28NOP2.SGM 28NOP2 sradovich on DSK3GMQ082PROD with PROPOSALS2 Federal Register / Vol. 82, No. 227 / Tuesday, November 28, 2017 / Proposed Rules 56345

2019, and they were established with an to identify beneficiaries who are not at- beneficiary as a potential at-risk estimate of program size. risk. beneficiary. Similarly, if through such Several stakeholders in their In this regard, in applying the OMS case management, the Part D plan finds comments referred to various criteria criteria, CMS counts prescribers with that multiple locations of a pharmacy used in state Medicaid lock-in programs the same TIN as one prescriber, unless used by the beneficiary share real-time to identify beneficiaries appropriate for any of the prescribers are associated electronic data, the Part D plan would lock-in, without suggesting that any with multiple TINs. For example, under treat those locations as one pharmacy particular ones be adopted. Other the criteria we have proposed, a for purposes of identification of the commenters suggested CMS consider beneficiary who meets the 90 MME beneficiary as a potential at-risk other guidelines, such as the American criterion and received opioid beneficiary. Both of these scenarios may Society of Addiction Medicine (ASAM) prescriptions from 4 prescribers in the result in a Part D sponsor no longer National Practice Guideline for the Use same group practice and 3 independent conducting case management for a of Medications in the Treatment of opioid prescribers (1 group practice + 3 beneficiary because the beneficiary does Addiction Involving Opioid Use and the prescribers = 4 prescribers) and filled not meet the clinical guidelines. We also Veterans Affairs/Department of Defense the prescriptions at 4 opioid dispensing note that group practices and chain (VA/DoD) Clinical Practice Guideline on pharmacies, would still meet the pharmacies are important to consider Opioid Therapy for Chronic Pain. criteria, which is appropriate. However, for purposes of the selection of a However, these guidelines are similar to a beneficiary who meets that 90 MME prescriber(s) and pharmacy(ies) in cases or moving toward an MME methodology criterion and received opioid when a Part D plan limits a beneficiary’s which we currently use or address a prescriptions from 4 prescribers in the access to coverage of frequently abused more narrow population than persons same group practice and 1 independent drugs to selected pharmacy(ies) and/or who may be abusing or misusing opioid prescriber (1 group practice + 1 prescriber(s), which we discuss in more frequently abused drugs, and they do prescriber = 2 prescribers) and filled the detail later in this preamble. not directly address situations involving prescriptions at 4 opioid dispensing Under the current policy, sponsors multiple opioid providers. The VA/DoD pharmacies would not meet the criteria, must use 90 MME as a ‘‘floor’’ for their Clinical Practice Guideline for Opioid which is also appropriate at this time own criteria to identify beneficiaries Therapy for Chronic Pain is similar to given program size concerns. who may be overutilizing opioids, but Section 1860D–4(c)(5)(D) of the Act the scope of the CDC Guideline. The they may vary the prescriber and specifies that for purposes of limiting ASAM Guideline for the Use of pharmacy count. This means sponsors access to coverage of frequently abused Medications in the Treatment of may review beneficiaries who do not drugs to those obtained from a selected Addiction Involving Opioid Use was meet the OMS criteria but meet the pharmacy, if the pharmacy has multiple sponsors’ internal criteria for review, or developed specifically for the locations that share real-time electronic they may not review beneficiaries who evaluation and treatment of opioid use data, all such locations of the pharmacy meet the OMS criteria but do not meet disorder and for the management of collectively are treated as one the sponsors’ internal criteria for opioid overdose, which would not be pharmacy. Given this provision, as well review. However, under our proposal to applicable here because it serves a as our proposal to treat multiple adopt the 2018 OMS criteria as the 2019 different purpose. Therefore, we do not prescribers from the same group clinical guidelines for Part D drug see a reason to adopt these guidelines practice as one prescriber under the management programs, we also propose instead of the 2018 OMS criteria. clinical guidelines, we propose that to mostly eliminate this feature of the The clinical guidelines for use in drug where a pharmacy has multiple current policy. Under our proposal, Part management programs we are proposing locations that share real-time electronic D plan sponsors would not be able to for 2019 are: Use of opioids with an data, all locations of the pharmacy vary the criteria of the guidelines to average daily MME greater than or equal collectively be treated as one pharmacy include more or fewer beneficiaries in to 90 mg for any duration during the under the clinical guidelines. their drug management programs, most recent 6 months and either: 4 or Because not all Part D plans’ data except that we propose to continue to more opioid prescribers and 4 or more systems may be able to account for permit plan sponsors to apply the opioid dispensing pharmacies OR 6 or group practice prescribers as we criteria more frequently than CMS more opioid prescribers, regardless of described above, or chain pharmacies would apply them through OMS in the number of opioid dispensing through data analysis alone, or may not 2018, which can result in sponsors pharmacies. We note that we have be able to fully account for them, we identifying beneficiaries earlier. This is described alternative clinical guidelines request information on sponsors’ because CMS evaluates enrollees that we considered in the Regulatory systems capabilities in this regard. Also, quarterly using a 6-month look back Impact Analysis section of this rule. if a plan sponsor does not have the period, whereas sponsors may evaluate Stakeholders are invited to comment on systems capability to automatically enrollees more frequently (for example, those alternatives and any others which determine when a prescriber is part of monthly). would involve identifying more or fewer a group or a pharmacy is part of a chain, While several commenters stated that potential at-risk beneficiaries. the plan sponsor would have to make Part D plan sponsors should have We propose that under the proposed these determinations during case flexibility in developing their own clinical guidelines, prescribers management, as they do with respect to criteria for identifying at-risk associated with the same single Tax group practices under the current beneficiaries in their plans, a more Identification Number (TIN) be counted policy. If through such case conservative and uniform approach is as a single prescriber. This is consistent management, the Part D plan finds that warranted for the initial implementation with the current policy under which we the multiple prescribers who prescribed of Part D drug management programs. have found that such prescribers are frequently abused drugs for the While we already have experience with typically in the same group practice that beneficiary are members of the same how frequently Part D plan sponsors use is coordinating the care of the patients group practice, the Part D plan would beneficiary-specific opioid POS claim served by it. Thus, it is appropriate to treat those prescribers as one prescriber edits to prevent opioid overutilization, count such prescribers as one, so as not for purposes of identification of the we wish to learn how sponsors will use

VerDate Sep<11>2014 20:14 Nov 27, 2017 Jkt 244001 PO 00000 Frm 00011 Fmt 4701 Sfmt 4702 E:\FR\FM\28NOP2.SGM 28NOP2 sradovich on DSK3GMQ082PROD with PROPOSALS2 56346 Federal Register / Vol. 82, No. 227 / Tuesday, November 28, 2017 / Proposed Rules

lock-in as a tool to address this issue Furthermore, in approximately 39 program size would be manageable by before adopting clinical guidelines that percent of current OMS cases, sponsors Part D plan sponsors. In 2015, an might include parameters for respond that the case does not meet the average 0.37 percent of Medicaid permissible variations of the criteria. We sponsor’s internal criteria for review.15 recipients were locked-in and the plan to monitor compliance of drug We found that the original OMS criteria percentage of recipient’s locked-in by management programs as we monitor generated false positives that some state programs ranged from 0.01 percent compliance with the current policy sponsors’ internal criteria did not to 1.8 percent.16 through various CMS data sources, such because these sponsors used a shorter To derive this estimated population of as OMS, MARx, beneficiary complaints look back period or were able to group potential at-risk beneficiaries, we and appeals. prescribers within the same practice or chain pharmacies. These best practices analyzed prescription drug event data Also, we note that despite sponsors’ 17 have also been incorporated into the (PDE) from 2015, using the CDC additional identification of some revised 2018 OMS criteria, which are opioid drug list and MME conversion beneficiaries currently, in practice, we the basis of the proposed 2019 clinical factors, and applying the criteria we have found that CMS identifies the vast guidelines. Thus, while our proposal proposed earlier as the clinical majority of beneficiaries who are will prevent sponsors from voluntarily guidelines. This estimate is over- reviewed by Part D sponsors through reviewing more potential at-risk inclusive because we did not exclude OMS. CMS identifies over 80 percent of beneficiaries than CMS identifies beneficiaries in long-term care (LTC) the cases reviewed through OMS, and through OMS, it will likely require facilities who would be exempted from about 20 percent are identified by sponsors to review more beneficiaries drug management programs, as we sponsors based on their internal criteria. than they currently do. discuss later in this section. However, We understand that most of the Table 1 shows that in 2015 beneficiaries representing the 20 percent based on similar analyses we have approximately 33,000 beneficiaries conducted, this exclusion would not were reported to OMS due to the would have met the proposed 2019 result in a noteworthy reduction to our sponsors averaging the MME clinical guidelines, which is estimate. Also, we were unable to count calculations across all opioid approximately 0.08 percent of the 42 prescriptions, which has subsequently million beneficiaries enrolled in Part D all locations of a pharmacy that has been changed in the 2018 OMS criteria. in 2015. We think this population multiple locations that share real-time The 2018 OMS criteria also have a lower would constitute a manageable program electronic data as one, which is a topic MME threshold and account for size because this is the estimated OMS we discussed earlier and will return to additional beneficiaries who receive population we finalized during the Plan later. Thus, there likely are beneficiaries their opioids from many prescribers Year 2018 Parts C&D Call Letter process. counted in our estimate who would not regardless of the number of pharmacies, Moreover, we have no evidence to be identified as potential at-risk which will result in the identification of suggest that this program size will be beneficiaries because they are in an LTC more beneficiaries through OMS. Thus, problematic for sponsors. facility or only use multiple locations of our proposal would not substantially In addition, current Medicaid lock-in a retail chain pharmacy that share real- change the current practice. programs support the notion that this time electronic data.

TABLE 1—CLINICAL GUIDELINES OR IDENTIFYING POTENTIAL AT-RISK BENEFICIARIES

Criteria applied Impact to Part D program

≥90 mg MED and either: 33,053 beneficiaries in 2015 (76.3% were LIS). 4+ opioid prescribers AND 4+ opioid dispensing pharmacies ...... Represents 0.08% of 41,835,016 Part D beneficiaries in 2015. OR LTC beneficiaries included in estimate but are exempt. 6+ opioid prescribers (regardless of the number of opioid dis- Prescribers associated with the same single Tax Identification Numbers pensing pharmacies). (TIN) are counted as a single prescriber.

We note that the alternatives for whether CMS should adjust the clinical which frequently abused drugs are clinical guidelines that we considered, guidelines so that more or fewer dispensed for residents through a which are described in the Regulatory potential at-risk beneficiaries are contract with a single pharmacy, or who Impact Analysis (RIA) section of this identified, and if more are identified, the Secretary elects to treat as an rule, also include estimated population whether the additional number would exempted individual. Consistent with of potential at-risk beneficiaries for each result in a manageable program size for this, we propose that an exempted alternative. Most of the options include plan sponsors (or too few beneficiaries beneficiary, with respect to a drug a 90 MME threshold with varying to be meaningful). management program, would mean an prescriber and pharmacy counts and • Exempted Beneficiary enrollee who: (1) Has elected to receive range from identifying 33,053 to 319,133 hospice care; (2) Is a resident of a long- beneficiaries. Again, stakeholders are Section 1860D–4(c)(5)(C)(ii) of the Act term care facility, of a facility described invited to comment on these defines an exempted individual as one in section 1905(d) of the Act, or of alternatives. We are particularly who receives hospice care, who is a another facility for which frequently interested in receiving comments on resident of a long-term care facility for abused drugs are dispensed for residents

15 We noted in the final CY Parts C&D Call Letter, 16 Medicaid Drug Utilization Review State 17 Unique count of beneficiaries who met the for the January 2014 OMS reports, 67 percent of the Comparison/Summary Report FFY 2015 Annual criteria in any 6 month measurement period potential opioid overutilization responses were that Report: Prescription Drug-Fee-For-Service Programs (January 2015–June 2015; April 2015–September the beneficiary did not meet the sponsor’s internal (December 2016), pg. 26. 2015; or July 2015–December 2015). criteria. We explained the reasons for this figure and the actions we took to reduce it.

VerDate Sep<11>2014 20:14 Nov 27, 2017 Jkt 244001 PO 00000 Frm 00012 Fmt 4701 Sfmt 4702 E:\FR\FM\28NOP2.SGM 28NOP2 sradovich on DSK3GMQ082PROD with PROPOSALS2 Federal Register / Vol. 82, No. 227 / Tuesday, November 28, 2017 / Proposed Rules 56347

through a contract with a single beneficiaries in assisted living. Other frequently abused drugs. Therefore, we pharmacy; or (3) Has a cancer diagnosis. commenters suggested exempting propose to amend § 423.153(a) by While the first two exceptions are beneficiaries in various other health adding this sentence at the end: ‘‘A Part required under CARA, we propose to care facilities, such as group homes and D plan sponsor may establish a drug exercise the authority in section 1860D– adult day care centers, where management program for at-risk 4(c)(5)(C)(ii)(III) of the Act to treat a medication is supervised. Other beneficiaries enrolled in their beneficiary who has a cancer diagnosis commenters suggested exempting prescription drug benefit plans to as an exempted individual for two beneficiaries with debilitating disorders address overutilization of frequently reasons. First, many commenters or receiving medication-assisted abused drugs, as described in paragraph recommended that the Secretary exempt treatment for substance abuse disorders. (f) of this section,’’ in accordance with beneficiaries who have a cancer We have not proposed to exempt our authority under revised section diagnosis, because a Part D drug these additional categories of 1860D–4(c)(5)(A) of the Act. management program should not be able beneficiaries but we seek specific We also propose to revise § 423.153 to interfere administratively with their comment on whether to do so and our by adding a new paragraph (f) about pain control regimen in the form of rationale. First, we have not exempted drug management programs for which additional notices from their these other beneficiaries under the the introductory sentence would read: prescription drug benefit plans and current policy, and we thus do not think ‘‘(f) Drug Management Programs. A drug limitations on their access to coverage it is necessary to exempt them from management program must meet all the for frequently abused drugs. We agree drug management programs. Second, following requirements.’’ Thus, the with these commenters. Second, unlike with cancer diagnoses, we are requirements that a Part D plan sponsor exempting beneficiaries with a cancer not able to determine administratively must meet to operate a drug diagnosis would be consistent with through CMS data who these management program would be codified current policy. Under the current beneficiaries are to exempt them from in various provisions under subsection policy, which has been developed OMS reporting. Consequently, it could § 423.153(f). through stakeholder feedback, be burdensome for Part D sponsors to (iii) Written Policies and Procedures beneficiaries with cancer are excluded attempt to exempt these beneficiaries, (§ 423.153(f)(1)) because the benefit of their opioid use by definition, from their drug may outweigh the risk associated with management programs. Third, it is We propose to require Part D sponsors their opioid use. Also, as noted important to remember that the document their programs in written previously, some commenters requested proposed clinical guidelines would only policies and procedures that are that implementation of the drug identify potential at-risk beneficiaries in approved by the applicable P&T management program provisions of the Part D program who are receiving committee and reviewed and updated as CARA be as consistent as possible with potentially unsafe doses of opioids from appropriate, which is consistent with the current policy for operational ease. multiple prescribers and/or multiple the current policy. Also consistent with We also agree with these commenters. pharmacies who typically do not know the current policy, we would require Some commenters recommended about each other in terms of providing these policies and procedures to address against exempting beneficiaries with services to the beneficiary. Thus, it is the appropriate credentials of the cancer diagnoses, stating that there is no likely that a plan would discover during personnel conducting case management standard clinical reason why a case management that a potential at-risk and the necessary and appropriate beneficiary with cancer should be beneficiary is receiving palliative and contents of files for case management. receiving opioids from multiple end-of-life care during case We additionally propose to require prescribers and/or multiple pharmacies, management. Absent a compelling sponsors to monitor information about and that such situations warrant further reason, we would expect the plan not to incoming enrollees who would meet the review. While we understand the seek to implement a limit on such definition of a potential at-risk and an concern of these commenters, we beneficiary’s access to coverage of at-risk beneficiary in proposed § 423.100 maintain that beneficiaries who have a opioids under the current policy nor a and respond to requests from other cancer diagnosis should be exempted drug management program, as it would sponsors for information about potential for the reasons stated just above. seem to outweigh the medication risk in at-risk and at-risk beneficiaries who Moreover, our experience with this such circumstances. Moreover, in cases recently disenrolled from the sponsor’s exemption under the current policy where a prescriber is cooperating with prescription drug benefit plans. We suggests that the exemption is workable case management, we would not expect discuss potential at-risk and at-risk and appropriate. We understand the prescriber to agree to such a beneficiaries who are identified as such beneficiaries with cancer diagnoses are limitation, again, absent a compelling in their most recent Part D plan later in identifiable by Part D plan sponsors reason. With respect to beneficiaries this preamble. either through recorded diagnoses, their receiving medication-assisted treatment To codify these requirements, we drug regimens or case management, and for substance abuse for opioid use propose that section § 423.153(f)(1) read no major concerns have been expressed disorder, we decline to propose to treat as follows: (1) Written policies and about this exemption under our current these individuals as exempted procedures. A sponsor must document policy, including from standalone Part individuals. It is these beneficiaries who its drug management program in written D plan sponsors who may not have are among the most likely to benefit policies and procedures that are access to their enrollees’ medical from a drug management program. approved by the applicable P&T records. committee and reviewed and updated as A few commenters suggested (ii) Requirements of Drug Management appropriate. The policies and exempting beneficiaries who are Programs (§§ 423.153, 423.153(f)) procedures must address all aspects of receiving palliative and end-of-life care, As noted previously, we are the sponsor’s drug management since not all patients receiving this type proposing to codify a regulatory program, including but not limited to of care are necessarily enrolled in framework under which Part D plan the following: (i) The appropriate hospice or reside in an LTC facility. sponsors may adopt drug management credentials of the personnel conducting Two commenters suggested exempting programs to address overutilization of case management required under

VerDate Sep<11>2014 20:14 Nov 27, 2017 Jkt 244001 PO 00000 Frm 00013 Fmt 4701 Sfmt 4702 E:\FR\FM\28NOP2.SGM 28NOP2 sradovich on DSK3GMQ082PROD with PROPOSALS2 56348 Federal Register / Vol. 82, No. 227 / Tuesday, November 28, 2017 / Proposed Rules

paragraph (f)(2); (ii) The necessary and and verifying whether a potential at-risk earlier. We will address required appropriate contents of files for case beneficiary is an at-risk beneficiary. reporting to OMS and MARx by management required under paragraph Proposed § 423.153(f)(2)(i) would sponsors again later. (f)(2); and (iii) Monitoring reports and further state that, except as provided in We note that, currently, OMS notifications about incoming enrollees paragraph (f)(2)(ii) of this section, the standardized responses generally fall who meet the definition of an at-risk sponsor must do all of the following: (A) into four categories: First, in beneficiary and a potential at-risk Send written information to the approximately 18 percent of cases, the beneficiary in § 423.100 and responding beneficiary’s prescribers that the enrollee’s opioid use is medically to requests from other sponsors for beneficiary meets the clinical guidelines necessary. Second, approximately 38 information about at-risk beneficiaries and is a potential at-risk beneficiary; (B) percent of cases are resolved without a and potential at-risk beneficiaries who Elicit information from the prescribers beneficiary-specific POS opioid claim recently disenrolled from the sponsor’s about any factors in the beneficiary’s edit, for example, when the sponsor prescription drug benefit plans. Thus, treatment that are relevant to a takes a ‘‘wait and see’’ approach to Part D sponsors would have flexibility— determination that the beneficiary is an observe if the prescribers adjust their as they do today under the current at-risk beneficiary, including whether management of, and the opioid policy—to adopt specific policies and prescribed medications are appropriate prescriptions they are writing for, their procedures for their drug management for the beneficiary’s medical conditions patient due to the written information programs, as long as they are consistent or the beneficiary is an exempted they received from the sponsor about with the requirements of § 423.153, as beneficiary; and (C) In cases where the their patient. Third, a small subset of finalized. prescribers have not responded to the cases—on average 1.3 percent—need a inquiry described in (i)(B), make beneficiary-specific opioid POS claim (iv) Case Management/Clinical Contact/ reasonable attempts to communicate edit to resolve the beneficiary’s opioid Prescriber Verification (§ 423.153(f)(2)) telephonically with the prescribers overutilization issue. From 2013 As discussed earlier, case within a reasonable period after sending through of July 4, 2017, CMS received management is a key feature of the the written information. 4,617 contract-beneficiary-level opioid current policy, under which we Given the ‘‘Except as provided in POS claim edit notifications through currently expect Part D plan sponsors’ paragraph (f)(2)(ii) of this section’’, we MARx for 3,961 unique beneficiaries. clinical staff to diligently engage in case propose to add paragraph (ii) to Fourth, as previously mentioned, management with the relevant opioid § 423.153(f)(2) that would read: (ii) approximately 39 percent of cases do prescribers to coordinate care with Exception for identification by prior not meet the sponsor’s internal criteria respect to each beneficiary reported by plan. If a beneficiary was identified as for review. We expect adjustment to OMS until the case is resolved (unless a potential at-risk or an at-risk these percentages under our proposal, the beneficiary does not meet the beneficiary by his or her most recent particularly since we anticipate that sponsor’s internal criteria). We propose prior plan, and such identification has plans will no longer be able to respond that the second requirement for drug not been terminated in accordance with that a case does not meet its internal management programs in a new paragraph (f)(14) of this section, the criteria for review. In addition, the § 423.153(f)(2) reflect the current policy sponsor meets the requirements in revised 2018 OMS criteria which are the with some adjustment to the current paragraph (f)(2)(i) of this section, so long basis of the proposed 2019 clinical policy to require all beneficiaries as the sponsor obtains case management guidelines should reduce ‘‘false reported by OMS to be reviewed by information from the previous sponsor positives’’ which may have been sponsors. and such information is still clinically reported through OMS but not Our proposal for a new § 423.153(f)(2) adequate and up to date. This proposal identified through sponsors’ internal also meets the requirements of section is to avoid unnecessary burden on criteria due to a shorter look back period 1860D–4I(5)(C) of the Act. This section health care providers when additional and ability to group prescribers within of the Act requires that, with respect to case management outreach is not the same practice. each at-risk beneficiary, the sponsor necessary. This is consistent with the We also note that under the current shall contact the beneficiary’s providers current policy under which sponsors are policy, sponsors are expected to make who have prescribed frequently abused expected to enter information into ‘‘at least three (3) attempts to schedule drugs regarding whether prescribed MARx about pending, implemented and telephone conversations with the medications are appropriate for such terminated beneficiary-specific POS prescribers (separately or together) beneficiary’s medical conditions. claim edits, which is transferred to the within a reasonable period (for example, Further, our proposal meets the next sponsor, if applicable. Pending and a 10 business day period) from the requirements of Section 1860D– implemented POS claim edits are issuance of the written inquiry 4(c)(5)(B)(i)(II) of the Act, which actions that sponsors enter into MARx notification.’’ If the prescribers are requires that a Part D sponsor first verify after case management. We discuss unresponsive to case management, with the beneficiary’s providers that the potential at-risk and at-risk beneficiaries under our current policy, a sponsor may beneficiary is an at-risk beneficiary, if who change plans again later in this also implement a beneficiary-specific the sponsor intends to limit the preamble. POS claim edit for opioids as a last beneficiary’s access to coverage for The information that the plan sends to resort to encourage prescriber frequently abused drugs. the prescribers and elicits from them is engagement with case management. Specifically, we propose that a new intended to assist a Part D sponsor to By contrast, our proposed § 423.153(f)(2) read as follows: Case understand why the beneficiary meets § 423.153(f)(2) uses the terms Management/Clinical Contact/Prescriber the clinical guidelines and if a plan ‘‘reasonable attempts’’ and ‘‘reasonable Verification. (i) General Rule. The intervention is warranted for the safety period’’ rather than a specific number of sponsor’s clinical staff must conduct of the beneficiary. Also, sponsors use attempts or a specific timeframe for plan case management for each potential at- this information to choose standardized to call prescribers. The reason for this risk beneficiary for the purpose of responses in OMS and provide proposed adjustment to our policy is engaging in clinical contact with the information to MARx about plan because our current policy also states prescribers of frequently abused drugs interventions that were referenced that ‘‘[s]ponsors are not required to

VerDate Sep<11>2014 20:14 Nov 27, 2017 Jkt 244001 PO 00000 Frm 00014 Fmt 4701 Sfmt 4702 E:\FR\FM\28NOP2.SGM 28NOP2 sradovich on DSK3GMQ082PROD with PROPOSALS2 Federal Register / Vol. 82, No. 227 / Tuesday, November 28, 2017 / Proposed Rules 56349

automatically contact prescribers additional tools commonly known as pharmacy(ies) and/or prescriber(s), or telephonically,’’ but those that ‘‘employ ‘‘lock-in’’, for Part D plans to limit an at- both, as applicable, (1) in accordance a wait-and-see approach’’ should risk beneficiary’s access to coverage for with all other coverage requirements of understand that ‘‘we expect sponsors to frequently abused drugs. Prescriber the beneficiary’s prescription drug address the most egregious cases of lock-in would limit an at-risk benefit plan, unless the limit is opioid overutilization without beneficiary’s access to coverage for terminated or revised based on a unreasonable delay, and that we do not frequently abused drugs to those that are subsequent determination, including a believe that all such cases can be prescribed for the beneficiary by one or successful appeal, and (2) except as addressed through a prescriber letter more prescribers, and pharmacy lock-in necessary to provide reasonable access campaign.’’ Our guidance further states would restrict an at-risk beneficiary’s in accordance with paragraph (f)(12) of that, ‘‘to the extent that some cases can access to coverage for frequently abused this section. be addressed through written drugs to those that are dispensed to the (vi) Requirements for Limiting Access to communication to prescribers only, we beneficiary by one or more network Coverage for Frequently Abused Drugs would acknowledge the benefit of not pharmacies. (§ 423.153(f)(4)) aggravating prescribers with If the sponsor uses a lock-in tool(s), unnecessary telephonic the sponsor must generally cover We propose that before a Part D plan communications.’’ Finally, our guidance frequently abused drugs for the sponsor could limit the access of at-risk states that, ‘‘[s]ponsors must determine beneficiary only when they are obtained beneficiary to coverage for frequently for themselves the usefulness of from the selected pharmacy(ies) and/or abused drugs, the sponsor must first attempting to call or contact all opioid prescriber(s), as applicable, absent a take certain actions, consistent with prescribers when there are many, subsequent determination, including a current policy. We propose that a particularly when they are emergency successful appeal. Pursuant to section sponsor must first conduct the case room physicians.’’ 18 1860D–4(c)(5)(D)(i)(II) of the Act, a management discussed earlier, which Given the competing priorities of sponsor would also have to cover includes clinical contact to determine sponsors’ diligently addressing opioid frequently abused drugs from a non- whether prescribed medications are overutilization in the Part D program selected pharmacy or prescriber, if such appropriate for the potential at-risk through case management, which may coverage were necessary in order to beneficiary’s medical conditions and necessitate telephone calls to the provide reasonable access. We discuss prescriber verification that the prescribers, while being cognizant of the selection of pharmacies and prescribers beneficiary is an at-risk beneficiary. We need to be judicious in contacting and reasonable access later. also propose that the sponsor must first prescribers telephonically in order to We propose to describe all the tools obtain the agreement of the prescribers not unnecessarily disrupt their that would be available to sponsors to of frequently abused drugs with the practices, we wish to leave flexibility in limit an at-risk beneficiary’s access to limitation, unless the prescribers were the regulation text for sponsors to coverage for frequently abused drugs not responsive to the required case balance these priorities on a case-by- through a drug management program in management, in light of the risk to the case basis in their drug management § 423.153(f)(3) as follows: Limitation on beneficiary’s health. We further propose programs, particularly since this Access to Coverage for Frequently that the sponsor must first provide flexibility exists under the current Abused Drugs. Subject to the notice to the beneficiary in accordance policy. We note however, that we requirements of paragraph (f)(4) of this with section 1860D–4(c)(5)(B)(i)(I) of the propose a 3 attempts/10 business days section, a Part D plan sponsor may do Act. requirement for sponsors to conclude all of the following: (i) Implement a We propose to require the additional that a prescriber is unresponsive to case point-of-sale claim edit for frequently step of prescriber agreement, which is management in § 423.153(f)(4) discussed abused drugs that is specific to an at- consistent with the current policy as later in this section. risk beneficiary; or (ii) In accordance discussed earlier, because a prescriber with paragraphs (f)(10) and (f)(11) of may verify that the beneficiary is an at- (v) Limitations on Access to Coverage this section, limit an at-risk risk beneficiary but may not view a for Frequently Abused Drugs beneficiary’s access to coverage for limitation on the beneficiary’s access to (§ 423.153(f)(3)) frequently abused drugs to those that are coverage for frequently abused drugs as As described earlier, under the (A) Prescribed for the beneficiary by one appropriate. Given the additional current policy, Part D sponsors may or more prescribers; (B) Dispensed to information the prescribers would have implement a beneficiary-specific opioid the beneficiary by one or more network from the Part D sponsor through case POS claim edit to prevent continued pharmacies; or (C) Specified in both management about the beneficiary’s overutilization of opioids, with paragraphs (3)(ii)(B)(1) and (2) of this utilization of frequently abused drugs, prescriber agreement or in the case of an paragraph. Paragraph (iii)(A) would the prescribers’ professional opinion unresponsive prescriber during case state that if the sponsor implements an may be that an adjustment to their management. If a sponsor implements a edit as specified in paragraph (f)(3)(i) of prescribing for, and care of, the POS claim edit, the sponsor thereafter this section, the sponsor must not cover beneficiary is all that is needed to safely does not cover opioids for the frequently abused drugs for the manage the beneficiary’s use of beneficiary in excess of the edit, absent beneficiary in excess of the edit, unless frequently abused drugs going forward. a subsequent determination, including a the edit is terminated or revised based We invite stakeholders to comment on successful appeal. on a subsequent determination, not requiring prescriber agreement to As noted earlier, revised section including a successful appeal. implement pharmacy lock-in. We could 1860D–4(c)(5)(A) of the Act provides Paragraph (iii)(B) would state that if the foresee a case in which the prescriber is sponsor limits the at-risk beneficiary’s responsive, but does not agree with 18 See ‘‘Supplemental Guidance Relating to access to coverage as specified in pharmacy lock-in. Improving Drug Utilization Review Controls in Part paragraph (f)(3)(ii) of this section, the We also propose language that would D’’, September 6, 2012 (pp. 5, 19–20) at https:// www.cms.gov/Medicare/Prescription-Drug- sponsor must cover frequently abused provide an exception to the case Coverage/PrescriptionDrugCovContra/ drugs for the beneficiary only when they management requirement in RxUtilization.html. are obtained from the selected § 423.153(f)(2) when an at-risk

VerDate Sep<11>2014 20:14 Nov 27, 2017 Jkt 244001 PO 00000 Frm 00015 Fmt 4701 Sfmt 4702 E:\FR\FM\28NOP2.SGM 28NOP2 sradovich on DSK3GMQ082PROD with PROPOSALS2 56350 Federal Register / Vol. 82, No. 227 / Tuesday, November 28, 2017 / Proposed Rules

beneficiary was identified as an at-risk provide an initial written notice to the applicable, any limitation on the beneficiary by the beneficiary’s most potential at-risk beneficiary. We also availability of the special enrollment recent prior prescription drug benefit propose that the language be approved period described in § 423.38; (6) Clear plan. We discuss such cases more later by the Secretary and be in a readable instructions that explain how the in this section. Given the foregoing, we and understandable form that contains beneficiary can contact the sponsor, propose to add a paragraph (f)(4) to the language required by section 1860D– including how the beneficiary may § 423.153 that reads: Requirements for 4(c)(5)(B)(ii) of the Act to which we submit information to the sponsor in Limiting Access to Coverage for propose to add detail in the regulation response to the request described in Frequently Abused Drugs. (i) A sponsor text. Finally, we propose that the paragraph (f)(5)(ii)(C)(4); (7) Contact may not limit the access of an at-risk sponsor be required to make reasonable information for other organizations that beneficiary to coverage for frequently efforts to provide the prescriber(s) of can provide the beneficiary with abused drugs under paragraph (f)(3) of frequently abused drugs with a copy of assistance regarding the sponsor’s drug this section, unless the sponsor has the notice. management program; and (8) Other done all of the following: (A) Conducted We propose that § 423.153(f)(5)(i) read content that CMS determines is the case management required by as follows: Initial Notice to Beneficiary. necessary for the beneficiary to paragraph (f)(2) of this section and A Part D sponsor that intends to limit understand the information required in updated it, if necessary; (B) Obtained the access of a potential at-risk this notice. the agreement of the prescribers of beneficiary to coverage for frequently We propose to require at § 423.153(f)(5)(iii) that the Part D plan frequently abused drugs for the abused drugs under paragraph (f)(3) of sponsor make reasonable efforts to beneficiary that the specific limitation is this section must provide an initial provide the beneficiary’s prescriber(s) of appropriate; and (C) Provided the written notice to the beneficiary. frequently abused drugs with a copy of notices to the beneficiary in compliance Paragraph (f)(5)(ii) would require that the notice required under paragraph with paragraphs (f)(5) and (6) of this the notice use language approved by the section. We would also state in (f)(5)(i). Secretary and be in a readable and The content of the initial notice we subsection (ii) that if the sponsor understandable form that provides the complied with the requirement of propose in § 423.153(f)(5) closely following information: (1) An follows the content required by section paragraph (f)(2)(i)(C) of this section, and explanation that the beneficiary’s the prescribers were not responsive after 1860D–4(c)(5)(B)(ii) of the Act, but as current or immediately prior Part D plan noted previously, we have proposed to 3 attempts by the sponsor to contact sponsor has identified the beneficiary as them by telephone within 10 business add some detail to the regulation text. a potential at-risk beneficiary; (2) A In proposed paragraph (f)(5)(ii)(C)(2)— days, then the sponsor has met the description of all State and Federal which would require a description of requirement of paragraph (f)(4)(i)(B) of public health resources that are public health resources that are this section. Finally, we would state in designed to address prescription drug designed to address prescription drug a subsection (iii) that if the beneficiary abuse to which the beneficiary has abuse—we propose to require that the meets paragraph (2) of the definition of access, including mental health and notice contain information on how to a potential at-risk beneficiary or an at- other counseling services and access such services. We also included risk beneficiary, and the sponsor has information on how to access such a reference in proposed paragraph obtained the applicable case services, including any such services (ii)(C)(4) to the fact that a beneficiary management information from the covered by the plan under its Medicare would have 30 days to provide sponsor of the beneficiary’s most recent benefits, supplemental benefits, or information to the sponsor, which is a plan and updated it as appropriate, the Medicaid benefits (if the plan integrates timeframe we discuss later in this sponsor has met the case management coverage of Medicare and Medicaid preamble. We propose an additional requirement in paragraph (f)(2)(i). benefits); (3) An explanation of the requirement in paragraph (ii)(C)(5) that (vii) Beneficiary Notices and Limitation beneficiary’s right to a redetermination the sponsor include the limitation the of Special Enrollment Period if the sponsor issues a determination sponsors intends to place on the (§§ 423.153(f)(5), 423.153(f)(6), 423.38) that the beneficiary is an at-risk beneficiary’s access to coverage for beneficiary and the standard and frequently abused drugs, the timeframe (A) Initial Notice to Beneficiary and expedited redetermination processes for the sponsor’s decision, and, if Sponsor Intent To Implement Limitation described at § 423.580 et seq.; (4) A applicable, any limitation on the on Access to Coverage for Frequently request that the beneficiary submit to availability of the SEP. Finally, we Abused Drugs (§ 423.153(f)(5)) the sponsor within 30 days of the date proposed a requirement in paragraph The notices referred to in proposed of this initial notice any information (ii)(C)(8) that the notice contain other § 423.153(f)(4)(i)(C) are the initial and that the beneficiary believes is relevant content that CMS determines is second notice that section 1860D– to the sponsor’s determination, necessary for the beneficiary to 4(c)(5)(B)(i)(I) of the Act requires Part D including which prescribers and understand the information required in sponsors to send to potential at-risk and pharmacies the beneficiary would prefer the initial notice. at-risk beneficiaries regarding their drug the sponsor to select if the sponsor We note that our proposed management programs. We remind Part implements a limitation under implementation of the statutory D sponsors that under Section 504 of the § 423.153(f)(3)(ii); (5) An explanation of requirements for the initial notice Rehabilitation Act of 1973, effective the meaning and consequences of being would permit the notice also to be used communications requirements would identified as an at-risk beneficiary, when the sponsor intends to implement apply to both these notices. We first including an explanation of the a beneficiary-specific POS claim edit for discuss the initial notice. sponsor’s drug management program, frequently abused drugs. This is We propose in § 423.153(f)(5) that if a the specific limitation the sponsor consistent with our current policy and Part D plan sponsor intends to limit the intends to place on the beneficiary’s would streamline beneficiary notices access of a potential at-risk beneficiary access to coverage for frequently abused about opioids since we propose to coverage for frequently abused drugs, drugs under the program, the timeframe frequently abused drugs to consist of the sponsor would be required to for the sponsor’s decision, and if opioids for 2019.

VerDate Sep<11>2014 20:14 Nov 27, 2017 Jkt 244001 PO 00000 Frm 00016 Fmt 4701 Sfmt 4702 E:\FR\FM\28NOP2.SGM 28NOP2 sradovich on DSK3GMQ082PROD with PROPOSALS2 Federal Register / Vol. 82, No. 227 / Tuesday, November 28, 2017 / Proposed Rules 56351

Although section 1860D–4(c)(5) is alternate second notice later in this program and not receive the care silent as to the sequence of the steps of preamble. coordination such a program provides. clinical contact, prescriber verification, We intend to develop language for the Even if an-risk beneficiary joined and the initial notice, we propose to initial notice. Therefore, the proposed another plan that had a drug implement these requirements such that regulatory text states that the notice management program in place, there they would occur in the following order: must use language approved by the would be challenges in terms of First, the plan sponsor would conduct Secretary. preventing a gap managing their the case management which (B) Limitation on the Special potential or actual overutilization of encompasses clinical contact and Enrollment Period for LIS Beneficiaries frequently abused drugs due to timing of prescriber verification required by With an At-Risk Status (§ 423.38) information sharing between the plans § 423.153(f)(2) and prescriber agreement and possible difference in provider required by § 423.153(f)(4), and second In addition to providing relevant networks. would, as applicable, indicate the information to a potential at-risk Accordingly, we are proposing to sponsor’s intent to limit the beneficiary, we propose that the initial revise § 423.38(c)(4), so that it is not beneficiary’s access to frequently abused notice will notify dually- and other low available to potential at-risk drugs by providing the initial notice. In income subsidy (LIS)-eligible beneficiaries or at-risk beneficiaries. our view, a sponsor cannot reasonably beneficiaries, that they will be unable to Once an individual is identified as a intend to limit the beneficiary’s access use the special enrollment period (SEP) potential at-risk beneficiary and the unless it has first undertaken case for LIS beneficiaries due to their at-risk sponsor intends to limit the management to make clinical contact status. (Hereafter, this SEP is referred to beneficiary’s access to coverage for and obtain prescriber verification and as the ‘‘duals’ SEP’’). Section 1860D– frequently abused drugs, the sponsor 1(b)(3)(D) of the Act requires the agreement. Further, under our proposal, would provide an initial notice to the Secretary to establish a Part D SEP for although the proposed regulatory text of beneficiary and the duals’ SEP would no full-benefit dually eligible (FBDE) (f)(4)(i) states that the sponsor must longer be available to the otherwise beneficiaries. This SEP, codified at verify with the prescriber(s) that the eligible individual. This means that he § 423.38(c)(4), was later extended to all beneficiary is an at-risk beneficiary in or she would be unable to use the duals’ other subsidy-eligible beneficiaries (75 accordance with the applicable statutory SEP to enroll in a different plan or FR 19720) so that all LIS-eligible language, the beneficiary would still be disenroll from the current Part D plan. beneficiaries were treated uniformly. a potential at-risk beneficiary from the The limitation would be effective as of The duals’ SEP currently allows such sponsor’s perspective when the sponsor the date the Part D plan sponsor individuals to make Part D enrollment identifies an individual to be potentially provides the beneficiary the initial changes (that is, enroll in, disenroll notice. This is because the sponsor has at-risk. Limiting the duals’ SEP from, or change Part D plans) concurrent with the plan’s identification yet to solicit information from the throughout the year, unlike other Part D beneficiary about his or her use of of a potential at-risk beneficiary would enrollees who generally may make reduce the opportunities for such frequently abused drugs, and such enrollment changes only during the information may have a bearing on beneficiaries to use the interval between annual election period (AEP). receipt of the initial notice and whether a sponsor identifies a potential Individuals using this SEP can enroll in at-risk beneficiary as an at-risk application of the limitation (for either a stand-alone Part D prescription example, pharmacy or prescriber lock- beneficiary. drug plan (PDP) or a Medicare in, beneficiary-specific POS claim edit) Moreover, we believe that in general, Advantage plan with prescription drug as an opportunity to change plans before a sponsor should not send a potential at- coverage. the restriction takes effect. risk beneficiary an initial notice until Section 704(a)(3) of CARA gives the Based on the 2015 data in CMS’ OMS, after the sponsor has been in contact Secretary the discretion to limit the SEP more than 76 percent of all beneficiaries with the beneficiary’s prescribers of for FBDE beneficiaries outlined in estimated to be potential at-risk frequently abused drugs, so as to avoid section 1860D–1(b)(3)(D) of the Act. beneficiaries are LIS-eligible unnecessarily alarming the beneficiary, This limitation is related to, but distinct individuals. Based on this data, without considering that a sponsor may learn from, other changes to the duals’ SEP an SEP limitation at the initial point of from the prescribers that the proposed in section III.A.11 of this identification, the notification of a beneficiary’s use of the drugs is proposed rule (as discussed later). A potential drug management program medically necessary, or that the limitation under a sponsor’s drug may prompt these individuals to switch beneficiary is an exempted beneficiary. management program can only be plans immediately after receiving the This proposed approach is also effective as long as the individual is initial notice. In effect, under the consistent with our current policy and enrolled in that plan or another plan current regulations, if unchanged, the stakeholder comments. Therefore, under that also has a drug management dually- or other LIS-eligible individual, this approach, a sponsor would provide program. Therefore, this proposed SEP could keep changing plans and avoid an initial notice to a potential at-risk limitation would be an important tool to being subject to any drug management beneficiary if the sponsor intends to reduce the opportunities for LIS-eligible program. limit the beneficiary’s access to coverage beneficiaries designated as at-risk to We propose that, consistent with the for frequently abused drugs, and the switch plans. If an individual is timeframes discussed in proposed sponsor would provide a second notice determined to be an at-risk beneficiary, paragraph § 423.153(f)(7), if the Part D to an at-risk beneficiary when it actually and is permitted to change plans using plan sponsor takes no additional action limits the beneficiary’s access to the duals’ SEP, he or she could avoid to identify the individual as an at-risk coverage for frequently abused drugs. the drug management program by beneficiary within 90 days from the Alternatively, the sponsor would leaving the plan before the program can initial notice, the ‘‘potentially at-risk’’ provide an alternate second notice if it be started or by enrolling in a PDP that designation and the duals’ SEP decides not to limit the beneficiary’s does not have a drug management limitation would expire. If the sponsor access to coverage for frequently abused program. This would allow the determines that the potential at-risk drugs. We discuss the second notice and beneficiary to circumvent the lock-in beneficiary is an at-risk beneficiary, the

VerDate Sep<11>2014 20:14 Nov 27, 2017 Jkt 244001 PO 00000 Frm 00017 Fmt 4701 Sfmt 4702 E:\FR\FM\28NOP2.SGM 28NOP2 sradovich on DSK3GMQ082PROD with PROPOSALS2 56352 Federal Register / Vol. 82, No. 227 / Tuesday, November 28, 2017 / Proposed Rules

duals’ SEP would not be available to section III.A.11. of this proposed rule, paragraph (f)(3) of this section, a Part D that beneficiary until the date the would not be permissible once the sponsor must provide a second written beneficiary’s at-risk status is terminated individual is enrolled in a plan that has notice to the beneficiary. Paragraph based on a subsequent determination, identified him or her as a potential at- (f)(6)(ii) would require that the second including a successful appeal, or at the risk beneficiary or at-risk beneficiary, notice use language approved by the end of a 12-month period calculated for a dual or other LIS-eligible who Secretary and be in a readable and from the effective date the sponsor meets the definition of at-risk understandable form that contains the provided the beneficiary in the second beneficiary or potential at-risk following information: (1) An notice as proposed at § 423.153(f)(6) beneficiary under proposed § 423.100. explanation that the beneficiary’s whichever is sooner. (C) Second Notice to Beneficiary and current or immediately prior Part D plan As discussed in section III.A.11 of this sponsor has identified the beneficiary as proposed rule, we are also proposing to Sponsor Implementation of Limitation on Access to Coverage for Frequently an at-risk beneficiary; (2) An revise § 423.38(c)(4) to make the SEP for explanation that the beneficiary is FBDE or other subsidy-eligible Abused Drugs by Sponsor (§ 423.153(f)(6)) subject to the requirements of the individuals available only in certain sponsor’s drug management program, circumstances. As further explained in As previously noted, section 1860D– including the limitation the sponsor is section III.A.11, we also are proposing 4(c)(5)(B)(i)(I) of the Act requires Part D placing on the beneficiary’s access to to establish a new SEP at § 423.38(c)(9) sponsors to provide a second written coverage for frequently abused drugs to permit any beneficiary to make an notice to at-risk beneficiaries when they and the effective and end date of the enrollment change when he or she has limit their access to coverage for limitation; and, if applicable, any a gain, loss, or change in Medicaid or frequently abused drugs. Also, as with limitation on the availability of the LIS eligibility. the initial notice, our proposed special enrollment period described in We propose not to limit the implementation of this statutory § 423.38 et seq.; (3) The prescriber(s) availability of this new SEP to potential requirement for the second notice and/or pharmacy(ies) or both, if and as at-risk and at-risk beneficiaries. In would permit the second notice to be applicable, from which the beneficiary situations where an individual is used when the sponsor implements a must obtain frequently abused drugs in designated as a potential at-risk beneficiary-specific POS claim edit for order for them to be covered by the beneficiary or an at-risk beneficiary and frequently abused drugs. sponsor; (4) An explanation of the We propose to codify this requirement later determined to be dually-eligible for beneficiary’s right to a redetermination in § 423.153(f)(6)(i). Specifically, we Medicaid or otherwise eligible for LIS, under § 423.580 et seq., including a propose to require the sponsor to that beneficiary should be afforded the description of both the standard and provide the second notice when it ability to receive the subsidy benefit to expedited redetermination processes, the fullest extent for which he or she determines that the beneficiary is an at- with the beneficiary’s right to, and qualifies and therefore should be able to risk beneficiary and to limit the conditions for, obtaining an expedited change to a plan that is more affordable, beneficiary’s access to coverage for redetermination; (5) An explanation that or that is within the premium frequently abused drugs. We further the beneficiary may submit to the benchmark amount if desired. Likewise, propose to require the second notice to sponsor, if the beneficiary has not if an individual with an ‘‘at-risk’’ include the effective and end date of the already done so, the prescriber(s) and designation loses dual-eligibility or LIS limitation. Thus, this second notice pharmacy(ies), as applicable, from status, or has a change in the level of would function as a written which the beneficiary would prefer to extra help, he or she would be afforded confirmation of the limitation the obtain frequently abused drugs; (6) Clear an opportunity to elect a different Part sponsor is implementing with respect to D plan, as discussed in section III.A.11 the beneficiary, and the timeframe of instructions that explain how the of this proposed rule. This is also a life that limitation. beneficiary may contact the sponsor, changing event that may have a We also propose that the second including how the beneficiary may financial impact on the individual, and notice, like the initial notice, contain submit information to the sponsor in could necessitate an individual making language required by section 1860D– response to the request described in a plan change in order to continue 4(c)(5)(B)(iii) of the Act to which we paragraph (f)(6)(ii)(C)(5) of this section; coverage. propose to add detail in the regulation and (7) Other content that CMS We note that auto- and facilitated text. We also propose that the second determines is necessary for the enrollment of LIS eligible individuals notice, like the initial notice, be beneficiary to understand the and plan annual reassignment processes approved by the Secretary and be in a information required in this notice. would still apply to dual- and other LIS- readable and understandable form, as The content of the second notice we eligible individuals who were identified well as contain other content that CMS propose in § 423.153(f)(6) closely as an at-risk beneficiary in their determines is necessary for the follows the content required by section previous plan. This is consistent with beneficiary to understand the 1860D–4(c)(5)(B)(iii) of the Act, but as CMS’s obligation and general approach information required in this notice. noted previously, we have proposed to to ensure Part D coverage for LIS- Finally, in § 423.153(f)(6)(iii), we add some detail to the regulation text. eligible beneficiaries and to protect the propose that the sponsor be required to In proposed paragraph (2), we have individual’s access to prescription make reasonable efforts to provide the proposed language that would require a drugs. Furthermore, we note that the beneficiary’s prescriber(s) of frequently sponsor to include the limitation the proposed enrollment limitations for abused drugs with a copy of the notice, sponsors is placing on the beneficiary’s Medicaid or other LIS-eligible as we proposed with the initial notice. access to coverage for frequently abused individuals designated as at-risk Proposed § 423.153(f)(6)(i) would read drugs, the effective and end date of the beneficiaries would not apply to other as follows: Second notice. Upon making limitation, and if applicable, any Part D enrollment periods, including the a determination that a beneficiary is an limitation on the availability of the SEP. AEP or other SEPs. As discussed at-risk beneficiary and to limit the We propose an additional requirement previously, we propose that the ability beneficiary’s access to coverage for in paragraph (6) that the sponsor to use the duals’ SEP, as outlined in frequently abused drugs under include instructions how the beneficiary

VerDate Sep<11>2014 20:14 Nov 27, 2017 Jkt 244001 PO 00000 Frm 00018 Fmt 4701 Sfmt 4702 E:\FR\FM\28NOP2.SGM 28NOP2 sradovich on DSK3GMQ082PROD with PROPOSALS2 Federal Register / Vol. 82, No. 227 / Tuesday, November 28, 2017 / Proposed Rules 56353

may submit information to the sponsor drugs; and if applicable, that the SEP In addition, we propose to impose a in response to the request described in limitation no longer applies. deadline by when a sponsor must paragraph (4). Finally, we proposed a Specifically, we propose that provide the second notice or alternate requirement in paragraph (7) that the § 423.153(f)(7)(i) would read: Alternate second notice to the beneficiary, notice contain other content that CMS second notice. (i) If, after providing an although not specifically required by determines is necessary for the initial notice to a potential at-risk CARA. Such a requirement should beneficiary to understand the beneficiary under paragraph (f)(4) of this provide the sponsor with sufficient time information required in the initial section, a Part D sponsor determines to complete the administrative steps notice. that the potential at-risk beneficiary is necessary to execute the action the We note that under our current not an at-risk beneficiary, the sponsor sponsor intends to take that was policy, plan sponsors send only one must provide an alternate second explained in the initial notice to the notice to the beneficiary if they intend written notice to the beneficiary. beneficiary, while acknowledging that to implement a beneficiary-specific POS Paragraph (f)(7)(ii) would require that the sponsor would have already met in opioid claim edit, which generally the notice use language approved by the the case management, clinical contact provides the beneficiary with a 30-day Secretary in a readable and and prescriber verification requirement. advance written notice and opportunity understandable form containing the In the case of an alternate second to provide additional information, as following information: (1) The sponsor notice, the timeframe should provide well as to request a coverage has determined that the beneficiary is the beneficiary with definitive notice determination if the beneficiary not an at-risk beneficiary; (2) The that the sponsor has not identified the disagrees with the edit. If our proposal sponsor will not limit the beneficiary’s beneficiary as an at-risk beneficiary and is finalized, the implementation of a access to coverage for frequently abused that there will be no limitation on his/ beneficiary-specific POS claim edit or a drugs; (3) If applicable, the SEP her access to coverage for frequently limitation on the at-risk beneficiary’s limitation no longer applies; (4) Clear abused drugs. Accordingly, we propose instructions that explain how the coverage for frequently abused drugs to that the sponsor would be required to beneficiary may contact the sponsor; a selected pharmacy(ies) or prescriber(s) send either the second notice or the and (5) Other content that CMS would be an at-risk determination (a alternate second notice, as applicable, determines is necessary for the type of initial determination that would when it makes its determination or no beneficiary to understand the confer appeal rights). Also, the sponsor later than 90 calendar days after the date information required in this notice. on the initial notice, whichever comes would generally be required to send two Again, as with the initial and second sooner. notices—the first signaling the sponsor’s notices, we propose in a paragraph intent to implement a POS claim edit or (f)(7)(iii) that the Part D sponsor be Specifically, we propose to include at limitation (both referred to generally as required to make reasonable efforts to § 423.153(f)(8) the following: Timing of a ‘‘limitation’’), and the second upon provide the beneficiary’s prescriber(s) of Notices. (i) Subject to paragraph (ii) of implementation of such limitation. frequently abused drugs with a copy of this section, a Part D sponsor must Under our proposal, the requirement to the notice required by paragraph provide the second notice described in send two notices would not apply in (f)(7)(i). Also, as with the initial and paragraph (f)(6) of this section or the certain cases involving at-risk second notices, we propose in alternate second notice described in beneficiaries who are identified as such paragraph (ii) that the notice use paragraph (f)(7) of this section, as and provided a second notice by their language approved by the Secretary and applicable, on a date that is not less immediately prior plan’s drug be in a readable and understandable than 30 days and not more than the management program. form; in paragraph (ii)(C)(4) that the earlier of the date the sponsor makes the relevant determination or 90 days after (D) Alternate Second Notice When Limit notice contain clear instructions that the date of the initial notice described on Access Coverage for Frequently explain how the beneficiary may contact in paragraph (f)(5) of this section. We Abused Drugs by Sponsor Will Not the sponsor; and in paragraph (ii)(C)(5), intend this proposed timeframe for the Occur (§ 423.153(f)(7)) that the notice contain other content that CMS determines is necessary for sponsor to provide either the second We propose that if a sponsor does not the beneficiary to understand the notice or the alternate second notice, as implement the limitation on the information required in the notice. applicable, to be reasonable for both potential at-risk beneficiary’s access to Part D sponsors and the relevant coverage of frequently abused drugs it (E) Timing of Notices (§ 423.153(f)(8)) beneficiaries and important to ensuring described in the initial notice, then the Section 1860D–4(c)(5)(B)(iv) of the clear, timely and reasonable sponsor would be required to provide Act requires a Part D sponsor to provide communication between the parties. the beneficiary with an alternate second the second notice to the beneficiary on Section 1860D–4(c)(5)(B)(iv)(II) of the notice. Although not explicitly required a date that is not less than 30 days after Act explicitly provides for an exception by the statute, we believe this notice is the sponsor provided the initial notice to the required timeframe for issuing a consistent with the intent of the statute to the beneficiary. We interpret the second notice. Specifically, the statute and is necessary to avoid beneficiary purpose of this requirement to be that permits the Secretary to identify confusion and minimize unnecessary the beneficiary should have ample time through rulemaking concerns regarding appeals. We propose generally that in to provide information to the sponsor the health or safety of a beneficiary or such an alternate notice, the sponsor that may alter the sponsor’s intended significant drug diversion activities that must notify the beneficiary that the action that is contained in the initial would necessitate that a Part D sponsor sponsor no longer considers the notice to the beneficiary, or to provide provide the second written notice to the beneficiary to be a potential at-risk the sponsor with the beneficiary’s beneficiary before the 30 day time beneficiary upon making such pharmacy and/or prescriber preferences, period normally required has elapsed. determination; will not place the if the sponsor’s intent is to limit the For this reason, we included the beneficiary in its drug management beneficiary’s access to coverage for language, ‘‘subject to paragraph (ii),’’ at program; will not limit the beneficiary’s frequently abused drugs from selected a the beginning of proposed access to coverage for frequently abused pharmacy(ies) and/or prescriber(s). § 423.153(f)(8)(i).

VerDate Sep<11>2014 20:14 Nov 27, 2017 Jkt 244001 PO 00000 Frm 00019 Fmt 4701 Sfmt 4702 E:\FR\FM\28NOP2.SGM 28NOP2 sradovich on DSK3GMQ082PROD with PROPOSALS2 56354 Federal Register / Vol. 82, No. 227 / Tuesday, November 28, 2017 / Proposed Rules

We note that the proposed definition drug, or if the sponsor is implementing should be very narrow. Therefore, we of at-risk beneficiary would include a limitation on access to coverage for have only included a proposal for an beneficiaries for whom a gaining Part D frequently abused drugs to a selected exception to shorten the 30 day plan sponsor received a notice upon the pharmacy(ies) or prescriber(s) and has timeframe between the initial and beneficiary’s enrollment that the the same location of pharmacy(ies) and/ second notice that is based on a beneficiary was identified as an at-risk or the same prescriber(s) in its provider beneficiary’s status as an at-risk beneficiary under the prescription drug network, as applicable, that the beneficiary in an immediately preceding plan in which the beneficiary was most beneficiary used to obtain frequently plan. We note that is a status the drug recently enrolled and such abused drugs in the most recent plan. management provisions of CARA identification had not been terminated Otherwise, we propose that the new explicitly requires to be shared with the upon enrollment. This proposed sponsor would be required to provide next plan sponsor, if a beneficiary definition is based on the language in the initial notice to the at-risk changes plans, which means there section 1860–D–4(c)(5)(C)(i)(II) of the beneficiary, even though the initial would be a concrete data point for this Act. notice is generally intended for proposed exception to the timing of the Given that this provision allows an at- potential at-risk beneficiaries, and could notices. We discuss such sharing of risk identification to carry forward to not provide the second notice until at information later in the preamble. the next plan, we believe it is least 30 days had passed. This is (viii) Provisions Specific to Limitations appropriate to propose to permit a because even though there would also on Access to Coverage of Frequently gaining plan to provide the second be a concern for the at-risk beneficiary’s Abused Drugs to Selected Pharmacies notice to an at-risk beneficiary so health and safety in this latter case as and Prescribers (§§ 423.153(f)(4), identified by the most recent prior plan well, this concern would be outweighed 423.153(f)(9), 423.153(f)(10), sooner than would otherwise be by the fact that the beneficiary had not 423.153(f)(11), 423.153(f)(12), required. For the same reasons, we been afforded a chance to submit his or 423,153(f)(13)) believe that it would be appropriate to her preference for a pharmacy(ies) and/ permit the gaining plan to even send the or prescriber(s), as applicable, from Some of the drug management beneficiary a combined initial and which he or she would have to obtain program provisions in CARA are only second notice, under certain frequently abused drugs to obtain relevant to ‘‘lock-in’’. We propose circumstances. However, because the coverage under the new plan’s drug several regulatory provisions to content of the initial notice would not management program. implement these provisions, as follows: be appropriate for an at-risk beneficiary, We propose to codify this policy by (A) Special Requirement To Limit and because such beneficiary would adding a paragraph (ii) to Access to Coverage of Frequently have already received an initial notice § 423.153(f)(8), as noted earlier, to read Abused Drugs to Selected Prescriber(s) from his or her immediately prior plan as follows: Immediately upon the (§ 423.153(f)(4)) sponsor, the content of this combined beneficiary’s enrollment in the gaining notice should only consist of the plan, the gaining plan sponsor may We believe prescriber lock-in should required content for the second notice provide a second notice described in be a tool of last resort to manage at-risk so as not to confuse the beneficiary. paragraph (f)(6) to a beneficiary for beneficiaries’ use of frequently abused Thus, our interpretation of section whom the gaining sponsor received drugs, meaning when a different 1860D–4(c)(5)(B)(iv)(II) of the Act in notice that the beneficiary was approach has not been successful, conjunction with section 1860D– identified as an at-risk beneficiary by whether that was a ‘‘wait and see’’ 4(c)(5)(C)(i)(II) of the Act is that a his or her most recent prior plan and approach or the implementation of a gaining Part D sponsor may send the such identification had not been beneficiary specific POS claim edit or a second notice immediately to a terminated in accordance with pharmacy lock-in. Limiting an at-risk beneficiary for whom the sponsor § 423.153(f)(14), if the sponsor is beneficiary’s access to coverage for received a notice upon the beneficiary’s implementing either of the following: frequently abused drugs from only enrollment that the beneficiary was (A) A beneficiary-specific point-of-sale selected prescribers impacts the identified as an at-risk beneficiary under claim edit as described in paragraph beneficiary’s relationship with his or the prescription drug plan in which the (f)(3)(i); or (B) A limitation on access to her health care providers and may beneficiary was most recently enrolled coverage as described in impose burden upon prescribers in and such identification had not been paragraph(f)(3)(ii), if such limitation terms of prescribing frequently abused terminated upon disenrollment. This is would require the beneficiary to obtain drugs. As a result, we propose that a sponsor consistent with our current policy under frequently abused drugs from the same may not limit an at-risk beneficiary’s which a gaining sponsor may location of pharmacy and/or the same access to coverage of frequently abused immediately implement a beneficiary- prescriber, as applicable, that was drugs to a selected prescriber(s) until at specific opioid POS claim edit, if the selected under the immediately prior least 6 months has passed from the date gaining sponsor is notified that the plan under (f)(9). the beneficiary is first identified as a beneficiary was subject to such an edit Some stakeholders commented that potential at-risk beneficiary. We propose in the immediately prior plan and such sponsors should be allowed to expedite the second notice in cases of egregious that this date be the date of the first edit had not been terminated.19 OMS report that identified the We propose that sending a second and potentially dangerous beneficiary, so long as the beneficiary notice to an at-risk beneficiary so overutilization or in cases involving an was also reported in the most recent identified in the most recent plan would active criminal investigation when OMS report that the sponsor received. be permissible only if the new sponsor allowed by a court. However, given the This is because limiting the is implementing a beneficiary-specific importance of a beneficiary having beneficiary’s access to coverage of POS claim edit for a frequently abused advance notice of a pending limit on his or her access to coverage for frequently frequently abused drugs from a selected 19 See ‘‘Beneficiary-Level Point-of-Sale Claim abused drugs and sufficient time to prescriber would only be necessary if Edits and Other Overutilization Issues,’’ August 25, respond and/or prepare, we believe the beneficiary continues to meet the 2014. exceptions to the timing of the notices clinical guidelines despite any existing

VerDate Sep<11>2014 20:14 Nov 27, 2017 Jkt 244001 PO 00000 Frm 00020 Fmt 4701 Sfmt 4702 E:\FR\FM\28NOP2.SGM 28NOP2 sradovich on DSK3GMQ082PROD with PROPOSALS2 Federal Register / Vol. 82, No. 227 / Tuesday, November 28, 2017 / Proposed Rules 56355

intervention or limitation. We discuss frequently abused drugs to a selected alone Part D plans (PDPs) do not have OMS reports in more detail later. prescriber. Finally, we note that even if provider networks, and thus no We expect that the 6-month waiting a sponsor had already provided the prescriber would be in-network, the period will provide the sponsor beneficiary with the required notices to plan sponsor must generally select the additional time to assess whether case comply with § 423.153(f)(4)(i)(C), the prescriber that the beneficiary prefers, management or another tool, such as a sponsor would have to provide them unless an exception applies. We discuss beneficiary-specific POS claim edit or again in order to remain compliant, exceptions in the next section of this pharmacy lock-in has failed to resolve because the beneficiary would not have preamble. In our view, it is essential the beneficiary’s overutilization of been notified about the specific that an at-risk beneficiary must frequently abused drugs. Sponsors have limitation on his or her access to generally select in-network pharmacies indicated in comments on the current coverage for frequently abused drugs to and prescribers so that the plan is in the policy that the case management a selected prescriber(s) and has an best possible position to coordinate the process can take 3 to 6 months. Also, opportunity to select the prescriber(s). beneficiary’s care going forward in light sponsors would need time to determine We foresee a scenario in which a of the demonstrated concerns with the whether the beneficiary still meets the sponsor may wish to implement a beneficiary’s utilization of frequently clinical guidelines and is thus limitation on a beneficiary’s access to abused drugs. continuing to be reported by OMS. coverage of frequently abused drugs to Accordingly, we propose Therefore, the time period we propose a selected prescriber(s) when the § 423.153(f)(9) to read: Beneficiary was chosen to account for time needed sponsor’s first round of case preferences. Except as described in for the case management process and to management, clinical contact and paragraph (f)(10) of this section, if a align with the 6 month measurement prescriber verification resulted only in beneficiary submits preferences for period of the proposed clinical sending the prescribers of frequently prescribers or pharmacies or both from guidelines. abused drugs a written report about the which the beneficiary prefers to obtain We seek comment on whether this 6- beneficiary’s utilization of frequently frequently abused drugs, the sponsor month waiting period would reduce abused drugs and taking a ‘‘wait and must do the following—(i) Review such provider burden sufficiently to see’’ approach, which did not result in preferences and (ii) If the beneficiary outweigh the additional case the prescribers’ adjusting their is—(A) Enrolled in a stand-alone management, clinical contact and prescriptions for frequently abused prescription drug benefit plan and prescriber verification that providers drugs for their patient. In such a specifies a prescriber(s) or network may experience if a sponsor believes a scenario, assuming the patient still pharmacy(ies) or both, select or change beneficiary’s access to coverage of meets the clinical guidelines and the selection of prescriber(s) or network frequently abused drugs should be continues to be reported by OMS, the pharmacy(ies) or both for the limited to a selected prescriber(s). sponsor would need to try another beneficiary based on beneficiary’s Comments should include the intervention to address the opioid preference(s) or (B) Enrolled in a additional operational considerations overuse. Another scenario could be that Medicare Advantage prescription drug for sponsors to implement this proposal. the sponsor implemented a pharmacy benefit plan and specifies a network Given our proposal, we propose lock-in, but after 6-months, the prescriber(s) or network pharmacy(ies) adding a paragraph (iv) to § 423.153(f)(4) beneficiary still meets the clinical or both, select or change the selection of that would state: (f)(4)(iv) A Part D guidelines due to receiving frequently prescriber(s) or pharmacy(ies) or both sponsor must not limit an at-risk for the beneficiary based on the beneficiary’s access to coverage for abused drugs from additional prescribers. beneficiary’s preference(s). If the frequently abused drugs to those that are beneficiary submits preferences for a prescribed for the beneficiary by one or (B) Selection of Pharmacies and non-network pharmacy(ies), or in the more prescribers under Prescribers (§§ 423.153(f)(9), case of a Medicare Advantage § 423.153(f)(3)(ii)(A) unless—(A) At 423.153(f)(10), 423.153(f)(11), prescription drug benefit plan a non- least 6 months has passed from the date 423.153(f)(12), 423.153(f)(13)) network prescriber(s), or both, the the beneficiary was first identified as a (1) Beneficiary Preferences sponsor does not have to select or potential at-risk beneficiary from the (§ 423.153(f)(9)) change the selection for the beneficiary date of the applicable CMS to a non-network pharmacy or identification report; and (B) The Section 1860D–4(c)(5)(D) of the Act prescriber except if necessary to provide beneficiary meets the clinical guidelines provides that, if a sponsor intends to reasonable access. and was reported by the most recent impose, or imposes, a limit on a In a paragraph (iii), we propose that CMS identification report. beneficiary’s access to coverage of the sponsor must inform the beneficiary We note that in conducting the case frequently abused drugs to selected of the selection in the second notice, or management required under pharmacy(ies) or prescriber(s), and the if not feasible due to the timing of the § 423.153(f)(4)(i)(A) in anticipation of potential at-risk beneficiary or at-risk beneficiary’s submission, in a implementing a prescriber lock-in, the beneficiary submits preferences for a subsequent written notice, issued no sponsor would be expected to update pharmacy(ies) or prescriber(s), the later than 14 days after receipt of the any case management it had already sponsor must select the pharmacy(ies) submission. Thus, this section would conducted. Also, even if a sponsor had and prescriber(s) for the beneficiary require a Part D plan sponsor to honor already obtained the prescriber’s based on such preferences, unless an an at-risk beneficiary’s preferences for agreement to implement a limitation on exception applies, which we will in-network prescribers and pharmacies the beneficiary’s coverage of frequently address later in the preamble. We from which to obtain frequently abused abused drugs to a selected pharmacy to further propose that such pharmacy(ies) drugs, unless the plan was a stand-alone comply with § 423.153(f)(4)(i)(B), for or prescriber(s) must be in-network, PDP and the selection involves a example, the sponsor would have to except if the at-risk beneficiary’s plan is prescriber. In other words, a stand-alone obtain the agreement of the prescriber a stand-alone prescription drug benefit PDP or MA–PD does not have to honor who would be selected to implement a plan and the beneficiary’s preference a beneficiary’s selection of a non- limitation on a beneficiary’s coverage of involves a prescriber. Because stand- network pharmacy, except as necessary

VerDate Sep<11>2014 20:14 Nov 27, 2017 Jkt 244001 PO 00000 Frm 00021 Fmt 4701 Sfmt 4702 E:\FR\FM\28NOP2.SGM 28NOP2 sradovich on DSK3GMQ082PROD with PROPOSALS2 56356 Federal Register / Vol. 82, No. 227 / Tuesday, November 28, 2017 / Proposed Rules

to provide reasonable access, which we advance written notice of the change; PDP and the selection involves a discuss later in this section. Also, under and (B) A rationale for the change. prescriber(s). In the latter case, the our proposal, the beneficiary could prescriber will not be a network (3) Reasonable Access (§§ 423.100, submit preferences at any time. Finally, provider, because such plans do not 423.153(f)(11), 423.153(f)(12)) the sponsor would be required to have provider networks. In urgent confirm the selection in writing either If a potential at-risk beneficiary or at- circumstances, we propose that in the second notice, if feasible, or risk beneficiary does not submit reasonable access means the sponsor within 14 days of receipt of the pharmacy or prescriber preferences, must have reasonable policies and beneficiary’s submission. section 1860–D–4(c)(5)(D)(i) of the Act procedures in place to ensure provides that the Part D sponsor shall beneficiary access to coverage of (2) Exception to Beneficiary Preferences make the selection. Section 1860–D– frequently abused drugs without a delay (§ 423.153(f)(10)) 4(c)(5)(D)(ii) of the Act further provides that may seriously jeopardize the life or Section 1860D–4(c)(5)(D)(iv) of the that, in making the selection, the health of the beneficiary or the Act, provides for an exception to an at- sponsor shall ensure that the beneficiary beneficiary’s ability to regain maximum risk beneficiary’s preference of continues to have reasonable access to function. prescriber or pharmacy from which the frequently abused drugs, taking into Determining reasonable access may be beneficiary must obtain frequently account geographic location, beneficiary complicated when an enrollee has abused drugs, if the beneficiary’s preference, impact on cost-sharing, and multiple addresses or his or her health allowable preference of prescriber or reasonable travel time. care necessitates obtaining frequently pharmacy would contribute to We propose to add the following at abused drugs from more than one prescription drug abuse or drug § 423.153(f)(11): Reasonable access. In prescriber and/or more than one diversion by the at-risk beneficiary. making the selections under paragraph pharmacy. Section 1860D–4(c)(5) Section 1860–D–4(c)(5)(D)(iv) of the Act (f)(12) of this section, a Part D plan addresses this issue by requiring the sponsor must ensure both of the requires the sponsor to provide the at- Part D plan sponsor to select more than following: (i) That the beneficiary risk beneficiary with at least 30 days one prescriber to prescribe frequently continues to have reasonable access to written notice and a rationale for not abused drugs and more than one frequently abused drugs, taking into honoring his or her allowable preference pharmacy to dispense them, as account geographic location, beneficiary for pharmacy or prescriber from which applicable, when it reasonably preference, the beneficiary’s the beneficiary must obtain frequently determines it is necessary to do so to predominant usage of a prescriber or abused drugs under the plan. provide the at-risk beneficiary with pharmacy or both, impact on cost- A few commenters asserted there reasonable access. sharing, and reasonable travel time; and Given the foregoing, we propose the should be limits to how many times (ii) reasonable access to frequently following at § 423.153(f)(12): Selection beneficiaries can submit their abused drugs in the case of individuals of Prescribers and Pharmacies. (i) A Part preferences. Other commenters stated with multiple residences, in the case of D plan sponsor must select, as there should be a strong evidence of natural disasters and similar situations, applicable—(A) One, or, if the sponsor inappropriate action before a sponsor and in the case of the provision of reasonably determines it necessary to can change a beneficiary’s selection. emergency services. provide the beneficiary with reasonable We are not proposing to place a limit Since the statute explicitly allows the access, more than one, network on how many times beneficiaries can beneficiary to submit preferences, we prescriber who is authorized to submit their preferences, but we are interpret the additional reference to prescribe frequently abused drugs for open to additional comments on this beneficiary preference in the context of the beneficiary, unless the plan is a topic. We agree with commenters who reasonable access to mean that a stand-alone PDP and the selection stated that there should be a strong beneficiary allowable preference should involves a prescriber(s), in which case, evidence of inappropriate action before prevail over a sponsor’s evaluation of the prescriber need not be a network a sponsor can change a beneficiary’s geographic location, the beneficiary’s prescriber; and (B) One, or, if the selection, but we note that because such predominant usage of a prescriber and/ sponsor reasonably determines it a situation would often involve a or pharmacy impact on cost-sharing and necessary to provide the beneficiary network pharmacy or prescriber, we reasonable travel time. In the absence of with reasonable access, more than one, would expect that the sponsor would a beneficiary preference for pharmacy network pharmacy that may dispense also take appropriate action with respect and/or prescriber, however, a Part D such drugs to such beneficiary. to the pharmacy or prescriber, such as plan sponsor must take into account We also propose to address chain termination from the network. geographic location, the beneficiary’s pharmacies and group practices by Given the foregoing, we propose to predominant usage of a prescriber and/ adding a paragraph (ii) that states: (ii) add the following: § 423.153(f)(10) or pharmacy, impact on cost-sharing (A) For purposes of this subsection Exception to Beneficiary Preferences. (i) and reasonable time travel in selecting (f)(12) of this section, in the case of a If the Part D sponsor determines that the a pharmacy and/or prescriber, as pharmacy that has multiple locations selection or change of a prescriber or applicable, from which the at-risk that share real-time electronic data, all pharmacy under paragraph (f)(9) of this beneficiary will have to obtain such locations of the pharmacy shall section would contribute to prescription frequently abused drugs under the plan. collectively be treated as one pharmacy; drug abuse or drug diversion by the at- Thus, absent a beneficiary’s allowable and (B) For purposes of this subsection risk beneficiary, the sponsor may preference, or the beneficiary’s selection (f)(12), in the case of a group practice, change the selection without regard to would contribute to prescription drug all prescribers of the group practice the beneficiary’s preferences if there is abuse or drug diversion, the sponsor shall be treated as one prescriber. strong evidence of inappropriate action must ensure reasonable access by We would interpret these provisions by the prescriber, pharmacy or choosing the network pharmacy or to mean that a sponsor would be beneficiary. (ii) If the sponsor changes prescriber that the beneficiary uses most required to select more than one the selection, the sponsor must provide frequently to obtain frequently abused prescriber of frequently abused drugs, if the beneficiary with (A) At least 30 days drugs, unless the plan is a stand-alone more than one prescriber has asserted

VerDate Sep<11>2014 20:14 Nov 27, 2017 Jkt 244001 PO 00000 Frm 00022 Fmt 4701 Sfmt 4702 E:\FR\FM\28NOP2.SGM 28NOP2 sradovich on DSK3GMQ082PROD with PROPOSALS2 Federal Register / Vol. 82, No. 227 / Tuesday, November 28, 2017 / Proposed Rules 56357

during case management that multiple is accepted before conveying this that at-risk determination. For example, prescribers of frequently abused drugs information to the at-risk beneficiary, if a Part D plan determines that a are medically necessary for the at-risk unless the prescriber or pharmacy has beneficiary is at-risk, implements a beneficiary. We further propose that if agreed in advance in its network beneficiary-specific claim edit on 2 no prescribers of frequently abused agreement with the sponsor to accept all drugs that beneficiary is taking and drugs were responsive during case such selections and the agreement locks that beneficiary into a specific management, and the beneficiary does specifies how the prescriber or pharmacy, the affected beneficiary not submit preferences, the sponsor pharmacy will be notified by the should not be expected to raise a would be required to select the sponsor of its selection. dispute about the pharmacy selection pharmacy or prescriber that the and about one of the claim edits in (ix) Drug Management Program Appeals beneficiary predominantly uses to distinct appeals. (§§ 423.558, 423.560, 423.562, 423.564, obtain frequently abused drugs. We note that, while section 1860D– 423.580, 423.582, 423.584, 423.590, 4(c)(5)(B)(ii)(III) of the Act requires the (4) Confirmation of Pharmacy and 423.602, 423.636, 423.638, 423.1970, initial written notice to the beneficiary, Prescriber Selection (§ 423.153(f)(13)) 423.2018, 423.2020, 423.2022, 423.2032, which identifies him or her as Section 1860D–4(c)(5)(D)(v) of the Act 423.2036, 423.2038, 423.2046, 423.2056, potentially being at-risk, to include requires that, before selecting a 423.2062, 423.2122, and 423.2126) ‘‘notice of, and information about, the prescriber or pharmacy, a Part D plan Section 1860D–4(c)(5)(E) of the Act right of the beneficiary to appeal such sponsor must notify the prescriber and/ specifies that the identification of an identification under subsection (h),’’ we or pharmacy that the at-risk beneficiary individual as an at-risk beneficiary for interpret ‘‘such identification’’ to refer has been identified for inclusion in the prescription drug abuse under a Part D to any subsequent identification that the drug management program which will drug management program, a coverage beneficiary is actually at-risk. Because limit the beneficiary’s access to coverage determination made under such a CARA, at section 1860D–4(c)(5)(E) of of frequently abused drugs to selected program, the selection of a prescriber or the Act, specifically provides for appeal pharmacy(ies) and/or prescriber(s) and pharmacy, and information sharing for rights under subsection (h) but does not that the prescriber and/or pharmacy has subsequent plan enrollments shall be refer to identification as a potential at- been selected as a designated prescriber subject to reconsideration and appeal risk beneficiary, we believe this and/or pharmacy for the at-risk under section 1860D–4(h) of the Act. interpretation is consistent with the beneficiary. This provision also permits the option statutory intent. Furthermore, when a We propose that plan sponsors can of an automatic escalation to external beneficiary is identified as being obtain a network provider’s review to the extent provided by the potentially at-risk, but has not yet been confirmation in advance by including a Secretary. identified as at-risk, the plan is not provision in the network agreement As discussed earlier in this preamble, taking any action to limit such specifying that the provider agrees to we are proposing to integrate the lock- beneficiary’s access to frequently abused serve as at-risk beneficiaries’ selected in provisions with existing Part D drugs; therefore, the situation is not ripe prescriber or pharmacy, as applicable. Opioid DUR Policy/OMS. for appeal. While an LIS SEP under In these cases, the network provider Determinations made in accordance § 423.38 would be restricted at the time would agree to forgo providing specific with any of those processes, proposed at the beneficiary is identified as confirmation if selected under a drug § 423.153(f), and discussed previously, potentially at-risk under proposed management program to serve an at-risk are interrelated issues that we § 423.100, the loss of such SEP is not beneficiary. However, the contract collectively refer to as an ‘‘at-risk appealable under section 1860D–4(h) of between the sponsor and the network determination’’ made under a drug the Act. provider would need to specify how the management program. The at-risk As noted previously, section 1860D– sponsor will notify the provider of its determination includes prescriber and/ 4(c)(5)(E) of the Act specifically refers to selection. Absent a provision in the or pharmacy selection for lock-in, the Part D benefit appeals provisions in network contract, however, the sponsor beneficiary-specific POS claim edits for section 1860D–4(h) of the Act, which would be required to receive frequently abused drugs, and require Part D plan sponsors to meet the confirmation from the prescriber(s) and/ information sharing for subsequent plan requirements of paragraphs (4) and (5) or pharmacy(ies) that the selection is enrollments. Given the concomitant of section 1852(g) of the Act for benefits accepted before conveying this nature of the at-risk determination and in a manner similar to the manner such information to the at-risk beneficiary. associated aspects of the drug requirements apply to MA Otherwise, the plan would need to make management program applicable to an organizations. Section 1852(g)(4) of the another selection and seek confirmation. at-risk beneficiary, we expect that any Act specifically provides for We propose § 423.153(f)(13) to read: dispute under a plan’s drug independent review of Confirmation of Selections(s). (i) Before management program will be ‘‘reconsiderations that affirm denial of selecting a prescriber or pharmacy adjudicated as a single case involving a coverage, in whole or in part (emphasis under this paragraph, a Part D plan review of all aspects of the drug added).’’ We believe section 1860D– sponsor must notify the prescriber or management program for the at-risk 4(c)(5)(E) of the Act broader reference to pharmacy, as applicable, that the beneficiary. While a beneficiary who is ‘‘reconsideration and appeal’’ should be beneficiary has been identified for subject to a Part D plan sponsor’s drug interpreted to mean that individuals inclusion in the drug management management program always retains the have a right to a plan level appeal, program for at-risk beneficiaries and right to request a coverage consistent with the reconsideration that the prescriber or pharmacy or both determination under existing § 423.566 provisions under section 1860D–4(g) of is (are) being selected as the for any Part D drug that the beneficiary the Act, followed by the right to beneficiary’s designated prescriber or believes may be covered by their plan, independent review if the plan level pharmacy or both for frequently abused we believe that appeals of an at-risk affirms the initial adverse decision. In drugs. (ii) The sponsor must receive determination made under proposed other words, we believe the reference to confirmation from the prescriber(s) or § 423.153(f) should involve ‘‘reconsideration’’ means that a Part D pharmacy(ies) or both that the selection consideration of all relevant elements of plan sponsor should conduct the initial

VerDate Sep<11>2014 20:14 Nov 27, 2017 Jkt 244001 PO 00000 Frm 00023 Fmt 4701 Sfmt 4702 E:\FR\FM\28NOP2.SGM 28NOP2 sradovich on DSK3GMQ082PROD with PROPOSALS2 56358 Federal Register / Vol. 82, No. 227 / Tuesday, November 28, 2017 / Proposed Rules

level of appeal following an at-risk program. Stakeholders cited meet the redetermination adjudication determination under the plan sponsor’s administrative efficiency in using the timeframe. We are also proposing to drug management program, consistent existing appeal process that is familiar amend the existing Subpart M rules at with the existing Part D drug benefit to enrollees, plans, and the IRE, while § 423.584 and § 423.600 related to appeals process, despite the absence of other commenters expressed support for obtaining an expedited redetermination a specific reference to section 1860D– automatic escalation to the IRE as a and IRE reconsideration, respectively, to 4(g) of the Act. beneficiary protection. apply them to appeals of a Part D enrollees, plan sponsors, and We are proposing that at-risk determination made under a drug other stakeholders are already familiar determinations made under the management program. The right to an with the Part D benefit appeals process. processes at § 423.153(f) be adjudicated expedited appeal of such a Resolving disputes that arise under a under the existing Part D benefit appeals determination, which must be plan sponsor’s drug management process and timeframes set forth in adjudicated as expeditiously as the at- program within the existing Part D Subpart M. However, we are not risk beneficiary’s health condition benefit appeals process would allow at- proposing to revise the existing requires, would ensure that the rights of risk beneficiaries to be more familiar definition of a coverage determination. at-risk beneficiaries are protected with with, and more easily access, the The types of decisions made under a respect to access to medically necessary appeals process instead of creating a drug management program align more drugs. While we are not proposing to new process specific to appeals related closely with the regulatory provisions in adopt auto-escalation, we believe our to a drug management program. Also, Subpart D than with the provisions in proposed approach ensures that an at- allowing a plan sponsor the opportunity Subpart M related to coverage or risk beneficiary has the right to obtain to review information it used to make an payment for a drug based on whether IRE review and higher levels of appeal at-risk determination under the drug the drug is medically necessary for an (ALJ/attorney adjudicator, Council, and management program (and any enrollee. Therefore, we believe it is judicial review). Accordingly, we also additional relevant information clearer to set forth the rules for at-risk are proposing to add the reference to an submitted as part of the appeal) would determinations as part of § 423.153 and ‘‘at-risk determination’’ to the following be efficient for both the individual and cross reference § 423.153(f) in relevant regulatory provisions that govern ALJ the Medicare program because it would provisions in Subpart M and Subpart U. and Council processes: §§ 423.2018, potentially resolve the issues at a lower While a coverage determination made 423.2020, 423.2022, 423.2032, 423.2036, level of administrative review. under a drug management program 423.2038, 423.2046, 423.2056, 423.2062, Conversely, permitting review by the would be subject to the existing rules 423.2122, and 423.2126. independent review entity (IRE) before related to coverage determinations, the Finally, we are also proposing a a plan sponsor has an opportunity to other types of initial determinations change to § 423.1970(b) to address the review and resolve any errors or made under a drug management calculation of the amount in controversy omissions that may have been made program (for example, a restriction on (AIC) for an ALJ hearing in cases during the initial at-risk determination the at-risk beneficiary’s access to involving at-risk determinations made would likely result in an unnecessary coverage of frequently abused drugs to under a drug management program in increase in costs for plan sponsors as those that are prescribed for the accordance with proposed § 423.153(f). well as CMS’ Part D IRE contract costs. beneficiary by one or more prescribers) Specifically, we propose that the As noted previously, the Secretary has would be subject to the processes set projected value of the drugs subject to the discretion under CARA to provide forth at proposed § 423.153(f). the drug management program be used for automatic escalation of drug Consistent with existing rules for to calculate the amount remaining in management program appeals to redeterminations at § 423.582, an controversy. For example, if the external review. Under existing Part D enrollee who wishes to dispute an at- beneficiary is disputing the lock-in to a benefit appeals procedures, there is no risk determination would have 60 days specific pharmacy for frequently abused automatic escalation to external review from the date of the second written drugs and the beneficiary takes 3 for adverse appeal decisions; instead, notice to make such request, unless the medications that are subject to the the enrollee (or prescriber, on behalf of enrollee shows good cause for untimely plan’s drug management program, the the enrollee) must request review by the filing under § 423.582(c). As previously projected value of those 3 drugs would Part D IRE. Under the existing Part D discussed for proposed § 423.153(f)(6), be used to calculate the AIC, including benefit appeals process, cases are auto- the second written notice is sent to a the value of any refills prescribed for the forwarded to the IRE only when the beneficiary the plan has identified as an drug(s) in dispute during the plan year. plan fails to issue a coverage at-risk beneficiary and with respect to In addition to the proposed changes determination within the applicable whom the sponsor limits his or her related to the implementation of drug timeframe. During the stakeholder call access to coverage of frequently abused management program appeals, we are and in subsequent written comments, drugs regarding the requirements of the also proposing to make technical most commenters opposed automatic sponsor’s drug management programs. changes to § 423.562(a)(1)(ii) to remove escalation to the IRE, citing support for Also consistent with the existing Part the comma after ‘‘includes’’ and replace using the existing appeals process for D benefit appeals process, we are the reference to ‘‘§§ 423.128(b)(7) and reasons of administrative efficiency and proposing that at-risk beneficiaries (or (d)(1)(iii)’’ with a reference to better outcomes for at-risk beneficiaries. an at-risk beneficiary’s prescriber, on ‘‘§§ 423.128(b)(7) and (d)(1)(iv).’’ The majority of stakeholders supported behalf of the at-risk beneficiary) must following the existing Part D appeals affirmatively request IRE review of (x) Termination of a Beneficiary’s process, and some commenters adverse plan level appeal decisions Potential At-Risk or At-Risk Status specifically supported permitting the made under a plan sponsor’s drug (§ 423.153(f)(14)) plan to review its lock-in decision prior management program. In other words, Section 1860–D–4(c)(5)(F) of the Act to the case being subject to IRE review. under this proposal, an adverse provides that the Secretary shall Stakeholders cited a variety of reasons redetermination would not be develop standards for the termination of for their opposition, including increased automatically escalated to the Part D the identification of an individual as an costs to plans, the IRE, and the Part D IRE, unless the plan sponsor fails to at-risk beneficiary, which shall be the

VerDate Sep<11>2014 20:14 Nov 27, 2017 Jkt 244001 PO 00000 Frm 00024 Fmt 4701 Sfmt 4702 E:\FR\FM\28NOP2.SGM 28NOP2 sradovich on DSK3GMQ082PROD with PROPOSALS2 Federal Register / Vol. 82, No. 227 / Tuesday, November 28, 2017 / Proposed Rules 56359

earlier of the date the individual the basis of additional information on Regarding data disclosures, section demonstrates that he or she is no longer drug use occurring after the date of 1860D–4(c)(5)(H) of the Act provides likely to be an at-risk beneficiary in the notice of such termination. Accordingly, that, in the case of potential at-risk absence of limitations, or the end of we note that our proposed approach to beneficiaries and at-risk beneficiaries, such maximum period as the Secretary termination of an at-risk determination the Secretary shall establish rules and may specify. would not prevent an at-risk beneficiary procedures to require the Part D plan Most commenters recommended a from being subsequently identified as a sponsor to disclose data, including any maximum 12-month period for an at- potential at-risk beneficiary or at-risk necessary individually identifiable risk beneficiary to be locked-in. We also beneficiary on the basis of new health information, in a form and note that a 12-month lock-in period is information on drug use occurring after manner specified by the Secretary, common in Medicaid lock-in the date of such termination that causes about the decision to impose such programs.20 A few commenters stated the beneficiary to once again meet the limitations and the limitations imposed that a physician should be able to clinical guidelines. by the sponsor under this part. determine that a beneficiary is no longer Sponsors also report information to an at-risk beneficiary. One commenter (xi) Data Disclosure and Sharing of CMS’ MARx system about pending, was opposed to an arbitrary termination Information for Subsequent Sponsor implemented and terminated based on a time period. Enrollments (§ 423.153(f)(15)) beneficiary-specific POS claim edit for Given that most commenters In order for Part D sponsors to opioids within 7 business days of the recommended a 12-month period and conduct the case management/clinical date on the applicable beneficiary notice 23 such a period is common in Medicaid contact/prescriber verification required or of the termination. The MARx ‘‘lock-in’’ program, we propose a by proposed § 423.153(f)(2), CMS must system transfers information about maximum 12-month period for both a identify potential at-risk beneficiaries to pending and implemented claim edits to lock-in period, and also for the duration sponsors who are in the sponsors’ Part the gaining sponsor with the of a beneficiary-specific POS claim edit D prescription drug benefit plans. In beneficiary’s enrollment record if the for frequently abused drugs through the addition, new sponsors must have beneficiary disenrolls and enrolls in the addition of the following language at information about potential at-risk gaining sponsor’s plan. If a gaining § 423.153(f)(14): Termination of beneficiaries and at-risk beneficiaries sponsor requests case management Identification as an At-Risk Beneficiary. who were so identified by their information from the losing sponsor The identification of an at-risk immediately prior plan and enroll in the about the beneficiary, we expect the beneficiary as such shall terminate as of new sponsor’s plan and such losing sponsor to transfer the the earlier of the following— identification had not terminated before information to the gaining sponsor as (i) The date the beneficiary the beneficiary disenrolled from the soon as possible, but no later than 2 demonstrates through a subsequent immediately prior plan. Finally, as weeks from the date of the gaining 24 determination, including but not limited discussed earlier, sponsors may identify sponsor’s request. to, a successful appeal, that the potential at-risk beneficiaries by their Section 1860–D–4(c)(5)(I) of the Act beneficiary is no longer likely, in the own application of the clinical requires that the Secretary establish absence of the limitations under this guidelines on a more frequent basis. It procedures under which Part D paragraph, to be an at-risk beneficiary; is important that CMS be aware of sponsors must share information when or which Part D beneficiaries sponsors at-risk beneficiaries or potential at-risk (ii) The end of a 12 calendar month identify on their own, as well as which beneficiaries enrolled in one period calculated from the effective date ones have been subjected to limitations prescription drug plan subsequently of the limitation, as specified in the on their access to coverage for disenroll and enroll in another notice provided under paragraph (f)(6) frequently abused drugs under sponsors’ prescription drug plan offered by the of this section. drug management programs for Part D next sponsor (gaining sponsor). We plan Thus, we note that if a beneficiary program administration and other to expand the scope of the reporting to continues to meet the clinical guidelines purposes. This data disclosure process MARx under the current policy to and, if the sponsor implements an would be consistent with current policy, include the ability for sponsors to report additional, overlapping limitation on as described earlier in this preamble. similar information to MARx about all the at-risk beneficiary’s access to pending, implemented and terminated coverage for frequently abused drugs, As we also discussed earlier, under limitations on access to coverage of the beneficiary may experience a the current policy, CMS provides frequently abused drugs associated with coverage limitation beyond 12-months. quarterly reports to sponsors about their plans’ drug management programs. The same is true for at-risk beneficiaries beneficiaries enrolled in their plans who We propose to codify the data who were identified as such in the most meet the OMS criteria. In turn, Part D disclosure and information sharing recent prescription drug plan in which sponsors are expected to provide process under the current policy, with they were enrolled and the sponsor of responses to CMS through the OMS for the expansion just described, by adding his or her subsequent plan immediately each case identified within 30 days of the following requirement to § 423.153: implements a limitation on coverage of receiving a report that reflects the status (f)(15) Data Disclosure. (i) CMS frequently abused drugs. or outcome of their case management.21 identifies each potential at-risk Section 1860–D–4(c)(5)(F)(ii) of the At the same time, also within 30 days, beneficiary to the sponsor of the Act states that nothing in CARA shall be sponsors are expected to report prescription drug plan in which the construed as preventing a plan from additional beneficiaries to OMS that beneficiary is enrolled. (ii) A Part D identifying an individual as an at-risk they identify using their own opioid sponsor that operates a drug beneficiary after such termination on overutilization identification criteria.22 management program must disclose any

20 Medicaid Drug Utilization Review State 21 See ‘‘Medicare Part D Overutilization 23 Final Parts C&D 2017 Call Letter, April 4, 2016. Comparison/Summary Report FFY 2015 Annual Monitoring System,’’ July 5, 2013. 24 See ‘‘Beneficiary-Level Point-of-Sale Claim Report: Prescription Drug Fee-For Service Program 22 See ‘‘Medicare Part D Overutilization Edits and Other Overutilization Issues,’’ August 25, (December 2016). Monitoring System, January 17, 2014. 2014.

VerDate Sep<11>2014 20:14 Nov 27, 2017 Jkt 244001 PO 00000 Frm 00025 Fmt 4701 Sfmt 4702 E:\FR\FM\28NOP2.SGM 28NOP2 sradovich on DSK3GMQ082PROD with PROPOSALS2 56360 Federal Register / Vol. 82, No. 227 / Tuesday, November 28, 2017 / Proposed Rules

data and information to CMS and other both section 1852(d) of the Act, which sharing reductions and targeted Part D sponsors that CMS deems requires that benefits under the MA supplemental benefits are for health necessary to oversee Part D drug plan be available and accessible to each care services that are medically related management programs at a time, and in enrollee in the plan, and section 1854(c) to each disease condition. CMS will be a form and manner, specified by CMS. of the Act, which requires uniform concerned about potential The data and information disclosures premiums for each enrollee in the plan. discrimination if an MA plan is must do all of the following: (A) Previously, we required MA plans to targeting cost sharing reductions and Respond to CMS within 30 days of offer all enrollees access to the same additional supplemental benefits for a receiving a report about a potential at- benefits at the same level of cost large number of disease conditions, risk beneficiary from CMS; (B) Provide sharing. We have determined that these while excluding other higher-cost information to CMS about any potential statutory provisions and the regulation conditions. We will review benefit at-risk beneficiary that a sponsor at § 422.100(d) mean that we have the designs to make sure that the overall identifies within 30 days from the date authority to permit MA organizations impact is non-discriminatory and that of the most recent CMS report the ability to reduce cost sharing for higher acuity, higher cost enrollees are identifying potential at-risk certain covered benefits, offer specific not being excluded in favor of healthier beneficiaries; (C) Provide information to tailored supplemental benefits, and offer populations. CMS within 7 business days of the date lower deductibles for enrollees that For example, an MA plan could of the initial notice or second notice that meet specific medical criteria, provided identify enrollees diagnosed with the sponsor provided to a beneficiary, or that similarly situated enrollees (that is, specific diseases, such as diabetes, within 7 days of a termination date, as all enrollees who meet the identified chronic heart failure, and COPD, as applicable, about a beneficiary-specific criteria) are treated the same. For medically vulnerable and in need of opioid claim edit or a limitation on example, reduced cost sharing certain services, which could be offered access to coverage for frequently abused flexibility would allow an MA plan to to these enrollees in the form of tailored drugs; and (D) Transfer case offer diabetic enrollees zero cost sharing supplemental benefits. In identifying management information upon request for endocrinologist visits. Similarly, eligible enrollees, the MA plan must use of a gaining sponsor as soon as possible with this flexibility, a MA plan may medical criteria that are objective and but no later than 2 weeks from the offer diabetic enrollees more frequent measurable, and the enrollee must be gaining sponsor’s request when: (1) An foot exams as a tailored, supplemental diagnosed by a plan provider or have at-risk beneficiary or potential at-risk benefit. In addition, with this flexibility, their existing diagnosis certified or beneficiary disenrolls from the a MA plan may offer diabetic enrollees affirmed by a plan provider to assure sponsor’s plan and enrolls in another a lower deductible. Under this example, equal application of the objective prescription drug plan offered by the non-diabetic enrollees would not have criteria necessary to provide equal gaining sponsor; and (2) The edit or access to these diabetic-specific tailored treatment of similarly situated limitation that the sponsor had cost-sharing or supplemental benefits; individuals. For contract year 2019, we are implemented for the beneficiary had not however, any enrollee that develops considering issuing guidance clarifying terminated before disenrollment. diabetes would then have access to the flexibility MA plans have to offer these benefits. (xii) Summary targeted supplemental benefits for their Such flexibility under our new Our proposal is intended to be most medically vulnerable enrollees. A interpretation of the uniformity responsive to stakeholder input that benefit package that offers differential requirement is not without limits, CMS focus on opioids; allow for access to enhanced services or benefits however, as section 1852(b)(1)(A) of the flexibility to adjust the clinical or reduced cost sharing or different guidelines and frequently abused drugs Act prohibits an MA plan from denying, deductibles based on objective criteria, in the future; is reflective of the limiting, or conditioning the coverage or and ensures equal treatment of similarly importance of the provider-patient provision of a service or benefit based situated enrollees, for whom such relationship; protects beneficiary’s on health-status related factors. MA services and benefits are useful, can be rights and access, and allows for regulations (for example, priced at a uniform premium consistent operational manageability and §§ 422.100(f)(2) and 422.110(a)) reiterate with the requirements for availability consistency with the current policy to and implement this non-discrimination and accessibility throughout the service the extent possible. This proposal, if requirement. In interpreting these area for all enrollees in section finalized, should result in effective Part obligations to protect against 1852(d)(1)(A) of the Act and for uniform D drug management programs within a discrimination, we have historically bids and premiums in section 1854(c) of regulatory framework provided by CMS, indicated that the purpose of the the Act. We believe this flexibility will and further reduce opioid requirements is to protect high-acuity help MA plans better manage health overutilization in the Part D program. enrollees from adverse treatment on the care services for the most vulnerable basis of their higher cost health enrollees. The benefit and cost sharing 2. Flexibility in the Medicare Advantage conditions (79 FR 29843; 76 FR 21432; flexibility we have discussed here Uniformity Requirements and 74 FR 54634). As MA plans applies to Part C benefits but not Part D We have determined that providing consider this new flexibility in meeting benefits. We are requesting comments access to services (or specific cost the uniformity requirement, they must and/or questions from stakeholders sharing for services or items) that is tied be mindful of ensuring compliance with about the implementation of this to health status or disease state in a non-discrimination responsibilities and flexibility. We note that CMS is manner that ensures that similarly obligations.25 MA plans that exercise currently testing value based insurance situated individuals are treated this flexibility must ensure that the cost design (VBID) through the use of our uniformly is consistent with the demonstration authority under Section uniformity requirement in the Medicare 25 Among these responsibilities and obligations 1115A of the Act (42 U.S.C. 1315a, are compliance with Title VI of the Civil Rights Act, Advantage (MA) regulations at section 504 of the Rehabilitation Act, the Age added by Section 3021 of the Affordable § 422.100(d). This regulatory Discrimination Act, and section 1557 of the Care Act), which will include some of requirement is a means to implement Affordable Care Act. the elements we have discussed

VerDate Sep<11>2014 20:14 Nov 27, 2017 Jkt 244001 PO 00000 Frm 00026 Fmt 4701 Sfmt 4702 E:\FR\FM\28NOP2.SGM 28NOP2 sradovich on DSK3GMQ082PROD with PROPOSALS2 Federal Register / Vol. 82, No. 227 / Tuesday, November 28, 2017 / Proposed Rules 56361

previously. However, there are also A and B services, excluding plan consistent pattern of increasing or features of the VBID demonstration that premium, must be included in each decreasing costs emerges over time. are unique to the demonstration test. We plan’s Maximum Out-of-Pocket (MOOP) As part of the annual Call Letter expect the VBID demonstration to amount subject to these limits. process, stakeholders have suggested provide CMS with insights into future As discussed in the 2010 rulemaking changes to how CMS establishes MOOP VBID innovations for the MA program. (75 FR 19709), CMS affords greater limits. Some of the comments suggested flexibility in establishing Parts A and B CMS use Medicare FFS and MA 3. Segment Benefits Flexibility cost sharing to MA plans that adopt a encounter data to inform its decision- In reviewing section 1854(h) of the lower, voluntary MOOP limit than is making. Other suggestions received Social Security Act and Medicare available to plans that adopt the higher, have included increasing the voluntary Advantage (MA) regulations governing mandatory MOOP limit. The percentage MOOP limit, increasing the number of plan segments, we have determined that of eligible Medicare beneficiaries with service categories that have higher cost the statute and existing regulations may access to an MA plan (excluding sharing in return for a plan offering a be interpreted to allow MA plans to vary employer and dual eligible special lower MOOP limit, and considering supplemental benefits, in addition to needs plans) offering a voluntary MOOP three levels of MOOP and service premium and cost sharing, by segment, limit has decreased from 97.7 percent in category cost sharing to encourage plan as long as the benefits, premium, and CY 2011 to 68.1 percent in CY 2017. offerings with lower MOOP limits. cost sharing are uniform within each This has resulted in the percentage of CMS’s goal is to establish future segment of an MA plan’s service area. total enrollees in a voluntary MOOP MOOP limits based on the most relevant Plans segments are county-level plan decreasing from 51 percent in CY and available data, or combination of portions of a plan’s overall service area 2011 to 21 percent in CY 2017. data, that reflects beneficiary health care which, under current CMS policy, are As stated in the CY 2018 final Call costs in the MA program and maintains permitted to have different premiums Letter 26 and in the 2010 final rule (75 benefit stability over time. Medicare and cost sharing amounts as long as FR 19710), CMS currently sets MOOP FFS data currently represents the most these premiums and cost sharing limits based on a beneficiary-level relevant and available data at this time. amounts are uniform throughout the distribution of Parts A and B cost CMS may consider future rulemaking segment. We are proposing to revise our sharing for individuals enrolled in regarding the use of MA encounter cost interpretation of the existing statute and Medicare Fee-for-Service (FFS) for local data to understand program health care regulations to allow MA plan segments and regional MA plans. The mandatory costs and compare to Medicare FFS data to vary by benefits in addition to MOOP amount represents in establishing cost sharing limits. premium and cost sharing, consistent approximately the 95th percentile of Under this current proposal to revise the with the MA regulatory requirements projected beneficiary out-of-pocket regulations controlling MOOP limits, defining segments at § 422.262(c)(2). spending. Stated differently, 5 percent CMS might change its existing methodology of using the 85th and 95th 4. Maximum Out-of-Pocket Limit for of Medicare FFS beneficiaries are percentiles of projected beneficiary out- Medicare Parts A and B Services expected to incur approximately $6,700 of-pocket Medicare FFS spending in the (§§ 422.100 and 422.101) or more in Parts A and B deductibles, future. CMS expects to establish future As provided at § 422.100(f)(4) and (5) copayments, and coinsurance. The voluntary MOOP amount of $3,400 limits by striking the appropriate and § 422.101(d)(2) and (3), all Medicare balance between limiting MOOP costs Advantage (MA) plans (including represents approximately the 85th percentile of projected Medicare FFS and potential changes in premium, employer group waiver plans (EGWPs) benefits, and cost sharing with the goal and special needs plans (SNPs)), must out-of-pocket costs. The Office of the Actuary conducts an annual analysis to of making sure beneficiaries can access establish limits on enrollee out-of- affordable and sustainable benefit pocket cost sharing for Parts A and B help CMS determine the MOOP limits. Since the MOOP requirements for local packages. While CMS intends to services that do not exceed the annual continue using the 85th and 95th limits established by CMS. CMS added and regional MA plans were finalized in regulation, a strict application of the percentiles of projected beneficiary out- §§ 422.100(f)(4) and (f)(5), effective for of-pocket spending for the immediate 95th and 85th percentile would have coverage in 2011, under the authority of future to set MA MOOP limits, CMS resulted in MOOP limits for local and sections 1852(b)(1)(A), 1856(b)(1), and proposes to amend the regulation text in regional MA plans fluctuating from 1857(e)(1) of the Act in order not to §§ 422.100(f)(4) and (5) and year-to-year. Therefore, CMS has discourage enrollment by individuals 422.101(d)(2) and (d)(3) to incorporate exercised discretion in order to who utilize higher than average levels of authority to balance factors discussed maintain stable MOOP limits from year- health care services (that is, in order for previously. The flexibility provided by to-year, when the beneficiary-level a plan not to be discriminatory) (75 FR these proposed changes will permit distribution of Parts A and B cost 19709–11). Section 1858(b)(2) of the Act CMS to annually adjust mandatory and sharing for individuals enrolled in requires a limit on in-network out-of- voluntary MOOP limits based on pocket expenses for enrollees in Medicare FFS is approximately equal to changes in market conditions and to Regional MA Plans. In addition, Local the appropriate percentile. This ensure the sustainability of the MA Preferred Provider Organization (LPPO) approach avoids enrollee confusion, program and benefit options. plans, under § 422.100(f)(5), and allows plans to provide stable benefit The proposed new authority Regional PPO (RPPO) plans, under packages year over year, and does not permitting changes in data and section 1858(b)(2) of the Act and discourage the adoption of the lower methodology related to establishing § 422.101(d)(3), are required to have a voluntary MOOP amount because of MOOP limits would be exercised by ‘‘catastrophic’’ limit inclusive of both fluctuations in the amount. CMS CMS in advance of each plan year; CMS in- and out-of-network cost sharing for expects to change MOOP limits if a would use the annual Call Letter and all Parts A and B services, the annual other guidance documents to explain its 26 The CY 2018 final Call Letter may be accessed limit which is also established by CMS. at https://www.cms.gov/Medicare/Health-Plans/ application of this proposed regulatory All cost sharing (that is, deductibles, MedicareAdvtgSpecRateStats/Announcements-and- standard and the data used to identify coinsurance, and copayments) for Parts Documents.html. MOOP limits in advance of bid

VerDate Sep<11>2014 20:14 Nov 27, 2017 Jkt 244001 PO 00000 Frm 00027 Fmt 4701 Sfmt 4702 E:\FR\FM\28NOP2.SGM 28NOP2 sradovich on DSK3GMQ082PROD with PROPOSALS2 56362 Federal Register / Vol. 82, No. 227 / Tuesday, November 28, 2017 / Proposed Rules

deadlines. This will provide MA more likely to have a discriminatory sharing (service category deductibles, organizations adequate time to comment impact on beneficiaries. The review copayments or co-insurance) that fails to and prepare for changes. In addition, parameters are currently based on cover at least half the cost of a particular CMS plans to transition any significant Medicare FFS data and reflect a service or item acts to discriminate changes under this proposal over time combination of patient utilization against those for whom those services to avoid disruption to benefit designs scenarios and length of stays or services and items are medically necessary and and minimize potential beneficiary used by average to sicker patients. CMS discourages enrollment by beneficiaries confusion. uses multiple utilization scenarios for who need those services and items. If a CMS proposes to codify specific some services (for example, inpatient plan uses a copayment method of cost requirements because of the number of care) to guard against MA organizations sharing, then the copayment for an in- comments received in the past about distributing benefit cost sharing network Medicare FFS service category MOOP changes. CMS proposes to amounts in a manner that is cannot exceed 50 percent of the average amend §§ 422.100(f)(4) and (f)(5) and discriminatory. Review parameters are contracted rate of that service under this 422.101(d)(2) and (d)(3) to clarify that also established for frequently used guidance (Medicare Managed Care CMS may use Medicare FFS data to professional services, such as primary Manual, Chapter 4, Section 50.1). Some establish annual MOOP limits. In and specialty care services. service categories may identify specific addition, CMS would have authority to CMS proposes here to amend benefits for which a unique copayment increase the voluntary MOOP limit to § 422.100(f)(6) to clarify that it may use would apply, while others include a another percentile level of Medicare Medicare FFS data to establish variety of services with different levels FFS, increase the number of service appropriate cost sharing limits. In of cost which may reasonably have a categories that have higher cost sharing addition, CMS intends to use MA range of copayments based on groups of in return for offering a lower MOOP utilization encounter data to inform similar services, such as durable amount, and implement more than two patient utilization scenarios used to medical equipment or outpatient levels of MOOP and cost sharing limits help identify MA plan cost sharing diagnostic and radiological services. to encourage plan offerings with lower standards and thresholds that are not CMS affords MA plans that adopt a MOOP limits. This proposal includes discriminatory; we solicit comment on lower, voluntary MOOP limit greater authority to increase the number of whether to codify that use of MA flexibility in establishing Parts A and B service categories that have higher cost encounter data for this purpose in cost sharing than is available to plans sharing in return for offering a lower § 422.100(f)(6). This proposal is not that adopt the higher, mandatory MOOP (voluntary) MOOP amount and related to a statutory change. limit. As discussed in section III.A.5, considering more than two levels of This proposal aims to allow CMS to CMS intends to continue to establish MOOP (with associated cost sharing use the most relevant and appropriate more than one set of Parts A and B limits) to encourage plan offerings with information in determining whether service cost sharing thresholds for plans lower MOOP limits. Consistent with specific cost sharing is discriminatory choosing to offer benefit designs with past practice, CMS will continue to and to set standards and thresholds either a lower, voluntary MOOP limit or publish annual limits and a description above which CMS believes cost sharing the higher, mandatory MOOP limit set of how the regulation standard was is discriminatory. CMS intends to under §§ 422.100(f)(4) and (5) and applied (that is, the methodology used) continue the practice of furnishing 422.101(d)(2) and (3). Medicare FFS in the annual Call Letter prior to bid information to MA organizations about data currently represents the most submission so that MA plans can submit the methodology used to establish cost relevant and available data at this time bids consistent with parameters that sharing limits and the thresholds CMS and is used to evaluate cost sharing for CMS has determined to meet the cost identifies as non-discriminatory through specific services as well in applying the sharing limits requirements. CMS seeks the annual Call Letter process or Health standard currently at § 422.100(f)(6) and comments and suggestions on the topics Plan Management System (HPMS) in considering CMS’s authority to add discussed in this section. memoranda and solicit comments, as (by regulation) categories of services for appropriate. This process allows MA which cost sharing may not exceed 5. Cost Sharing Limits for Medicare organizations to prepare plan bids levels in Medicare FFS. Parts A and B Services (§§ 417.454 and consistent with parameters that CMS As noted with regard to setting MOOP 422.100) have determined to be non- limits under §§ 422.100 and 422.101, As provided at §§ 417.454(e), discriminatory. CMS expects that MA encounter data 422.100(f)(6), and 422.100(j), MA plan As specified in section will be more accurate and complete in cost sharing for Parts A and B services 1852(a)(1)(B)(iv) of the Act, the cost the future and may consider future specified by CMS must not exceed sharing charged by MA plans for rulemaking regarding the use of MA certain levels. Section 422.100(f)(6) chemotherapy administration services, encounter to understand program health provides that cost sharing must not be renal dialysis services, and skilled care costs and compare to Medicare FFS discriminatory and CMS determines nursing care may not exceed the cost data in establishing cost sharing limits. annually the level at which certain cost sharing for those services under Parts A For reasons discussed in section III.A.5, sharing becomes discriminatory. and B. Although CMS has not CMS proposes to amend § 422.100(f)(6) Sections 417.454(e) and 422.100(j), on established a specific service category to permit use of Medicare FFS to the other hand, are based on how cost sharing limit for all possible evaluate whether cost sharing for Part A section 1852(a)(1)(B)(iii) and (iv) of the services, CMS has issued guidance that and B services is discriminatory to set Act directs that cost sharing for certain MA plans must pay at least 50 percent the evaluation limits announced each services may not exceed cost sharing of the contracted (or Medicare year in the Call Letter: in addition, we levels in Medicare Fee-for-Service allowable) rate and that cost sharing for propose to use MA utilization encounter (FFS); under the statute and the services cannot exceed 50 percent of the data as part of that evaluation process. regulations, CMS may add to that list of total MA plan financial liability for the As with the proposal to authorize use of services. CMS reviews cost sharing set benefit in order for the cost sharing for this data for setting MOOP limits, CMS by MA organizations using parameters such services to be considered non- intends to use the Advance Notice/Call based on Parts A and B services that are discriminatory; CMS believes that cost Letter process to communicate its

VerDate Sep<11>2014 20:14 Nov 27, 2017 Jkt 244001 PO 00000 Frm 00028 Fmt 4701 Sfmt 4702 E:\FR\FM\28NOP2.SGM 28NOP2 sradovich on DSK3GMQ082PROD with PROPOSALS2 Federal Register / Vol. 82, No. 227 / Tuesday, November 28, 2017 / Proposed Rules 56363

application of the regulation and to (§§ 422.100(f)(2), 422.510(a)(4)(xiv), current evaluation may create transition any significant changes over 422.2264, and 422.2260(e)). CMS unintended consequences related to time to avoid disruption to benefit expects organizations to continue innovative benefit designs. In addition, designs and minimize potential designing plan benefit packages that, CMS’s efforts in implementing more beneficiary confusion. within a service area, are different from sophisticated approaches to consumer This proposal will allow CMS to use one another with respect to key benefit engagement and decision-making the most relevant and appropriate design characteristics, so that any should help beneficiaries, caregivers, information in determining cost sharing potential beneficiary confusion is and family members make informed standards and thresholds. For example, minimized when comparing multiple plan choices. For example, in MPF, plan analyses of MA utilization encounter plans offered by the organization. For details have been expanded to include data can be used with Medicare FFS example, beneficiaries may consider the MA and Part D benefits and a new data to establish the appropriate following factors when they make their consumer friendly tool for the CY 2018 utilization scenarios to determine MA health care decisions: plan type, Part D Medicare open enrollment period which plan cost sharing standards and coverage, differences in provider will assist beneficiaries in choosing a thresholds. CMS seeks comments and network, Part B and plan premiums, and plan that meets their unique and suggestions on this proposal, unique populations served (for example, financial needs based on a set of 10 particularly whether additional special needs plans, or SNPs). In quick questions. regulation text is needed to achieve addition, CMS intends to continue the Prior to implementing the meaningful CMS’s goal of setting and announcing practice of furnishing information to difference evaluation for CY 2011 bid each year presumptively discriminatory MA organizations about their bid submissions, the beneficiary weighted levels of cost sharing. evaluation methodology through the average number of plans per county was about 30 in 2010 compared to 18 in 6. Meaningful Differences in Medicare annual Call Letter process and/or Health 2017 (these numbers do not include Advantage Bid Submissions and Bid Plan Management System (HPMS) SNPs or employer group plans which Review (§§ 422.254 and 422.256) memoranda and solicit comments, as appropriate. This process allows CMS to have additional criteria for enrollment). As provided at §§ 422.254(a)(4) and articulate bid requirements and MA Private-fee-for-service (PFFS) plans 422.256(b)(4), CMS will only approve a organizations to prepare bids that satisfy represented 13 of the 30 plans in 2010 bid submitted by a Medicare Advantage CMS requirements and standards prior and less than 1 of the 18 plans in 2017. (MA) organization if its plan benefit to bid submission in June each year. The Medicare Improvements for package is substantially different from Research studies indicate that Patients and Providers Act of 2008 those of other plans offered by the consumers, especially elderly required PFFS plans to establish organization in the area with respect to consumers, may be challenged by a contracted provider networks by 2011 key plan characteristics such as large number of plan choices that may: and many PFFS plans non-renewed. premiums, cost sharing, or benefits (1) Result in not making a choice, (2) The weighted average number of plans offered. MA organizations may submit create a bias to not change plans, and (3) has remained relatively stable since the bids for multiple plans in the same area impact MA enrollment growth.27 decline of PFFS options. MA enrollment under the same contract only if those Beneficiaries indicate they want to make continued to grow from more than 11 plans are substantially different from informed and effective decisions, but do million in July 2010 to 18.7 million in one another based on CMS’s annual not feel qualified. As a result, they seek July 2017, fueled by the continued meaningful difference evaluation help from Medicare Plan Finder (MPF), overall acceptance of managed care, the standards. CMS proposes to eliminate brokers or plan representatives, baby boom generation aging into this meaningful difference requirement providers, and family members. Medicare beginning in 2011, and beginning with MA bid submissions for Although challenged by choices, decreases in average plan premium contract year (CY) 2019. Separate beneficiaries do not want their plan during the time period. meaningful difference rules were choices to be limited and understand As stated in the October 22, 2009, concurrently adopted for MA and stand- key decision factors such as premiums, proposed rule (74 FR 54670 through 73) alone prescription drug plans (PDPs), out-of-pocket cost sharing, Part D and April 15, 2010, final rule (75 FR but this specific proposal is limited to coverage, familiar providers, and 19736 through 40), CMS’s goal for the the meaningful difference provision company offering the plan.28 CMS meaningful difference evaluation was to related to the MA program. This continues to explore enhancements to ensure a proper balance between proposal is not related to a statutory MPF that will improve the customer affording beneficiaries a wide range of change. experience; some examples of recent plan choices and avoiding undue This proposal aims to improve updates are provided below. beneficiary confusion in making competition, innovation, available As discussed later in this section, coverage selections. The meaningful benefit offerings, and provide CMS believes that it is challenging to difference evaluation was initiated beneficiaries with affordable plans that apply the current standardized when cost sharing and benefits were are tailored for their unique health care meaningful difference evaluation relatively consistent within each plan needs and financial situation. CMS will (which is applied consistently to all and similar plans within the same maintain requirements that prohibit plans) in a manner that accommodates contract could be readily compared by plans from misleading beneficiaries in and evaluates important considerations measuring estimated out-of-pocket costs their communication materials, provide objectively. CMS is concerned that the and other factors currently integrated in CMS the authority to disapprove a bid the evaluation’s methodology. if a plan’s proposed benefit design 27 McWilliams JM, Afendulis CC, McGuire TG, The current meaningful difference substantially discourages enrollment in Landon BE. Complex Medicare advantage choices evaluation uses estimated enrollee out- that plan by certain Medicare-eligible may overwhelm seniors—especially those with of-pocket costs based on the CMS Out- individuals, and allow CMS to non- impaired decision making. Health Aff (Millwood). of-Pocket Cost (OOPC) model. This 2011;30(9):1786–94. renew a plan that fails to attract a 28 Jacobson, G. Swoope, C., Perry, M. Slosar, M. model uses a nationally representative sufficient number of enrollees over a How are seniors choosing and changing health cohort of beneficiaries from the sustained period of time insurance plans? Kaiser Family Foundation. 2014. Medicare Beneficiary Surveys (MCBS)

VerDate Sep<11>2014 20:14 Nov 27, 2017 Jkt 244001 PO 00000 Frm 00029 Fmt 4701 Sfmt 4702 E:\FR\FM\28NOP2.SGM 28NOP2 sradovich on DSK3GMQ082PROD with PROPOSALS2 56364 Federal Register / Vol. 82, No. 227 / Tuesday, November 28, 2017 / Proposed Rules

and is intended to be objective and Provider Specific Plans (PSPs) designed The current meaningful difference applied in a standardized and consistent to offer enrollees benefits through a methodology may force MA manner across plans. MCBS data subset of the overall contracted network organizations to design benefit packages collected by CMS from beneficiaries are in a given service area, which are to meet CMS standards rather than used to create the cohort of beneficiaries sometimes referred to as narrower beneficiary needs. To satisfy current whose medical and prescription data are networks, and which was collected in CMS meaningful difference standards, used to estimate out-of-pocket costs. the PBP beginning in CY 2011; and (3) MA organizations may have to change The OOPC model generates estimated beginning in CY 2019, provide different benefit coverage or cost sharing in out-of-pocket costs based on utilization cost sharing and/or additional certain plans to establish the necessary from the cohort of beneficiaries and supplemental benefits for enrollees benefit value difference, even if each plan’s benefit design entered into based on defined health conditions substantial difference exists based on the Plan Benefit Package submitted to within the same plan (Flexibility in the factors CMS is currently unable to CMS as part of the bidding process. Medicare Advantage Uniformity incorporate into the evaluation (such as Detailed information about the Requirements). These flexibilities allow tiered cost sharing, and unique benefit meaningful difference evaluation is MA organizations to provide packages based on enrollee health available in the CY 2018 Final Call beneficiaries with access to health care conditions). Although these changes in Letter issued April 3, 2017 (pages 115– benefits that are tailored to individual benefits coverage may be positive or 118) and information about the CMS needs, but make it difficult for CMS to negative, CMS is concerned the OOPC model is available at: https:// objectively measure meaningful meaningful difference requirement www.cms.gov/Medicare/Prescription- differences between plans. Items 1 and results in organizations potentially Drug-Coverage/ 3 provide greater cost sharing flexibility reducing the value of benefit offerings. PrescriptionDrugCovGenIn/ to address individual beneficiary needs, On the basis of bid review activities OOPCResources.html. Estimated but result in a much broader range of performed over the past several years, enrollee cost sharing is determined by cost sharing values being entered into CMS is concerned that benefits may be the cost sharing amounts for Part A, B, PBP. As discussed in the previous decreased or cost sharing increased to and D services and most mandatory paragraph, the CMS OOPC model uses satisfy the meaningful difference supplemental benefits (for example, the lowest cost sharing value for each evaluation. These are unintended dental services). Benefit service service category to estimate out-of- consequences of the existing meaningful categories within a plan may have a pocket costs which may or may not be difference evaluation and may restrict range of multiple and varying cost a relevant comparison between different innovative benefit designs that address sharing amounts. For example, the plans for purposes of evaluating individual beneficiary needs and outpatient procedures, tests, labs, and meaningful difference when variable affordability. radiology services benefit category cost sharing of this type is involved. Beneficiaries may also consider plan includes many services that may have a CMS remains committed to ensuring and Part B premiums when choosing wide range of cost sharing amounts. The transparency in plan offerings so that among health plan options. Making OOPC model uses the minimum or beneficiaries can make informed changes to the existing meaningful lowest cost sharing value placed in the decisions about their health care plan difference evaluation to consider Plan Benefit Package (PBP) for each choices. It is also important to premiums differences as sufficient to encourage competition, innovation, and distinguish among otherwise similar service category to estimate out-of- provide access to affordable health care plans may limit the value of CMS’s pocket costs in these situations. As approaches that address individual evaluation by introducing factors that discussed in the CY 2018 Final Call needs. The current meaningful plans can easily leverage, such as risk Letter, the differences between similar difference methodology evaluates the selection, costs, and margin, to satisfy plans must have at least a $20 per entire plan and does not capture the evaluation test without resulting in member per month estimated differences in benefits that are tied to additional benefit value or choice for beneficiary out-of-pocket cost specific health conditions. As a result, enrollees. difference. Differences in plan type (for the meaningful difference evaluation Stakeholders have expressed concern example, HMO, LPPO), SNP sub-type, would not fully represent benefit and that without the meaningful difference and inclusion of Part D coverage are cost sharing differences experienced by evaluation the number of bids and plan considered meaningful differences enrollees and could lead to MA choices will likely increase and make which aligns with beneficiary decision- organizations to focus on CMS beneficiary decisions more difficult. The making. Premiums, risk scores, actual standards, rather than beneficiary needs, number of plan bids may increase plan utilization and enrollment are not when designing benefit packages. because of a variety of factors, such as included in the evaluation because In order to capture differences in payments, bidding and service area these factors would introduce risk provider network, more tailored benefit strategies, serving unique populations, selection, costs, and margin into the and cost sharing designs, or other and in response to other program evaluation, resulting in a negation of the innovations, the evaluation process constraints or flexibilities. CMS expects evaluation’s objectivity. would have to use more varied and that eliminating the meaningful Based on CMS’s efforts to revisit MA complex assumptions to identify plans difference requirement will improve the standards and the implementation of the that are not meaningfully different from plan options available for beneficiaries, governing law to find flexibility for MA one another. CMS believes that such an but CMS does not believe the number of beneficiaries and plans, MA evaluation could result in more similar plan options offered by the same organizations are able to: (1) Tier the complicated and potentially confusing MA organization in each county will cost sharing for contracted providers as benefit designs to achieve differences necessarily increase significantly or an incentive to encourage enrollees to between plans. This process may create confusion in beneficiary decision- seek care from providers the plan require greater administrative resources making. New flexibilities in benefit identifies based on efficiency and for MA organizations and CMS, while design and more sophisticated quality data which was communicated not producing results that are useful to approaches to consumer engagement in CY 2011 guidance; (2) establish beneficiaries. and decision-making should help

VerDate Sep<11>2014 20:14 Nov 27, 2017 Jkt 244001 PO 00000 Frm 00030 Fmt 4701 Sfmt 4702 E:\FR\FM\28NOP2.SGM 28NOP2 sradovich on DSK3GMQ082PROD with PROPOSALS2 Federal Register / Vol. 82, No. 227 / Tuesday, November 28, 2017 / Proposed Rules 56365

beneficiaries, caregivers, and family community resources, and other organizations. Such subregulatory members make informed plan choices stakeholders. guidance was established later that same among more individualized plan CMS will continue to furnish year and was applicable to the 2006 offerings. Based on the previously stated information to MA organizations and contract year. As outlined in Chapter 2 information, CMS does not expect a solicit comments on bid evaluation of the Medicare Managed Care Manual, significant increase in time spent in bid methodology through the annual Call we established an optional enrollment review as a direct result of eliminating Letter process or HPMS memoranda, as mechanism, whereby MA organizations meaningful difference nor increased appropriate. may develop processes and, with CMS health care provider burden. In addition, CMS is maintaining approval, provide seamless continuation In addition, new flexibilities in requirements around plans not of coverage by way of enrollment in an benefit design may allow MA misleading beneficiaries in MA plan for newly MA eligible organizations to address different communication materials, disapproving individuals who are currently enrolled beneficiary needs within existing plan a bid if CMS finds that a plan’s in other health plans offered by the MA options and reduce the need for new proposed benefit design substantially organization (such as commercial or plan options to navigate existing CMS discourages enrollment in that plan by Medicaid plans) at the time of the requirements. In addition, MA certain Medicare-eligible individuals, individuals’ initial eligibility for organizations may be able to offer a and non-renewing plans that fail to Medicare. The guidance emphasized portfolio of plan options with clear attract a sufficient number of enrollees that MA organizations not limit differences between benefits, providers, over a sustained period of time seamless continuation of coverage to and premiums which would allow (§§ 422.100(f)(2), 422.510(a)(4)(xiv), situations in which an enrollee becomes beneficiaries to make more effective 422.2264, and 422.2260(e)). CMS eligible for Medicare by virtue of age, decisions if the MA organizations are expects these measures will continue to but includes all newly eligible Medicare not required to change benefit and cost protect beneficiaries from beneficiaries, including those whose sharing designs in order to satisfy discriminatory plan benefit packages Medicare eligibility is based on and health plans that demonstrate a lack §§ 422.254 and 422.256. Currently, MA disability. We did not mandate that of beneficiary interest if the meaningful organizations must satisfy CMS organizations implement a process for difference requirement is eliminated. meaningful difference standards (and seamless continuation of coverage but, For all these reasons, CMS proposes to other requirements), rather than solely instead, gave organizations the option of remove §§ 422.254(a)(4) and focusing on beneficiary purchasing implementing such a process for its 422.256(b)(4) to eliminate the needs when establishing a range of plan enrollees who are approaching Medicare meaningful difference requirement for options. eligibility. From its inception, the MA bid submissions. CMS seeks guidance has required that individuals CMS supports beneficiary decision- comments and suggestions on the topics receive advance notice of the proposed making by providing tools and materials discussed in this section about making MA enrollment and have the ability to that focus on key beneficiary purchasing sure beneficiaries have access to ‘‘opt out’’ of such an enrollment prior to criteria, such as eligibility to enroll in innovative plans that meet their unique the effective date of coverage. This SNPs, need for Part D coverage, Part D needs. formulary and benefit coverage, plan guidance has been in practice for the type preference (for example, HMO vs. 7. Coordination of Enrollment and past decade for MA organizations that PPO), network providers, medical Disenrollment Through MA requested to use this voluntary benefit coverage, premiums, and the Organizations and Effective Dates of enrollment mechanism, but we have brand or organization offering the plan Coverage and Change of Coverage encountered complaints and heard options. CMS is also taking steps to (§§ 422.66 and 422.68) concerns about the practice. We are improve information available through Section 1851(c)(3)(A)(ii) of the Act proposing new regulation text to MPF and 1–800–MEDICARE to help provides the Secretary with the establish limits and requirements for beneficiaries, caregivers, and family authority to implement default these types of default enrollments to members make informed plan choices. enrollment rules for the Medicare address these concerns and our CMS continually evaluates consumer Advantage (MA) program in addition to administrative experience with seamless engagement tools and outreach the statutory direction that beneficiaries continuation of coverage, commonly materials (including marketing, who do not elect an MA plan are referred to as seamless conversion. educational, and member materials) to defaulted to original (fee-for-service) Based on our experience with the ensure information is formatted Medicare. This provision states that the seamless conversion process thus far, consistently so beneficiaries can easily Secretary may establish procedures we are proposing, to be codified at compare multiple plans. CMS also whereby an individual currently § 422.66(c)(2), requirements for seamless provides annual guidance and model enrolled in a non-MA health plan default enrollments upon conversion to materials to MA organizations to assist offered by an MA organization at the Medicare. As proposed in more detail them in providing resources, such as the time of his or her Initial Coverage later in this section, such default plan’s Annual Notice of Change and Election Period is deemed to have enrollments would be into dual eligible Evidence of Coverage, which contain elected an MA plan offered by the special needs plans (D–SNPs) and be valuable information for the enrollee to organization if he or she does not elect subject to five substantive conditions: evaluate and select the best plan for to receive Medicare coverage in another (1) The individual is enrolled in an their needs. To reinforce informed way. affiliated Medicaid managed care plan decision making, CMS invests We initially addressed default and is dually eligible for Medicare and substantial resources in engagement enrollment upon conversion to Medicaid; (2) the state has approved use strategies such as 1–800–MEDICARE, Medicare in rulemaking (70 FR 4606 of this default enrollment process and MPF, standard and electronic mail, and through 4607) in 2005, indicating that provided Medicare eligibility social media to continuously we would retain the flexibility to information to the MA organization; (3) communicate with beneficiaries, implement this provision through future the individual does not opt out of the caregivers, family members, providers, instructions and guidance to MA default enrollment; (4) the MA

VerDate Sep<11>2014 20:14 Nov 27, 2017 Jkt 244001 PO 00000 Frm 00031 Fmt 4701 Sfmt 4702 E:\FR\FM\28NOP2.SGM 28NOP2 sradovich on DSK3GMQ082PROD with PROPOSALS2 56366 Federal Register / Vol. 82, No. 227 / Tuesday, November 28, 2017 / Proposed Rules

organization provides a notice that On October 21, 2016,29 in response to Organizations operating Medicaid meets CMS requirements to the inquiries regarding this enrollment managed care plans are better able to individual; and (5) CMS has approved mechanism, its use by MA meet these requirements when states the MA organization to use the default organizations, and the beneficiary provide data, including the individual’s enrollment process before any protections currently in place, we Medicare number, on those about to enrollments are processed. We are also announced a temporary suspension of become Medicare eligible. As part of proposing that coverage under these acceptance of new proposals for coordination between the Medicare and types of default enrollments begin on seamless continuation of coverage. Medicaid programs, CMS shares with the first of the month that the Based on our subsequent discussions states, via the State MMA file, data of individual’s Part A and Part B eligibility with beneficiary advocates and MA individuals with Medicaid who are is effective. We are also proposing organizations approved for this newly becoming entitled to Medicare; changes to §§ 422.66(d)(1) and (d)(5) enrollment mechanism, it is clear that such data includes the Medicare and 422.68 that coordinate with the organizations attempting to conduct number of newly eligible Medicare proposal for § 422.66. seamless continuation of coverage from beneficiaries. MA organizations with In the Advance Notice of commercial coverage (that is, private state contracts to offer D–SNPs would be Methodological Changes for Calendar coverage and Marketplace coverage) able to obtain (under their agreements Year (CY) 2016 for Medicare Advantage find it difficult to comply with our with state Medicare agencies) the data (MA) Capitation Rates, Part C and Part current guidance and approval necessary to process the MA enrollment D Payment Policies and 2016 Call parameters. This is especially true of the submission to CMS. Therefore, we are Letter, we explained how entities that requirement to identify commercial proposing to revise § 422.66 to permit sponsor Medicaid managed care members who are approaching Medicare default enrollment only for Medicaid organizations (MCOs) and affiliated D– eligibility based on disability. Also managed care enrollees who are newly SNPs can promote coverage of an challenging for these organizations is eligible for Medicare and who are integrated Medicare and Medicaid the requirement that they have the enrolled into a D–SNP administered by benefit through existing authority for means to obtain the individual’s an MA organization under the same seamless continuation of coverage of Medicare number and are able to parent organization as the organization Medicaid MCO members as they confirm the individual’s entitlement to that operates the Medicaid managed become eligible for Medicare. We Part A and enrollment in Part B no care plan in which the individual received positive comments from state fewer than 60 days before the MA plan remains enrolled. These requirements Medicaid agencies that supported this enrollment effective date. would be codified at § 422.66(c)(2)(i) (as enrollment mechanism and requested In addition, the ability for a limit on the type of plan into which that we clarify the process for approval organizations to conduct seamless enrollment is defaulted) and (c)(2)(i)(A) of seamless continuation of coverage as enrollment of individuals converting to (requiring existing enrollment in the a mechanism to promote enrollment in Medicare will be further limited due to affiliated Medicaid managed care plan integrated D–SNPs that deliver both the statutory requirement that CMS as a condition of default MA Medicare and Medicaid benefits. We remove Social Security Numbers (SSNs) enrollment). At paragraph (c)(2)(i)(B), also received comments from from all Medicare cards by April 2019. we are also proposing to limit these beneficiary advocates asking that A new Medicare number will replace default enrollments to situations where additional consumer protections, the SSN-based Health Insurance Claim the state has actively facilitated and including requiring written beneficiary Number (HICN) on the new Medicare approved the MA organization’s use of confirmation and a special enrollment cards for Medicare transactions. this enrollment process and articulates period for those individuals who Beginning in April 2018, we’ll start this in the agreement with the MA transition from non-Medicare products mailing the new Medicare cards with organization offering the D–SNP, as well to Medicare Advantage. We believe that the new number to all people with as providing necessary identifying our proposal, described later in this Medicare. Given the random and unique information to the MA organization. section, adequately addresses the nature of the new Medicare number, we The option of default enrollment can concerns on which these requests are believe MA organizations will be be particularly beneficial for Medicaid based, given that the default enrollment limited in their ability to automatically managed care enrollees who are newly process would be permissible only for enroll newly eligible Medicare eligible for Medicare, because in the individuals enrolled in a Medicaid beneficiaries without having to contact case that the parent organization of the managed care plan in states that support them to obtain their Medicare numbers, Medicaid managed care plan also offers this process. This means that the as CMS does not share Medicare a D–SNP, default enrollment promotes Medicare plan into which individuals numbers with organizations for their enrollment in a plan that offers some would be defaulted would be one that commercial members who are level of integration of acute care, is offered by the same parent approaching Medicare eligibility. We behavioral health and, for eligible organization as their existing Medicaid note that contacting the individual in beneficiaries, long-term care services plan, such that much of the information order to obtain the information and supports, including institutional needed by the MA plan would already necessary to process the enrollment care, and home and community-based be in the possession of the MA does not align with the intent of default services (HCBS). This is in line with organization to facilitate the default enrollment, which is designed to CMS’ support of state efforts to increase enrollment process. Also, default process enrollments and have coverage enrollment of dually eligible individuals enrollment would not be permitted if automatically shift into the MA plan in fully integrated systems of care and the state does not actively support this without an enrollment action required the evidence 30 that such systems process, ensuring an accurate source of by the beneficiary. data for use by MA organizations to 30 There is a growing evidence that integrated care appropriately identify and notify 29 https://www.cms.gov/Medicare/Eligibility-and- and financing models can improve beneficiary Enrollment/MedicareMangCareEligEnrol/ experience and quality of care, including: individuals eligible for default Downloads/HPMS_Memo_Seamless_ • Health Management Associates, Value enrollment. Moratorium.pdf. Assessment of the Senior Care Options (SCO)

VerDate Sep<11>2014 20:14 Nov 27, 2017 Jkt 244001 PO 00000 Frm 00032 Fmt 4701 Sfmt 4702 E:\FR\FM\28NOP2.SGM 28NOP2 sradovich on DSK3GMQ082PROD with PROPOSALS2 Federal Register / Vol. 82, No. 227 / Tuesday, November 28, 2017 / Proposed Rules 56367

improve health outcomes. Further this currently conducting seamless affirmative elections would be necessary proposal will provide states with conversion enrollment have revealed for individuals not enrolled in a additional flexibility and control. States that several of them already include in Medicaid managed care plan, consistent can decide if they wish to allow their their process additional outreach, with § 422.50. However, because contracted Medicaid managed care including reminder notices and individuals enrolled in an plans to use default enrollment of outbound telephone calls to aid in the organization’s commercial plan, for Medicaid enrollees into D–SNPs and transition. We believe that these example would already be known to the can control which D–SNPs receive additional outreach efforts are helpful parent organization offering both the default enrollments through two means: and we would encourage their use non-Medicare plan and the MA plan The contracts that states maintain with under our proposal. and the statute acknowledges that this D–SNPs (§ 422.107(b)) and by providing We also propose, in paragraph existing relationship is somewhat the data necessary for MA organizations (c)(2)(i)(E) and (2)(ii), that MA relevant to Part C coverage, we propose to successfully implement the process. organizations must obtain approval from to amend § 422.66(d)(5) and to establish, Under our proposal, MA organizations CMS before implementing default through subregulatory guidance, a new can process default enrollments only for enrollment. Under our proposal in and simplified positive (that is, ‘‘opt dual-eligible individuals in states where paragraph (c)(2)(i)(B), CMS approval in’’) election process that would be the contract with the state under would be granted only if the applicable available to all MA organizations for the § 422.107 approves it and the state state approves the default enrollment MA enrollments of their commercial, identifies eligibility and shares through its agreement with the MA Medicaid or other non-Medicare plan necessary data with the organization. organization. MA organizations would members. To reflect our change in To ensure that Medicaid beneficiaries be required to implement default policy with regard to a default considered for default enrollment upon enrollment in a non-discriminatory enrollment process and this proposal to their conversion to Medicare are aware manner, consistent with their permit a simplified election process for of the default MA enrollment and of the obligations under § 422.110; that is, MA individuals who are electing coverage in changes to their Medicare and Medicaid organizations could not select for an MA plan offered by the same entity coverage, we also propose, at default enrollment only certain of the as the individual’s non-Medicare § 422.66(c)(2)(i)(C) and (c)(2)(iv), that members of the affiliated Medicaid plan coverage, we are also proposing to add the MA organization must issue a notice who were identified as eligible for text in § 422.66(d)(5) authorizing a no fewer than 60 days before the default default enrollment. Lastly, we propose enrollment effective date to the enrollee. that CMS may suspend or rescind simplified election for purposes of The proposed revised notice 31 must approval at any time if it is determined converting existing non-Medicare include clear information on the D– that the MA organization is not in coverage, commercial, Medicaid or SNP, as well as instructions to the compliance with the requirements. We otherwise, to MA coverage offered by individual on how to opt out (or request comment whether this authority the same organization. This new decline) the default enrollment and how to rescind approval should be broader; mechanism would allow for a less to enroll in Original Medicare or a we have considered whether a time burdensome process for MA different MA plan. This notice limit on the approval (such as 2 to 5 organizations to offer enrollment in requirement aims to help ensure a years) would be appropriate so that their MA plans to their non-Medicare smooth transition of eligible individuals CMS would have to revisit the processes health plan members who are newly into the D–SNP for those who choose and procedures used by an MA eligible for Medicare. As the MA not to opt out. All MA organizations organization under this proposed organization has a significant amount of currently approved to conduct seamless regulation in order to assure that the the information from the member’s non- conversion enrollment issue at least one regulation requirements are still being Medicare enrollment, this new notice 60 days prior to the MA followed. We are particularly interested simplified election process aims to enrollment effective date, so our in comment on this point in conjunction make enrollment easier for the newly- proposal would not result in any with our alternative (discussed later in eligible beneficiary to complete and for additional burden to these MA this section) proposal to codify the the MA organization to process. It organizations using this process. Recent existing parameters for this type of would align with the individual’s Part A discussions with MA organizations seamless conversion default enrollment and Part B initial enrollment period such that all MA organizations would be (and initial coordinated election period Program, July 21, 2015, available at: http:// able to use this default enrollment for MA coverage), provided he or she www.mahp.com/unify-files/ process for newly eligible and newly enrolled in both Medicare Parts A and HMAFinalSCOWhitePaper_2015_07_21.pdf; B when first eligible for Medicare. This • enrolled Medicare beneficiaries in the MedPAC chapter ‘‘Care coordination programs new election process would provide a for dual-eligible beneficiaries,’’ June 2012, available MA organization’s non-Medicare at: http://www.medpac.gov/docs/default-source/ coverage. longer period of time for MA reports/chapter-3-appendixes-care-coordination- Under our proposal, default organizations to accept enrollment programs-for-dual-eligible-beneficiaries-june-2012- enrollment of individuals at the time of requests than the time period in which report-.pdf?sfvrsn=0; their conversion to Medicare would be MA organizations would be required to • Anderson, Wayne L., Zhanlian Fen, and Sharon K. Long, RTI International and Urban Institute, more limited than the default effectuate default enrollments, as Minnesota Managed Care Longitudinal Data enrollments Congress authorized the organizations would be able to accept Analysis, prepared for the U.S. Department of Secretary to permit in section enrollments throughout the individual’s Health and Human Services Assistant Secretary for 1851(c)(3)(A)(ii) of the Act. However, Initial Coverage Election Period (ICEP), Planning and Evaluation (ASPE), March 2016, available at: https://aspe.hhs.gov/report/minnesota- we are also proposing some flexibility which for an aged beneficiary is the 7- managed-care-longitudinal-data-analysis. for MA organizations that wish to offer month period that begins 3 months 31 Enrollment requirements and burden are seamless continuation of coverage to before the month in which the currently approved by OMB under control number their non-Medicare members, individual turns 65 and ends 3 months 0938–0753 (CMS–R–267). Since this rule would not impose any new or revised requirements/burden, commercial, Medicaid or otherwise, after the month in which the individual we are not making any changes to that control who are gaining Medicare eligibility. As turns 65. We would use existing number. discussed in more detail below, authority to create this new enrollment

VerDate Sep<11>2014 20:14 Nov 27, 2017 Jkt 244001 PO 00000 Frm 00033 Fmt 4701 Sfmt 4702 E:\FR\FM\28NOP2.SGM 28NOP2 sradovich on DSK3GMQ082PROD with PROPOSALS2 56368 Federal Register / Vol. 82, No. 227 / Tuesday, November 28, 2017 / Proposed Rules

mechanism which, if implemented, month in which he or she is entitled to regulations to codify that guidance as would be available to MA organizations both Part A and Part B, enrollment follows— in the 2019 contract year. We solicit requests from an individual who is • Articulating the requirements for an comments on the proposed changes to enrolled in a non-Medicare health plan MA organization’s proposal to use the the regulation text as well as the form offered by the MA organization and who seamless conversion mechanism, and manner in which such enrollments meets MA eligibility requirements. To including identifying eligible may occur. better reflect section 1851(c)(3)(A)(ii), individuals in advance of Medicare This optional simplified election we are proposing to amend eligibility; process for the enrollment of non- § 422.66(d)(1) to add text clarifying that • Establishing timeframes for Medicare plan members into MA upon seamless continuations of coverage are processing and the effective date of the their initial eligibility (or initial available to an individual who requests enrollment; and entitlement) for Medicare would enrollment during his or her Initial • Requiring notification to provide individuals the option to Coverage Election Period. In light of our individuals at least 60 days prior to the remain with the organization that offers proposal to permit a simplified election conversion of their right to opt-out or their non-Medicare coverage. A positive process for individuals who are electing decline the enrollment. coverage in an MA plan offered by the election in this circumstance provides In considering this alternative, we same parent organization as the an additional beneficiary protection for contemplated adding additional individual’s non-Medicare coverage, we non-dually eligible individuals, so that beneficiary protections, including the are also proposing a revision to they may actively choose a Medicare issuance of an additional notice to § 422.68(a) to ensure that ICEP elections plan structure similar to that of their ensure that individuals understood the made during or after the month of commercial, Medicaid or other non- implication of taking no action. While entitlement to both Part A and Part B are Medicare health plans, as there may be this alternative would have led to effective the first day of the calendar significant differences between an increased use of the seamless month following the month in which organization’s commercial plans, for conversion enrollment mechanism than the election is made. This proposed example, and its MA plans in terms of what had been used in the past, the revision would codify the subregulatory provider networks, drug formularies, operational challenges, particularly in guidance that MA organizations have costs and benefit structures. While these relation to the new Medicare been following since 2006. This differences may result in a more Beneficiary Identification number may proposal is also consistent with the restrictive network, a mandated change be significant for MA organizations to proposal at § 422.66(c)(2)(iii) regarding in a primary care physician and overcome at this time. increased out-of-pocket costs for the effective date of coverage for default We also considered proposing converting enrollees, default enrollment enrollments into D–SNPs. We also regulations to limit the use of default of a dually eligible individual enrolled solicit comment on these related enrollment to only the aged population. in a Medicaid plan into a D–SNP, proposals. While this alternative would simplify a triggers no premium liability or cost In conclusion, we are proposing to MA organization’s ability to identify sharing for medical care or prescription add regulation text at § 422.66(c)(2)(i) eligible individuals, we have concerns drugs above levels that apply under through (iv) to set limits and about disparate treatment among newly Original Medicare. Further, the requirements for a default enrollment of eligible individuals based on their individual remains in the Medicaid the type authorized under section reason for obtaining Medicare managed care plan and is gaining 1851(c)(3)(A)(ii). We are proposing a entitlement. additional Medicare coverage, which is clarifying amendment to § 422.66(d)(1) not always the case in other contexts. regarding when seamless continuation We invite comments on our proposal We solicit comment on these coverage can be elected and revisions to and the alternate approaches, including coordinated proposals to implement § 422.66(d)(5) to reflect our proposal for the following: • section 1851(c)(3)(A)(ii) in general as a new and simplified positive election Codify the existing parameters for discussed below and in two particular process that would be available to all this type of seamless conversion default ways: (1) To permit default MA MA organizations. Lastly, we are enrollment such that all MA enrollments for dually-eligible proposing revisions to § 422.68(a) to organizations would be able to use this beneficiaries who are newly eligible for ensure that ICEP elections made during default enrollment process for newly Medicare under certain conditions and or after the month of entitlement to both eligible and newly enrolled Medicare (2) to permit simplified elections for Part A and Part B are effective the first beneficiaries in the MA organization’s seamless continuations of coverage for day of the calendar month following the non-Medicare coverage. other newly-eligible beneficiaries who month in which the election is made. • Codify the existing parameters for are in non-Medicare health coverage We invite comments in general on our this type of seamless conversion default offered by the same parent organization proposal, as well as on the alternatives enrollment, as described previously, but that offers the MA plan. We further presented. We recognize that our allow that use of default enrollment be invite comments regarding whether the proposal narrows the scope of default limited to only the aged population. CMS approval of an organization’s enrollments compared to what CMS If commenters recommend one or request to conduct default enrollment approved under section 1851(c)(3)(A) of more alternate approaches, we ask for should be limited to a specific time the Act in the past. As we contemplated suggested solutions that address the frame. In addition, we are proposing the future of the seamless conversion concerns noted in this discussion, amendments to §§ 422.66(d)(1) and mechanism, we considered retaining particularly related to the requirement 422.68 that are also related to MA processes similar to how the seamless that plans identify commercial members enrollment. Currently, as described in conversion mechanism is outlined who are approaching Medicare the 2005 final rule (70 FR 4606 through currently in section 40.1.4 of Chapter 2 eligibility based on disability, as well as 4607), § 422.66(d)(1) requires MA of the Medicare Managed Care Manual how plans could confirm MA eligibility organizations to accept, during the and had been in practice through and process enrollments without access month immediately preceding the October 2016. We considered proposing to the individual’s Medicare number.

VerDate Sep<11>2014 20:14 Nov 27, 2017 Jkt 244001 PO 00000 Frm 00034 Fmt 4701 Sfmt 4702 E:\FR\FM\28NOP2.SGM 28NOP2 sradovich on DSK3GMQ082PROD with PROPOSALS2 Federal Register / Vol. 82, No. 227 / Tuesday, November 28, 2017 / Proposed Rules 56369

8. Passive Enrollment Flexibilities To continuity of integrated care for dually • Where such action is taken in Protect Continuity of Integrated Care for eligible beneficiaries, we are proposing consultation with the state Medicaid Dually Eligible Beneficiaries a limited expansion of our regulatory agency; (§ 422.60(g)) authority to initiate passive enrollment • Where the D–SNP receiving passive Beneficiaries who are dually eligible for certain dually eligible beneficiaries enrollment contracts with the state for both Medicare and Medicaid in instances where integrated care Medicaid agency to provide Medicaid typically face significant challenges in coverage would otherwise be disrupted. services; and • navigating the two programs, which Section 1851(c)(1) of the Act Where certain other conditions are include separate or overlapping benefits authorizes us to develop mechanisms met to promote continuity and quality and administrative processes. for beneficiaries to elect MA enrollment, of care. Fragmentation between the two and we have used this authority to We expect that these factors would all programs can result in a lack of create passive enrollment. The current occur in situations when affected coordination for care delivery, regulation at § 422.60(g) limits the use of beneficiaries would otherwise be potentially resulting in unnecessary, passive enrollment to two scenarios: (1) experiencing an involuntary disruption duplicative, or missed services. One In instances where there is an in either their Medicare or Medicaid method for overcoming this challenge is immediate termination of an MA coverage. We anticipate using this new through integrated care, which provides contract; or (2) in situations in which proposed authority exclusively in such dually eligible beneficiaries with the we determine that remaining enrolled in situations. full array of Medicaid and Medicare a plan poses potential harm to All individuals would be provided benefits for which they are eligible beneficiaries. The passive enrollment with a special election period (which, as through a single delivery system, defined in § 422.60(g) requires established in subregulatory guidance, thereby improving quality of care, beneficiaries to be provided prior lasts for 2 months), as described in beneficiary satisfaction, care notification and a period of time prior § 422.62(b)(4), provided they are not coordination, and reducing to the effective date to opt out of otherwise eligible for another SEP (for administrative burden. enrollment from a plan. Current example, under proposed Integrated care options are § 422.60(g)(3) provides every passively § 423.38(c)(4)(ii)). increasingly available for dually eligible enrolled beneficiary with a special For illustrative purposes we have beneficiaries, which include a variety of election period to allow for election of outlined two scenarios in which this integrated D–SNPs. D–SNPs can provide different Medicare coverage: Selecting a proposed regulatory authority could be greater integrated care than enrollees different managed care plan or opting used to promote continued access to would otherwise receive in other MA out of MA completely and, instead, integrated care and maintain continuity plans or Medicare Fee-For-Service receiving services through Original of care for dually eligible individuals: (FFS), particularly when an individual Medicare (a FFS delivery system). A • State Re-Procurement of Medicaid is enrolled in both a D–SNP and beneficiary who is offered a passive Managed Care Contracts: In several Medicaid managed care organization enrollment is deemed to have elected states, dually eligible beneficiaries offered by the same organization. D– enrollment in the designated plan if he receive Medicaid services through SNPs that meet higher standards of or she does not elect to receive Medicare managed care plans that the state selects integration, quality, and performance coverage in another way. through a competitive procurement benchmarks—known as highly Our proposal is a limited expansion of process. Some states also require that integrated D–SNPs—are able to offer this regulatory authority to promote the sponsors of Medicaid health plans additional supplemental benefits to continued enrollment of dually eligible also offer a D–SNP in the same service support integrated care pursuant to beneficiaries in integrated care plans to area to promote opportunities for § 422.102(e). D–SNPs that are fully preserve and promote care integration integrated care. Dually eligible integrated—known as Fully Integrated under certain circumstances. The beneficiaries can face disruptions in Dual-Eligible (FIDE) SNPs, as defined at proposal includes use of these existing coverage due to routine state re- § 422.2 provide for a much greater level opt-out procedures and special election procurements of Medicaid managed care of integration and coordination than period. Therefore, we are proposing to contracts. Individuals enrolled in non-integrated D–SNPs, providing all redesignate these requirements from Medicaid managed care plans that are primary, acute, and long-term care (g)(1) through (3) to (g)(3) through (g)(5) not renewed are typically transitioned services and supports under a single respectively, with minor revisions in to a separate Medicaid managed care entity. proposed paragraph (g)(5) to describe plan. In such a scenario, dually eligible While enrollment in integrated care the application of special election beneficiaries enrolled in the non- options continues to grow, there are period and in proposed paragraph (g)(4) renewing Medicaid managed care plan’s instances in which beneficiaries may to make minor grammatical changes to corresponding D–SNP product would face disruptions in coverage in the text to improve its readability and now be enrolled in two separate integrated care plans. These disruptions clarity. organizations for their Medicaid and can result from numerous factors, Medicare services, resulting in non- including market forces that impact the Our proposal is to add authority to integrated coverage. Under this availability of integrated D–SNPs and passively enroll full-benefit dually proposed regulation, CMS would have state re-procurements of Medicaid eligible beneficiaries who are currently the ability, in consultation with the state managed care organizations. Such enrolled in an integrated D–SNP into Medicaid agency that contracts with disruptions can result in beneficiaries another integrated D–SNP under certain integrated D–SNPs, to passively enroll being enrolled in two separate circumstances. We anticipate that these dually eligible beneficiaries facing such organizations for their Medicaid and proposed regulations would permit a disruption into an integrated D–SNP Medicare benefits, thereby losing the passive enrollments only when all the that corresponds with their new benefits of integration achieved when following conditions are met: Medicaid managed care plan, thereby the same entity offers both benefit • When necessary to promote promoting continuous enrollment in packages. In an effort to protect the integrated care and continuity of care; integrated care.

VerDate Sep<11>2014 20:14 Nov 27, 2017 Jkt 244001 PO 00000 Frm 00035 Fmt 4701 Sfmt 4702 E:\FR\FM\28NOP2.SGM 28NOP2 sradovich on DSK3GMQ082PROD with PROPOSALS2 56370 Federal Register / Vol. 82, No. 227 / Tuesday, November 28, 2017 / Proposed Rules

• Non-Renewal of D–SNP Contracts: a highly-integrated D–SNP, as defined including community behavioral health Beneficiaries enrolled in an integrated in § 422.2 and described in § 422.102(e) treatment and long-term services and D–SNP that non-renews its MA contract respectively. In an effort to ensure supports. We welcome comments on the at the end of the contract year can face continuity of care, acquiring MA plans process for determining qualification for disruptions in integrated care coverage, would also be required to have passive enrollment under this proposal requiring them to actively select a new substantially similar provider and and particularly on the minimum MA plan or default into Original facility networks and Medicare- and quality standards. We request that Medicare and a standalone prescription Medicaid-covered benefits as the commenters identify specific measures drug plan. While states are permitted to integrated MA plan (or plans) from and minimum ratings that would best passively enroll beneficiaries for which beneficiaries are passively serve our goals in this proposal and are Medicaid coverage as defined in enrolled. MA plans receiving passive specific or especially relevant to § 438.54(c), CMS is not permitted to do enrollment would also be required to coverage for dually eligible so for Medicare coverage when an MA not have any prohibition on new beneficiaries. plan non-renews at the end of the enrollment imposed by CMS and have In addition to the proposed minimum contract year, as current authority for appropriate limits on premium and cost- quality standards and other passive enrollment is limited to midyear sharing for beneficiaries. If our proposed requirements for a D–SNP to receive terminations. Rather, beneficiaries in paragraphs (g)(1) and (g)(2) are finalized, passive enrollments, we are considering the D–SNP that is non-renewing its we would describe in subregulatory limiting our exercise of this proposed contract would need to actively select guidance the procedure through which new passive enrollment authority to and enroll in an MA plan that integrates CMS would determine qualification for those circumstances in which such their Medicare and Medicaid coverage passive enrollment. We also propose exercise would not raise total cost to the in order to continue the same level of that to receive these passive Medicare and Medicaid programs. We integrated care. Permitting CMS the enrollments, that D–SNP must meet seek comment on this potential further ability to passively enroll D–SNP minimum quality standards based on limitation on exercise of the proposed enrollees into other integrated D–SNP MA Star Ratings; we direct the reader to passive enrollment regulatory authority plans in consultation with the state the proposal at section III.A.12. of this to better promote integrated care and Medicaid agency would support rule regarding the MA Star Rating continuity of care. In particular, we seek beneficiaries remaining in integrated System. Our proposed regulation text stakeholder feedback how to calculate care. refers to a requirement to have a the projected impact on Medicare and With a limited expansion of our minimum overall MA Star Rating of at Medicaid costs from exercise of this passive enrollment regulatory authority, least 3 stars, which represents average authority. The intent of the proposed passive we can better promote integrated care or above-average performance. The enrollment regulatory authority is to and continuity of care for dually eligible rating for the year prior to receipt of better promote integrated care and beneficiaries. Therefore, we are passive enrollment would be used in continuity of care—including with proposing to redesignate the order to provide sufficient time for respect to Medicaid coverage—for introductory text in § 422.60(g) as CMS, states, and MAOs to prepare for dually eligible beneficiaries. As such, paragraph (g)(1), with a new heading, the passive enrollment process. Low- we would implement this authority in technical revisions to the existing text enrollment contracts or new plans consultation with the state Medicaid that specifies when passive enrollments without MA Star Ratings as defined in may be implemented by CMS agencies that are contracting with these § 422.252 would also be eligible for designated as (g)(1)(i) and (ii), and a plan sponsors for provision of Medicaid passive enrollment under our proposal, new paragraph (iii). This new (g)(1)(iii) benefits. as long as the plan meets all other would authorize CMS to passively We considered proposing new proposed requirements. enroll certain dually eligible individuals beneficiary notification requirements for currently enrolled in an integrated D– Our goal with this proposed passive enrollments that occur under SNP into another integrated D–SNP, requirement is to ensure that the D–SNP proposed paragraph (g)(1)(iii). We after consulting with the state Medicaid plans receiving these passive considered requiring MA organizations agency that contracts with the D–SNP or enrollments provide high-quality care, receiving the passive enrollment to other integrated managed care plan, to coverage and administration of benefits. provide two notifications to all potential promote continuity of care and As passive enrollments, in some sense, enrollees prior to their enrollment integrated care. are a benefit to a plan, by providing an effective date. We acknowledge that We also propose to add a new enrollee and associated payments under the Financial Alignment Initiative paragraph (g)(2) to include a number of without the plan having successfully demonstrations, states are required to requirements that an MA plan would marketed to the enrollee, we believe that provide two passive enrollment notices. have to meet in order to qualify to it is important that these enrollments Under the passive enrollment authority receive passive enrollments under are limited to plans that have proposed here, we would continue to paragraph (g)(1)(iii). We also propose to demonstrated commitment to quality. encourage, but not require, a second include in paragraph (g)(1)(iii) a Further, it is important to ensure that notice or additional outreach to reference to new paragraph (g)(2) to when we are making an enrollment impacted individuals. Given the make it clear that a contract with the decision for a beneficiary who does not existing beneficiary notifications that state is also necessary for a D–SNP to be make an alternative coverage choice that are currently required under Medicare eligible to receive these passive we are guided by the beneficiary’s best regulations and concerns regarding the enrollments. Specifically, we propose interests, which are likely served by a quantity of notifications sent to that in order to receive passive plan that is rated as having average or beneficiaries, we are not proposing to enrollments under the new authority, above-average performance on the MA modify the existing notification MA plans must be highly integrated, Stars Rating System. However, we requirements, so these existing thereby restricting passive enrollment to recognize that MA Star Ratings do not standards would apply for existing those MA plans that operate as a FIDE capture performance for those services passive enrollments and for the newly SNP or meet the integration standard for that would be covered under Medicaid, proposed passive enrollment authority.

VerDate Sep<11>2014 20:14 Nov 27, 2017 Jkt 244001 PO 00000 Frm 00036 Fmt 4701 Sfmt 4702 E:\FR\FM\28NOP2.SGM 28NOP2 sradovich on DSK3GMQ082PROD with PROPOSALS2 Federal Register / Vol. 82, No. 227 / Tuesday, November 28, 2017 / Proposed Rules 56371

However, we solicit comment on packages (PBPs) that offered drug b. General Rules alternatives regarding beneficiary benefits through use of a tiered We are proposing to revise notices, including comments about the formulary had 4 or fewer tiers. Since § 423.578(a)(2) to read as follows: ‘‘Part content and timing of such notices. Our that time, there have been substantial D plan sponsors must establish criteria proposal redesignates the notice changes in the prescription drug that provide for a tiering exception requirements to paragraph (g)(4) with landscape, including increasing costs of consistent with paragraphs minor grammatical revisions. some generic drugs, as well as the § 423.578(a)(3) through (a)(6) of this Finally, we propose a technical considerable impact of high-cost drugs section.’’ We believe that inserting a correction to a citation in § 422.60(g), on the Part D program. Plan sponsors cross-reference to paragraph (a)(6), which discusses situations involving an have responded by modifying their which establishes allowable limitations immediate termination of an MA plan as formularies and PBPs, resulting in the on tiering exceptions, and which we are increased use of two generic-labeled provided in § 422.510(a)(5). This also proposing to revise, would drug tiers and mixed drug tiers that citation is outdated, as the regulatory streamline and clarify the requirements include brand and generic products on language at § 422.510(a)(5) has been for such exceptions. The proposed the same tiers. The flexibilities CMS moved to § 422.510(b)(2)(i)(B). We revisions would establish rules that permits in benefit design enable plan propose to replace the current citation more definitively base eligibility for sponsors to continue to offer with a reference to § 422.510(b)(2)(i)(B). tiering exceptions on the lowest comprehensive prescription drug applicable cost sharing for the tier 9. Part D Tiering Exceptions (§§ 423.560, coverage with reasonable controls on containing the preferred alternative 423.578(a) and (c)) out of pocket costs for enrollees, but drug(s) for treatment of the enrollee’s a. Background increasingly complex PBPs with more health condition in relation to the cost Section 1860D–4(g)(2) of the Act variation in type and level of cost- sharing. For the 2017 plan year, about sharing of the requested, higher-cost specifies that a beneficiary enrolled in a 91 percent of all Part D PBPs offer drug drug, and not based on tier labels. Part D plan offering prescription drug benefits through use of a tiered benefits for Part D drugs through the use c. Limitations on Tiering Exceptions formulary. Over 98 percent of those of a tiered formulary may request an We are also proposing to revise the tiered PBPs use a formulary containing exception to the plan sponsor’s tiered regulations at § 423.578(a)(6) to specify 5 or 6 tiers; of those, about 98 percent cost-sharing structure. The statute when a Part D plan sponsor may limit contain two generic-labeled tiers. requires such plan sponsors to have a These changes and increased tiering exceptions. We believe the process in place for making complexities, and more than a decade of current text, which permits a plan determinations on such requests, program experience, lead us to believe sponsor to exempt any dedicated consistent with guidelines established that our current regulations are no generic tier from its tiering exceptions by the Secretary. At the start of the Part longer sufficient to ensure that tiering procedures, is being applied in a D program, we finalized regulations at exceptions are understood by manner that restricts tiering exceptions § 423.578(a) that require plan sponsors beneficiaries and adjudicated by plan more stringently than is appropriate. to establish and maintain reasonable sponsors in the manner the statute Specifically, Part D sponsors have been and complete exceptions procedures. contemplates. For this reason, we considering any tier that is labeled These procedures permit enrollees, propose to amend §§ 423.560, ‘‘generic’’ to be exempt from tiering under certain circumstances, to obtain a 423.578(a) and 423.578(c) to revise and exceptions even if the tier also contains drug in a higher cost-sharing tier at the clarify requirements for how tiering brand name drugs. This has become more favorable cost-sharing applicable exceptions are to be adjudicated and even more problematic with the to alternative drugs on a lower cost- effectuated. increase in the number of PBPs with sharing tier of the plan sponsor’s While section 1860D–4(g)(2) of the more than one tier labeled ‘‘generic’’. formulary. Such an exception is granted Act uses the terms ‘‘preferred’’ and Based on an analysis of 2017 plan data when the plan sponsor determines that ‘‘non-preferred’’ drug, rather than entered into the Health Plan the non-preferred drug is medically ‘‘brand’’ and ‘‘generic’’, it also gives the Management System (HPMS), for all necessary based on the prescriber’s Secretary authority to establish Part D plans using a tiered formulary, 62 supporting statement. The tiering guidelines for making a determination percent have indicated at least two tiers exceptions regulations establish the with respect to a tiering exception that contain only generic drugs, and 7 general scope of issues that must be request. The statute further specifies percent have three such tiers. Combined addressed under the plan sponsor’s that ‘‘a non-preferred drug could be with the allowable exemption of a tiering exceptions process. Our goal covered under the terms applicable for specialty tier (used by 99.8 percent of with the exceptions rules codified in the preferred drugs’’ (emphasis added) if the tiered Part D plans in 2017), almost two- Part D final rule (70 FR 4352) was to prescribing physician determines that thirds of all tiered PBPs could exempt allow plan sponsors sufficient flexibility the preferred drug would not be as 3 of their 5 or 6 tiers from tiering in benefit design to obtain pricing effective or would have adverse effects exceptions without any consideration of discounts necessary to offer optimal for the individual. The statute therefore medical need or placement of preferred value to beneficiaries, while ensuring contemplates that tiering exceptions alternative drugs. To ensure appropriate that beneficiaries with a medical need must allow for an enrollee with a enrollee access to tiering exceptions, we for a non-preferred drug are afforded the medical need to obtain favorable cost- are proposing to revise § 423.578(a)(6) to type of drug access and favorable cost- sharing for a non-preferred product, but specify that a Part D plan sponsor would sharing called for under the law. that such access be subject to reasonable not be required to offer a tiering At the start of the program, most Part limitations. Establishing regulations that exception for a brand name drug to a D formularies included no more than allow plans to impose certain preferred cost-sharing level that applies four cost-sharing tiers, generally with limitations on tiering exceptions helps only to generic alternatives. Under this only one generic tier. For the 2006 and ensure that all enrollees have access to proposal, however, plans would be 2007 plan years respectively, about 83 needed drugs at the most favorable cost- required to approve tiering exceptions percent and 89 percent of plan benefit sharing terms possible. for non-preferred generic drugs when

VerDate Sep<11>2014 20:14 Nov 27, 2017 Jkt 244001 PO 00000 Frm 00037 Fmt 4701 Sfmt 4702 E:\FR\FM\28NOP2.SGM 28NOP2 sradovich on DSK3GMQ082PROD with PROPOSALS2 56372 Federal Register / Vol. 82, No. 227 / Tuesday, November 28, 2017 / Proposed Rules

the plan determines that the enrollee specialty tier to a more preferable cost- drugs among Part D enrollees and assist cannot take the preferred generic sharing tier, the specialty tier is not them in managing out of pocket costs. alternative(s), including when the exempt from being considered a We are also proposing at preferred generic alternative(s) are on preferred tier for purposes of tiering § 423.578(a)(6)(i) to codify that plans are tier(s) that include only generic drugs or exceptions. not required to offer tiering exceptions when the lower tier(s) contain a mix of We believe a shift in regulatory policy for brand name drugs or biological brand and generic alternatives. In other that establishes a distinction between products at the cost-sharing level of words, plans would not be permitted to non-preferred branded drugs, biological alternative drug(s) for treating the exclude a tier containing alternative products, and non-preferred generic and enrollee’s condition, where the drug(s) with more favorable cost-sharing authorized generic drugs, achieves alternatives include only the following from their tiering exceptions procedures needed balance between limitations in drug types: • altogether just because that lower-cost plans’ exceptions criteria and Generic drugs for which an tier is dedicated to generic drugs. As beneficiary access, and aligns with how application is approved under section described in the following paragraph, many plan sponsors already design their 505(j) of the Federal Food, Drug, and we are also proposing at § 423.578(a)(6) Cosmetic Act (21 U.S.C. 355(j)), or tiering exceptions criteria. Accordingly, • to establish specific tiering exceptions we are proposing to revise Authorized generic drugs as defined policy for biological products. § 423.578(a)(6) to clarify and establish in section 505(t)(3) of the Federal Food, Proposed § 423.578(a)(6)(iii) would additional limitations plans would be Drug, and Cosmetic Act (21 U.S.C. specify that, ‘‘If a Part D plan sponsor permitted to place on tiering exception 355(t)(3)). As discussed in the Call Letter, CMS maintains a specialty tier, as defined in requests. First, we are proposing new collects Part D plan formulary data § 423.560, the sponsor may design its paragraphs (i) and (ii), which would exception process so that Part D drugs based on the National Library of permit plans to limit the availability of Medicare RxNorm concept unique and biological products on the specialty tiering exceptions for the following drug tier are not eligible for a tiering identifier (RxCUI), and not at the types to a preferred tier that contains the manufacturer-specific National Drug exception.’’ We also propose to add the same type of alternative drug(s) for following definition to Subpart M at Code (NDC) level. This process does not treating the enrollee’s condition: allow us to clearly identify whether a § 423.560: • Brand name drugs for which an Specialty tier means a formulary cost- plan sponsor includes coverage of application is approved under section sharing tier dedicated to very high cost authorized generic NDCs or not. We 505(c) of the Federal Food, Drug, and Part D drugs and biological products believe this position is consistent with Cosmetic Act (21 U.S.C. 355(c)), that exceed a cost threshold established how plans currently administer their including an application referred to in by the Secretary. We note that, while the formularies. Under this regulatory proposed definition of specialty tier section 505(b)(2) of the Federal Food, proposal, a plan sponsor could not does not refer to ‘‘unique’’ drugs as Drug, and Cosmetic Act (21 U.S.C. completely exclude a lower tier 355(b)(2)); and containing only generic and authorized existing § 423.578(a)(7) does, we do not • intend to change the criteria for the Biological products, including generic drugs from its tiering exception specialty tier, which has always been follow-on biologics, licensed under procedures, but would be permitted to based on the drug cost. This proposal section 351 the Public Health Service limit the cost sharing for a particular would retain the current regulatory Act. brand drug or biological product to the provision that permits Part D plan With the proposed revisions, that lowest tier containing the same drug sponsors to disallow tiering exceptions approved tiering exceptions for brand type. Plans would be required to grant for any drug that is on the plan’s name drugs would generally be assigned a tiering exception for a higher cost specialty tier. This policy is currently to the lowest applicable cost-sharing generic or authorized generic drug to the codified at § 423.578(a)(7), which would associated with brand name cost sharing associated with the lowest be revised and redesignated as alternatives, and approved tiering tier containing generic and/or § 423.578(a)(6)(iii). We believe that exceptions for biological products authorized generic alternatives when retaining the existing policy limiting the would generally be assigned to the the medical necessity criteria is met. availability of tiering exceptions for lowest applicable cost-sharing d. Alternative Drugs for Treatment of drugs on the specialty tier is important associated with biological alternatives. the Enrollee’s Condition because of the beneficiary protection Similarly, tiering exceptions for non- that limits cost-sharing for the specialty preferred generic drugs would be In response to the 2018 Call Letter tier to 25 percent coinsurance (up to 33 assigned to the lowest applicable cost- and RFI, we received comments from percent for plans that have a reduced or sharing associated with alternatives that plan sponsors and PBMs requesting that $0 Part D deductible), ensuring that are either brand or generic drugs (see CMS provide additional guidance on these very high cost drugs remain further discussion later in this section how to determine what constitutes an accessible to enrollees at cost sharing related to assignment of cost-sharing for alternative drug for purposes of tiering equivalent to the defined standard approved tiering exceptions to the exceptions, including establishment of benefit. lowest applicable tier). Given the additional limitations on when such We also clarify that, if the specialty widespread use of multiple generic tiers exceptions are approvable. The statutory tier has cost sharing more preferable on Part D formularies, and the inclusion language for tiering and formulary than another tier, then a drug placed on of generic drugs on mixed, higher-cost exceptions at sections 1860D–4(g)(2) such other non-preferred tier is eligible tiers, we believe these changes are and 1860D–4(h)(2) of the Act, for a tiering exception down to the cost needed to ensure that tiering exceptions respectively, specifically refers to a sharing applicable to the specialty tier if for non-preferred generic drugs are preferred or formulary drug ‘‘for an applicable alternative drug is on the available to enrollees with a treatment of the same condition.’’ We specialty tier and the other requirements demonstrated medical need. Procedures interpret this language to be referring to of § 423.578(a) are met. In other words, that allow for tiering exceptions for the condition as it affects the enrollee— while plans are not required to allow higher-cost generics when medically that is, taking into consideration the tiering exceptions for drugs on the necessary promote the use of generic individual’s overall clinical condition,

VerDate Sep<11>2014 20:14 Nov 27, 2017 Jkt 244001 PO 00000 Frm 00038 Fmt 4701 Sfmt 4702 E:\FR\FM\28NOP2.SGM 28NOP2 sradovich on DSK3GMQ082PROD with PROPOSALS2 Federal Register / Vol. 82, No. 227 / Tuesday, November 28, 2017 / Proposed Rules 56373

including the presence of comorbidities statement address the enrollee’s medical 10 years of programmatic experience, and known relevant characteristics of need for the requested drug is already we have observed certain enrollment the enrollee and/or the drug regimen, explained in the introductory text of trends in terms of FBDE and other LIS which can factor into which drugs are § 423.578(a). beneficiaries: appropriate alternative therapies for that • Redesignate paragraphs • Most LIS beneficiaries do not make enrollee. The Part D statute at § 1860D– § 423.578(c)(3)(i) through (iii) as an active choice to join a PDP. For plan 4(g)(2) requires that coverage decisions paragraphs § 423.578(c)(3)(i)(A) through year 2015, over 71 percent of LIS subject to the exceptions process be (C), respectively. This proposed change individuals in PDPs were placed into based on the medical necessity of the would improve consistency between the that plan by CMS. requested drug for the individual for regulation text for tiering and formulary • Once in a plan, whether it was a whom the exception is sought. We exceptions. CMS-initiated enrollment or a choice believe that requirement reasonably We anticipate that the proposed they made on their own, most LIS includes consideration of alternative changes to the tiering exceptions beneficiaries do not make changes therapies for treatment of the enrollee’s regulations will make this process more during the year. Of all LIS beneficiaries condition, based on the facts and accessible and transparent for enrollees who were eligible for the SEP in 2016, circumstances of the case. and less cumbersome for plan sponsors less than 10 percent utilized it. Overall, to administer. We also believe that, by we have seen slight growth of SEP usage e. Approval of Tiering Exception helping plan sponsors ensure their over the past 5 years (for example, less Requests tiering exceptions processes comply than 8 percent in 2012, approximately 9 We are proposing to revise with CMS requirements, IRE overturn percent in 2014). § 423.578(c)(3) by renumbering the rates for tiering exception requests will • A small subset (0.8 percent) of LIS provision and adding a new paragraph remain low. beneficiaries use the SEP to actively enroll in a plan of their choice and then (ii) to codify our current policy that cost 10. Establishing Limitations for the Part sharing for an approved tiering disenroll within 2 months. D Special Election Period (SEP) for While we know that the majority of exception request is assigned at the Dually Eligible Beneficiaries (§ 423.38) lowest applicable tier when preferred LIS-eligible beneficiaries do not take alternatives sit on multiple lower tiers. As discussed in section III.A.2 of this advantage of the SEP, we have seen the Under this proposal, assignment of cost proposed rule, the MMA added section Medicare and Medicaid environment sharing for an approved tiering 1860D–1(b)(3)(D) to the Act to establish evolve in such a way that it may be exception must be at the most favorable a special election period (SEP) for full- disadvantageous to beneficiaries if they cost-sharing tier containing alternative benefit dual eligible (FBDE) changed plans during the year, let alone drugs, unless such alternative drugs are beneficiaries under Part D. This SEP, if they made multiple changes. States not applicable pursuant to limitations codified at § 423.38(c)(4), was later and plans have noted that they are best set forth under proposed § 423.578(a)(6). extended to all other subsidy-eligible able to provide or coordinate care if We are also proposing to delete similar beneficiaries by regulation (75 FR there is continuity of enrollment, language from existing (c)(3) that 19720). The SEP allows eligible particularly if the beneficiary is enrolled proposed new paragraph (c)(3)(ii) would beneficiaries to make Part D enrollment in an integrated product (as discussed replace. changes (that is, enroll in, disenroll later in this section). We now know that from, or change Part D plans, including in addition to choice, there are other f. Additional Technical Changes and Medicare Advantage Prescription Drug critical issues that must be considered Corrections (MA–PD) plans) throughout the year, in determining when and how often Finally, we are proposing various unlike other Part D enrollees who beneficiaries should be able to change technical changes and corrections to generally may switch plans only during their Medicare coverage during the year, improve the clarity of the tiering the annual enrollment period (AEP) such as coordination of Medicare- exceptions regulations and consistency each fall. Medicaid benefits, beneficiary care with the regulations for formulary The MMA sought to strike a balance management, and public health exceptions. Specifically, we are of promoting beneficiary plan choice, concerns such as the national opioid proposing the following: but also ensuring that FBDE epidemic (and the drug management • Revise the introductory text of beneficiaries who did not make an programs discussed in section II.A.1). In § 423.578(a) to clarify that a ‘‘requested’’ active election would still have Part D addition, there are different care models non-preferred drug for treatment of an coverage. The statute directed the available now such as dual eligible enrollee’s health condition may be Secretary to enroll FBDE beneficiaries special needs plans (D–SNPs), Fully eligible for an exception. into a PDP if they did not enroll in a Integrated Dual Eligible (FIDE) SNPs, • Revise § 423.578(a)(1) to include Part D plan on their own. (As noted and Medicare-Medicaid Plans (MMPs) ‘‘tiering’’ when referring to the previously, CMS extended the SEP that are discussed later in this section exceptions procedures described in this through rulemaking to make it available and specifically designed to meet the subparagraph. to all other subsidy-eligible needs of high risk, high needs • Revise § 423.578(a)(4) by making beneficiaries.) When the automatic beneficiaries. ‘‘conditions’’ singular and by adding enrollment of subsidy-eligible Current enrollment trends ‘‘(s)’’ to ‘‘drug’’ to account for situations beneficiaries was originally proposed in demonstrate that while a majority of when there are multiple alternative rulemaking, we noted that beneficiaries subsidy-eligible beneficiaries still drugs. would have the option to use the SEP receive their Part D coverage through • Revise § 423.578(a)(5) by removing if they determined there was a better standalone PDPs, an increasing the text specifying that the prescriber’s plan option for them, and codified a percentage of beneficiaries are enrolled supporting statement ‘‘demonstrate the continuous SEP (that is, that was in MA–PDs and other capitated medical necessity of the drug’’ to align available monthly). managed care products, including over with the existing language for formulary At the time, we did not know on what one in three dually eligible exceptions at § 423.578(b)(6). The factors FBDE beneficiaries would rely to beneficiaries. A smaller but rapidly requirement that the supporting make their plan choice. Now, with over growing subset are enrolled in capitated

VerDate Sep<11>2014 20:14 Nov 27, 2017 Jkt 244001 PO 00000 Frm 00039 Fmt 4701 Sfmt 4702 E:\FR\FM\28NOP2.SGM 28NOP2 sradovich on DSK3GMQ082PROD with PROPOSALS2 56374 Federal Register / Vol. 82, No. 227 / Tuesday, November 28, 2017 / Proposed Rules

Medicare managed care products that Commission (MedPAC 32), opportunities have a change in their Medicaid or LIS- also integrate Medicaid services. For for marketing abuses. eligible status would have an SEP to example: Among the key obstacles the SEP (and make an election within 2 months of the • The MMA established D–SNPs to resulting plan movement) can present change, or of being notified of such are— provide coordinated care to dually change, whichever is later. This SEP • Interfering with the coordination of would be available to beneficiaries who eligible beneficiaries. Between 2007 and care among the providers, health plans, experience a change in Medicaid or LIS 2016, growth in D–SNPs has increased and states; status regardless of whether they have by almost 150 percent. • Hindering the ability for been identified as potential at-risk • FIDE SNPs are a type of SNP beneficiaries to benefit from case beneficiaries or at-risk beneficiaries created by the Affordable Care Act management and disease management; under proposed § 423.100. In addition, (ACA) in 2010 designed to promote full • Wasting the effort and resources we are also proposing to remove the integration and coordination of needed to conduct enrollee needs phrase ‘‘at any time’’ in the introductory Medicare and Medicare benefits for assessments and developing plans of language of § 423.38(c) for the sake of dually eligible beneficiaries by a single care for services covered by Medicare clarity. and Medicaid; The onetime annual SEP opportunity managed care organization. In 2017, • there are 39 FIDE SNPs providing Limiting a plan’s opportunity for would be able to be used at any time of coverage to approximately 155,000 continuous treatment of chronic the year to enroll in a new plan or conditions; and beneficiaries. • disenroll from the current plan, Diminishing incentives for plans to provided that their eligibility for the • MMPs, which operate as part of a innovate and invest in serving SEP has not been limited consistent model test under Section 1115(A) of the potentially high-cost members. with section 1860D–1(b)(3)(D) of the Act, are fully-capitated health plans that While we still support in the Act, as amended by CARA (as discussed serve dually eligible beneficiaries underlying principle that LIS in section III.A.2. of this proposed rule). though demonstrations under the beneficiaries should have the ability to We believe that the onetime annual SEP Financial Alignment Initiative. The make an active choice, we find that plan would still provide dually eligible demonstrations are designed to promote sponsors are better able to administer beneficiaries adequate opportunity to full access to seamless, high quality benefits to beneficiaries, including change their coverage during the year if integrated health care across both coordination of Medicare and Medicaid desired, but is also responsive to Medicare and Medicaid. In 2017, there benefits, and maximize care consistent feedback we have received are 58 MMPs providing coverage to management and positive health from States and plans that have noted nearly 400,000 beneficiaries. outcomes, if dual and other LIS-eligible that the current SEP, which allows beneficiaries are held to the similar The current SEP, especially in the month-to-month movement, can disrupt election period requirements as all other continuity of care, especially in context of these products that integrate Part D-eligible beneficiaries. Therefore, Medicare and Medicaid, highlights integrated care plans. They specifically we are proposing to amend noted that effective care management differences in Medicare and Medicaid § 423.38(c)(4) to make the SEP for FBDE managed care enrollment policies. can best be achieved through and other subsidy-eligible individuals continuous enrollment. Bringing Medicare and Medicaid available only in certain circumstances. Beneficiaries who have been enrolled enrollment policies into greater These circumstances would be in a plan by CMS or a state (that is, alignment, even partially, is a considered separate and unique from through processes such as auto mechanism to reduce complexity in the one another, so there could be situations enrollment, facilitated enrollment, health care system and better partner where a beneficiary could still use the passive enrollment, default enrollment with states. Both are important priorities SEP multiple times if he or she meets (seamless conversion), or reassignment), more than one of the conditions for CMS. would be allowed a separate, additional proposed as follows. Specifically, we In addition, the application of the use of the SEP, provided that their are proposing to revise to § 423.38(c) to continuous SEP carries different service eligibility for the SEP has not been specify that the SEP is available only as delivery implications for enrollees of limited consistent with section 1860D– follows: MA–PD plans and related products than 1(b)(3)(D) of the Act, as amended by • In new paragraph (c)(4)(i), eligible CARA. These beneficiaries would still for standalone enrollees of PDPs. At the beneficiaries (that is, those who are dual have a period of time before the election outset of the Part D program, when drug or other LIS-eligible and meet the takes effect to opt out and choose their coverage for dually eligible beneficiaries definition of at-risk beneficiary or own plan or they would be able to use was transitioned from Medicaid to potential at-risk beneficiary under the SEP to make an election within 2 Medicare, there were concerns about proposed § 423.100) would be able to months of the assignment effective date. how CMS would effectively identify, use the SEP once per calendar year. Once a beneficiary has made an election educate, and enroll dually eligible • In new paragraph (c)(4)(iii), eligible (either prior to or after the effective beneficiaries. While processes (for beneficiaries who have been assigned to date) it would be considered ‘‘used’’ and example, auto-enrollment, a plan by CMS or a State would be able no longer would be available. If a reassignment) were established to to use the SEP before that election beneficiary wants to change plans after facilitate coverage, the continuous SEP becomes effective (that is, opt out and 2 months, he or she would have to use served as a fail-safe to ensure that the enroll in a different plan) or within 2 the onetime annual election opportunity months of their enrollment in that plan. beneficiary was always in a position to discussed previously, provided that it • In new paragraph (c)(9), dual and make a choice that best served their has not been used yet. If that election other LIS-eligible beneficiaries who healthcare needs. Unintended has been used, the beneficiary would consequences have resulted from this have to wait until they are eligible for flexibility, including, as noted by the 32 Medicare Payment Advisory Commission, ‘‘Report to Congress: Medicare Payment Policy,’’ another election period to make a Medicare Payment Advisory March 2008. change.

VerDate Sep<11>2014 20:14 Nov 27, 2017 Jkt 244001 PO 00000 Frm 00040 Fmt 4701 Sfmt 4702 E:\FR\FM\28NOP2.SGM 28NOP2 sradovich on DSK3GMQ082PROD with PROPOSALS2 Federal Register / Vol. 82, No. 227 / Tuesday, November 28, 2017 / Proposed Rules 56375

Under a new proposed SEP, As such, the SEP would not be used for ensure that dual and other LIS-eligible individuals who have a change in their switching between MA–PD plans, beneficiaries understand that the SEP is Medicaid or LIS-eligible status would movement from integrated products to a no longer an unlimited opportunity. We have an election opportunity that is non-integrated MA–PD plan, or would also need to ensure that separate from, and in addition to, the movement from Medicare FFS to an beneficiaries who are assigned to a plan two scenarios discussed previously. (As MA–PD plan. Beneficiaries would still by CMS or the State understand that discussed in section III.A.2. of this rule, be able to select non-integrated MA–PD they must use the SEP within 2 months and unlike the other two conditions plans during other enrollment periods, after the new coverage begins if they discussed previously, individuals such as the AEP, the open enrollment wish to change from the plan to which identified as ‘‘at risk’’ would be able to period (OEP) outlined in section III.C.2. they were assigned. use this SEP.) This would apply to of this proposed rule, and any other SEP We note that other election periods, individuals who gain, lose, or change for which they may be eligible; and including the AEP, the new OEP, or Medicaid or LIS eligibility. We believe • Allow continuous use of the dual other SEPs (for example, when moving that in these instances, it would be SEP to allow eligible beneficiaries to to a new service area), would still be appropriate to give these beneficiaries enroll into FIDE SNPs or comparably available to individuals. In addition, the an opportunity to re-evaluate their Part integrated products for dually eligible proposed limitations would also apply D coverage in light of their changing beneficiaries through model tests under to the Part C SEP established in sub- circumstances. Beneficiaries eligible for section 1115(A) of the Act. regulatory guidance for dual-eligible this SEP would need to use it within 2 This alternative would still permit individuals or individuals who lose months of the change or of being continuous election of Medicare FFS their dual-eligibility. notified of the change, whichever is with a standalone PDP throughout the We welcome public comment on this later. year and a continuous option to change proposal and the considered We considered multiple alternatives between standalone PDPs. alternatives. Specifically, we seek input related to the SEP proposal. We describe We believe this alternative would on the following areas: two such alternatives in the following create greater stability among plans and • Are there other limited discussion: limit the opportunities for misleading circumstances where the dual SEP Limit of two or three uses of the SEP and aggressive marketing to dually- should be available? per year. In 2016, 1.2 million eligible individuals. It would also • Are there special considerations beneficiaries used the SEP for FBDE or maintain the opportunity for continuous CMS should keep in mind if we finalize other subsidy-eligible individuals, enrollment into integrated products to this policy? including over 27,000 who used the SEP reflect our ongoing partnership with • Are there other alternative three or more times, and over 1,700 who states to promote integrated care. approaches we should consider in lieu used the SEP five or more times during However, this alternative would be of narrowing the scope of the SEP? the year. These SEP changes are in more complex to administer and explain • In addition to CMS outreach to beneficiaries, and it encourages addition to changes made during the materials, what are the best ways to enrollment into a limited set of MA AEP and any other election periods for educate the affected population and plans compared to all the plans which a beneficiary may qualify. We other stakeholders of the new proposed available to the beneficiary under the believe that any overuse of the SEP SEP parameters? creates significant inefficiencies and MA program. We welcome comments on this alternative. 11. Medicare Advantage and Part D impedes meaningful continuity of care We believe that our proposed Prescription Drug Program Quality and care coordination. As such, we approach to narrowing of the scope of Rating System considered applying a simple numerical the SEP preserves a dual or other LIS- a. Introduction limit to the number of times the LIS SEP eligible beneficiary’s ability to make an could be used by any beneficiary within active choice. As noted previously, less We are committed to transforming the each calendar year. We specifically than 10 percent of the LIS population health care delivery system—and the considered limits of either two or three used the dual SEP in 2016. We Medicare program—by putting a strong uses of the SEP per year. acknowledge that even though this is a focus on person-centered care, in Compared to our proposal to limit the small percentage of the population, accordance with the CMS Quality use of the SEP to one time per calendar given the number of beneficiaries who Strategy, so each provider can direct year, this alternative would permit more receive Extra Help, this equates to over their time and resources to each opportunities for midyear changes. a million elections. We note, though, beneficiary and improve their outcomes. However, it could still allow for a high that of this group, the majority (74.5 As part of this commitment, one of our level of membership churning. Relative percent) used the SEP one time. Under most important strategic goals is to to our proposal, it would also be less our proposal, this population would improve the quality of care for Medicare effective in limiting the opportunities still be able to make an election, thus, beneficiaries. The Part C and D Star for aggressive marketing to LIS we believe that the majority of Ratings support the efforts of CMS to beneficiaries outside of the AEP. We beneficiaries would not be negatively improve the level of accountability for welcome comments on this alternative. the care provided by health and drug Limits on midyear MA–PD plan impacted by these changes. We opted plans, physicians, hospitals, and other switching. We also considered a more for our proposed approach, as opposed Medicare providers. We currently complex option, drawing heavily on to the alternatives, because we believe it publicly report the quality and earlier MedPAC recommendations.33 encourages continuity of enrollment and performance of health and drug plans Under this alternative we would: care, without overcomplicating both on the Medicare Plan Finder tool on • Modify the SEP to prohibit its use beneficiary understanding of how the www.medicare.gov in the form of to elect a non-integrated MA–PD plan. SEP is available to them, as well as plan sponsor operational responsibilities. summary and overall ratings for the 33 Medicare Payment Advisory Commission, If the proposal is finalized, we would contracts under which each MA plan ‘‘Report to Congress: Medicare Payment Policy,’’ revise our messaging and beneficiary (including MA–PD plans) and Part D March 2008. education materials as necessary to plan is offered, with drill downs to

VerDate Sep<11>2014 20:14 Nov 27, 2017 Jkt 244001 PO 00000 Frm 00041 Fmt 4701 Sfmt 4702 E:\FR\FM\28NOP2.SGM 28NOP2 sradovich on DSK3GMQ082PROD with PROPOSALS2 56376 Federal Register / Vol. 82, No. 227 / Tuesday, November 28, 2017 / Proposed Rules

ratings for domains, ratings for govern the Star Ratings System, we are Data and Information Set (HEDIS), individual measures, and underlying demonstrating a commitment to Health Outcomes Survey (HOS), CAHPS performance data. We also post transparency and predictability for the data, Part C and D Reporting additional measures on the display rules in the system so as to foster requirements and administrative data, page 34 at www.cms.gov for investment. and data from CMS contractors and informational purposes. The goals of the oversight activities to measure quality b. Background Star Ratings are to display quality and performance of contracts. We have information on Medicare Plan Finder for We originally acted upon our been displaying plan quality public accountability and to help authority to disseminate information to information based on that and other beneficiaries, families, and caregivers beneficiaries as the basis for developing data since 1998. make informed choices by being able to and publicly posting the 5-star ratings Since 2007, we have published consider a plan’s quality, cost, and system (sections 1851(d) and 1852(e) of annual performance ratings for stand- coverage; to incentivize quality the Act). The MA statute explicitly alone Medicare PDPs. In 2008, we improvement; to provide information to requires that information about plan introduced and displayed the Star oversee and monitor quality; and to quality and performance indicators be Ratings for Medicare Advantage accurately measure and calculate scores provided to beneficiaries in an easy to Organizations (MAOs) for both Part C and stars to reflect true performance. In understand language to help them make only contracts (MA-only contracts) and addition, CMS has started to incorporate informed plan choices. These data are to Part C and D contracts (MA–PDs). Each efforts to recognize the challenges of include disenrollment rates, enrollee year since 2008, we have released the serving high risk, high needs satisfaction, health outcomes, and plan MA Star Ratings. An overall rating populations while continuing the focus compliance with requirements. combining health and drug plan on improving health care for these The Part D statute (at section 1860D– measures was added in 2011, and important groups. 1(c)) imposes a parallel information differential weighting of measures (for In this rule as part of the dissemination requirement with respect example, outcomes being weighted 3 Administration’s efforts to improve to Part D plans, and refers specifically times the value of process measures) transparency, we propose to codify the to comparative information on began in 2012. The measurement of year existing Star Ratings System for the MA consumer satisfaction survey results as to year improvement began in 2013, and and Part D programs with some changes. well as quality and plan performance an adjustment (Categorical Adjustment As noted later in this section in more indicators. Part D plans are also Index) was introduced in 2017 to detail, the proposed changes include required by regulation (§ 423.156) to address the within-contract disparity in more clearly delineating the rules for make Consumer Assessment of performance revealed in our research adding, updating, and removing Healthcare Providers and Systems among beneficiaries that are dual measures and modifying how we (CAHPS) survey data available to CMS eligible, receive a low income subsidy, calculate Star Ratings for contracts that and are required to submit pricing and and/or are disabled. consolidate. Although the rulemaking prescription drug event data under The MA and Part D Star Ratings process will create a longer lead time for statutes and regulations specific to those measure the quality of care and changes, codifying the Star Ratings data. Regulations require plans to report experiences of beneficiaries enrolled in methodology will provide plans with on quality improvement and quality MA and Part D contracts, with 5 stars as more stability to plan multi-year assurance and to provide data which the highest rating and 1 star as the initiatives, because they will know the CMS can use to help beneficiaries lowest rating. The Star Ratings provide measures several years in advance. We compare plans (§§ 422.152 and ratings at various levels of a hierarchical have received comments for the past 423.153). In addition we may require structure based on contract type, and all several years from MA organizations plans to report statistics and other ratings are determined using the and other stakeholders asking that CMS information in specific categories measure-level Star Ratings. Contingent use Federal Register rulemaking for the (§§ 422.516 and 423.514). on the contract type, ratings may be Star Ratings System; we discuss in Currently, for similar reasons of provided and include overall, summary section III.12.c. (regarding plans for the providing information to beneficiaries to (Part C and D), and domain Star Ratings. transition period before the codified assist them in plan enrollment Information about the measures, the rules are used) how section 1832(b) decisions, we also review and rate hierarchical structure of the ratings, and authorizes CMS to establish and section 1876 cost plans on many of the the methodology to generate the Star annually modify the Star Ratings same measures and publish the results. Ratings is detailed in the annually System using the Advance Notice and We also propose to continue to include updated Medicare Part C and D Star Rate Announcement process because 1876 cost contracts in the MA and Part Ratings Technical Notes, referred to as the system is an integral part of the D Star Rating system to provide Technical Notes, available at http:// policies governing Part C payment. We comparative information to Medicare go.cms.gov/partcanddstarratings. think this is an appropriate time to beneficiaries making plan choices. We The MA and Part D Star Ratings codify the methodology, because the propose specific text, to be codified at System is designed to provide rating system has been used for several § 417.472(k), noting that 1876 cost information to the beneficiary that is a years now and is relatively mature so contracts must agree to be rated under true reflection of the plan’s quality and there is less need for extensive changes the quality rating system specified at encompasses multiple dimensions of every year; the smaller degree of subpart D of part 422. Cost contracts are high quality care. The information flexibility in having codified regulations also required by regulation (§ 17.472(j)) included in the ratings is selected based rather than using the process for to make CAHPS survey data available to on its relevance and importance such adopting payment methodology changes CMS. As is the case today, no quality that it can meet the data needs of may be appropriate. Further, by bonus payments (QBP) would be beneficiaries using it to inform plan adopting and codifying the rules that associated with the ratings for 1876 cost choice. While encouraging improved contracts. health outcomes of beneficiaries in an 34 http://go.cms.gov/partcanddstarratings (under In line with §§ 422.152 and 423.153, efficient, person centered, equitable, the downloads). CMS uses the Healthcare Effectiveness and high quality manner is one of the

VerDate Sep<11>2014 20:14 Nov 27, 2017 Jkt 244001 PO 00000 Frm 00042 Fmt 4701 Sfmt 4702 E:\FR\FM\28NOP2.SGM 28NOP2 sradovich on DSK3GMQ082PROD with PROPOSALS2 Federal Register / Vol. 82, No. 227 / Tuesday, November 28, 2017 / Proposed Rules 56377

primary goals of the ratings, they also respective program requirements and for changes through this or future provide feedback on specific aspects of the provision of quality care and health rulemaking or in connection with care that directly impact outcomes, such coverage to Medicare beneficiaries. interpreting our regulations (once as process measures and the The true potential of the use of the finalized) on the Star Rating system beneficiary’s perspective. The ratings MA and Part D Star Ratings System to measures. However, we are particularly focus on aspects of care that are within reach our goals and to serve as a catalyst interested in receiving stakeholder the control of the health plan and can for change can only be realized by feedback on the following topics: working in tandem with our many spur quality improvement. The data • Additional opportunities to used in the ratings must be complete, stakeholders including beneficiaries, improve measures so that they further accurate, reliable, and valid. A delicate industry, and advocates. The following reflect the quality of health outcomes balance exists between measuring guiding principles have been used under the rated plans. numerous aspects of quality and the historically in making enhancements to need for a small data set that minimizes the MA and Part D Star Ratings: • Whether CMS’ current process for reporting burden for the industry. Also, • Ratings align with the current CMS establishing the cut points for Star the beneficiary or his or her Quality Strategy. Rating can be simplified, and if the representative must have enough • Measures developed by consensus- relative performance as reflected by the information to make an informed based organizations are used as much as existing cut points accurately reflects decision without feeling overwhelmed possible. plan quality. • by the volume of data. Ratings are a true reflection of plan • How CMS should measure overall quality and enrollee experience; the The Patient Protection and Affordable improvement across the Star Ratings methodology minimizes risk of Care Act (Pub. L. 111–148), as amended measures. We are requesting input on by the Healthcare and Education misclassification. • additional improvement adjustments Reconciliation Act (Pub. L. 111–152), Ratings are stable over time. • that could be implemented, and the provides for quality ratings, based on a Ratings treat contracts fairly and equally. effect that these adjustments could have 5-star rating system and the information • on new entrants (that is, new MA collected under section 1852(e) of the Measures are selected to reflect the prevalence of conditions and the organizations and/or new plans offered Act, to be used in calculating payment by existing MA organizations). to MA organizations beginning in 2012. importance of health outcomes in the Medicare population. • Additional adjustments to the Star Specifically, sections 1853(o) and • 1854(b)(1)(C) of the Act provide, Data are complete, accurate, and Ratings measures or methodology that reliable. could further account for unique respectively, for an increase in the • benchmark against which MA Improvement on measures is under geographic and provider market organizations bid and in the portion of the control of the health or drug plan. characteristics that affect performance • Utility of ratings is considered for a the savings between the bid and (for example, rural geographies or wide range of purposes and goals. benchmark available to the MA monopolistic provider geographies), and ++ Accountability to the public. the operational difficulties that plans organization to use as a rebate. Under ++ Enrollment choice for could experience if such adjustments the Act, Part D plan sponsors are not beneficiaries. were adopted. eligible for quality based payments or ++ Driving quality improvement for rebates. We finalized a rule on April 15, plans and providers. • In order to further encourage plan 2011 to implement these provisions and • Ratings minimize unintended participation and new market entrants, to use the existing Star Ratings System consequences. whether CMS should consider that had been in place since 2007 and • Process of developing methodology implementing a demonstration to test 2008. (76 FR 21485–21490).35 In is transparent and allows for multi- alternative approaches for putting new addition, the Star Ratings measures are stakeholder input. entrants (that is, new MA organizations) tied in many ways to responsibilities We are using these goals to guide our on a level playing field with renewing and obligations of MA organizations and proposal and how we interpret and plans from a Star Ratings perspective for Part D sponsors under their contracts apply the proposed regulations once a pre-determined period of time. with CMS. We believe that continued finalized. For each provision we are • Adding measures that evaluate poor performance on the measures and proposing, we solicit comment on quality from the perspective of adopting overall and summary ratings indicates whether our specific proposed new technology (for example, the systemic and wide-spread problems in regulation text best serves these guiding percent of beneficiaries enrolled an MA plan or Part D plan. In April principles. We also solicit comment on through online brokers or the use of 2012, we finalized a regulation to use whether additional or other principles telemedicine) or improving the ease, consistently low summary Star are better suited for these roles in simplicity, and satisfaction of the Ratings—meaning 3 years of summary measuring and communicating quality beneficiary experience in a plan. Star Ratings below 3 stars—as the basis in the MA and Part D programs in a for a contract termination for Part C and comparative manner. • Including survey measures of Part D plans. (§§ 422.510(a)(14) and As we continue to consider making physicians’ experiences. (Currently, we 423.509(a)(13)). Those regulations changes to the MA and Part D programs measure beneficiaries’ experiences with further reflect the role the Star Ratings in order to increase plan participation their health and drug plans through the have had in CMS’ oversight, evaluation, and improve benefit offerings to CAHPS survey.) Physicians also interact and monitoring of MA and Part D plans enrollees, we would also like to solicit with health and drug plans on a daily to ensure compliance with the feedback from stakeholders on how well basis on behalf of their patients. We are the existing stars measures create considering developing a survey tool for 35 The ratings were first used as part of the meaningful quality improvement collecting standardized information on Quality Bonus Payment Demonstration for 2012 physicians’ experiences with health and through 2014 and then used for payment purposes incentives and differentiate plans based as specified in sections 1853(o) and 1854(b)(1)(C) on quality. We welcome all comments drug plans and their services, and we and the regulation at 42 CFR 422.258(d)(7). on those topics, and will consider them would welcome comments.

VerDate Sep<11>2014 20:14 Nov 27, 2017 Jkt 244001 PO 00000 Frm 00043 Fmt 4701 Sfmt 4702 E:\FR\FM\28NOP2.SGM 28NOP2 sradovich on DSK3GMQ082PROD with PROPOSALS2 56378 Federal Register / Vol. 82, No. 227 / Tuesday, November 28, 2017 / Proposed Rules

c. Basis, Purpose and Applicability of have used the draft and final Call Letter, subregulatory guidance because we the Quality Star Ratings System which are attachments to the Advance believe such regulation text would be We propose to codify regulation text, Notice and final Rate Announcement unnecessary. We propose to codify the 36 at §§ 422.160 and 423.180, that respectively, to propose for comment first performance period (2019) and first identifies the statutory authority, and finalize changes to the quality Star payment year (2022) to which our purpose, and applicability of the Star Ratings System since the ratings became proposed regulations would apply at Ratings System regulations we are a component of the payment § 422.160(c) and § 423.180(c). methodology for MA and MA–PD plans. proposing to add to part 422 subpart D d. Definitions and part 423 subpart D. Under our (76 FR 214878 through 89). Because the Star Ratings System has been integrated There are a number of technical and proposal, the existing purposes of the other terms relevant to our proposed quality rating system—to provide into the payment methodology since the 2012 contract year (as a mechanism regulations. Therefore, we propose the comparative information to Medicare following definitions for the respective beneficiaries pursuant to sections used to determine how much a plan is paid, and not the mechanism by which subparts in part 422 and part 423 in 1851(d) and 1860D–1(c) of the Act, to (or a rule about when) a plan is paid), paragraph (a) of §§ 422.162 and 423.182 identify and apply the payment the Star Ratings are part of the process respectively. Some proposed definitions consequences for MA plans under for setting benchmarks and capitation are discussed in more detail later in this sections 1853(o) and 1854(b)(1)(C) of the rates under section 1853, and the preamble in connection with other Act, and to evaluate and oversee overall process for announcing changes to the proposed regulation text related to the and specific performance by plans— Star Ratings System falls within the definition. would continue. To reflect how the Part • scope of section 1853(b). Although not CAHPS refers to a comprehensive D ratings are used for MA–PD plan QBP expressly required by section 1853(b), and evolving family of surveys that ask status and rebate retention allowances, CMS has historically solicited comment consumers and patients to evaluate the we also propose specific text, to be on significant changes to the ratings interpersonal aspects of health care. codified at § 423.180(b)(2), noting that system using a Request for Comment CAHPS surveys probe those aspects of the Part D Star Rating will be used for process before the Advance Notice and care for which consumers and patients those purposes. are the best or only source of We are proposing here, broadly stated, draft Call Letter are released; this Request for Comment 37 provides information, as well as those that to codify the current quality Star Ratings consumers and patients have identified System uses, methodology, measures, MAOs, Part D sponsors, and other stakeholders an opportunity to request as being important. CAHPS initially and data collection beginning with the stood for the Consumer Assessment of measurement periods in calendar year changes to and raise concerns about the Star Ratings methodology and measures Health Plans Study, but as the products 2019. We are proposing some changes, have evolved beyond health plans the such as how we handle consolidations before CMS finalizes its proposal for the Advance Notice. We intend to continue acronym now stands for Consumer from the current Star Ratings program, Assessment of Healthcare Providers and but overall the proposal is to continue the current process at least until the 2019 measurement period that we are Systems. the Star Ratings System as it has been • Case-mix adjustment means an proposing as the first measurement developed and has stabilized. Data will adjustment to the measure score made period under these new regulations, but be collected and performance will be prior to the score being converted into we may discontinue that process at a measured using these proposed rules a Star Rating to take into account certain later date as the rulemaking process may and regulations for the 2019 enrollee characteristics that are not provide sufficient opportunity for measurement period; the associated under the control of the plan. For public input. In addition, CMS issues quality Star Ratings will be used to example age, education, chronic annually the Technical Notes 38 that assign QBP ratings for the 2022 payment medical conditions, and functional describe in detail how the methodology year and released prior to the annual health status that may be related to the is applied from the changes in policy coordinated election period held in late enrollee’s survey responses. 2020 for the 2021 contract year. adopted through the Advance Notice • Categorical Adjustment Index (CAI) Application of the final regulations and Rate Announcement process. We means the factor that is added to or resulting from this proposal will intend to continue the practice of subtracted from an overall or summary determine whether the measures publishing the Technical Notes during Star Rating (or both) to adjust for the proposed in section III.A.12.i. of the the preview periods. Under our average within-contract (or within-plan proposed rule (Table 2) are updated, proposal, we would also continue to use as applicable) disparity in performance transitioned to or from the display page, the draft and final Call Letters as a associated with the percentages of and otherwise used in conjunction with means to provide subregulatory beneficiaries who are dually eligible for the 2019 performance period. application), interpretation, and Medicare and enrolled in Medicaid, Under our proposal, the current guidance of the final version of these beneficiaries who receive a Low Income quality Star Ratings System and the proposed regulations where necessary. Subsidy or have disability status in that procedures for revising it will remain in Our proposed regulation text does not contract (or plan as applicable). place for the 2019 and 2020 quality Star detail these plans for continued use of • Clustering refers to a variety of Ratings. Section 1853(b) of the Act the current process and future for techniques used to partition data into authorizes an advance notice and rate distinct groups such that the 36 Advance Notices and Rate Announcements are announcement to announce and seek posted each year on the CMS Web site at: https:// observations within a group are as comment for proposed changes to the www.cms.gov/Medicare/Health-Plans/ similar as possible to each other, and as MA payment methodology, which MedicareAdvtgSpecRateStats/Announcements-and- dissimilar as possible to observations in includes the Part C and D Star Ratings Documents.html. any other group. Clustering of the program. The statute identifies specific 37 Requests for Comment are posted at http:// measure-specific scores means that gaps go.cms.gov/partcanddstarratings under the notice and comment timeframes, but downloads. that exist within the distribution of the that process does not require 38 http://go.cms.gov/partcanddstarratings (under scores are identified to create groups publication in the Federal Register. We the downloads) for the Technical Notes. (clusters) that are then used to identify

VerDate Sep<11>2014 20:14 Nov 27, 2017 Jkt 244001 PO 00000 Frm 00044 Fmt 4701 Sfmt 4702 E:\FR\FM\28NOP2.SGM 28NOP2 sradovich on DSK3GMQ082PROD with PROPOSALS2 Federal Register / Vol. 82, No. 227 / Tuesday, November 28, 2017 / Proposed Rules 56379

the four cut points resulting in the patient reported outcomes measure that regulatory definition, we clarify that creation of five levels (one for each Star was used in Medicare managed care. CMS uses statistical tests (for example, Rating), such that the scores in the same The goal of the Medicare HOS program t-test) to determine if a contract’s Star Rating level are as similar as is to gather valid, reliable, and clinically measure value is statistically different possible and the scores in different Star meaningful health status data in the (greater than or less than depending on Rating levels are as different as possible. Medicare Advantage (MA) program for the test) from the national mean for that Technically, the variance in measure use in quality improvement activities, measure, or whether conversely, the scores is separated into within-cluster pay for performance, program oversight, observed differences from the national and between-cluster sum of squares public reporting, and improving health. mean could have arisen by chance. components. The clusters reflect the All managed care organizations with • Surviving contract means the groupings of numeric value scores that MA contracts must participate. contact that will still exist under a minimize the variance of scores within • Low Income Subsidy (LIS) means consolidation, and all of the the clusters. The Star Ratings levels are the subsidy that a beneficiary receives to beneficiaries enrolled in the consumed assigned to the clusters that minimize help pay for prescription drug coverage contract(s) are moved to the surviving the within-cluster sum of squares. The (see § 423.34 for definition of a low- contracts. • cut points for star assignments are income subsidy eligible individual). Traditional rounding rules mean derived from the range of measure • Measurement period means the that the last digit in a value will be scores per cluster, and the star levels period for which data are collected for rounded. If rounding to a whole associated with each cluster are a measure or the performance period number, look at the digit in the first determined by ordering the means of the that a measures covers. decimal place. If the digit in the first clusters. • Measure score means the numeric decimal place is 0, 1, 2, 3 or 4, then the • Consolidation means when an MA value of the measure or an assigned value should be rounded down by organization/Part D sponsor that has at ‘missing data’ message. deleting the digit in the first decimal least two contracts for health and/or • Measure star means the measure’s place. If the digit in the first decimal drug services of the same plan type numeric value is converted to a Star place is 5 or greater, then the value under the same parent organization in a Rating. It is displayed to the nearest should be rounded up by 1 and the digit year combines multiple contracts into a whole star, using a 1–5 star scale. in the first decimal place deleted. • Overall Rating means a global rating single contract for the start of the e. Contract Ratings subsequent contract year. that summarizes the quality and • Consumed contract means a performance for the types of services Star Ratings and data reporting are at contract that will no longer exist after a offered across all unique Part C and Part the contract level for most measures. contract year’s end as a result of a D measures. Currently, data for measures are consolidation. • Part C Summary Rating means a collected at the contract level including • Display page means the CMS Web global rating that summarizes the health data from all PBPs under the contract, site on which certain measures and plan quality and performance on Part C except for the following Special Needs scores are publicly available for measures. Plan (SNP)-specific measures which are informational purposes; the measures • Part D Summary Rating means a collected at the PBP level: Care for that are presented on the display page global rating of the prescription drug Older Adults—Medication Review, Care are not used in assigning Part C and D plan quality and performance on Part D for Older Adults—Functional Status Star Ratings. measures. Assessment, and Care for Older • Domain rating means the rating that • Plan Benefit Package (PBP) means a Adults—Pain Assessment. The SNP- groups measures together by dimensions set of benefits for a defined MA or PDP specific measures are rolled up to the of care. service area. The PBP is submitted by contract level by using an enrollment- • Dual Eligible (DE) means a PDP sponsors and MA organizations to weighted mean of the SNP PBP scores. beneficiary who is enrolled in both CMS for benefit analysis, bidding, Subject to the discussion later in this Medicare and Medicaid. marketing, and beneficiary section about the feasibility and burden • HEDIS is the Healthcare communication purposes. of collecting data at the PBP (plan) level Effectiveness Data and Information Set • Reliability means a measure of the and the reliability of ratings at the plan which is a widely used set of fraction of the variation among the level, we propose to continue the performance measures in the managed observed measure values that is due to practice of calculating the Star Ratings care industry, developed and real differences in quality (‘‘signal’’) at the contract level and all PBPs under maintained by the National Committee rather than random variation (‘‘noise’’); the contract would have the same for Quality Assurance (NCQA). HEDIS it is reflected on a scale from 0 (all overall and/or summary ratings. data include clinical measures assessing differences in plan performance However, beneficiaries select a plan, the effectiveness of care, access/ measure scores are due to measurement rather than a contract, so we have availability measures, and service use error) to 1 (the difference in plan considered whether data should be measures. performance scores is attributable to real collected and measures scored at the • Highest rating means the overall differences in performance). plan level. We have explored the rating for MA–PDs, the Part C summary • Reward factor means a rating- feasibility of separately reporting quality rating for MA-only contracts, and the specific factor added to the contract’s data for individual D–SNP PBPs, instead Part D summary rating for PDPs. summary or overall (or both) rating if a of the current reporting level. For • Highly-rated contract means a contract has both high and stable example, in order for CAHPS measures contract that has 4 or more stars for their relative performance. to be reliably scored, the number of highest rating when calculated without • Statistical significance assesses how respondents must be at least 11 people the improvement measures and with all likely differences observed in and reliability must be at least 0.60. Our applicable adjustments (CAI and the performance are due to random chance current analyses show that, at the PBP reward factor). alone under the assumption that plans level, CAHPS measures could be • HOS means the Medicare Health are actually performing the same. reliably reported for only about one- Outcomes Survey which is the first Although not part of the proposed third of D–SNP PBPs due to sample size

VerDate Sep<11>2014 20:14 Nov 27, 2017 Jkt 244001 PO 00000 Frm 00045 Fmt 4701 Sfmt 4702 E:\FR\FM\28NOP2.SGM 28NOP2 sradovich on DSK3GMQ082PROD with PROPOSALS2 56380 Federal Register / Vol. 82, No. 227 / Tuesday, November 28, 2017 / Proposed Rules

issues, and HEDIS measures could be geographic area. For example, when congress-social-risk-factors-and- reliably reported for only about one- HEDIS reporting began in 1997, there performance-under-medicares-value- quarter of D–SNP PBPs. If reporting were contract-specific market areas that based-purchasing-programs), there has were done at the plan level, a significant evolved into reporting by market area been a continued increase in the number of D–SNP plans would not be for five states with large Medicare number of enrollees being moved from rated and in lieu of a Star Rating, populations.39 We are planning to lower Star Rating contracts that do not Medicare Plan Finder would display continue work in this area to determine receive a QBP to higher Star Rating that the plan is ‘‘too small to be rated.’’ the best reporting level for each measure contracts that do receive a QBP as part However, when enough data are that most accurately reflects of contract consolidations, which available, plan level quality reporting performance and minimizes to the increases the size of the QBPs that are would better reflect the quality of care extent possible plan reporting burden. made to MAOs due to the large provided to enrollees in that plan. Plan- As we consider alternative reporting enrollment increase in the higher rated, level quality reporting would also give units, we welcome comments and surviving contract. We are worried that states that contract with D–SNPs plan- suggestions about requiring reporting at this practice results in masking low specific information on their different levels (for example, parent quality plans under higher rated performance and provide the public organization, contract, plan, or surviving contracts. This does not with data specific to the quality of care geographic area) by measure. provide beneficiaries with accurate and for dual eligible (DE) beneficiaries We propose to continue at this time reliable information for enrollment enrolled in these plans. For all plans as calculating the same overall and/or decisions, and it does not truly reward well as D–SNPs, reporting at the plan summary Star Ratings for all PBPs higher quality contracts. We propose offered under an MA-only, MA–PD, or level would significantly increase plan here to modify from the current policy PDP contract. We propose to codify this burden for data reporting and would the calculation of Star Ratings for policy in regulation text at §§ 422.162(b) have to be balanced against the surviving contracts that have and 423.182(b). We also propose a cost availability of additional clinical consolidated. Instead of assigning the plan regulation at § 417.472(k) to require information available at the plan level. surviving contract the Star Rating that cost contracts to be subject to the part Plan-level ratings would also potentially the contract would have earned without 422 and part 423 Medicare Advantage increase the ratings of higher- regard to whether a consolidation took and Part D Prescription Drug Program performing plans when they are in place, we propose to assign and display Quality Rating System as they are contracts that have a mix of high and on Medicare Plan Finder Star Ratings measured and rated like an MA plan. low performing plans. Similarly, plan- based on the enrollment-weighted mean Specifically, we propose, at paragraph level ratings would also potentially of the measure scores of the surviving (b)(1) that CMS will calculate overall decrease the ratings of lower-performing and consumed contract(s) so that the and summary ratings at the contract plans that are currently in contracts ratings reflect the performance of all level and propose regulation text that with a mix of high and low performing contracts (surviving and consumed) cross-references other proposed plans. Measurement reliability issues involved in the consolidation. Under regulations regarding the calculation of due to small sample sizes would also this proposal, the calculation of the measure scoring and rating, and decrease our ability to measure true measure, domain, summary, and overall domain, summary and overall ratings. performance at the plan level and add ratings would be based on these Further, we propose to codify, at (b)(2) complexities to the rating system. We enrollment-weighted mean scores. The of each section, that data from all PBPs are soliciting comments on balancing number of contracts this would impact offered under a contract will continue to the improved precision associated with is small relative to all contracts that be used to calculate the ratings for the plan level reporting (relative to contract qualify for QBPs. During the period contract. For SNP specific measures level reporting) with the negative from 1/1/2015 through 1/1/2017 annual collected at the PBP level, we propose consequences associated with an consolidations for MA contracts ranged that the contract level score would be an increase in the number of plans without from a low of 7 in 2015 to a high of 19 enrollment-weighted mean of the PBP adequate sample sizes for at least some in 2016 out of approximately 500 MA scores using enrollment in each PBP as measures; we ask for comments about contracts. As proposed in reported as part of the measure this for D–SNPs and for all plans as we §§ 422.162(b)(3)(i)–(iii) and specification, which is consistent with continue to consider whether rating at 423.182(b)(3)(i)–(iii), CMS will use current practice. The proposed text is the plan level is feasible or appropriate. enrollment-weighted means of the explicit that domain and measure In particular, we are interested in measure scores of the consumed and ratings, other than the SNP-specific feedback on the best balance and surviving contracts to calculate ratings measures, are based on data from all whether changing the level at which for the first and second plan years PBPs under the contract. ratings are calculated and reported following the contract consolidations. better serves beneficiaries and our goals f. Contract Consolidations We believe that use of enrollment- for the Star Ratings System. We are proposing a change in how weighted means will provide a more We are also exploring whether some contract-level Star Ratings are assigned accurate snapshot of the performance of measure data could be reported at a in the case of contract consolidations. the underlying plans in the new higher level (parent organization versus We have historically permitted MAOs consolidated contract, such that both contract) to ease and simplify reporting and Part D sponsors to consolidate information to beneficiaries and QBPs and still remain useful (for example, call contracts when a contract novation are not somehow inaccurate or center measures as we anticipate that occurs or to better align business misleading. We also propose, however, parent organizations use a consolidated practices. As noted in MedPAC’s March that the process of weighting the call center to serve all contracts and 2016 Report to Congress (https:// enrollment of each contract and plans) to incorporate into the Star aspe.hhs.gov/pdf-report/report- applying this general rule would vary Ratings. Further, we are exploring if depending on the specific types of contract market area reporting is feasible 39 The following states were divided into multiple measures involved in order to take into when a contract covers a large market areas: CA, FL, NY, OH, and TX. account the measurement period and

VerDate Sep<11>2014 20:14 Nov 27, 2017 Jkt 244001 PO 00000 Frm 00046 Fmt 4701 Sfmt 4702 E:\FR\FM\28NOP2.SGM 28NOP2 sradovich on DSK3GMQ082PROD with PROPOSALS2 Federal Register / Vol. 82, No. 227 / Tuesday, November 28, 2017 / Proposed Rules 56381

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

VerDate Sep<11>2014 20:14 Nov 27, 2017 Jkt 244001 PO 00000 Frm 00047 Fmt 4701 Sfmt 4702 E:\FR\FM\28NOP2.SGM 28NOP2 sradovich on DSK3GMQ082PROD with PROPOSALS2 56382 Federal Register / Vol. 82, No. 227 / Tuesday, November 28, 2017 / Proposed Rules

periods. We would also like to know addition, there are several measures in experiences and benefit administration. whether sponsoring organizations the Stars Ratings System that are based The measures encompass data believe that the special rule for on performance that address telephone submitted directly by MA organizations consolidations involving the same customer service, members’ complaints, (MAOs) and Part D sponsors to CMS, parent organization and same plan types disenrollment rates, and appeals; surveys of MA and Part D enrollees, adequately addresses how those however these additional measures are data collected by CMS contractors, and situations are different from cases where not collected directly from the CMS administrative data. We also an MA organization buys or sells a plan sponsoring organizations for the propose, primarily so that the regulation or contract from or to a different entity primary purpose of quality text is complete on this point, a and whether these rules should be measurement. These additional regulatory provision at §§ 422.162(c)(2) extended to situations where there are measures are calculated from and 423.182(c)(2) that requires MA different parent organizations involved. information that CMS has gathered as organizations and Part D plan sponsors For commenters that support the latter, part of the administration of the to submit unbiased, accurate, and we also request comment on how CMS Medicare program, such as information complete quality data as described in should determine that the same on appeals forwarded to the paragraph(c)(1) of each section. Our administrative processes are used and Independent Review Entity under authority to collect quality data is clear whether attestations from sponsoring subparts M, enrollment, and compliance under the statute and existing organizations or evidence from prior and enforcement actions. regulations, such as section audits should be required to support The Part D program was implemented 1852(e)(3)(A) and 1860D–4(d) and such determinations. in 2006, and while there is no parallel §§ 422.12(b)(2) and 423.156. We propose provision regarding applicable Part D the paragraph (c)(2) regulation text to g. Data Sources sources of data, we have used similar ensure that the quality ratings system Under 1852(e) of the Act, MA datasets, for example CAHPS survey regulations include a regulation on this organizations are required to collect, data, for beneficiaries’ experiences with point for readers and to avoid confusion analyze, and report data that permit prescription drug plans. Section 1860D– in the future about the authority to measurement of health outcomes and 4(d) of the Act specifically directs the collect this data. In addition, it is other indices of quality. The Star administration and collection of data important that the data underlying the Ratings System is based on information from consumer surveys in a manner ratings are unbiased, accurate, and collected consistent with section similar to those conducted in the MA complete so that the ratings themselves 1852(e) of the Act. Section 1852(e)(3)(B) program. All of these measures reflect are reliable. This proposed regulation of the Act prohibits the collection of structure, process, and outcome indices text would clearly establish the data on quality, outcomes, and of quality that form the measurement set sponsoring organization’s responsibility beneficiary satisfaction other than the under Star Ratings. Since 2007, we have to submit data that can be reliably used types of data that were collected by the publicly reported a number of measures to calculate ratings and measure plan Secretary as of November 1, 2003; there related to the drug benefit as part of the performance. is a limited exception for SNPs to Star Ratings. For MA organizations that collect, analyze, and report data that offer prescription drug coverage, we h. Adding, Updating, and Removing permit the measurement of health have developed a series of measures Measures outcomes and other indicia of quality. focusing on administration of the drug We are committed to continuing to The statute does not require that only benefit. Similar to MA measures of improve the Part C and D Star Ratings the same data be collected, but that we quality relative to health services, the System by focusing on improving do not change or expand the type of Part D measures focus on customer clinical and other outcomes. We data collected until after submission of service and beneficiary experiences, anticipate that new measures will be a Report to Congress (prepared in effectiveness, and access to care relative developed and that existing measures consultation with MA organizations and to the drug benefit. We believe that the will be updated over time. NCQA and accrediting bodies) that explains the Part D Star Ratings are consistent with the Pharmacy Quality Alliance (PQA) reason for the change(s). We clarify here the limitation expressed in section continually work to update measures as that the types of data included under 1852(e) of the Act even though the clinical guidelines change and develop the Star Ratings System are consistent limitation does not apply to our new measures focused on health and with the types of data collected as of collection of Part D quality data from drug plans. To address these anticipated November 1, 2003. Since 1997, Part D sponsors. changes, we propose in §§ 422.164 and Medicare managed care organizations We intend to continue to base the 423.184 specific rules to govern the have been required to annually report types of information collected in the addition, update, and removal of quality of care performance measures Part C Star Ratings on section 1852(e) of measures. We also propose to apply through HEDIS. We have also been the Act, and we propose at these rules to the measure set proposed conducting the CAHPS survey since § 422.162(c)(1) that the type of data used in this rulemaking, to the extent that 1997 to measure beneficiaries’ for Star Ratings will be data consistent there are changes between the final rule experiences with their health plans, and with the section 1852(e) limits and data and the Star Ratings based on the since 2007 we have been measuring gathered from CMS administration of performance periods beginning on or experiences with drug plans with the MA program. In addition, we after January 2019. CAHPS. HOS began in 1998 to capture propose in § 422.162(c)(1) and in As discussed in more detail in the changes in the physical and mental § 423.182(c)(1) to include measures that following paragraphs, we propose the health of MA enrollees. To some extent, reflect structure, process, and outcome following general rules to govern these surveys have been revised and indices of quality, including Part C adding, updating, and removing updated over time, but the same types measures that reflect the clinical care measures: of data—clinical measures, beneficiary provided, beneficiary experience, • For data quality issues identified experiences, and changes in physical changes in physical and mental health, during the calculation of the Star and mental health, respectively—have and benefit administration, and Part D Ratings for a given year, we propose to remained the focus of these surveys. In measures that reflect beneficiary continue our current practice of

VerDate Sep<11>2014 20:14 Nov 27, 2017 Jkt 244001 PO 00000 Frm 00048 Fmt 4701 Sfmt 4702 E:\FR\FM\28NOP2.SGM 28NOP2 sradovich on DSK3GMQ082PROD with PROPOSALS2 Federal Register / Vol. 82, No. 227 / Tuesday, November 28, 2017 / Proposed Rules 56383

removing the measure from the Star using the draft and final Call Letter each while outcome measures are sometimes Ratings. year. more challenging requiring in some • That new measures and substantive Second, we propose, in paragraph (b) cases medical record review and more updates to existing measures would be of these sections, that CMS would sophisticated risk-adjustment added to the Star Ratings System based review the quality of the data on which methodologies. on future rulemaking but that prior to performance, scoring, and rating of Over time new measures will be such a rulemaking, CMS would measures is done each year. We propose added and measures will be removed announce new measures and to continue our current practice of from the Star Ratings program to meet substantive updates to existing reviewing data quality across all our policy goals. As new measures are measures and solicit feedback using the measures, variation among added, our general guidelines for process described for changes in and organizations and sponsors, and deciding whether to propose new adoption of payment and risk measures’ accuracy, reliability, and measures through future rulemaking adjustment policies in section 1853(b) of validity before making a final will use the following criteria: • the Act (that is the Call Letter determination about inclusion of Importance: The extent to which attachment to the Advance Notice and measures in the Star Ratings. The intent the measure is important to making Rate Announcement). is to ensure that Star Ratings measures significant gains in health care • That existing measures (currently accurately measure true plan processes and experiences, access to existing or existing after a future performance. If a systemic data quality services and prescription medications, rulemaking) used for Star Ratings would issue is identified during the calculation and improving health outcomes for MA be updated with regular updates from of the Star Ratings, we would remove and Part D enrollees. • Performance Gap: The extent to the measure stewards through the the measure from that year’s rating which the measure demonstrates process described for changes in and under proposed paragraph (b). opportunities for performance adoption of payment and risk Third, we propose to address the addition of new measures in paragraph improvement based on variation in adjustment policies in section 1853(b) of (c). current health and drug plan the Act when the changes are not In identifying whether to add a performance. substantive. • • measure, we will be guided by the Reliability and Validity: The extent That existing measures (currently principles we listed in section to which the measure produces existing or existing after a future III.A.12.b. of the proposed rule. consistent (reliable) and credible (valid) rulemaking) used for Star Ratings would Measures should be aligned with best results. be removed from use in the Star Ratings practices among payers and the needs of • Feasibility: The extent to which the when there has been a change in clinical the end users, including beneficiaries. data related to the measure are readily guidelines associated with the measure Our strategy is to continue to adopt available or could be captured without or reliability issues identified in measures when they are available, undue burden and could be advance of the measurement period; nationally endorsed, and in alignment implemented by the majority of MA and CMS would announce the removal with the private sector, as we do today Part D contracts. using the process described for changes through the use of measures developed • Alignment: The extent to which the in and adoption of payment and risk by NCQA and the PQA, and the use of measure or measure concept is included adjustment policies in section 1853(b) of measures that are endorsed by the in one or more existing federal, State, the Act. Removal might be permanent or National Quality Forum (NQF). We and/or private sector quality reporting temporary, depending on the basis for propose to codify this standard for programs. the removal. adopting new measures at We would balance these criteria as We are proposing specific rules for §§ 422.164(c)(1) and 423.184(c)(1). We part of our decision making process so updating and removal that would be do not intend this standard to require that each new measure proposed for implemented through subregulatory that a measure be adopted by an addition to the Star Ratings meets each action, so that rulemaking will not be independent measure steward or criteria in some fashion or to some necessary for certain updates or endorsed by NQF in order for us to extent. We intend to apply these criteria removals. Under this proposal, CMS propose its use for the Star Ratings, but to identify and adopt new measures for would announce application of the that these are considerations that will the Star Ratings, which will be done regulation standards in the Call Letter guide us as we develop such proposals. through future rulemaking that includes attachment to the Advance Notice and We also propose that CMS may develop explanations for how and why we Rate Announcement process under its own measures as well when propose to add new measures. When we section 1853(b) of the Act. appropriate to measure and reflect identify a measure that meets these First, we propose to codify, at performance in the Medicare program. criteria, we propose to follow the §§ 422.164(a) and 423.184(a), regulation For the 2021 Star Ratings, we propose process in our proposed paragraphs text stating the general rule that CMS (at section III.A.12.) of the proposed rule (c)(2) through (4) of §§ 422.164 and would add, update, and remove to have measures that encompass 423.184. We would initially solicit measures used to calculate Star Ratings outcome, intermediate outcome, feedback on any potential new measures as provided in §§ 422.164 and 423.184. patient/consumer experience, access, through the Call Letter. In each paragraph regarding addition, process, and improvement measures. It As new performance measures are updating, and removal of measures and is important to have a mix of different developed and adopted, we propose, at the use of improvement measures, we types of measures in the Star Ratings §§ 422.164(c)(3) and (4) and also propose rules to identify when program to understand how all of the 423.184(c)(3) and (4), that they would these types of changes would not different facets of the provision of initially be incorporated into the display involve rulemaking based on health and drug services interact. For page for at least 2 years but that we application of the standards and example, process measures are would keep a new measure on the authority in the regulation text. Under evidence-based best practices that lead display page for a longer period if CMS our proposal, CMS would solicit to clinical outcomes of interest. Process finds there are reliability or validity feedback of its application of the rules measures are generally easier to collect, issues with the measure. As noted in the

VerDate Sep<11>2014 20:14 Nov 27, 2017 Jkt 244001 PO 00000 Frm 00049 Fmt 4701 Sfmt 4702 E:\FR\FM\28NOP2.SGM 28NOP2 sradovich on DSK3GMQ082PROD with PROPOSALS2 56384 Federal Register / Vol. 82, No. 227 / Tuesday, November 28, 2017 / Proposed Rules

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

VerDate Sep<11>2014 20:14 Nov 27, 2017 Jkt 244001 PO 00000 Frm 00050 Fmt 4701 Sfmt 4702 E:\FR\FM\28NOP2.SGM 28NOP2 sradovich on DSK3GMQ082PROD with PROPOSALS2 Federal Register / Vol. 82, No. 227 / Tuesday, November 28, 2017 / Proposed Rules 56385

++ Adding additional instructions to consistent with current guidelines. We transition out of the Star Ratings, and identify services or procedures that are proposing to announce such the availability of alternative related meet (or do not meet) the specifications subregulatory removals through the Call measures. If, for example, performance of the measure. Letter so that removals for this reason in a given measure has just improved • If the measure specification change are accomplished quickly and as soon as across all contracts, or if no other is adding additional data sources, the the disconnect with positive clinical measures capture a key focus in Star measure would also not move to the outcomes is definitively identified. We Ratings, a ‘‘topped out’’ measure which display page because we believe such note that this proposal is consistent would have lower reliability may be changes are merely to add alternative with our current practice. For example, retained in Star Ratings. Under our ways to collect the data to meet the previously we retired the Glaucoma proposal to be codified at paragraph measure specifications without Screening measure for HEDIS 2015 after (e)(2), we would announce application changing the intent of the measure. the U.S. Preventive Services Task Force of this rule through the Call Letter in We solicit comment on our proposal concluded that the clinical evidence is advance of the measurement period. to add non-substantive updates to insufficient to assess the balance of We request comment on these measures and using the updated benefits and harms of screening for proposals regarding the processes to measure (replacing the legacy measure) glaucoma in adults. add, update, and remove Star Ratings to calculate Star Ratings. In particular, In addition to removal of measures measures. we are interested in stakeholders’ views because of changes in clinical whether only non-substantive updates guidelines, we currently review i. Measure Set for Performance Periods that have been adopted by a measure measures continually to ensure that the Beginning on or After January 1, 2019 steward after a consensus-based or measure remains sufficiently reliable notice and comment process should be such that it is appropriate to continue We are proposing the measures added to the Star Ratings under this use of the measure in the Star Ratings. included in Table 2 to be collected for proposed authority. Further, we solicit We propose, at paragraph (e)(1)(ii), that performance periods beginning on or comment on whether there are other we would also have authority to after January 1, 2019 for the 2021 Part examples or situations involving non- subregulatorily remove measures that C and D Star Ratings. The CAHPS substantive updates that should be show low statistical reliability so as to measure specification, including case- explicitly addressed in the regulation move swiftly to ensure the validity and mix adjustment, is described in the text or if our proposal is sufficiently reliability of the Star Ratings, even at Technical Notes and at ma- extensive. the measure level. We will continue to pdpcahps.org. The HOS measure In addition to updates and additions analyze measures to determine if specification, including case-mix of measures, we are proposing rules to measure scores are ‘‘topped out’’ (that adjustment, is described at (http:// address the removal of measures from is, showing high performance across all hosonline.org/globalassets/hos-online/ _ _ _ the Star Ratings to be codified in contracts decreasing the variability survey-results/hos casemix coefficient _ §§ 422.164(e) and 423.184(e). In across contracts and making the tables c17.pdf). These specifications are paragraph (e)(1) of each section, we measure unreliable) so as to inform our part of our proposal. propose the two circumstances under approach to the measure, or if measures We are not proposing to codify this which a measure would be removed have low reliability. Although some list of measures and specifications in entirely from the calculation of the Star measures may show uniform high regulation text in light of the regular Ratings. The first circumstance would performance across contracts and little updates and revisions contemplated by be changes in clinical guidelines that variation between them, we seek our proposals at §§ 422.164 and mean that the measure specifications are evidence of the stability of such high 423.184. We intend, as proposed in no longer believed to align with or performance, and we want to balance paragraph (a) of these sections, that the promote positive health outcomes. As how critical the measures are to Technical Notes for each year’s Star clinical guidelines change, we would improving care, the importance of not Ratings would include the applicable need the flexibility to remove measures creating incentives for a decline in full list of measures. from the Star Ratings that are not performance after the measures BILLING CODE 4120–01–P

VerDate Sep<11>2014 20:14 Nov 27, 2017 Jkt 244001 PO 00000 Frm 00051 Fmt 4701 Sfmt 4702 E:\FR\FM\28NOP2.SGM 28NOP2 sradovich on DSK3GMQ082PROD with PROPOSALS2 56386 Federal Register / Vol. 82, No. 227 / Tuesday, November 28, 2017 / Proposed Rules Star ON 2020, survey is Type) 4) ( the annual where MA-only MA-only MA-only year for Reporting and and and The of2019. Requirements measurement (Contract Detailed BEGINNING fall MA-PD MA-PD MA-PD supporting addition, Ratings calculation, the In specific submitted and for (3) Star in stewards. Rating the measure. the data Statistical Assigning PERIODS Method Star for Distribution Relative Testmq Significance Clustering Clustering and annually. each specifications produced recent for the measure are denominator, year' column, of NQF 'most updated (2) measure period. is 2020 as Endorsement #0031 #0034 #0040 Ratings Source year 2018 the the manuals listed PERFORMANCE year year the to to specifications Ratings year year Star data for the Data is 31, enrollees numerator, 2019 prior prior document of the in Star recent Period Ratings Ratings 1, calendar calendar for FOR (1) to years years Measurement Most The The submitted survey 2 2 Star Star detailed period The MEASURES Notes C prior December Ratings referenced to Source provides JANUARY Star as years DIS* DIS* PART a measure's: MEASURES 2 Data HE HE CAHPS** Technical 2018 reference the technical reference of descriptions. 1, 2A: The Notes, year the measurement AFTER 1 1 1 table manuals, example, Measure Measure Measure of of of and RATING Weight OR Measure this Category For January Process Process Process Weight Weight Weight TABLE high-level calendar in Technical the identification measures, exclusions. technical are STAR year. 'the the listed Healthy Healthy Healthy (6) as and and and submitted. table prior Domain Ratings and Tests Tests Tests Staying Screenings, Staying Screenings, Staying Screenings, Vaccines Vaccines VaCCines this the listed stewards' referencing data Star is in is of 2 HEDIS/HOS D aged who appropriate, cancer. descriptions past & members fall INDIVIDUAL season. recent and a the C listed flu measure period plan period appropriate adjustment, to had the members members Description colorectal where during had most in Source influenza who prior See for Part female HOS, plan plan 4 an who of of of the 52-7 75 Data to Measure of case-mix include, mammogram received Percent Percent Percent screenings aged 50 vaccination years PROPOSED descriptions the produced CARPS, measurement (5) measurement Medicare 2: enrollees.' a are of periods If the For Vaccine (BCS) (COL) Cancer Flu measure Cancer 1. 3. 2. Measure TABLE specifications The document, appropriate, Breast Screening Screening Colorectal Annual timeframe, Ratings

VerDate Sep<11>2014 20:14 Nov 27, 2017 Jkt 244001 PO 00000 Frm 00052 Fmt 4701 Sfmt 4725 E:\FR\FM\28NOP2.SGM 28NOP2 sradovich on DSK3GMQ082PROD with PROPOSALS2 EP28NO17.000 Federal Register / Vol. 82, No. 227 / Tuesday, November 28, 2017 / Proposed Rules 56387 Type) Plans Plans Plans Plans MA-only MA-only MA-only MA-only Reporting Needs Needs Needs Needs and and and and Requirements (Contract MA-PD MA-PD MA-PD MA-PD Special Special Special Special for Rating Statistical Assigning Method Star Clustering Clustering Clustering Clustering Clustering Clustering Clustering Clustering NQF Applicable Applicable Applicable Applicable Applicable Endorsement Not Not Not Not Not #0421 #0029 #0553 the the the the the year year year year year the the the to to to to to year year year year year data data data for for for enrollees enrollees enrollees prior prior prior prior prior of of of recent recent recent Period Ratings Ratings Ratings Ratings Ratings calendar calendar calendar calendar calendar years years years years years Measurement Most Most Most The The The The The submitted survey submitted survey submitted survey 2 2 2 2 2 Star Star Star Star Star HOS*~ I Source Plan C Data Hos~· Hos~· HEDIS Part Reporting HEDIS* HEDIS* HEDIS* HEDIS* Measure Measure Measure Measure Measure Measure of1 of1 of1 of1 of1 of1 of3 of3 and Weight Measure Category Measure Measure Process Process Process Process Process We1ght We1ght We1ght We1ght We1ght We1ght We1ght We1ght Outcome Outcome Process (Long (Long (Long (Long Healthy Healthy Healthy Healthy and and and and Domain Managing Managing Managing Managing Tests Tests Tests Tests Term) Term) Term) Term) Slaying Screenings, Slaying Screenings, Slaying Screenings, Slaying Screenings, Chronic Conditions Chronic Conditions Chronic Conditions Chronic Conditions Vaccines Vaccines Vaccines Vaccines 4 by in or and body 2 pain Plan Plan Plan health level 18-7 list aged aged aged or start, than the older older older risk doctor's an same one one one after to their a activity whose and enrollees and and and Needs Needs Needs months conducted mental Special physical was the had better assessment. years least least least had members members members members health and 2 Description or medication advice at at at a practitioner was who years years years (HRA) a (SNP) record. (BMI) maintain review physical expected whose whose who eligible Special Special Special plan plan plan plan pas112 visit status of after 66 66 66 or or age of of same of of of of of of pharmacist Plan the status than of index older older older received received received received received the in med1cal or or or Measure prescribing mass health increase medication Percent Percent Percent Percent Percent Needs Percent Percent Percent functional the outpatient documented. 65 65 expected 65 exercise assessment enrollees enrollees enrollees assessment. a clinical better presence was who who who who who visit years years Plan Pain - - (ABA) Mental Review Physical Status or or Health Older Older Older Needs (PAO) (COA) (COA) (COA)- Care BMI for for for Measure Improving Improving (SNP) Maintaining Physical Maintaining Monitoring Management Medication Health Functional Special Care Care Care Activity Adult Assessment Adults Adults Assessment Adults Assessment

VerDate Sep<11>2014 20:14 Nov 27, 2017 Jkt 244001 PO 00000 Frm 00053 Fmt 4701 Sfmt 4725 E:\FR\FM\28NOP2.SGM 28NOP2 sradovich on DSK3GMQ082PROD with PROPOSALS2 EP28NO17.001 56388 Federal Register / Vol. 82, No. 227 / Tuesday, November 28, 2017 / Proposed Rules Type) MA-only MA-only MA-only MA-only MA-only MA-only MA-only Reporting and and and and and and and Requirements (Contract MA-PD MA-PD MA-PD MA-PD MA-PD MA-PD MA-PD for Rating Statistical Assigning Method Star Clustering Clustering Clustering Clustering Clustering Clustering Clustering NQF Endorsement #0053 #0055 #0062 #0059 #0018 #0054 #0035 the the the the the the year year year year year year the to to to to to to year year year year year year data for enrollees prior prior prior prior prior prior of recent Period Ratings Ratings Ratings Ratings Ratings Ratings calendar calendar calendar calendar calendar calendar years years years years years years Measurement Most The The The The The The 2 2 2 2 2 2 submitted survey Star Star Star Star Star Star HOS*** I Source Data HEDIS HEDIS* HEDIS* HEDIS* HEDIS* HEDIS* HEDIS* Measure Measure Measure Measure Measure of1 of1 of1 of1 of1 of3 of3 and Weight Measure Category Intermediate Intermediate Measure Measure Process Process Process Process Process We1ght We1ght We1ght We1qht We1ght We1ght We1ght Outcome Outcome (Long (Long (Long (Long (Long (Long (Long Domain Managing Managing Managing Managing Managing Managing Managing Term) Term) Term) Term) Term) Term) Term) Chronic Conditions Chronic Conditions Chronic Conditions Chronic Conditions Chronic Conditions Chronic Conditions Chronic Conditions 12 a 18- 18- 18- age a a who a 1 c 1 or was (HTN) had 18-85 of 65 who past risk treat or eye (150/90) and and by for with enrollees fracture 12 test HbA 1 1 to current a (<140/90) or the bone fall months an rheumatoid who a with 9%, a without years 6 age in enrollees enrollees enrollees seen one anti- plan had past pressure their drug were (type (type of medical with the (BMD) recent members members members (DMARD). older a than Description the either in least 18-59 were 60-85 or who hypertension diabetes diabetes. nephropathy received who suffered had received for from in prescription controlled blood walk1ng female diabetic diabetic diabetic at plan plan plan years drug problems most of of of for tested. had fracture age age who or modifying of of of of of of of density and and diabetes diabetes who greater who who of of (retinal). had not diagnosed is the 2) 2) 85 60-85 who whose or members members - with with whose Measure level mineral rheumatic months, months intervention Percent Percent Percent Percent Percent Percent Percent for for fall type type and osteoporosis and and dispensed disease 67 after exam attention diagnosis adequately diagnosis diagnosis arthritis ambulatory 75 75 75 prescription balance practitioner practitioner. were were years years a Risk 1n Exam had Blood the (FRiv1) (CBP) Care Care Care (OMVV) Kidney Blood Eye Monitoring who - - - Controlled Measure Falling (CDC) (CDC) (CDC) (ART) Management Diabetes Diabetes Disease Diabetes Pressure Rheumatoid Management Reducing Fracture Women of Osteoporosis Sugar Controlling Arthritis

VerDate Sep<11>2014 20:14 Nov 27, 2017 Jkt 244001 PO 00000 Frm 00054 Fmt 4701 Sfmt 4725 E:\FR\FM\28NOP2.SGM 28NOP2 sradovich on DSK3GMQ082PROD with PROPOSALS2 EP28NO17.002 Federal Register / Vol. 82, No. 227 / Tuesday, November 28, 2017 / Proposed Rules 56389 except Type) Plans MA-only MA-only MA-only, MA-only MA-only MA-only MA-only MA-only Cost Reporting and and and and and and and and Requirements (Contract 1876 MA-PD MA-PD MA-PD MA-PD MA-PD MA-PD MA-PD MA-PD for and and and and and for Rating Statistical Assigning Method Star Relative Distribution Relative Distribution Relative Distribution Relative Distribution Relative Distribution Testing Testing Testing Testing Testing Significance Significance Significance Significance Significance Clustering Clustering Clustering NQF Endorsement #0030 #0554 #1768 #0006 #0006 #0006 #0006 #0006 the the year year the the the the the the to to year year data data data data data data for for for for for for enrollees enrollees enrollees enrollees enrollees enrollees prior prior of of of of of of recent recent recent recent recent recent Period Ratings Ratings calendar calendar years years Measurement Most Most Most Most Most Most The The submitted survey 2 2 submitted survey submitted survey submitted survey submitted survey submitted survey Star Star HOS*~ I Source Data HEDIS HEDIS* HEDIS* CAHPS~ CAHPS~ CAHPS~ CAHPS~ CAHPS~ and and and and and 1.5 1.5 1.5 1.5 1.5 Measure Measure of1 of1 of3 of of of of of and Weight Measure Category Measure Pat1ents' Measure Pat1ents' Measure Pat1ents' Measure Pat1ents' Measure Pat1ents' Measure Process Process Experience Experience Experience Experience Experience We1ght We1ght We1ght We1ght We1ght We1qht We1ght We1ght Outcome Complaints Complaints Complaints Complaints Complaints with with with with with (Long (Long (Long Plan Plan Plan Plan Plan Domain Managing Managing Managing Member Member Member Member Member Experience Health Experience Health Experience Health Experience Health Experience Health Term) Term) Term) Chronic Conditions Chronic Conditions Chronic Conditions for for the for from are whom stays and 30 the 18 65 how how how get get total health quality days, leakage care for received. to to from from on on on an age months who from (31 30 the the 6 possible possible possible possible possible of by care. leakage treatment urine reconciled they through get older readmission inpatient a help members members older readmission past rated rated Description earned earned earned earned earned best best best best best within and including years or care of urine members members were and the acute needed. the the the the the acute plan plan discharge 65 who who followed plan plan plan plan plan for for received having in age age and of of of of of of of of care, members discharge is is health Rates the the the the of of the it it after current of when who were diagnosis Measure the reported medications unplanned members risk-adjusted needed information members members Percent Percent Percent Percent Percent Percent Percent Percent their that and date days days) older. score specialists. score score score score any easy quickly appointments easy of plan problem problem plan. years years and Bladder Service Health Health Needed (MUI) of of Quickly Quality All-Cause Measure Improving (lv1RP) (PCR) Plan Plan Medication Post-Discharge Rating Rating Reconciliation Readmissions Care Care Care Control Getting Getting Customer Appointments

VerDate Sep<11>2014 20:14 Nov 27, 2017 Jkt 244001 PO 00000 Frm 00055 Fmt 4701 Sfmt 4725 E:\FR\FM\28NOP2.SGM 28NOP2 sradovich on DSK3GMQ082PROD with PROPOSALS2 EP28NO17.003 56390 Federal Register / Vol. 82, No. 227 / Tuesday, November 28, 2017 / Proposed Rules Type) MA-only MA-only MA-only MA-only MA-only MA-only Reporting and and and and and and Requirements (Contract MA-PD MA-PD MA-PD MA-PD MA-PD MA-PD and for Rating Statistical Assigning Method Star Relative Distribution Testing Significance Clustering Clustering Clustering Clustering Clustering NQF Applicable Applicable Applicable Applicable Applicable Applicable Endorsement Not Not Not Not Not Not the the the the year year year year the to to to to year year year year data and for Ratings enrollees prior prior prior prior of recent Period Star Ratings Ratings Ratings Ratings calendar calendar current calendar calendar years years years years Measurement Most The submitted survey prior years The The The The 2 2 2 2 Star Star Star Star Suite Module Entity Entity Source Ratings Systems Data Independent Independent (CTM) (MBDSS) (IRE) (IRE) Medicare Beneficiary Database Review Review CAHPS~ Tracking of Star Complaints and and and 1.5 1.5 1.5 1.5 1.5 of of of of5 of of and Weight Measure Category Improvement Pat1ents' Measure Pat1ents' Measure Pat1ents' Measure Measure Measures Measures Experience Experience Experience We1ght We1ght We1ght We1ght We1ght We1ght Complaints Complaints Complaints Capturing Capturing Access Access the the the and and and with in in in Plan Plan Plan Plan's Plan's Plan's Domain Member Member Performance Member Performance Member Performance Experience Health Health Health Health Health Health Serv1ce Serv1ce Complaints Changes Complaints Changes Complaints Changes Customer Customer the per by to they the into by test how the a who who how to Entity records plan Module to improved on has when includes and appeals their needed the and plan's "upheld" logged decision appeals possible where plan. coverage, year reviewed. a health got plan Review request 1 care had (This they or d1sm1ssed members members was the plan's Description earned best Tracking the approved whether health IRE the coordinates response a from about the the appeals plan plan care. the plan cases of appeal leave overturned, doctors of of of of all overturned plan complaints, 422.164(0). about members payment plan to decision members members an the of timely that of the information because Independent a Complaint declined Measure IRE 1,000 (CTM), (IRE) made (upheld, members' health refuse results) Measure next(§ Percent Rate Percent Percent Percent 1nclud1ng the the score and or got subsequently only) about quickly chose coverage/payment. performance, plan's partially well whether Plan T1mely Quality about Appeals Plan about Choosing the Plan Coordination Makes Measure Health Leave Improvement Members Plan Review1ng Decisions Decisions Health the to Care Complaints Appeals

VerDate Sep<11>2014 20:14 Nov 27, 2017 Jkt 244001 PO 00000 Frm 00056 Fmt 4701 Sfmt 4725 E:\FR\FM\28NOP2.SGM 28NOP2 sradovich on DSK3GMQ082PROD with PROPOSALS2 EP28NO17.004 Federal Register / Vol. 82, No. 227 / Tuesday, November 28, 2017 / Proposed Rules 56391 by except except Type) Type Plans fi!IA-only, MA-only PDP, Plans Cost Reporting Reporting and and and Requirements Contract Cost (Contract Requirements 1876 MA-PD MA-PD 1876 for MA-PD for for Rating Rating Statistical Statistical Assigning Assigning Method Method Star Star Clustering Clustering Clustering NQF NQF Applicable Applicable Applicable Endorsement Endorsement Not Not Not the ftrst first year to year Star Star year year (hltp.llrna-pdpcacips.crg.'enlgualtty-assurcncel) year prior year the the the the Period collected Period to collected to Ratings calendar of of years Manual Measurement Measurement half Data Ratings The 2 Star prior half Data Ratings prior MEASURES D Source Specifications Data Center Center Source DIS* PART Data Call HE Call Technical & 2B: Access 1 5 1 1 1.5 Measure of of of Weight and Protocols Weight 6 Measure Measure Category Category and Process Weight Measures Weight Capturing Measures Access Weight Capturing TABLE Volume Assurance (Long Survey, Quality Plan Plan Domain Domain Drug Service Customer Managing Health Term) Serv1ce Customer Chronic Conditions Survey Outcomes or CAHPS 2 (males Health were health number. females the high language Plan were TTY avatlable the servtce language who TTY and clinical prospective available stat1n one enrollee and that Volume phone called prospective Drug by were Medtcare members that foreign prospective age age) cardiovascular Description called by were Metric least foreign time of of having who the and customer time at plan of who service as number. plan's for and (ASCVD) needed of of years years prospective needed Prescription Specifications, Measure members health interpretation Percent services enrollee phone when and 40-75 members identified moderate-intensity medication. Percent Percent 1nterpretat1on 21-75 services disease dispensed customer atherosclerotic plan's when Specifications and Technical TTY for DIS Advantage and HE Foreign (SPC) with HEDIS Language Therapy Interpreter Center- Measure NCQA Measure I~CQA Interpreter Availability Patients Disease Foreign Call Stalin Cardiovascular Availability * **Medicare *** Center- Language TTY Call

VerDate Sep<11>2014 20:14 Nov 27, 2017 Jkt 244001 PO 00000 Frm 00057 Fmt 4701 Sfmt 4725 E:\FR\FM\28NOP2.SGM 28NOP2 sradovich on DSK3GMQ082PROD with PROPOSALS2 EP28NO17.005 56392 Federal Register / Vol. 82, No. 227 / Tuesday, November 28, 2017 / Proposed Rules by Type PDP PDP PDP PDP PDP PDP PDP Reporting and and and and and and and Contract Requirements MA-PD MA-PD MA-PD MA-PD MA-PD MA-PD MA-PD and and for Rating Statistical Assigning Method Star Relative Dtstrtbutton Relative Distribution Testing Testing Stgnificance Stgnificance Clustering Clustering Clustering Clustering Clustering NQF Applicable Applicable Applicable Applicable Applicable Applicable Applicable Endorsement Not Not Not Not Not Not Not the the the to year year year year the the to to to year year year data data and for for prior Ratings enrollees enrollees Ratmgs prior prior prior of of ttted recent recent itted Period Star Rattngs Rattngs Rattngs calendar calendar calendar calendar current years Star years years years Measurement Most Most two the The The The The The subrn subrn 2 2 2 survey survey Star Star Star prior year years Suite (CTM) Entity Entity Data Ratings Source Systems Independent Independent (IRE) (IRE) (MBDSS) Module Medicare Beneficiary Review Review Database Tracking of Star Complaints CAHPs- CAHPs- and and and and Access Access 1.5 1.5 1.5 1.5 1.5 1 5 1 of of of of of of of5 Weight Measure Category and Improvement Measures Measures Measure Measure Measure Measure Measure Patients' Experience Patients' Experience Patients' Expenence Patients' Experience Wetght Weight Weiqht Weight Weight Weight Weight Capturing Capturing Complaints Complaints Complaints Complaints the the the and and and wtth with and in in in Plan Plan Plan Plan Plan's Plan's Plan's Drug Drug Domain Drug Drug Member Drug Member Drug Member Drug Member Member Performance Performance Performance Expenence Expenence the the outcomes experience Servtce Service Complaints Changes Complaints Changes Complaints Changes Customer Customer or a 1 who how the get plan to from on they IRE from the plan's the members. "upheld' Review possible possible Review where timeframes about 422184(0) plan. plan's the the plan. overturned, drugs members plan. was the rated earned earned best all best auto-forwarded 1,000 that whether drug determinations overturned members declined drug of because a the next(§ Metric the the appeals plan decision per who or plan plan for of leave (upheld, only) of of of of cases complaints the is Independent to decision Independent (IRE) (IRE) the the ustng it of of plan to partially prescription coverage the the revtewed. members need redeterminations. improved Rate Measure Rate Entity Percent Entity Percent Percent Percent for to the and drug score score exceeded appeals appeals chose easy by plan's performance, prescription year Drug to the Plan Drugs about Quality Plan Choosing Drug Upheld Auto-Forward Needed Measure of the Plan Improvement Plan Members Leave Drug Rating Prescnptton Complaints Getting Appeals Appeals

VerDate Sep<11>2014 20:14 Nov 27, 2017 Jkt 244001 PO 00000 Frm 00058 Fmt 4701 Sfmt 4725 E:\FR\FM\28NOP2.SGM 28NOP2 sradovich on DSK3GMQ082PROD with PROPOSALS2 EP28NO17.006 Federal Register / Vol. 82, No. 227 / Tuesday, November 28, 2017 / Proposed Rules 56393 by Type PDP PDP PDP PDP PDP PDP Reporting and and and and and and Contract Requirements fviA-PD fviA-PD MA-PD MA-PD MA-PD MA-PD for Rating Statistical Assigning Method Star Clustering Clustering Clustering Clustering Clustering Clustering NQF Applicable Applicable Endorsement Not Not #0541 #0541 #0541 #2712 the the the the the the year year year year year year to to to to to to year year year year year year prior prior prior prior prior prior Period Ratrngs Ratrngs Ratrngs Ratrngs Ratrngs Ratrngs calendar calendar calendar calendar calendar calendar years years years years years years Manual Measurement The The The The The The 2 2 2 2 2 2 Star Star Star Star Star Star lv1PF Files Plan data data data data Specifications Event Event Event Event data, Data D Source POE Part Pricing Reporting (POE) (POE) (POE) (POE) Drug Drug Drug Drug Prescription Prescription Prescription Prescription Technical & 1 1 Measure Measure of of of3 of3 of3 of3 Weight Protocols Measure Category and Process Process Intermediate Intermediate Intermediate Intermediate Measure Measure Measure Measure Weight Weight Weight Weight Weight Weight Outcome Outcome Outcome Outcome Assurance and and and and and and of of of of of of Survey Quality Pricing Pricing Pricing Pricing Pricing Pricing Safety Safety Safety Safety Safety Safety Domain Drug Drug Drug Drug Drug Drug Drug Drug Drug Drug Drug Drug Accuracy Accuracy Accuracy Accuracy Accuracy Accuracy Survey Outcomes be who to who time their with with with fill plan CAHPS the more and the two to 2 Health prices of enough (MTrvl) old for the of or be Medicare who fills Plan drug) often supposed of (CMR) the cholesterol blood to their least who pay enough prices the drabetes a a often medication 80% more at years fill medrcation. are members members members Volume Drug number for for for for stalin more or supposed Medrcare drug the often website. (a Revrew who or Metric they stalin Comprehensive Medication the plan plan plan cover medication. medication. 40-75 actually the are medication medication a a enrollees Management the supposed 80% of of of of of to comparing prescription the the for to time 80% taking dispensed Finder prescription they are provided their the cover be Prescription score prescnptron prescriptron prescriptron Specifications, members received members received medication medication Plan Medication Percent Percent Percent Percent Percent fill frll. they takinq therr to trme takinq to Therapy drugs of diabetes a cover a a enough plan program prescription pressure A were and for for for Specifications with Technical DIS Advantage HE Completion (RAS Persons HEDIS (Statins) Adherence Adherence Adherence Accuracy in (SUPD) Medicatrons CrviR NCQA Measure Use I~CQA Program Price for **Medicare *** . MPF MTM Medication Drabetes Medication Medication Rate Drabetes Hypertension antagonists) Statrn Cholesterol

BILLING CODE 4120–01–C

VerDate Sep<11>2014 20:14 Nov 27, 2017 Jkt 244001 PO 00000 Frm 00059 Fmt 4701 Sfmt 4702 E:\FR\FM\28NOP2.SGM 28NOP2 sradovich on DSK3GMQ082PROD with PROPOSALS2 EP28NO17.007 56394 Federal Register / Vol. 82, No. 227 / Tuesday, November 28, 2017 / Proposed Rules

j. Improvement Measures significant decline in the time period. eligibility for the improvement measure In the 2013 Part C and D Star Ratings, The improvement measure would be and in the denominator of the calculated in a series of distinct steps: improvement measure score. The intent we implemented the Part C and D • improvement measures (CY2013 Rate The improvement change score (the of the hold harmless provision for a Announcement, https://www.cms.gov/ difference in the measure scores in the contract that receives a measure rating 2-year period) would be determined for Medicare/Health-Plans/ of 5 stars for each year is to prevent the each measure that has been identified as MedicareAdvtgSpecRateStats/ measure from lowering a contract’s part of an improvement measure and for Downloads/Announcement2013.pdf). improvement measure when the which a contract has a numeric score for The improvement measures address the contract still demonstrates high each of the 2 years examined. performance. We propose in section overall improvement or decline in • Each contract’s improvement individual measure scores from the III.A.12. of this proposed rule another change score would be categorized as a hold harmless provision to be codified prior to the current year. We propose to significant change or not by employing at §§ 422.166(g)(1) and 423.186(g)(1). continue the current methodology a two tailed t-test with a level of We request comment on the detailed in the Technical Notes for significance of 0.05. methodology for the improvement calculating the improvement measures • The net improvement per measure measures, including rules for and to codify it at §§ 422.164(f) and category (outcome, access, patient determining which measures are 423.184(f). For a measure to be included experience, process) would be included, the conversion to a Star in the improvement calculation, the calculated by finding the difference Rating, and the hold harmless provision measure must have numeric value between the weighted number of for individual measures that are used for scores in both the current and prior year significantly improved measures and the determination of the improvement and not have had a substantive significantly declined measures, using measure score. specification change during those years. the measure weights associated with In addition, the improvement measure each measure category. k. Data Integrity will not include any data on measures • The improvement measure score The data underlying a measure score that are already focused on would then be determined by and rating must be complete, accurate, improvement (for example, HOS calculating the weighted sum of the net and unbiased for it to be useful for the measures focused on improving or improvement per measure category purposes we have proposed at maintaining physical or mental health). divided by the weighted sum of the §§ 422.160(b) and 423.180(b). As part of The Part C improvement measure number of eligible measures. the current Star Ratings methodology, includes only Part C measure scores, • The improvement measure score all measures and the associated data and the Part D improvement measure would be converted to a measure-level have multiple levels of quality includes only Part D measure scores. All Star Rating using the hierarchical assurance checks. Our longstanding measures meeting these criteria would clustering algorithm. policy has been to reduce a contract’s be included in the improvement The improvement measure score cut measure rating if we determine that a measures under our proposal at points would be determined using two contract’s measure data are incomplete, paragraph (f)(1)(i) through (iv) of separate clustering algorithms. inaccurate, or biased. Data validation is §§ 422.164 and 423.184. Improvement measure scores of zero a shared responsibility among CMS, Annually, the subset of measures to and above would use the clustering CMS data providers, contractors, and be included in the improvement algorithm to determine the cut points Part C and D sponsors. When applicable measures following these criteria would for the Star Rating levels of 3 and above. (for example, data from the IRE, PDE, be announced through the Call Letter, Improvement measure scores below zero call center), CMS expects sponsoring similar to our proposal for regular would be clustered to determine the cut organizations to routinely monitor their updates and removal of measures. points for 1 and 2 stars. The Part D data and immediately alert CMS if Under our proposal, once the measures improvement measure thresholds for errors or anomalies are identified so to be used for the improvement MA–PDs and PDPs would be reported CMS can address these errors. measures are identified, CMS would separately. We propose to codify at §§ 422.164(g) determine which contracts have We propose a special rule in and 423.184(g) specific rules for the sufficient data for purposes of applying paragraph (f)(3) to hold harmless reduction of measure ratings when CMS and scoring the improvement sponsoring organizations that have 5- identifies incomplete, inaccurate, or measure(s). Following current practices, star ratings for both years on a measure biased data that have an impact on the the improvement measure score would used for the improvement measure accuracy, impartiality, or completeness be calculated only for contracts that calculation. This hold harmless of data used for the impacted measures. have numeric measure scores for both provision was added in 2014 to avoid Data may be determined to be years for at least half of the measures the unintended consequence for incomplete, inaccurate, or biased based identified for use in the improvement contracts that score 5 stars on a subset on a number of reasons, including measure. We propose this standard for of measures in each of the 2 years. For mishandling of data, inappropriate determining contracts eligible for an any identified improvement measure for processing, or implementation of improvement measure at paragraph which a contract received a rating of 5 incorrect practices that impacted (f)(2). stars in each of the years examined, but specific measure(s). One example of We propose at part §§ 422.164(f)(3) for which the measure score such situations that give rise to such and (4) and 423.184(f)(3) and (4) the demonstrates a statistically significant determinations includes a contract’s process for calculating the improvement decline based on the results of the failure to adhere to HEDIS, HOS, or measure score(s) and a special rule for significance testing (at a level of CAHPS reporting requirements. Our any identified improvement measure for significance of 0.05) on the change modifications to measure-specific a contract that received a measure-level score, the measure will be categorized as ratings due to data integrity issues are Star Rating of 5 in each of the 2 years having no significant change. The separate from any CMS compliance or examined, but whose associated measure will be included in the count enforcement actions related to a measure score indicates a statistically of measures used to determine sponsor’s deficiencies. This policy and

VerDate Sep<11>2014 20:14 Nov 27, 2017 Jkt 244001 PO 00000 Frm 00060 Fmt 4701 Sfmt 4702 E:\FR\FM\28NOP2.SGM 28NOP2 sradovich on DSK3GMQ082PROD with PROPOSALS2 Federal Register / Vol. 82, No. 227 / Tuesday, November 28, 2017 / Proposed Rules 56395

these rating reductions are necessary to them to CMS, we believe that a negative determinations and redeterminations. avoid falsely assigning a high star to a inference is appropriate to conclude that The timeframe for the submitted data contract, especially when deficiencies performance is likely poor. Third, we was dependent on the enrollment of the have been identified that show we propose a new specific rule to authorize contract with smaller contracts cannot objectively evaluate a sponsor’s scaled reductions in Star Ratings for submitting data from a three-month performance in an area. appeal measures in both Part C and Part period, medium-sized contracts As a standard practice, we check for D. submitting data from a two-month flags that indicate bias or non-reporting, The data downgrade policy was period, and larger contracts submitting check for completeness, check for adopted to address instances when the data from a one-month period.41 outliers, and compare measures to the data that would be used for specific We propose to use multiple data previous year to identify significant measures are not reliable for measuring sources whenever possible, such as the changes which could be indicative of performance due to their TMP data or information from audits to data issues. CMS has developed and incompleteness or biased/erroneous determine whether the data at the implemented Part C and Part D nature. For instances where the integrity Independent Review Entity (IRE) are Reporting Requirements Data Validation of the data is compromised because of complete. Given the financial and standards to assure that data reported by the action or inaction of the sponsoring marketing incentives associated with sponsoring organizations pursuant to organization (or its subcontractors or higher performance in Star Ratings, §§ 422.516 and 423.514 satisfy the agents), this policy reflects the safeguards are needed to protect the Star regulatory obligation. Sponsor underlying fault of the sponsoring Ratings from actions that inflate organizations should refer to specific organization for the lack of data for the performance or mask deficiencies. guidance and technical instructions applicable measure. Without some CMS is proposing to reduce a related to requirements in each of these policy for reduction in the rating for contract’s Part C or Part D appeal areas. For example, information about these measures, sponsoring measures Star Ratings for IRE data that HEDIS measures and technical organizations could ‘‘game’’ the Star are not complete or otherwise lack specifications is posted on: http:// Ratings and merely fail to submit data integrity based on the TMP or audit www.ncqa.org/ that illustrate poor performance. We information. The reduction would be HEDISQualityMeasurement/ believe that removal of the measure applied to the measure-level Star HEDISMeasures.aspx. Information about from the ratings calculation would Ratings for the applicable appeals Data Validation of Reporting unintentionally reward poor data measures. There are varying degrees of Requirements data is posted on: https:// compilation and submission activities data issues and as such, we are www.cms.gov/Medicare/Prescription- such that our only recourse is to reduce proposing a methodology for reductions Drug-Coverage/ the rating to 1 star for affected measures. that reflects the degree of the data PrescriptionDrugCovContra/ For verification and validation of the accuracy issue for a contract instead of PartCDDataValidation.html and https:// Part C and D appeals measures, we a one-size fits all approach. The www.cms.gov/Medicare/Prescription- propose to use statistical criteria to methodology would employ scaled Drug-Coverage/ determine if a contract’s appeals reductions, ranging from a 1-star PrescriptionDrugCovContra/ measure-level Star Ratings would be reduction to a 4-star reduction; the most RxContracting_ reduced for missing IRE data. The severe reduction for the degree of ReportingOversight.html. criteria would allow us to use scaled missing IRE data would be a 4-star We propose, in paragraphs (g)(1)(i) reductions for the appeals measures to reduction which would result in a through (iii), rules for specific account for the degree to which the data measure-level Star Rating of 1 star for circumstances where we believe a are missing. The completeness of the the associated appeals measures (Part C specific response is appropriate. First, IRE data is critical to allow fair and or Part D). The data source for the scaled we propose a continuation of a current accurate measurement of the appeals reduction is the TMP or audit data, policy: To reduce HEDIS measures to 1 measures. All plans are responsible and however the specific data used for the star when audited data are submitted to held accountable for ensuring high determination of a Part C IRE data NCQA with an audit designation of quality and complete data to maintain completeness reduction are ‘‘biased rate’’ or BR based on an the validity and reliability of the independent of the data used for the auditor’s review of the data if a plan appeals measures. Part D IRE data completeness reduction. chooses to report; this proposal would In response to stakeholder concerns If a contract receives a reduction due to also apply when a plan chooses not to about CMS’ prior practice of reducing missing Part C IRE data, the reduction submit and has an audit designation of measure ratings to one star based on any would be applied to both of the ‘‘non-report’’ or NR. Second, we finding of data inaccuracy, contract’s Part C appeals measures. propose to continue to reduce Part C incompleteness, or bias, CMS initiated Likewise, if a contract receives a and D Reporting Requirements data, that the Timeliness Monitoring Project 40 reduction due to missing Part D IRE is, data required pursuant to §§ 422.514 (TMP) in CY 2017. The first data, the reduction would be applied to and 423.516, to 1 star when a contract submission for the TMP was for the both of the contract’s Part D appeals did not score at least 95 percent on data measurement year 2016 related to Part measures. We solicit comment on this validation for the applicable reporting C organization determinations and proposal and its scope; we are looking section or was not compliant with data reconsiderations and Part D coverage in particular for comments related to validation standards/sub-standards for how to use the process we are proposing data directly used to calculate the 40 This project was discussed in the November 28, associated measure. In our view, data 2016 HPMS memo, ‘‘Industry-wide Appeals Timeliness Monitoring.’’ https://www.cms.gov/ 41 Contracts with a mean annual enrollment of that do not reach at least 95 percent on Medicare/Prescription-Drug-Coverage/ less than 50,000 are required to submit data for a the data validation standards are not PrescriptionDrugCovGenIn/Downloads/Industry- three-month time period. Contracts with a mean sufficiently accurate, impartial, and wide-Timeliness-Monitoring.pdf, https:// enrollment of at least 50,000 but at most 250,000 complete for use in the Star Ratings. As www.cms.gov/Medicare/Prescription-Drug- are required to submit data for a two-month time Coverage/PrescriptionDrugCovGenIn/Downloads/ period. Contracts with a mean enrollment greater the sponsoring organization is Industry-wide-Appeals-Timeliness-Monitoring- than 250,000 are required to submit data for a one- responsible for these data and submits Memo-November-28-2016.pdf. month period.

VerDate Sep<11>2014 20:14 Nov 27, 2017 Jkt 244001 PO 00000 Frm 00061 Fmt 4701 Sfmt 4702 E:\FR\FM\28NOP2.SGM 28NOP2 sradovich on DSK3GMQ082PROD with PROPOSALS2 56396 Federal Register / Vol. 82, No. 227 / Tuesday, November 28, 2017 / Proposed Rules

in this proposal to account for data Rating (before the application of the contract, with smaller contracts integrity issues discovered through reduction) and the identified scaled submitting data from a three-month means other than the TMP and audits of reduction is less than one, the contract period, medium-sized contracts sponsoring organizations. would receive a measure-level Star submitting data from a 2-month period, CMS’ proposed scaled reduction Rating of 1 star for the appeals measure. and larger contracts submitting data methodology is a three-stage process The error rate for the Part C and Part from a one-month period, the use of a using the TMP or audit information to D appeals measures using the TMP or projected number of cases allows a determine: First, whether a contract may audit data and the projected number of consistent time period for the be subject to a potential reduction for cases not forwarded to the IRE for a 3- application of the criteria proposed. the Part C or Part D appeals measures; month period would be used to identify second, the basis for the estimate of the contracts that may be subject to an The calculated error rate formula error rate; and finally, whether the appeals-related IRE data completeness (Equation 1) for the Part C measures is estimated error rate is significantly reduction. A minimum error rate is proposed to be determined by the greater than the cut points for the scaled proposed to establish a threshold for the quotient of the number of cases not reductions of 1, 2, 3, or 4 stars. identification of contracts that may be forwarded to the IRE and the total Once the scaled reduction for a subject to a reduction. The number of cases that should have been contract is determined using this establishment of the threshold allows forwarded to the IRE. The number of methodology, the reduction would be the focus of the possible reductions on cases that should have been forwarded applied to the contract’s associated contracts with error rates that have the to the IRE is the sum of the number of appeals measure-level Star Ratings. The greatest potential to distort the signal of cases in the IRE during TMP or audit minimum measure-level Star Rating is 1 the appeals measures. Since the data collection period and the number star. If the difference between the timeframe for the TMP data is of cases not forwarded to the IRE during associated appeals measure-level Star dependent on the enrollment of the the same period.

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

The projected number of cases not not to be forwarded to the IRE based on The requirement for a minimum forwarded to the IRE in a 3-month the TMP data multiplied by the constant number of cases is needed to address period would be calculated by 1.5. Small contracts with mean statistical concerns with precision and multiplying the number of cases found enrollments less than 50,000 that small numbers. If a contract meets only not to be forwarded to the IRE based on submitted data for a 3-month period one of the conditions, the contract the TMP or audit data by a constant would have their number of cases found would not be subject to reductions for determined by the TMP time period. not to be forwarded to the IRE based on IRE data completeness issues. the TMP data multiplied by the constant Contracts with mean annual If a contract is subject to a possible enrollments greater than 250,000 that 1.0. Under this proposal, contract ratings reduction based on the aforementioned submitted data from 1-month period would be subject to a possible reduction conditions, a confidence interval would have their number of cases found due to lack of IRE data completeness if estimate for the true error rate for the not to be forwarded to the IRE based on both following conditions are met• The contract would be calculated using a the TMP data multiplied by the constant calculated error rate is 20 percent or Score Interval (Wilson Score Interval) at 3.0. Contracts with mean enrollments of more. a confidence level of 95 percent. 50,000 but at most 250,000 that • The projected number of cases not The midpoint of the score interval submitted data from a 2-month period forwarded to the IRE is at least 10 in a would be determined using Equation 3. would have their number of cases found 3-month period.

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

VerDate Sep<11>2014 20:14 Nov 27, 2017 Jkt 244001 PO 00000 Frm 00062 Fmt 4701 Sfmt 4702 E:\FR\FM\28NOP2.SGM 28NOP2 sradovich on DSK3GMQ082PROD with PROPOSALS2 EP28NO17.008 EP28NO17.009 EP28NO17.010 Federal Register / Vol. 82, No. 227 / Tuesday, November 28, 2017 / Proposed Rules 56397

Equation 3 is the total number of Letting the calculated error rate be cases represented as n, Equation 3 can untimely cases for the Part D appeals represented by and the total number of be streamlined as Equation 4: measures.

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 TABLE 3—APPEALS MEASURE STAR to address the degree of missing IRE reduction, the lower bound of the RATINGS REDUCTIONS BY THE IN- data. interval estimate of the error rate would COMPLETE DATA ERROR RATE l. Measure-Level Star Ratings be compared to each of the thresholds We propose in §§ 422.166(a) and in Table 3. If the contract’s calculated Proposed thresholds using Reduction for lower bound is higher than the the lower bound of incomplete 423.186(a) the methods for calculating confidence interval Star Ratings at the measure level. As threshold, the contract would receive estimate of the error rate IRE data the reduction that corresponds to the (%) (stars) part of the Part C and D Star Ratings highest threshold that is less than the System, Star Ratings are currently lower bound. In other words, the 20 ...... 1 calculated at the measure level. To 40 ...... 2 contract’s lower bound is being separate a distribution of scores into 60 ...... 3 distinct groups or star categories, a set employed to determine whether the 80 ...... 4 contract’s error rate is significantly of values must be identified to separate one group from another group. The set greater than the thresholds of 20 We propose regulation text at of values that break the distribution of percent, 40 percent, 60 percent, and 80 § 422.164(g)(1)(iii)(A) through (N) and the scores into non-overlapping groups § 423.184(g)(1)(iii)(A) through (K) to percent. The proposed scaled reductions is a set of cut points. We propose to codify these parameters and formulas are in Table 3, and would be codified continue to determine cut points by for the scaled reductions. We note that in narrative form at paragraph applying either clustering or a relative the proposed text for the Part C (g)(1)(iii)(D) of both regulations. distribution and significance testing regulation includes specific paragraphs The reductions due to IRE data methodology; we propose to codify this related to MA and MA–PD plans that policy in paragraphs (a)(1) of each completeness issues would be applied are not included in the proposed text for section. We propose in paragraphs (a)(2) after the calculation of the measure- the Part D regulation but that the two and (a)(3) of each section that for non- level Star Rating for the appeals are otherwise identical. measures. The reduction would be In addition, we propose in CAHPS measures, we would use a applied to the Part C appeals measures §§ 422.164(g)(2) and 423.184(g)(2) to clustering methodology and that for and/or the Part D appeals measures. authorize reductions in a Star Rating for CAHPS measures, we would use relative distribution and significance testing. It is important to note that a contract’s a measure when there are other data accuracy concerns (that is, those not Measure scores would be converted to a lower bound could be statistically 5-star scale ranging from 1 to 5, with significantly greater than more than one specified in paragraph (g)(1)). We propose an example in paragraph (g)(2) whole star increments for the cut points. threshold. The reduction would be A rating of 5 stars would indicate the determined by the highest threshold of another circumstance where CMS would be authorized to reduce ratings highest Star Rating possible, while a that the contract’s lower bound exceeds. based on a determination that rating of 1 star would be the lowest For example, if the lower bound for a performance data are incomplete, rating on the scale. Consistent with contract is 64.560000 percent, the inaccurate, or biased. We also propose current policy, we propose to use the contract’s estimated value is this other situation would result in a two methodologies described as follows significantly greater than the thresholds reduction of the measure rating to 1 star. to convert measure scores to measure- of 20 percent, 40 percent, and 60 We have taken several steps in past level Star Ratings. percent because the lower bound value years to protect the integrity of the data The clustering method would be 64.560000 percent is greater than each we use to calculate Star Ratings. applied to all Star Ratings measures, of these thresholds. The lower bound for However, we welcome comments about except for the CAHPS measures. For the contract’s confidence interval is not alternative methods for identifying each individual measure, we would greater than 80 percent. The contract inaccurate or biased data and comments determine the measure cut points using would be subject to the reduction that on the proposed policies for reducing all measure scores for all contracts corresponds to the 60 percent threshold, stars for data accuracy and required to report that do not have which is three stars. completeness issues. Further, we missing, flagged as biased, or erroneous welcome comments on the proposed data. For the Part D measures, we methodology for scaled reductions for propose to determine MA–PD and PDP the Part C and Part D appeals measures cut points separately. The scores would

VerDate Sep<11>2014 20:14 Nov 27, 2017 Jkt 244001 PO 00000 Frm 00063 Fmt 4701 Sfmt 4702 E:\FR\FM\28NOP2.SGM 28NOP2 sradovich on DSK3GMQ082PROD with PROPOSALS2 EP28NO17.011 EP28NO17.012 56398 Federal Register / Vol. 82, No. 227 / Tuesday, November 28, 2017 / Proposed Rules

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

TABLE 4—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.

VerDate Sep<11>2014 20:14 Nov 27, 2017 Jkt 244001 PO 00000 Frm 00064 Fmt 4701 Sfmt 4702 E:\FR\FM\28NOP2.SGM 28NOP2 sradovich on DSK3GMQ082PROD with PROPOSALS2 Federal Register / Vol. 82, No. 227 / Tuesday, November 28, 2017 / Proposed Rules 56399

TABLE 4—CAHPS STAR ASSIGNMENT RULES—Continued

Star Criteria for assigning star ratings

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 request comments on our and under our proposal would continue stars, while the Part C and D summary proposed methods to determine cut to be, the measure. Because the MA Star and overall ratings employ a weighted points. For certain measures, we Ratings System consists of a large mean of the measure-level stars and up previously published pre-determined 4- collection of measures across numerous to two adjustments. We propose to star thresholds. If commenters quality dimensions, the measures would codify these policies at paragraphs recommend pre-determined 4-star be organized in a hierarchical structure (b)(2), (c)(1) and (d)(1) of §§ 422.166 and thresholds, we request suggestions on that provides ratings at the measure, 423.186. how to minimize generating Star Ratings domain, Part C summary, Part D n. Domain Star Ratings that do not reflect a contract’s ‘‘true’’ summary, and overall levels. The performance, otherwise referred to as regulation text at §§ 422.166 and Groups of measures that together the risk of ‘‘misclassifying’’ a contract’s 423.186 is built on this structure and represent a unique and important aspect performance (for example, scoring a provides for calculating ratings at each of quality and performance are ‘‘true’’ 4-star contract as a 3-star ‘‘level’’ of the system. The organization organized to form a domain. Domain contract, or vice versa, or creating of the measures into larger groups ratings summarize a plan’s performance ‘‘cliffs’’ in Star Ratings and therefore, increases both the utility and efficiency on a specific dimension of care. potential benefits between plans with of the rating system. At each aggregated Currently the domains are used purely nearly identical Star Ratings on different level, ratings are based on the measure- for purposes of displaying data on sides of a fixed threshold), and how to level stars. Ratings at the higher level Medicare Plan Finder to organize the continue to create incentives for quality are based on the measure-level Star measures and help consumers interpret improvement. We also welcome Ratings, with whole star increments for the data. We propose to continue this comments on alternative domains and half-star increments for policy at §§ 422.166(b)(1)(i) and recommendations for revising the cut summary and overall ratings; a rating of 423.186(b)(1)(i). point methodology. For example, we are 5 stars would indicate the highest Star At present, there are nine domains— considering methodologies that would Rating possible, while a rating of 1 star five for Part C measures for MA-only minimize year-to-year changes in the would be the lowest rating on the scale. and MA–PDs plans and four for Part D cut points by setting the cut points so Half-star increments are used in the measures for MA–PDs. We propose to they are a moving average of the cut summary and overall ratings to allow for continue to group measures for points from the two or three most recent more variation at the higher hierarchical purposes of display on Medicare Plan years or setting caps on the degree to levels of the ratings system. We believe Finder and to continue use of the same which a measure cut point could change this greater variation and the broader domains as in current practice in from one year to the next. We welcome range of ratings provide more useful §§ 422.166(b)(1)(i) and 423.196(b)(1)(i). comments on these particular information to beneficiaries in making The current domains are listed in Tables methodologies and recommendations enrollment decisions while remaining 5 and 6. for other ways to provide stability for consistent with the statutory direction cut points from year to year. in sections 1853(o) and 1854(b) of the TABLE 5—PART C DOMAINS Act to use a 5-star system. These m. Hierarchical Structure of the Ratings Domain policies for the assignment of stars We propose to continue our existing would be codified with other rules for Staying Healthy: Screenings, Tests and Vac- policy to use a hierarchical structure for the ratings at the domain, summary, and cines. the Star Ratings. The basic building overall level. Domain ratings employ an Managing Chronic (Long Term) Conditions. block of the MA Star Ratings System is, unweighted mean of the measure-level Member Experience with Health Plan.

VerDate Sep<11>2014 20:14 Nov 27, 2017 Jkt 244001 PO 00000 Frm 00065 Fmt 4701 Sfmt 4702 E:\FR\FM\28NOP2.SGM 28NOP2 sradovich on DSK3GMQ082PROD with PROPOSALS2 56400 Federal Register / Vol. 82, No. 227 / Tuesday, November 28, 2017 / Proposed Rules

TABLE 5—PART C DOMAINS— reward factor (if applicable) and the past the contract’s effective date the flag Continued categorical adjustment index (CAI); would be ‘‘Plan too new to be similarly, the current summary rating measured’’. Domain for a PDP contract is calculated using a We welcome comments on the weighted mean of the Part D measure- calculations for the Part C and D Member Complaints and Changes in the level Star Ratings with up to two summary ratings. Health Plan’s Performance. adjustments: The reward factor (if p. Overall Rating Health Plan Customer Service. applicable) and the CAI. We propose in §§ 422.166(c)(1) and 423.186(c)(1) that The overall Star Rating is a global rating that summarizes the plan’s TABLE 6—PART D DOMAINS the Part C and Part D summary ratings would be calculated as the weighted quality and performance for the types of Domain mean of the measure-level Star Ratings services offered by the plans under the with an adjustment to reward rated contract. We propose at Drug Plan Customer Service. consistently high performance (reward §§ 422.166(d) and 423.186(d) to codify Member Complaints and Changes in the factor) and the application of the CAI, the standards for calculating and Drug Plan’s Performance. pursuant to paragraph (f) (where we assigning overall Star Ratings for MA– Member Experience with the Drug Plan. propose the specifics for these PD contracts. The overall rating for an Drug Safety and Accuracy of Drug Pricing. adjustments) for Parts C and D, MA–PD contract is proposed to be respectively. calculated using a weighted mean of the Currently, Star Ratings for domains Second, and also consistent with Part C and Part D measure level Star are calculated using the unweighted current policy, we propose an MA-only Ratings, respectively, with an mean of the Star Ratings of the included contract and PDP would have a adjustment to reward consistently high measures. They are displayed to the summary rating calculated only if the performance described in paragraph nearest whole star, using a 1–5 star contract meets the minimum number of (f)(1) and the application of the CAI, scale. We propose to continue this rated measures required for its pursuant to described in paragraph policy at paragraph (b)(2)(ii). We also respective summary rating: A contract (f)(2). propose that a contract must have stars must have scores for at least 50 percent Consistent with current policy, we for at least 50 percent of the measures of the measures required to be reported propose at paragraph (d)(2) that an MA– required to be reported for that domain for the contract type to have the PD would have an overall rating for that contract type to have that summary rating calculated. The calculated only if the contract receives domain rating calculated in order to proposed regulation text would be both a Part C and Part D summary have enough data to reflect the codified as paragraph (c)(2)(i) of rating, and scores for at least 50% of the contract’s performance on the specific §§ 422.166 and 423.186. The same rules measures are required to be reported for dimension. For example, if a contract is would be applied to both the Part C and the contract type to have the overall rated only on one measure in Staying Part D summary ratings for the rating calculated. As with the Part C and Healthy: Screenings, Tests and minimum number of rated measures D summary ratings, the Part C and D Vaccines, that one measure would not and flags for display. We would apply improvement measures would not be necessarily be representative of how the this regulation to require a MA–PD to included in the count for the minimum contract performs across the whole have a Part C and a Part D summary number of measures for the overall domain so we do not believe it is rating if the minimum requirement of rating. Any measure that shares the appropriate to calculate and display a rated measures for each summary rating same data and is included in both the domain rating. We propose to continue type is met. The improvement measures Part C and Part D summary ratings this policy by providing, at paragraph are based on identified measures that would be included only once in the (b)(2)(i), that a minimum number of are each counted towards meeting the calculation for the overall rating; for measures must be reported for a domain proposed requirement for the example, Members Choosing to Leave rating to be calculated. calculation of a summary rating. We the Plan and Complaints about the Plan. As with summary ratings, we propose o. Part C and D Summary Ratings propose (at paragraph (c)(2)(ii)) that the improvement measures themselves are that overall MA–PD ratings would use a In the current rating system the Part not included in the count of minimum 1 to 5 star scale in half-star increments; C summary rating provides a rating of number of measures for the Part C or traditional rounding rules would be the health plan quality and the Part D Part D summary ratings. employed to round the overall rating to summary rating provides a rating of the Third, we propose a paragraph (c)(3) the nearest half-star. These policies are prescription drug plan quality. We are in both §§ 422.166 and 423.186 to proposed as paragraphs (d)(2)(i) through proposing, at §§ 422.166(c) and provide that the summary ratings are on (iv). 423.186(c), to codify regulation text a 1 to 5 star scale in half-star In accordance with our general governing the adoption of Part C increments. Traditional rounding rules proposed policy at §§ 422.166(h) and summary ratings and Part D summary would be employed to round the 423.186(h), the overall rating would be ratings. An MA-only plan and a Part D summary rating to the nearest half-star. posted on HPMS and Medicare Plan standalone plan would receive a The summary rating would be displayed Finder, with specific messages for lack summary rating only for, respectively, in HPMS and Medicare Plan Finder to of ratings for certain reasons. Applying Part C measures and Part D measures. the nearest half-star. As proposed in that rule, if an MA–PD contract has only First, in paragraphs (c)(1) of each §§ 422.166(h) and 423.186(h), if a one of the two required summary section, we propose the overall formula contract has not met the measure ratings, the overall rating would not be for calculating the summary ratings for requirement for calculating a summary calculated and the display in HPMS Part C and Part D. Under current policy, rating, the display in HPMS (and on would be the flag ‘‘Not enough data the summary rating for an MA-only Medicare Plan Finder) for the applicable available.’’ contract is calculated using a weighted summary rating would be the flag ‘‘Not For QBP purposes, low enrollment mean of the Part C measure-level Star enough data available’’ or if the contracts and new MA plans are defined Ratings with up to two adjustments: The measurement period is less than 1 year in § 422.252. Low enrollment contract

VerDate Sep<11>2014 20:14 Nov 27, 2017 Jkt 244001 PO 00000 Frm 00066 Fmt 4701 Sfmt 4702 E:\FR\FM\28NOP2.SGM 28NOP2 sradovich on DSK3GMQ082PROD with PROPOSALS2 Federal Register / Vol. 82, No. 227 / Tuesday, November 28, 2017 / Proposed Rules 56401

means a contract that could not program were weighted equally, measures, followed by outcome and undertake Healthcare Effectiveness Data suggesting equal importance. Based on intermediate outcome measures (weight and Information Set (HEDIS) and Health feedback from stakeholders, including of 3), then by patient experience/ Outcomes Survey (HOS) data health and drug plans and beneficiary complaints and access measures (weight collections because of a lack of a advocacy groups, we moved to provide of 1.5), and finally process measures sufficient number of enrollees to greater weight to clinical outcomes and (weight of 1). We are considering reliably measure the performance of the lesser weight to process measures. increasing the weight of the patient health plan; new MA plan means a MA Patient experience and access measures experience/complaints and access contract offered by a parent organization were also given greater weight than measures and are interested in that has not had another MA contract in process measures, but not as high as stakeholder feedback on this potential the previous 3 years. Low enrollment outcome measures. The differential change in order to reflect better the contracts and new plans do not receive weighting was implemented to help importance of these issues in plan an overall or summary rating because of create further incentives to drive performance. If we were to increase the the lack of necessary data. However, improvement in clinical outcomes, weight, we are considering increasing it they are treated as qualifying plans for patient experience, and access. These from a weight of 1.0 to between 1.5 and the purposes of QBPs. Section differential weights for measures were 3 similar to outcome measures. This 1853(o)(3)(A)(ii)(II) of the Act, as implemented for the 2012 Ratings increased weight would reflect CMS’ implemented at § 422.258(d)(7), following a May 2011 Request for commitment to serve Medicare provides that for 2013 and subsequent Comments and adopted in the CY2013 beneficiaries by putting the patients years, CMS shall develop a method for Rate Announcement and Final Call first, including their assessments of the determining whether an MA plan with Letter. care received by plans. We solicit In the Contract Year 2012 Final Rule low enrollment is a qualifying plan for comment on this point, particularly the for Changes to the Medicare Advantage purposes of receiving an increase in potential change in the weight of the and the Medicare Prescription Drug payment under section 1853(o). This patient experience/complaints and Benefit Programs rule (79 FR 21486), we determination is applied at the contract access measures. level and thus determines whether a stated that scoring methodologies contract (meaning all plans under that should also consider improvement as an Table 7 includes the proposed contract) is a qualifying contract. The independent goal. To this end, we measure categories, the definitions of statute, at section 1853(o)(3)(A)(iii) of implemented in the CY 2013 Rate the measure categories, and the weights. the Act, provides for treatment of new Announcement the Part C and D In calculating the summary and overall MA plans as qualifying plans eligible for improvement measures that measure the ratings, a measure given a weight of 3 a specific QBP. We therefore propose, at overall improvement or decline in counts three times as much as a measure §§ 422.166(d)(3) and 423.186(d)(3), that individual measure scores from the given a weight of 1. In section III.A.12. low enrollment contracts (as defined in prior to the current year. Given the of this proposed rule, we propose (as § 422.252 of this chapter) and new MA importance of recognizing quality Table 2) the measure set and include the plans (as defined in § 422.252 of this improvement as an independent goal, category and weight for each measure; chapter) do not receive an overall and/ for the 2015 Star Ratings, we proposed those weight assignments are consistent or summary rating; they would be and subsequently finalized through the with this proposal. We propose that as treated as qualifying plans for the 2015 Rate Announcement and final Call new measures are added to the Part C purposes of QBPs as described in Letter an increase in the weight of the and D Star Ratings, we would assign the § 422.258(d)(7) of this chapter and improvement measure from 3 times to 5 measure category based on these announced through the process times that of a process measure. This categories and the regulation text described for changes in and adoption weight aligns the Part C and D Star proposed at §§ 422.166(e) and of payment and risk adjustment policies Ratings program with value-based 423.186(e), subject to two exceptions. in section 1853(b) of the Act. This purchasing programs in Medicare fee- We propose in paragraphs (e)(2) of each proposal would merely codify existing for-service which heavily weight section as the first exception, to assign policy and practice. improvement. new measures to the Star Ratings We are proposing in §§ 422.166(e) and program a weight of 1 for their first year q. Measure Weights 423.186(e) to continue the current in the Star Ratings. In subsequent years Prior to the 2012 Part C and D Plan weighting of measures in the Part C and the weight associated with the measure Ratings (now known as Star Ratings), all D Star Ratings program by assigning the weighting category would be used. This individual measures included in the highest weight (5) to improvement is consistent with current policy.

TABLE 7—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 would 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.

VerDate Sep<11>2014 20:14 Nov 27, 2017 Jkt 244001 PO 00000 Frm 00067 Fmt 4701 Sfmt 4702 E:\FR\FM\28NOP2.SGM 28NOP2 sradovich on DSK3GMQ082PROD with PROPOSALS2 56402 Federal Register / Vol. 82, No. 227 / Tuesday, November 28, 2017 / Proposed Rules

TABLE 7—MEASURE CATEGORIES, DEFINITIONS AND WEIGHTS—Continued

Measure category Definition Weight

Process ...... Process measures capture the health care services provided to beneficiaries which can assist in 1 maintaining, monitoring, or improving their health status.

In addition, we propose (at improvement measures used in the reward factor. (The reference to either §§ 422.166(e)(3) and 423.186(e)(3)) a comparison would include up to two reward or integration factor refers to the second exception to the general adjustments, the reward factor (if same aspect of the Star Ratings.) This weighting rule for MA and Part D applicable) and the CAI. The higher factor is calculated separately for the contracts that have service areas that are overall rating would be used for the Part C summary rating, Part D summary wholly located in Puerto Rico. We overall rating. For an MA–PD that has rating for MA–PDs, Part D summary recognize the additional challenge an overall rating of 2 stars or less rating for PDPs, and the overall rating unique to Puerto Rico related to the without the use of the improvement for MA–PDs. It is currently added to the medication adherence measures used in measure and with all applicable summary (Part C or D) and overall rating the Star Ratings Program due to the lack adjustments (CAI and the reward factor), of contracts that have both high and of Low Income Subsidy (LIS). For the the overall rating would exclude the stable relative performance for the 2017 Star Ratings, we implemented a improvement measure. For all others, associated summary or overall rating. different weighting scheme for the Part the overall rating would include the The contract’s performance will be D medication adherence measures in the improvement measure. assessed using its weighted mean calculation of the overall and summary MA-only and PDPs would have the relative to all rated contracts without Star Ratings for contracts that solely hold harmless provisions for highly- adjustments. serve the population of beneficiaries in rated contracts applied for the Part C The contract’s stability of Puerto Rico. We propose, at and D summary ratings, respectively. performance will be assessed using its §§ 422.166(e)(3) and 423.186(e)(3), to For an MA-only or PDP that receives a weighted variance relative to all rated continue to reduce the weights for the summary rating of 4 stars or more contracts at the same rating level adherence measures to 0 for the without the use of the improvement (overall, summary Part C, and summary summary and overall rating calculations measure and with all applicable Part D). The Part D summary thresholds and maintain the weight of 3 for the adjustments (CAI and the reward factor), for MA–PDs are determined adherence measures for the a comparison of the rounded summary independently of the thresholds for improvement measure calculations for rating with and without the PDPs. We propose to codify the contracts that solely serve the improvement measure and up to two calculation and use of the reward factor population of beneficiaries in Puerto adjustments, the reward factor (if in §§ 422.166(f)(1) and 423.186(f)(1). Rico. We request comment on our applicable) and CAI, is done. The higher Annually, we propose to update the proposed weighting strategy for Measure summary rating would be used for the performance and variance thresholds for Weights generally and for Puerto Rico, summary rating for the contract’s the reward factor based upon the data including the weighting values highest rating. For MA-only and PDPs for the Star Ratings year, consistent with themselves. with a summary rating of 2 stars or less current policy. A multistep process without the use of the improvement r. Application of the Improvement would be used to determine the values measure and with all applicable Measure Scores that correspond to the thresholds for the adjustments (CAI and the reward factor), reward factors for the summary and/or Consistent with current policy, we the summary rating would exclude the overall Star Ratings for a contract. The propose at §§ 422.166(g) and 423.186(g) improvement measure. For all others, determination of the reward factors a hold harmless provision for the the summary rating would include the would rely on the contract’s ranking of inclusion or exclusion of the improvement measure. MA–PDs would its weighted variance and weighted improvement measure(s) for highly- have their summary ratings calculated mean of the measure-level stars to the rated contracts’ highest ratings. We are with the use of the improvement summary or overall rating relative to the proposing, in paragraphs (g)(1)(i) measure regardless of the value of the distribution of all contracts’ weighted through (iii), a series of rules that summary rating. variance and weighted mean to the specify when the improvement measure In addition, at paragraph (g)(2), we summary and/or overall rating. A is included in calculating overall and also propose text to clarify that contract’s weighted variance would be summary ratings. summary ratings use only the MA–PDs would have the hold calculated using the quotient of the improvement measure associated with following two values: (1) The product of harmless provisions for highly-rated the applicable Part C or D performance. contracts applied for the overall rating. the number of applicable measures We welcome comments on the hold based on rating-type and the sum of the For an MA–PD that receives an overall harmless improvement provision we rating of 4 stars or more without the use products of the weight of each propose to continue to use, particularly applicable measure and its squared of the improvement measures and with any clarifications in how and when it deviation 42 and (2) the product of one all applicable adjustments (CAI and the should be applied. reward factor), a comparison of the less than the number of applicable rounded overall rating with and without s. Reward Factor (Formerly Referred to measures and the sum of the weights of the improvement measures is done. The as Integration Factor) the applicable measures. A contract’s overall rating with the improvement In 2011, the integration factor was weighted mean performance would be measures used in the comparison would added to the Star Ratings methodology 42 A deviation is the difference between the include up to two adjustments, the to reward contracts that have performance measure’s Star Rating and the reward factor (if applicable) and the consistently high performance. The weighted mean of all applicable measures for the CAI. The overall rating without the integration factor was later renamed the contract.

VerDate Sep<11>2014 20:14 Nov 27, 2017 Jkt 244001 PO 00000 Frm 00068 Fmt 4701 Sfmt 4702 E:\FR\FM\28NOP2.SGM 28NOP2 sradovich on DSK3GMQ082PROD with PROPOSALS2 Federal Register / Vol. 82, No. 227 / Tuesday, November 28, 2017 / Proposed Rules 56403

found by calculating the quotient of the weighted variance for the rating type For an MA–PD’s Part C and D summary following two values: (1) The sum of the (Part C summary for MA–PDs and MA- ratings, its ranking is relative to all other products of the weight of a measure and only, overall for MA–PDs, Part D contracts’ weighted means for the rating its associated measure-level Star Ratings summary for MA–PDs, and Part D type (Part C summary, Part D summary) of the applicable measures for the summary for PDPs), and the manner in with the improvement measure. Further, rating-type and (2) the sum of the which the highest rating for the contract the same threshold criterion is weights of the applicable measures for was determined—with or without the employed per category regardless of the rating type. The thresholds for the improvement measure(s). For an MA– whether the improvement measure was categorization of the weighted variance PD’s Part C and D summary ratings, its included or excluded in the calculation and weighted mean for contracts would ranking is relative to all other contracts’ of the rating. The values that correspond be based upon the distribution of the weighted variance for the rating type to the thresholds are based on the calculated values of all rated contracts (Part C summary, Part D summary) with distribution of all rated contracts and of the same type. Because highly-rated the improvement measure. Similarly, a contracts may have the improvement contract’s weighted mean is categorized are determined with and without the measure(s) excluded in the into one of three mutually exclusive improvement measure(s) and exclusive determination of their final highest categories, identified in Table 8B, based of any adjustments. Table 8A details the rating, each contract’s weighted on its weighted mean of all measure- criteria for the categorization of a variance and weighted mean is level Star Ratings and its ranking contract’s weighted variance for the calculated both with and without the relative to all other contracts’ weighted summary and overall ratings. Table 8B improvement measures. means for the rating type (Part C details the criteria for the categorization A contract’s weighted variance is summary for MA–PDs and MA-only, of a contract’s weighted mean categorized into one of three mutually overall, Part D summary for MA–PDs, (performance) for the overall and exclusive categories, identified in Table and Part D summary for PDPs) and the summary ratings. The values that 8A, based upon the weighted variance manner in which the highest rating for correspond to the cutoffs are provided of its measure-level Star Ratings and its the contract was determined—with or each year during the plan preview and ranking relative to all other contracts’ without the improvement measure(s). are published in the 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.

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

Weighted mean (performance) Ranking category

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; these values would be and low weighted variance ranking and weighted mean and weighted variance codified, as a chart, in paragraph high, relatively high, and other determines the value of the reward (f)(i)(iii). The weighted variance and weighted mean ranking would be factor. Table 9 shows the values of the weighted mean thresholds for the codified in narrative form in paragraph reward factor based on the weighted reward factor are available in the (f)(1)(ii). variance and weighted mean Technical Notes and updated annually.

TABLE 9—CATEGORIZATION OF A CONTRACT FOR THE REWARD FACTOR

Weighted mean Reward Weighted variance (performance) factor

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

We propose to continue the use of a methodology described in this be applied at the summary and overall reward factor to reward contracts with subsection to categorize and determine rating level. consistently high and stable the reward factor for contracts. As performance over time. Further, we proposed in paragraphs (c)(1) and (d)(1), propose to continue to employ the these reward factor adjustments would

VerDate Sep<11>2014 20:14 Nov 27, 2017 Jkt 244001 PO 00000 Frm 00069 Fmt 4701 Sfmt 4702 E:\FR\FM\28NOP2.SGM 28NOP2 sradovich on DSK3GMQ082PROD with PROPOSALS2 56404 Federal Register / Vol. 82, No. 227 / Tuesday, November 28, 2017 / Proposed Rules

t. Categorical Adjustment Index beneficiaries on quality measures and percentages of beneficiaries who receive A growing body of evidence links the measures of resource use in nine a low income subsidy and/or are dual prevalence of beneficiary-level social Medicare value-based purchasing eligible (LIS/DE) and/or have disability risk factors with performance on programs. The report also included status. We developed the CAI as an measures included in Medicare value- considerations for strategies to account interim analytical adjustment while we based purchasing programs, including for social risk factors in these programs. developed a long-term solution. The MA and Part D Star Ratings. With A January 10, 2017 report released by adjustment factor varies by a contract’s support from our contractors, we the National Academies of Sciences, categorization into a final adjustment undertook research to provide scientific Engineering, and Medicine provided category that is determined by a evidence as to whether MA various potential methods for measuring contract’s proportion of LIS/DE and organizations or Part D sponsors that and accounting for social risk factors, beneficiaries with disabilities. By 45 enroll a disproportionate number of including stratified public reporting. design, the CAI values are monotonic in vulnerable beneficiaries are We have also engaged NCQA and the at least one dimension (LIS/DE or systematically disadvantaged by the PQA to examine their measure disability status) and thus, contracts specifications used in the Star Ratings current Star Ratings. In 2014, we issued with larger LIS/DE and/or disability program to determine if re-specification a Request for Information to gather percentages realize larger positive is warranted. The majority of measures information directly from organizations adjustments. MA–PD contracts can have used for the Star Ratings program are to supplement the data that CMS up to three rating-specific CAI consensus-based. Measure collects, as we believe that plans and adjustments—one for the overall Star specifications can be changed only by sponsors are uniquely positioned to Rating and one for each of the summary the measure steward (the owner and provide both qualitative and ratings (Part C and Part D). MA-only developer of the measure). Thus, quantitative information that is not contracts can have one adjustment for measure scores cannot be adjusted for available from other sources. In the Part C summary rating. PDPs can differences in enrollee case mix unless February and September 2015, we have one adjustment for the Part D required by the measure steward. summary rating. We propose to codify released details on the findings of our Measure re-specification is a multiyear research.43 We have also reviewed the calculation and use of the reward process. For example, NCQA has a factor and the CAI in §§ 422.166(f)(2) reports about the impact of socio- standard process for reviewing any economic status (SES) on quality and 423.186(f)(2), while we consider measure and determining whether a other alternatives for the future. ratings, such as the report published by measure requires re-specification. the NQF posted at As is currently done today, the _ _ NCQA’s re-evaluation process is www.qualityforum.org/risk adjustment designed to ensure any resulting adjusted measure scores of a subset of ses.aspx and the Medicare Payment measure updates have desirable the Star Ratings measures would serve Advisory Commission’s (MedPAC) attributes of relevance, scientific as the foundation for the determination Report to the Congress: Medicare soundness, and feasibility: of the index values. Measures would be Payment Policy posted at http:// • Relevance describes the extent to excluded as candidates for adjustment if www.medpac.gov/docs/default-source/ which the measure captures information the measures are already case-mix reports/march-2016-report-to-the- important to different groups, for adjusted for SES (for example, CAHPS congress-medicare-payment- example, consumers, purchasers, and HOS outcome measures), if the policy.pdf?sfvrsn=0. We have more policymakers. To determine relevance, focus of the measurement is not a recently been reviewing reports NCQA assesses issues such as health beneficiary-level issue but rather a plan prepared by the Office of the Assistant importance, financial importance, and or provider-level issue (for example, Secretary for Planning and Evaluation potential for improvement among appeals, call center, Part D price (ASPE 44) and the National Academies entities being measured. accuracy measures), if the measure is of Sciences, Engineering, and Medicine • Scientific soundness captures the scheduled to be retired or revised on the issue of measuring and extent to which the measure adheres to during the Star Rating year in which the accounting for social risk factors in clinical evidence and whether the CAI is being applied, or if the measure CMS’ value-based purchasing and measure is valid, reliable, and precise. is applicable to only Special Needs quality reporting programs, and we have • Feasibility captures the extent to Plans (SNPs) (for example, SNP Care been considering options on how to which a measure can be collected at Management, Care for Older Adults address the issue in these programs. On reasonable cost and without undue measures). We propose to codify these December 21, 2016, ASPE submitted a burden. To determine feasibility, NCQA paragraphs for determining the Report to Congress on a study it was also assesses whether a measure is measures for CAI values at paragraph required to conduct under section 2(d) precisely specified and can be audited. (f)(2)(ii).The categorization of a of the Improving Medicare Post-Acute The overall process for assessing the beneficiary as LIS/DE for the CAI would Care Transformation (IMPACT) Act of value of re-specification emphasizes rely on the monthly indicators in the 2014. The study analyzed the effects of multi-stakeholder input, use of enrollment file. For the determination of certain social risk factors of Medicare evidence-based guidelines and data, and the CAI values, the measurement period wide public input. would correspond to the previous Star 43 The February release can be found at https:// Beginning with 2017 Star Ratings, we Ratings year’s measurement period. For www.cms.gov/medicareprescription-drug-coverage/ implemented the CAI that adjusts for the identification of a contract’s final prescriptiondrugcovgenin/performancedata.html. the average within-contract disparity in adjustment category for its application The September release can be found at https:// www.cms.gov/Medicare/Prescription-Drug- performance associated with the of the CAI in the current year’s Star Coverage/PrescriptionDrugCovGenIn/Downloads/ Ratings Program, the measurement Research-on-the-Impact-of-Socioeconomic-Status- 45 National Academies of Sciences, Engineering, period would align with the Star Ratings on-Star-Ratingsv1-09082015.pdf. and Medicine. 2017. Accounting for social risk year. If a beneficiary was designated as 44 https://aspe.hhs.gov/pdf-report/report- factors in Medicare payment. Washington, DC: The congress-social-risk-factors-and-performance- National Academies Press—https://www.nap.edu/ full or partially dually eligible or under-medicares-value-based-purchasing- catalog/21858/accounting-for-social-risk-factors-in- receiving a LIS at any time during the programs. medicare-payment-identifying-social. applicable measurement period, the

VerDate Sep<11>2014 20:14 Nov 27, 2017 Jkt 244001 PO 00000 Frm 00070 Fmt 4701 Sfmt 4702 E:\FR\FM\28NOP2.SGM 28NOP2 sradovich on DSK3GMQ082PROD with PROPOSALS2 Federal Register / Vol. 82, No. 227 / Tuesday, November 28, 2017 / Proposed Rules 56405

beneficiary would be categorized as LIS/ consistent adjustments across MA–PDs methodology proposed at §§ 422.166 DE. For the categorization of a and PDPs, the Part D measures would be and 423.186 (which would also be beneficiary as disabled, we would selected by applying the selection outlined in the Technical Notes each employ the information from the Social criteria to MA–PDs and PDPs year), using the subset of adjusted Security Administration (SSA) and independently and, then, selecting measure-level Star Ratings and all other Railroad Retirement Board (RRB) record measures that met the criteria for either unadjusted measure-level Star Ratings. systems. Disability status would be delivery system. The measure set for In addition, all contracts would have determined using the variable original adjustment of Part D measures for MA– their summary rating(s) and for MA– reason for entitlement (OREC) for PDs and PDPs would be the same after PDs, an overall rating, calculated using Medicare. The percentages of LIS/DE applying the selection criteria and the traditional methodology and all and disability per contract would rely pooling the Part D measures for MA– unadjusted measure-level Star Ratings. on the Medicare enrollment data from PDs and PDPs. We propose to codify For the annual development of the the applicable measurement year. The these paragraphs for the selection of the CAI, the distribution of the percentages counts of beneficiaries for enrollment adjusted measure set for the CAI for for LIS/DE and disabled using the and categorization of LIS/DE and MA–PDs and PDPs at (f)(2)(iii)(C). We enrollment data that parallels the disability would be restricted to also seek comment on the proposed previous Star Ratings year’s data would beneficiaries that are alive for part or all methodology and criteria for the be examined to determine the number of of the month of December of the selection of the measures for equal-sized initial groups for each applicable measurement year. Further, a adjustment. Further, we seek comment attribute (LIS/DE and disabled). The beneficiary would be assigned to the on alternative methods or rules to select initial categories would be created using contract based on the December file of the measures for adjustment for future all groups formed by the initial LIS/DE the applicable measurement period. We rulemaking. and disabled groups. The total number propose to codify these paragraphs for Annually, while the CAI is being of initial categories would be the determining the enrollment counts at developed using the rules we are product of the number of initial groups paragraph (f)(2)(i)(B). proposing here, we would release on for LIS/DE and the number of initial Using the subset of the measures that CMS.gov an updated analysis of the groups for the disabled dimension. meet the basic inclusion requirements, subset of the Star Ratings measures The mean difference between the we propose to select the measure set for identified for adjustment using this rule adjusted and unadjusted summary or adjustment based on the analysis of the as ultimately finalized. Basic descriptive overall ratings per initial category dispersion of the LIS/DE within-contract statistics would include the minimum, would be calculated and examined. The differences using all reportable numeric median, and maximum values for the initial categories would then be scores for contracts receiving a rating in within-contract variation for the LIS/DE collapsed to form the final adjustment the previous rating year. For the differences. The set of measures for categories. The collapsing of the initial selection of the Part D measures, MA– adjustment for the determination of the categories to form the final adjustment PDs and PDPs would be independently CAI would be announced in the draft categories would be done to enforce analyzed. For each contract, the Call Letter. monotonicity in at least one dimension proportion of beneficiaries receiving the We propose, at paragraph (f)(2)(iv) of (LIS/DE or disabled). The mean measured clinical process or outcome each regulation, to determine the difference within each final adjustment for LIS/DE and non-LIS/DE beneficiaries adjusted measure scores for LIS/DE and category by rating-type (Part C, Part D would be estimated separately, and the disability status from regression models for MA–PD, Part D for PDPs, or overall) difference between the LIS/DE and non- of beneficiary-level measure scores that would be the CAI values for the next LIS/DE performance rates per contract adjust for the average within-contract Star Ratings year. would be calculated. CMS would use a difference in measure scores for MA or The percentage of LIS/DE is a critical element in the categorization of logistic mixed effects model for PDP contracts. The approach employed contracts into the final adjustment estimation purposes that includes LIS/ to determine the adjusted measure category to identify a contract’s CAI. DE as a predictor, random effects for scores approximates case-mix Starting with the 2017 Star Ratings, we contract and an interaction term of adjustment using a beneficiary-level, applied an additional adjustment for contract and LIS/DE. logistic regression model with contract Using the analysis of the dispersion of fixed effects and beneficiary-level contracts that solely serve the the within-contract disparity of all indicators of LIS/DE and disability population of beneficiaries in Puerto contracts included in the modelling, the status, similar to the approach currently Rico to address the lack of LIS in Puerto measures for adjustment would be used to adjust CAHPS patient Rico. The adjustment results in a identified employing the following experience measures. However, unlike modified percentage of LIS/DE decision criteria: (1) A median absolute CAHPS case-mix adjustment, the only beneficiaries that is subsequently used difference between LIS/DE and non-LIS/ adjusters would be LIS/DE and to categorize contracts into the final DE beneficiaries for all contracts disability status. adjustment category for the CAI. We propose to continue this analyzed is 5 percentage points or more The sole purpose of the adjusted measure scores is for the determination adjustment and to calculate the or 46 (2) the LIS/DE subgroup performed of the CAI values. The adjusted measure contract-level modified LIS/DE better or worse than the non-LIS/DE scores would be converted to a measure- percentage for Puerto Rico using the subgroup in all contracts. We propose to level Star Rating using the measure following sources of information: The codify these paragraphs for the selection thresholds for the Star Ratings year that most recent data available at the time of criteria for the adjusted measures for the corresponds to the measurement period the development of the model of both CAI at paragraph (f)(2)(iii). the 1-year American Community Survey The Part D measures for PDPs would of the data employed for the CAI (ACS) estimates for the percentage of be analyzed separately. In order to apply determination. All contracts would have their people living below the Federal Poverty 46 The use of the word ‘or’ in the decision criteria adjusted summary rating(s) and for MA– Level (FPL) and the ACS 5-year implies that if one condition or both conditions are PDs, an adjusted overall rating, estimates for the percentage of people met, the measure would be selected for adjustment. calculated employing the standard living below 150 percent of the FPL, and

VerDate Sep<11>2014 20:14 Nov 27, 2017 Jkt 244001 PO 00000 Frm 00071 Fmt 4701 Sfmt 4702 E:\FR\FM\28NOP2.SGM 28NOP2 sradovich on DSK3GMQ082PROD with PROPOSALS2 56406 Federal Register / Vol. 82, No. 227 / Tuesday, November 28, 2017 / Proposed Rules

the Medicare enrollment data from the We propose to continue the use of the better understand whether, how, and to same measurement period used for the CAI while the measure stewards what extent a sponsoring organization’s Star Ratings year. continue their examination of the administrative costs differ for caring for The data to develop the model would measure specifications and ASPE low-income beneficiaries and we be limited to the 10 states, drawn from completes their studies mandated by the welcome comment on that topic. the 50 states plus the District of IMPACT Act and formalizes final Administrative costs may include non- Columbia, with the highest proportion recommendations. Contracts would be medical costs such as transportation of people living below the FPL as categorized based on their percentages costs, coordination costs, marketing, identified by the 1-year ACS estimates. of LIS/DE and disability using the data customer service, quality assurance and Further, the Medicare enrollment data as outlined previously. The CAI value costs associated with administering the would be aggregated from MA contracts would be the same for all contracts benefit. We continue our commitment that had at least 90 percent of their within each final adjustment category. toward ensuring that all beneficiaries enrolled beneficiaries with mailing The CAI values would be determined have access to and receive excellent addresses in the 10 highest poverty using data from all contracts that meet care, and that the quality of care states. A linear regression model would reporting requirements from the prior furnished by plans is assessed fairly in be developed using the known LIS/DE year’s Star Rating data. The CAI CMS programs. calculation for the PDPs would be percentage and the corresponding DE u. High and Low Performing Icons percentage from the subset of MA performed separately and use the PDP contracts. specific cut points. Under our proposal, Consistent with our current practice, we are proposing regulation text to The estimated slope from the linear CMS would include the CAI values in govern assignment of high and low regression approximates the expected the draft and final Call Letter performing icons at §§ 422.166(i) and relationship between LIS/DE for each attachment of the Advance Notice and 423.186(i). We propose to continue contract in Puerto Rico and its DE Rate Announcement each year while the current policy that a contract would percentage. The intercept term is interim solution is applied. The values receive a high performing icon as a adjusted for use with Puerto Rico for the CAI value would be displayed to result of its performance on the Part C contracts by assuming that the Puerto 6 decimal places. Rounding would take and D measures. The high performing Rico model will pass through the point place after the application of the CAI icon would be assigned to an MA-only (x, y) where x is the observed average value and if applicable, the reward factor; standard rounding rules would contract for achieving a 5-star Part C DE percentage in the Puerto Rico summary rating, a PDP contract for a 5- contracts based on the enrollment data, be employed. (All summary and overall Star Ratings are displayed to the nearest star Part D summary rating, and an MA– and y is the expected average percentage PD contract for a 5-star overall rating. of LIS/DE in Puerto Rico. The expected half-star.) While we consider the We propose that a contract would average percentage of LIS/DE in Puerto recommendations from the ASPE report, receive a low performing icon as a result Rico (the y value) is not observable, but findings from measure developers, and of its performance on the Part C or Part is estimated by multiplying the work by NQF on risk adjustment for D summary ratings. The low performing observed average percentage of LIS/DE quality measures, we are continuing to icon would be calculated by evaluating in the 10 highest poverty states by the collaborate with stakeholders. We are the Part C and Part D summary ratings ratio based on the most recent 5-year seeking to balance accurate for the current year and the past 2 years ACS estimates of the percentage living measurement of genuine plan (for example, the 2016, 2017, and 2018 below 150 percent of the FPL in Puerto performance, effective identification of Star Ratings). If the contract had any Rico compared to the corresponding disparities, and maintenance of combination of Part C and Part D percentage in the set of 10 states with incentives to improve the outcomes for summary ratings of 2.5 or lower in all the highest poverty level. (Further disadvantaged populations. Keeping 3 years of data, it would be marked with details of the methodology can be found this in mind, we continue to seek public a low performing icon. A contract must in the CAI Methodology Supplement comment on whether and how we have a summary rating in either Part C available at http://go.cms.gov/ should account for low SES and other or Part D for all 3 years to be considered partcanddstarratings.) social risk factors in the Part C and D for this icon. These rules would be Using the model developed from this Star Ratings. codified at §§ 422.166(i)(2)(i) and process, the estimated modified LIS/DE We look forward to continuing to 423.186(i)(2)(i). percentage for contracts operating solely work with stakeholders as we consider We also propose, at paragraph in Puerto Rico would be calculated. The the issue of accounting for LIS/DE, (i)(2)(ii), to continue our policy of maximum value for the modified LIS/ disability and other social risk factors disabling the Medicare Plan Finder DE indicator value per contract would and reducing health disparities in CMS online enrollment function for Medicare be capped at 100 percent. All estimated programs. As we have stated previously, health and prescription drug plans with modified LIS/DE values for Puerto Rico we are continuing to consider options to the low-performing icon to ensure that would be rounded to 6 decimal places how to measure and account for social beneficiaries are fully aware that they when expressed as a percentage. risk factors in our Star Ratings program. are enrolling in a plan with low quality We propose to continue to employ the What we discovered though our and performance ratings; we believe this LIS/DE indicator for contracts operating research to date is, although a is an important beneficiary protection to solely in Puerto Rico while the CAI is sponsoring organization’s ensure that the decision to enroll in a being used as an interim analytical administrative costs may increase as a low rated and low performing plan has adjustment. Further, we propose that result of enrolling significant numbers been thoughtfully considered. the modeling results would continue to of beneficiaries with LIS/DE status or Beneficiaries who still want to enroll in be detailed in the appendix of the disabilities, the impacts of SES on the a low-performing plan or who may need Technical Notes and the modified LIS/ quality ratings are quite modest, affect to in order to get the benefits and DE percentages would be available for only a small subset of measures, and do services they require (for example, in contracts to review during the plan not always negatively impact the geographical areas with limited plans) previews. measures. However, CMS would like to will be warned, via explanatory

VerDate Sep<11>2014 20:14 Nov 27, 2017 Jkt 244001 PO 00000 Frm 00072 Fmt 4701 Sfmt 4702 E:\FR\FM\28NOP2.SGM 28NOP2 sradovich on DSK3GMQ082PROD with PROPOSALS2 Federal Register / Vol. 82, No. 227 / Tuesday, November 28, 2017 / Proposed Rules 56407

messaging of the plan’s poorly rated benchmark under paragraphs (a) and (b) for network participation. Section performance and directed to contact the of this section will reflect the level of 423.505(b)(18) requires Part D plan plan directly to enroll. quality rating at the plan or contract sponsors to have a standard contract level, as determined by the Secretary. with reasonable and relevant terms and v. Plan Preview of Star Ratings The quality rating for a plan is conditions of participation whereby any We propose in §§ 422.166(i)(3) and determined by the Secretary according willing pharmacy may access the 423.186(i)(3) that CMS have plan to the 5-star rating system (based on the standard contract and participate as a preview periods before each Star data collected under section 1852(e) of network pharmacy. Ratings release, consistent with current the Act) specified in subpart D of this In the preamble to final rule practice. Part C and D sponsors can part 422. Specifically, the applicable published on January 28, 2005 (January preview their Star Ratings data in HPMS percentage under paragraph (d)(5) of 2005 final rule) (70 FR 4194) which prior to display on the Medicare Plan this section must be increased according implemented § 423.120(a)(8)(i) and Finder. During the first plan preview, to criteria in paragraphs (d)(7)(i) through § 423.505(b)(18), we indicated that we expect Part C and D sponsors to (v) of this section if the plan or contract standard terms and conditions, closely review the methodology and is determined to be a qualifying plan or particularly for payment terms, could their posted numeric data for each a qualifying plan in a qualifying county vary to accommodate geographic areas measure. The second plan preview for the year. or types of pharmacies, so long as all • would include any revisions made as a In § 422.260(a), to revise the similarly situated pharmacies were result of the first plan preview. In paragraph to read: Scope. The offered the same terms and conditions. addition, our preliminary Star Ratings provisions of this section pertain to the We also stated that we viewed these for each measure, domain, summary administrative review process to appeal standard terms and conditions as a score, and overall score would be quality bonus payment status ‘‘floor’’ of minimum requirements that displayed. During the second plan determinations based on section 1853(o) all similarly situated pharmacies must preview, we expect Part C and D of the Act. Such determinations are abide by, but that Part D plans could sponsors to again closely review the made based on the overall rating for modify some standard terms and methodology and their posted data for MA–PDs and Part C summary rating for conditions to encourage participation by each measure, as well as their MA-only contracts for the contract particular pharmacies. We believe this preliminary Star Rating assignments. As assigned pursuant to subpart 166 of this approach strikes an appropriate balance part of this regulation, we are proposing part 422. • between the any willing pharmacy that CMS continue to offer plan preview In § 422.260(b), to revise the requirement at section 1860D–4(b)(1)(A) periods, but are not codifying the details definition of ‘‘quality bonus payment of the Act and the provisions of section of each period because over time the (QBP) determination methodology’’ to 1860D–4(b)(1)(B) of the Act, which process has evolved to provide more read: Quality bonus payment (QBP) permits Part D plan sponsors to offer data to sponsors to help validate their determination methodology means the reduced cost sharing at preferred data. We envision it to continue to quality ratings system specified in pharmacies. evolve in the future and do not believe subpart 166 of this part 422 for The balancing of these goals has led that codifying specific display content is assigning quality ratings to provide to the development of preferred necessary. comparative information about MA pharmacy networks in which certain It is important that Part C and D plans and evaluating whether MA pharmacies agree to additional or sponsors regularly review their organizations qualify for a QBP. underlying measure data that are the • In § 422.504(a)(18), to revise different terms from the standard terms basis for the Part C and D Star Ratings. paragraph (a)(18) to read: To maintain a and conditions. This has resulted in the For measures that are based on data Part C summary plan rating score of at development of ‘‘standard’’ terms and reported directly from sponsors, any least 3 stars pursuant to the 5-star rating conditions that in some cases has had issues or problems should be raised well system specified in subpart 166 of this the effect, in our view, of circumventing in advance of CMS’ plan preview part 422. A Part C summary plan rating the any willing pharmacy requirements periods. A draft version of the Technical is calculated as provided in § 422.166. and inappropriately excluding Notes would be available during the • In § 423.505(b)(26), to revise pharmacies from network participation. first plan preview. The draft is then paragraph (b)(26) to read: Maintain a This section is intended to clarify or updated for the second plan preview Part D summary plan rating score of at modify our interpretation of the existing and finalized when the ratings data have least 3 stars pursuant to the 5-star rating regulations to ensure that plan sponsors been posted to Medicare Plan Finder. system specified in subpart 186 of this can continue to develop and maintain We welcome comments on the part 423. A Part D summary plan rating preferred networks while fully proposed plan preview process. is calculated as provided in § 423.186. complying with the any willing We welcome comment on these pharmacy requirement. w. Technical Changes technical changes and whether there are First, we intend to clarify that the any We also propose a number of additional changes that should be made willing pharmacy requirement applies technical changes to other existing to account for our proposal to codify the to all pharmacies, regardless of how regulations that refer to the quality Star Ratings methodology and measures they have organized one or more lines ratings of MA and Part D plans; we in regulation text. of pharmacy business. Second, we propose to make technical changes to propose to revise the definition of retail refer to the proposed new regulation 12. Any Willing Pharmacy Standards pharmacy and define mail-order text that provides for the calculation Terms and Conditions and Better Define pharmacy. Third, we propose to clarify and assignment of Star Ratings. Pharmacy Types (§§ 423.100, 423.505) our regulatory requirements for what Specifically, we propose: Section 1860D–4(b)(1)(A) of the Act constitutes ‘‘reasonable and relevant’’ • In § 422.258(d)(7), to revise and § 423.120(a)(8)(i) require a Part D standard contract terms and conditions. paragraph (d)(7) to read: Increases to the plan sponsor to contract with any Finally, we propose to codify our applicable percentage for quality. pharmacy that meets the Part D plan existing guidance with respect to when Beginning with 2012, the blended sponsor’s standard terms and conditions a pharmacy must be provided with a

VerDate Sep<11>2014 20:14 Nov 27, 2017 Jkt 244001 PO 00000 Frm 00073 Fmt 4701 Sfmt 4702 E:\FR\FM\28NOP2.SGM 28NOP2 sradovich on DSK3GMQ082PROD with PROPOSALS2 56408 Federal Register / Vol. 82, No. 227 / Tuesday, November 28, 2017 / Proposed Rules

Part D plan sponsor’s standard terms various types of pharmacies, Part D plan pharmacies providing a mail-order and conditions. sponsors may not exclude pharmacies benefit. with unique or innovative business or In creating the Part D program, the a. Any Willing Pharmacy Required for care delivery models from participating Medicare Prescription Drug, All Pharmacy Business Models in their contracted pharmacy network Improvement, and Modernization Act of With the pharmaceutical distribution on the basis of not fitting in the correct 2003 (MMA) (Pub. L. 108–173) added and pharmacy practice landscape pharmacy type classification. In the convenient access provision of evolving rapidly, and because particular, we consider ‘‘similarly section 1860D–4(b)(1)(C) of the Act and pharmacies now frequently have situated’’ pharmacies to include any the level playing field provision of multiple lines of business, many pharmacy that has the capability of section 1860D–4(b)(1)(D) of the Act. The pharmacies no longer fit squarely into complying with standard terms and convenient access provisions, as traditional pharmacy type conditions for a pharmacy type, even if codified at § 423.120(a)(1)–(7), require classifications. For example, the pharmacy does not operate Part D plan sponsors to secure the compounding pharmacies and specialty exclusively as that type of pharmacy. participation in their networks a pharmacies, including but not limited to Thus, Part D plan sponsors must not sufficient number of pharmacies that manufacturer-limited-access exclude pharmacies from their retail dispense (other than by mail order) pharmacies, and those that may pharmacy networks solely on the basis drugs directly to patients to ensure specialize in certain drugs, disease that they, for example, maintain a convenient access (consistent with rules states, or both, are increasingly traditional retail business while also established by the Secretary) and common, and Part D enrollees specializing in certain drugs or diseases includes special provisions for increasingly need access to their or providing home delivery service by standards with respect to Long Term services. As noted previously, in mail to surrounding areas. Or as another Care (LTC) and I/T/U pharmacies (as implementing the any willing pharmacy example, a Part D plan sponsor must not defined at § 423.100). The level playing provision, we indicated that standard field provision, as codified at preclude a pharmacy from network terms and conditions could vary to § 423.120(a)(10), requires Part D plan participation as a retail pharmacy accommodate different types of sponsors to permit enrollees to receive because that pharmacy also operates a pharmacies so long as all similarly the same benefits, including extended home infusion book of business, or vice situated pharmacies were offered the days’ supplies, through a pharmacy versa. Later in this section we are same terms and conditions. In the (other than a mail-order pharmacy) (that proposing to codify our requirements for original rule to implement Part D (70 FR is, a retail pharmacy), although the Part when a Part D sponsor must provide a 4194, January 28, 2005), we defined D plan sponsor may require the enrollee pharmacy with a copy of its standard certain types of pharmacies (that is, to pay a higher level of cost-sharing to terms and conditions. These retail, mail order, Long Term Care do so. (LTC)/institutional, and I/T/U [Indian requirements, if finalized, would apply We currently define ‘‘retail Health Service, Indian tribe or tribal to all pharmacies, regardless of whether pharmacy’’ at § 423.100 to mean ‘‘any organization, or urban Indian they fit into traditional pharmacy licensed pharmacy that is not a mail- organization]) at § 423.100 to classifications or have unique or order pharmacy from which Part D operationalize various statutory innovative business or care delivery enrollees could purchase a covered Part provisions that specifically mention models. D drug without being required to receive these types of pharmacies (for example, b. Revise the Definition of Retail medical services from a provider or section 1860D–4(b)(1)(C)(iv) of the Act). Pharmacy and Add a Definition of Mail- institution affiliated with that However, these definitions were never Order Pharmacy pharmacy.’’ Although we did not define intended to limit the scope of the any ‘‘non-retail pharmacy,’’ § 423.120(a)(3) willing pharmacy requirement. Since the inception of the Part D provides that ‘‘a Part D plan’s contracted Nevertheless, we have anecdotal program, Part D statute, regulations, and pharmacy network may be evidence that some Part D plan sponsors sub-regulatory guidance have referred to supplemented by non-retail pharmacies, have declined to permit willing ‘‘mail-order’’ pharmacy and services ‘‘including pharmacies offering home pharmacies to participate in their without defining the term ‘‘mail order’’. delivery via mail-order and institutional networks on the grounds that they do Unclear references to the term ‘‘mail pharmacies,’’ provided the convenient not meet the Part D plan sponsor’s order’’ have generated confusion in the access requirements are met (emphasis definition of a pharmacy type for which marketplace over what constitutes added). In the preamble to our January it has developed standard terms and ‘‘mail-order’’ pharmacy or services. This 2005 final rule, we also stated, conditions. confusion has contributed to complaints ‘‘examples of non-retail pharmacies Section 1860D–4(b)(1)(A) of the Act from pharmacies and beneficiaries include I/T/U, FQHC, Rural Health requires Part D plan sponsors to permit regarding how Part D plan sponsors Center (RHC) and hospital and other the participation of ‘‘any pharmacy’’ classify pharmacies for network provider-based pharmacies, as well as that meets the standard terms and participation, the Plan Finder, and Part Part D [plan]-owned and operated conditions. Accordingly, it is not D enrollee cost-sharing expectations. pharmacies that serve only plan appropriate for Part D plan sponsors to Additionally, pharmacies that are not members’’ (see 70 FR 4249). We also offer standard terms and conditions for mail-order pharmacies, but that may stated ‘‘home infusion pharmacies will network participation that are specific offer home delivery services by mail not count toward Part D plans’ to only one particular type of pharmacy, (relative to that pharmacy’s overall pharmacy access requirements (at and then decline to permit a willing operation), have complained because § 423.120(a)(1)) because they are not pharmacy to participate on the grounds Part D plan sponsors classified them as retail pharmacies’’ (see 70 FR 4250). that it does not squarely fit into that mail-order pharmacies for network Since 2005, our regulation at pharmacy type. Therefore, we are participation and required them to be § 423.120(a) has included access clarifying in this preamble that although licensed in all United States, territories, requirements for retail, home infusion, Part D sponsors may continue to tailor and the District of Columbia, as would LTC, and I/T/U pharmacies. While mail- their standard terms and conditions to be required for traditional mail-order order pharmacies could be considered

VerDate Sep<11>2014 20:14 Nov 27, 2017 Jkt 244001 PO 00000 Frm 00074 Fmt 4701 Sfmt 4702 E:\FR\FM\28NOP2.SGM 28NOP2 sradovich on DSK3GMQ082PROD with PROPOSALS2 Federal Register / Vol. 82, No. 227 / Tuesday, November 28, 2017 / Proposed Rules 56409

one of several subsets of non-retail order versus other non-retail However, two aspects of this pharmacies, we never defined the term pharmacies, mail-order cost sharing is definition are similar to Part D statutory mail-order pharmacy in regulation, nor unique to mail-order pharmacies, as we language in section 1860D–4(b)(1)(C) have we specified access or service-level have proposed to define the term. For and (D) of the Act. The first is the requirements at § 423.120(a) for mail- example, while a non-retail home concept that a retail pharmacy is open order pharmacies. infusion pharmacy may provide services to dispense prescription medications to As discussed previously, our by mail, cost-sharing is commensurate the walk-in general public, which classifications of certain types of with retail cost-sharing. Therefore, to echoes the requirement at section pharmacies were never intended to limit clarify what a mail-order pharmacy is, 1860D–4(b)(1)(C) of the Act that Part D or exclude participation of pharmacies, we propose to define mail-order plan sponsors secure the participation such as pharmacies with multiple lines pharmacy at § 423.100 as a licensed in their networks a sufficient number of of business, that do not fit into one of pharmacy that dispenses and delivers pharmacies that dispense (other than these classifications. Additionally, we extended days’ supplies of covered Part mail order) drugs directly to patients. have recognized since our January 2005 D drugs via common carrier at mail- The second is the concept that final rule that pharmacies may have order cost sharing. prescriptions are dispensed at retail multiple lines of business, including Although we propose to add the prices, or for the Part D program, retail retail pharmacies that may offer home definition of mail-order pharmacy, we cost-sharing, which echoes the delivery services (see 70 FR 4235 and also believe that our existing definition requirement at section 1860D–4(b)(1)(D) 4255). of retail pharmacy has contributed, in of the Act that Part D plan sponsors Nonetheless, despite this guidance part, to the confusion in the Part D permit enrollees to receive benefits and specific access requirements for marketplace. As discussed previously, (which may include a 90-day supply of LTC and HI pharmacies at § 423.120(a), the existing definition of ‘‘retail drugs or biologicals) through a some Part D plan sponsors interpreted pharmacy’’ at § 423.100 means ‘‘any pharmacy (other than a mail-order ‘‘including pharmacies offering home licensed pharmacy that is not a mail- pharmacy), with any differential in delivery via mail-order and institutional order pharmacy from which Part D charge paid by such enrollees. Because pharmacies’’ at § 423.120(a)(3) to mean enrollees could purchase a covered Part these concepts are consistent with the that any pharmacies, even retail D drug without being required to receive Part D statute, we believe their inclusion pharmacies, that may offer home medical services from a provider or in our definition of retail pharmacy at delivery services by mail are mail-order institution affiliated with that § 423.100 would be appropriate. pharmacies. Although § 423.120(a)(3) Therefore, to clarify what a retail pharmacy.’’ This definition, given the specifically allows for access to non- pharmacy is, we propose to revise the rapidly evolving pharmacy practice retail pharmacies, and we intended definition of retail pharmacy at landscape, may be a source of some ‘‘including pharmacies offering home § 423.100. First, we note that the confusion given that it expressly delivery via mail-order and institutional existing definition of ‘‘retail pharmacy’’ excludes mail-order pharmacies, but not pharmacies’’ to mean home infusion is not in alphabetical order, and we other non-retail pharmacies such as pharmacies, mail-order pharmacies, propose a technical change to move it home infusion or specialty pharmacies. long-term care pharmacies, or other such that it would appear in non-retail pharmacies that offer home We note that Medicaid recently alphabetical order. Second, we propose delivery services by mail, some Part D adopted a definition of ‘‘retail to incorporate the concepts of being plan sponsors began to require any community pharmacy.’’ Pursuant to open to the walk-in general public and interested pharmacies, even retail section 1927(k)(10) of the Act, as retail cost-sharing such that the pharmacies, that may offer home amended by section 2503 of the definition of retail pharmacy would delivery services by mail to contract as Affordable Care Act (ACA), for purposes mean ‘‘any licensed pharmacy that is mail-order pharmacies in order to of Medicaid prescription drug coverage, open to dispense prescription drugs to participate in the plan’s contracted CMS defines ‘‘retail community the walk-in general public from which pharmacy network. Because Part D plan pharmacy’’ at § 447.504(a) as ‘‘an Part D enrollees could purchase a sponsors frequently require contracted independent pharmacy, a chain covered Part D drug at retail cost sharing mail-order pharmacies to be licensed in pharmacy, a supermarket pharmacy, or without being required to receive all United States, territories, and the a mass merchandiser pharmacy that is medical services from a provider or District of Columbia, the classification licensed as a pharmacy by the state and institution affiliated with that of any pharmacies that may offer home that dispenses medications to the walk- pharmacy.’’ delivery services by mail as mail-order in general public at retail prices. Such Although we were originally unsure pharmacies for purposes of contracting term does not include a pharmacy that whether Part D enrollees would need with Part D plan sponsors as a network dispenses prescription medications to routine access to specialty drugs and pharmacy, including licensure patients primarily through the mail, specialty pharmacies beyond our out-of- requirements, led to complaints from nursing home pharmacies, long-term network requirements (see 70 FR 4250), beneficiaries and pharmacies, including care facility pharmacies, hospital as the Part D program has evolved, the retail, specialty, and other pharmacies. pharmacies, clinics, charitable or not- use of specialty drugs in the Part D Although the language at for-profit pharmacies, government program has grown exponentially and § 423.120(a)(3) is specific to non-retail pharmacies, or pharmacy benefit will likely continue to do so. The June pharmacies, there is a great deal of managers.’’ Although this definition 2016 MedPAC report (available at confusion regarding mail-order adds greater clarity about the locations http://www.medpac.gov/docs/default- pharmacy in the Part D marketplace. We or practice settings where retail source/reports/chapter-6-improving- believe it is inappropriate to classify pharmacies may be found, we were medicare-part-d-june-2016-report-.pdf) pharmacies as ‘‘mail-order pharmacies’’ concerned that, for the purposes of the notes growth in the use of specialty solely on the basis that they offer home Part D program, the mention of drugs in the Part D program is currently delivery by mail. Because the statute at additional types of pharmacies in our outpacing other drugs and health section 1860D–4(b)(1)(D) of the Act regulation could contribute to more spending, generally. Such drugs are discusses cost sharing in terms of mail confusion instead of less. often high-cost and complex, for

VerDate Sep<11>2014 20:14 Nov 27, 2017 Jkt 244001 PO 00000 Frm 00075 Fmt 4701 Sfmt 4702 E:\FR\FM\28NOP2.SGM 28NOP2 sradovich on DSK3GMQ082PROD with PROPOSALS2 56410 Federal Register / Vol. 82, No. 227 / Tuesday, November 28, 2017 / Proposed Rules

diseases including, but not limited to, conditions for network participation to dispense specialty drugs, such as cancer, Hepatitis C, HIV/AIDS, multiple set a ‘‘floor’’ of minimum requirements pharmacy benefit managers (PBMs), sclerosis, and rheumatoid arthritis. The by which all similarly situated health plans, wholesalers, health report also highlights that each year pharmacies must abide. We further systems, physician practices, retail since 2009, more than half of the United believe it is reasonable for a Part D plan pharmacy chains, and small, States Food and Drug Administration sponsor to require additional terms and independent pharmacies (see the URAC (FDA) approvals have been for specialty conditions beyond those required in the White Paper, ‘‘Competing in the drugs. Because many specialty drugs standard contract for network Specialty Pharmacy Market: Achieving can be self-administered on an participation for pharmacies to have Success in Value-Based Healthcare,’’ outpatient basis, even in the patient’s preferred status. Therefore, we available at http://info.urac.org/ home, and for chronic or long-term use, implemented the requirements of specialtypharmacyreport). CMS is increasing numbers of Part D enrollees section 1860D–4(b)(1)(A) of the Act by concerned that Part D plan sponsors need routine access to specialty drugs requiring that standard terms and might use their standard pharmacy and specialty pharmacies. Nonetheless, conditions be ‘‘reasonable and network contracts in a way that because the pharmacy landscape is relevant,’’ but declined to further define inappropriately limits dispensing of changing so rapidly, we believe any ‘‘reasonable and relevant’’ in order to specialty drugs to certain pharmacies. In attempt by us to define specialty provide Part D plans with maximum fact, we have received complaints from pharmacy could prematurely and flexibility to structure their standard pharmacies that Part D plan sponsors inappropriately interfere with the terms and conditions. have begun to require accreditation of marketplace, and we decline to propose We note that a pharmacy’s ability to pharmacies, including accreditation by a definition of specialty pharmacy at participate in a preferred or specially multiple accrediting organizations, or this time. labeled subset of the Part D plan additional Part D plan-/PBM-specific Similar to specialty pharmacy, we sponsor’s larger contracted pharmacy credentialing criteria, for network also decline to further define non-retail network or to offer preferred cost participation. We agree that there is a pharmacy. The pharmacy types that we sharing assumes that, at a minimum, the role in the Part D program for pharmacy define and propose to modify and pharmacy is able to participate in the accreditation, to the extent pharmacy define in regulation describe functional network. Where there are barriers to a accreditation requirements in network lines of business that an individual pharmacy’s ability to participate in the agreements promote quality assurance. pharmacy may have, solely, or in network at all, it raises the question of In particular, we support Part D plan combination. However, unlike mail whether the standard (that is, entry- sponsors that want to negotiate an order, home infusion, I/T/U, FQHC, level) terms and conditions are accreditation requirement in exchange LTC, hospital, other institutional, other reasonable and relevant. for, for example, designating a It has been our longstanding policy provider-based, and ‘‘members-only’’ pharmacy as a specialty or preferred that Part D plans cannot restrict access Part D plan-owned and operated pharmacy in the Part D plan sponsor’s to certain Part D drugs to specialty pharmacy types or lines of business that contracted pharmacy network. However, pharmacies within their Part D network comprise ‘‘non-retail’’, the term ‘‘non- we do not support the use of Part D plan in such a manner that contravenes the retail’’ does not, itself, define a unique sponsor- or PBM-specific credentialing convenient access protections of section pharmacy functional line of business, criteria, in lieu of, or in addition to, 1860D–4(b)(1)(C) of the Act and and does not lend itself to a clear accreditation by recognized accrediting definition. Consistent with statutory any § 423.120(a) of our regulations. (See organizations, apart from drug-specific willing pharmacy and preferred Q&A at https://www.cms.gov/Medicare/ limited dispensing criteria such as FDA- pharmacy provisions, mail-order Prescription-Drug-Coverage/ mandated REMS or to ensure the pharmacies may be preferred or non- PrescriptionDrugCovContra/Downloads/ appropriate dispensing of Part D drugs preferred. Part D plan sponsors may QASpecialtyAccess_051706.pdf). In that require extraordinary special establish unique non-preferred mail- 2006, we informed sponsors they cannot handling, provider coordination, or order cost-sharing, or may establish restrict access to drugs on the patient education when such such non-preferred mail-order cost ‘‘specialty/high cost’’ tier to a subset of extraordinary requirements cannot be sharing commensurate with those for network pharmacies, except when met by a network pharmacy (as retail pharmacies. necessary to meet FDA-mandated We solicit comment on our proposed limited dispensing requirements (for discussed previously). Moreover, we are definition of mail-order pharmacy and example, Risk Evaluation and especially concerned about anecdotal our proposed modification to the Mitigation Strategies (REMS) processes) reports that allege such standard terms definition of retail pharmacy. or to ensure the appropriate dispensing and conditions for network Specifically, we solicit comment of Part D drugs that require participation are waived, for example, regarding whether stakeholders believe extraordinary special handling, provider when a Part D plan sponsor needs a these definitions strike the right balance coordination, or patient education when particular pharmacy in its network in to resolve confusion in the marketplace, such extraordinary requirements cannot order to meet convenient access afford Part D plan sponsor flexibility, be met by a network pharmacy (that is, requirements, or even for certain and incorporate recent innovations in a contracted network pharmacy that pharmacies that received preferred pharmacy business and care delivery does not belong to the restricted subset). pharmacy status. models. Since 2006, it has been our general If the premise of accreditation or Part policy that these types of special D plan sponsor- or PBM-specific c. Treatment of Accreditation and Other requirements for Part D plan sponsors to credentialing requirements is to ensure Similar Any Willing Pharmacy limit dispensing of specialty drugs be more stringent quality standards, then Requirements in Standard Terms and directly linked to patient safety or there is no reasonable explanation for Conditions regulatory reasons. why a quality-related standard term or As noted previously, since the As the specialty drug distribution condition could be waived for situations beginning of the Part D program, we market has grown, so has the number of when the Part D plan sponsor needs a have considered standard terms and organizations competing to distribute or particular pharmacy in its contracted

VerDate Sep<11>2014 20:14 Nov 27, 2017 Jkt 244001 PO 00000 Frm 00076 Fmt 4701 Sfmt 4702 E:\FR\FM\28NOP2.SGM 28NOP2 sradovich on DSK3GMQ082PROD with PROPOSALS2 Federal Register / Vol. 82, No. 227 / Tuesday, November 28, 2017 / Proposed Rules 56411

pharmacy network in order to meet the requested terms and conditions for would be required to provide the convenient access standards or to weeks or months or require pharmacies confidentiality agreement within two designate a particular pharmacy with to complete extensive paperwork business days after receipt of the preferred pharmacy status. A term or demonstrating their eligibility to pharmacy’s request and then provide condition which can be dropped in such participate in the sponsor’s network the standard terms and conditions situations is by definition not before the sponsor will provide a within 2 business days after receipt of ‘‘standard’’ according to the plain document containing the standard terms the signed confidentiality agreement. meaning of the word. Waivers or and conditions. CMS believes such While Part D plan sponsors may ask inconsistent application of such actions have the effect of frustrating the pharmacies to demonstrate that they are standard terms and conditions is an intent of the any willing pharmacy qualified to meet the Part D plan explicit acknowledgement that such requirement, and as a result, we believe sponsors’ standard terms and conditions terms and conditions are not necessary it is necessary to codify specific before executing the contract, Part D for the ability of a pharmacy to perform procedural requirements for the delivery plan sponsors would be required to its core functions, and are thus neither of pharmacy network standard terms provide the pharmacy with a copy of the reasonable nor relevant for any willing and conditions. contract terms for its review within the pharmacy standard terms and To this end, we propose to establish two-day timeframe. If finalized, this conditions. deadlines by which Part D plan proposed requirement would permit It has been our longstanding policy to sponsors must furnish their standard pharmacies to do their due diligence leave the establishment of pharmacy terms and conditions to requesting with respect to whether a Part D plan practice standards to the states, and we pharmacies. The first deadline we sponsor’s standard terms and conditions do not intend to change that now. We propose to establish is the date by are acceptable at the same time Part D continue to believe pharmacy practice which Part D plan sponsors must have plan sponsors are conducting their own standards established by the states standard terms and conditions available review of the qualifications of the provide applicable minimum standards for pharmacies that request them. By requesting pharmacy. We specifically for all pharmacy practice standards, and mid-September of each year, Part D plan seek comment on whether these § 423.153(c)(1) requires representation sponsors have signed a contract with timeframes are the right length to that network providers are required to CMS committing them to delivering the address our goal but are operationally comply with minimum standards for Part D benefit through an accessible realistic. We also request examples of pharmacy practice as established by the pharmacy network during the upcoming situations where a longer timeframe states. year and have provided information might be needed. Additionally, because a pharmacy’s about that network to CMS for posting ability to dispense certain medications on the Medicare Plan Finder Web site. 13. Changes to the Days’ Supply is not dependent on it having the ability At that point, Part D plan sponsors Required by the Part D Transition to dispense other medications, it is not should have had ample opportunity to Process relevant for sponsors to require develop standard contract terms and We promulgated regulations under pharmacies to dispense a particular conditions for the upcoming plan year. the authority of section 1860D– roster of certain drugs or drugs for Therefore, we propose to require at 11(d)(2)(B) of the Act to require Part D certain disease states in order to receive § 423.505(b)(18)(i) that Part D plan sponsors to provide for an appropriate standard terms and conditions for sponsors have standard terms and transition process for enrollees network participation as a contracted conditions readily available for prescribed Part D drugs that are not on network pharmacy for that Part D plan requesting pharmacies no later than the prescription drug plan’s formulary sponsor. Consequently, consistent with September 15 of each year for the (including Part D drugs that are on a our longstanding policy, discussed succeeding benefit year. sponsor’s formulary but require prior previously, we would not expect Part D The second deadline we propose authorization or step therapy under a plan sponsors to limit dispensing of concerns the promptness of Part D plan plan’s utilization management rules). certain drugs or drugs for certain disease sponsors’ responses to pharmacy These regulations are codified at states to a subset of network requests for standard terms and § 423.120(b)(3). Specifically, these pharmacies, except when necessary to conditions. As discussed previously, we regulations require that a Part D sponsor meet FDA-mandated limited dispensing propose to require all Part D plan ensure certain enrollees access to a requirements (for example, Risk sponsors to have standard terms and temporary supply of drugs within the Evaluation and Mitigation Strategies conditions developed and ready for first 90 days under a new plan (REMS) processes) or except as required distribution by September 15. Therefore, (including drugs that are on a plan’s by applicable state law(s) if the we propose to require at formulary but require prior contracted network pharmacy is capable § 423.505(b)(18)(ii) that, after that date authorization or step therapy under a of and appropriately licensed under and throughout the following plan year, plan’s utilization management rules) by applicable state law(s) for doing so. We Part D plan sponsors must provide the ensuring a temporary fill when an solicit comment on this topic. applicable standard terms and enrollee requests a fill of a non- conditions document to a requesting formulary drug during this time period. d. Timing of Contracting Requirements pharmacy within two business days of In the outpatient setting, the supply CMS has received complaints over the receipt of the request. Part D plan must be for at least 30 days of years from pharmacies that have sought sponsors would be required to clearly medication, unless the prescription is to participate in a Part D plan sponsor’s identify for interested pharmacies the written for less. In the LTC setting, this contracted network but have been told avenue (for example, phone number, supply must be for up to at least 91 days by the Part D plan sponsor that its email address, Web site) through which and may be up to 98 days, consistent standard terms are not available until they can make this request. In instances with the dispensing increment, unless a the sponsor has completed all other where the Part D plan sponsor requires less amount is prescribed. network contracting. In other instances, a pharmacy to execute a confidentiality We propose to make two changes to pharmacies have told us that Part D plan agreement with respect to the terms and these regulations. First, we propose to sponsors delay sending them the conditions, the Part D plan sponsor shorten the required transition days’

VerDate Sep<11>2014 20:14 Nov 27, 2017 Jkt 244001 PO 00000 Frm 00077 Fmt 4701 Sfmt 4702 E:\FR\FM\28NOP2.SGM 28NOP2 sradovich on DSK3GMQ082PROD with PROPOSALS2 56412 Federal Register / Vol. 82, No. 227 / Tuesday, November 28, 2017 / Proposed Rules

supply in the long-term care (LTC) a formulary drug. (75 FR 19721). Thus, not easily add up to a 30 days’ supply setting to the same supply currently the requirement to provide longer when dispensed (for example, drugs required in the outpatient setting. transition fill days’ supply in the LTC that typically are dispensed in 28-day Second, we propose a technical change setting was a result of our concerns that packages). Historically, our response to to the current required days’ transition a longer timeframe would be needed in those inquiries has been that the supply in the outpatient setting to be a the LTC setting. regulation requires plans to provide at month’s supply. After more than 10 years of least 30 days of medication, which We provided our rationale for the experience with Part D in LTC facilities, requires plans to dispense more than transition fill days’ supply requirement we have not seen the concerns that we one package to comply with the text of in the LTC setting in CMS final rule expressed in the 2010 final rule the regulation. However, the intent of CMS–4085–F published on April 15, materialize. We are not aware of any 2010 (75 FR 19678). In that final rule, evidence that transition for a Part D the regulation was for the transition fill we stated that for a new enrollee in a beneficiary in the LTC setting in the outpatient setting to be for at least LTC facility, the temporary supply may necessarily takes any longer than it does a month’s supply. For this reason, we be for up to 31 days (unless the for a beneficiary in the outpatient are proposing a change to the regulation prescription is written for less than 31 setting. We understand that it is from ‘‘30 days’’ to ‘‘a month’s supply.’’ days), consistent with the dispensing common for Part D beneficiaries in the If finalized, this change would mean practices in the LTC industry. We LTC setting to be cared for by on-staff that the regulation would require that a further stated that, due to the often or consultant physicians and other transition fill in the outpatient setting be complex needs of LTC residents that health professionals with prescriptive for a supply of at least a month of often involve multiple drugs and authority who are under contract with medication, unless the prescription is necessitate longer periods in order to the LTC facility. Additionally, we also written by the prescriber for less. successfully transition to new drug understand that Part D beneficiaries in Therefore, the supply would have to be regimens, we will require sponsors to the LTC setting are typically served by for at least the days’ supply that the honor multiple fills of non-formulary an on-site pharmacy or one under applicable Part D prescription drug Part D drugs, as necessary during the contract to service the LTC facility. plans has approved as its retail month’s entire length of the 90-day transition Given this structure of the LTC setting, supply in its Plan Benefit Package period. Thus, we required a Part D we understand that the LTC prescribers submitted to CMS for the relevant plan sponsor to provide a LTC resident and pharmacies are readily available to year, again, unless the prescription is enrolled in its Part D plan with at least address transition for Part D written by the prescriber for less. a 31 day supply of a prescription with beneficiaries in the LTC setting. In refills provided, if needed, up to a 93 addition, LTC facilities now have many Together, our two proposals—if days’ supply (unless the prescription is years’ experience with the Medicare finalized—would mean that § 423.120 written for less) (75 FR 19721). In a Part D program generally and transition (b)(3)(iii)(A) would be consolidated into subsequent final rule published on specifically. § 423.120 (b)(3)(iii) to read that the April 15, 2011, we changed the 93 days’ While our concerns about the needed transition process must ‘‘[e]nsure the supply to 91 to 98 days’ supply, as timeframe for transition in the LTC provision of a temporary fill when an noted previously, to acknowledge setting do not seem to have enrollee requests a fill of a non- variations in days’ supplies that could materialized, we have continuing formulary drug during the time period result from the short-cycle dispensing of concerns about drug waste and the costs specified in paragraph (b)(3)(ii) of this brand drugs in the LTC setting (76 FR associated with such waste in the LTC section (including Part D drugs that are 21460 and 21526). setting. Some of these concerns have on a plan’s formulary but require prior We received and responded to a been addressed by our rule requiring the authorization or step therapy under a comment in the April 2010 final rule short-cycle dispensing of brand drugs to plan’s utilization management rules) by about transition and a longer timeframe Part D beneficiaries in LTC facilities in in the LTC setting. We stated that a the April 2011 final rule. That rule, providing a one-time, temporary supply number of commenters supported our codified at 42 CFR 423.154, requires of at least a month’s supply of proposal of requiring an extended that all Part D sponsors require all medication, unless the prescription is transition supply for enrollees residing network pharmacies servicing LTC written by a prescriber for less than a in LTC facilities but that commenters facilities to dispense certain solid oral month’s supply and requires the Part D requested that we provide the same doses of covered Part D brand-name sponsor to allow multiple fills to protections to individuals requiring LTC drugs to enrollees in such facilities in provide up to a total of a month’s in community-based settings. In our no greater than 14-day increments at a supply of medication.’’ Section response to the comment, we indicated time to reduce drug waste. However, we 423.120(b)(3)(iii)(B) would be that residents of LTC institutions were now believe that CMS could eliminate eliminated. more limited in access to prescribing additional drug waste and cost by no Please note that we also are proposing physicians hired by LTC facilities due to longer requiring a longer transition in II.A.15. Expedited Substitutions of days’ supply in the LTC setting. a limited visitation schedule and more Certain Generics and Other Midyear likely to require extended transition Therefore, we are proposing that the Formulary Changes to revise timeframes in order for the physician to transition days’ supply in the LTC § 423.120(b)(3)(i)(B) to state that the work with the facility and LTC setting be the same as it is in the pharmacies on transitioning residents to outpatient setting. transition process is not applicable in formulary drugs. We further stated that Our second proposed change involves cases in which a Part D sponsor we believed that community-based the current required 30 days’ transition substitutes a generic drug for a brand enrollees, in contrast, were less limited supply in the outpatient setting, which name drug as specified under paragraph in their access to prescribing physicians is codified at § 423.120(b)(3)(iii)(A). We § 423.120(b)(3)(iv) or § 423.120(b)(6) of and did not require an extended have received a number of inquiries this section. transition period to work with their from Part D sponsors regarding physicians to successfully transition to scenarios involving medications that do

VerDate Sep<11>2014 20:14 Nov 27, 2017 Jkt 244001 PO 00000 Frm 00078 Fmt 4701 Sfmt 4702 E:\FR\FM\28NOP2.SGM 28NOP2 sradovich on DSK3GMQ082PROD with PROPOSALS2 Federal Register / Vol. 82, No. 227 / Tuesday, November 28, 2017 / Proposed Rules 56413

14. Expedited Substitutions of Certain formulary continuity with requests from add to their formularies) therapeutically Generics and Other Midyear Formulary Part D sponsors to provide greater equivalent newly approved generics— Changes (§§ 423.100, 423.120, and flexibility to make midyear changes to rather than having to wait until the 423.128) formularies. Indeed, MedPAC made its direct notice and formulary change Section 1860D–4(b)(3)(E) of the Act observation in a report that suggested request requirements have been met. requires Part D sponsors to provide that CMS’s rules regarding formulary The proposed provisions would also ‘‘appropriate notice’’ to the Secretary, changes warranted examination. There allow sponsors to make those specified affected enrollees, authorized MedPAC pointed out, among other generic substitutions at any time of the prescribers, pharmacists, and things, that CMS could provide Part D year rather than waiting for them to take pharmacies regarding any decision to sponsors with greater flexibility to make effect 2 months after the start of the plan either: (1) Remove a drug from its changes such as adding a generic drug year. Related proposals would require formulary, or (2) make any change in the and removing its brand name version advance general and retrospective direct preferred or tiered cost-sharing status of without first receiving agency approval. notice to enrollees and notice to entities; a drug. Section 423.120(b)(5) (MedPAC, Report to the Congress: clarify online notice requirements; implements that requirement by Medicare and the Health Care Delivery except specified generic substitutions defining appropriate notice as that given System, June 2016, page 192.) from our transition policy; and conform This proposed rule would implement at least 60 days prior to such change our definition of ‘‘affected enrollees.’’ MedPAC’s recommendation by taking effect during a given contract Lastly, to address stakeholder requests permitting generic substitutions without year. We have recognized that both for greater flexibility to make midyear advance approval as specified later in current and prospective enrollees of a formulary changes in general, we are this section. We have also taken this also proposing to decrease the days of prescription drug plan need to have the opportunity to examine our regulations most current formulary information by enrollee notice and refill required when to determine how to otherwise facilitate (aside from generic substitution and the time of the annual election period the use of certain generics. Currently, described in § 423.38(b) in order to drugs deemed unsafe or withdrawn Part D sponsors can add drugs to their from the market) drug removal or enroll in the Part D plan that best suits formularies at any time; however, there their particular needs. To this end, changes in cost-sharing will affect is no guarantee that enrollees will enrollees. § 423.120(b)(6) prohibits Part D sponsors switch from their brand name drugs to Specifically, we propose to add a new and MA organizations from removing a newly added generics. Therefore, Part D covered Part D drug from a formulary or sponsors seeking to better manage the paragraph (b)(5)(iv) to § 423.120 to changing the preferred or tiered cost- Part D benefit may choose to remove a permit Part D sponsors to immediately sharing status of a covered Part D drug brand name drug, or change its remove, or change the preferred or between the beginning of the annual preferred or tiered cost-sharing, and tiered cost-sharing of, brand name drugs election period described in substitute or add its therapeutic and substitute or add therapeutically § 423.38(b)(2) and 60 days subsequent to equivalent. But even this takes some equivalent generic drugs provided the beginning of the contract year time: Under current regulations, Part D specified requirements are met. The associated with that annual election sponsors must submit formulary change generic drug would need to be offered period. Our concern has been to prevent requests to CMS and provide specified at the same or a lower cost-sharing and situations in which Part D sponsors notice before removing drugs or with the same or less restrictive change their formularies early in the changing their cost-sharing (except for utilization management criteria contract year without providing unsafe drugs or those withdrawn from originally applied to the brand name appropriate notice as described in the market). As noted earlier, the drug. The Part D sponsor could not have § 423.120(b)(5) to new enrollees. Thus, general notice requirements and burden as a matter of timing been able to § 423.120(b)(6) has required that all are currently approved by OMB under previously request CMS approval of the materials distributed during the annual control number 0938–0964 (CMS– change because the generic drug had not election period reflect the formulary the 10141). Also, as detailed previously, yet been released to the market. Also, Part D sponsor will offer at the § 423.120(b)(5)(i) requires 60 days’ the Part D sponsor must have previously beginning of the contract year for which notice to specified entities prior to the provided prospective and current it is enrolling Part D eligible effective date of changes and 60 days’ enrollees general notice that certain individuals. Lastly, under direct notice to affected enrollees or a 60 generic substitutions could occur § 423.128(d)(2)(iii), Part D sponsors day refill. The ability of Part D sponsors without additional advance notice. As must also provide current and to make generic substitutions as proposed, we would permit Part D prospective Part D enrollees with at approved by CMS is further limited by sponsors to substitute a generic drug for least 60 days’ notice regarding the the fact that as detailed previously, a brand name drug immediately rather removal or change in the preferred or under § 423.120(b)(6), Part D sponsors than make that change effective, for tiered cost-sharing status of a Part D generally cannot remove drugs or make instance, at the start of the next month. drug on its Part D plan’s formulary. The cost-sharing changes from the start of However, we solicit comment as to general notice requirements and burden the annual election period (AEP) until 2 whether there would be a reason to are currently approved by OMB under months after the plan year begins. require such a delay, especially given control number 0938–0964 (CMS– We propose to provide Part D the fact that we are proposing not to 10141). sponsors with more flexibility to require advance direct notice (rather, MedPAC observed that the continuity implement generic substitutions as only advance general notice) or CMS of a plan’s formulary is very important follows: The proposed provisions would approval. The proposed regulation to all beneficiaries in order to maintain permit Part D sponsors meeting all would also require that, when generic access to the medications that were requirements to immediately remove drug substitutions occur, Part D offered by the plan at the time the brand name drugs (or to make changes sponsors must provide direct notice to beneficiaries enrolled. While we agree in their preferred or tiered cost-sharing affected enrollees and other specified with MedPAC’s assertion, we status), when those Part D sponsors notice to CMS and other entities. We acknowledge the need to balance replace the brand name drugs with (or also propose to specify in a revision to

VerDate Sep<11>2014 20:14 Nov 27, 2017 Jkt 244001 PO 00000 Frm 00079 Fmt 4701 Sfmt 4702 E:\FR\FM\28NOP2.SGM 28NOP2 sradovich on DSK3GMQ082PROD with PROPOSALS2 56414 Federal Register / Vol. 82, No. 227 / Tuesday, November 28, 2017 / Proposed Rules

§ 423.120(b)(3)(i)(B) that the transition situations: The purpose of the transition However, to be certain, that we have process is not applicable in cases in process is to make sure that the medical not missed practical or other which a Part D sponsor substitutes a needs of enrollees are safely complications that would hinder the generic drug for a brand name drug accommodated in that they do not go ability of Part D sponsors to timely seek under paragraph (b)(6) of this section. without their medications or face an approval within the CMS timeframes, A proposed exception to abrupt change in treatment. If the we solicit comment as to whether we § 423.120(b)(6) would permit Part D proposal to permit Part D sponsors to should consider immediate substitution, sponsors to make the above specified immediately substitute generics for potentially in limited circumstances, of changes (removing covered Part D drugs brand name drugs upon market release specified generics for which Part D from their formularies, or changing their were finalized, most enrollees in this sponsors could have previously cost-sharing, when substituting or situation would not have had an requested formulary approval. At the adding their generic equivalents) during opportunity to try the drug prior to the same time, we remain mindful of any time of the year. That section drug substitution to see how it worked beneficiary protections and are hesitant generally provides—with a current for them. In other words, an enrollee to simply permit substitution of any exception only for unsafe drugs and could not be certain that a generic generics regardless of how long they drugs removed from the market—that substitution would not work, would have been on the market. Accordingly, Part D sponsors generally cannot constitute an abrupt change in we welcome suggestions of any other remove drugs or make cost-sharing treatment, or that the enrollee would be practical cut-offs, as well as information changes between the beginning of the better served by taking no medication on possible effects on beneficiaries that AEP and 60 days after the plan year rather than the generic unless he or she could result if we were to permit Part D begins. We believe that revising this had previously tried the generic drug. sponsors to substitute specified generics provision would assist Part D sponsors Moreover, we have built beneficiary that have been on the market for longer by permitting substitutions to take place protections into the proposed time periods. effect during a longer time period than provisions. First, proposed Third, we believe the two-pronged is currently permitted. Given that the § 423.120(b)(5)(iv)(A) addresses safety approach of the proposed provision previous exception would permit concerns by permitting Part D sponsors would provide appropriate notice for generic substitutions prior to the start of to add only therapeutically equivalent this type of formulary change. The the calendar year, we also propose to generic drugs. This means the FDA must general notice requirement of proposed § 423.120(b)(iv)(C) would require that, conform the definition of ‘‘affected have approved the generic drug in an enrollees’’ to clarify that applicable before making any generic substitutions, abbreviated new drug application changes must affect their access to drugs a Part D sponsor provide all prospective pursuant to section 505(j) of the Federal during the current plan year. and current enrollees with notice in the Food, Drug, and Cosmetic Act (21 U.S.C. We are aware that some may be formulary and other applicable 355(j)), and it must be listed with the concerned about not requiring advance beneficiary communication materials innovator drug in the publication CMS approval or advance direct notice stating that the Part D sponsor can ‘‘Approved Drug Products with to enrollees prior to making the remove, or change the preferred or Therapeutic Equivalence Evaluations’’ permitted generic substitutions, or tiered cost-sharing of, any brand name (commonly known as the Orange Book) requiring a transition fill. But we would drug immediately without additional only permit immediate substitution in which the FDA identifies drug advance notice (beyond the general when the generics are deemed products approved on the basis of safety advance notice) when a new equivalent therapeutically equivalent to the brand and effectiveness by the FDA, and be generic is added. This would, for name drug being removed by the considered by the FDA to be instance, include the Evidence of Federal Drug and Food Administration therapeutically equivalent to the brand Coverage (EOC). Proposed (FDA) and meet other requirements name drug. § 423.120(b)(iv)(C) would also require specified later in this section. This Second, we share the concern that that this general notice advise would not apply to follow-on biological prospective enrollees could be misled prospective and current enrollees that products under current FDA guidance. by Part D sponsors that deliberately they will get direct notice about any The FDA has, in fact noted that, ‘‘A offer brand name drugs during open specific drug substitutions made that generic drug is a medication created to enrollment periods only to remove them would affect them and that the direct be the same as an existing approved or change their cost-sharing as quickly notice would advise them of the steps brand-name drug in dosage form, safety, as possible during the plan year. We they could take to request coverage strength, route of administration, believe that our proposed provision determinations and exceptions. quality, and performance would address such problems: Under Therefore, the general notice would characteristics.’’ (‘‘Generic Drug Facts,’’ proposed § 423.120(b)(5)(iv)(B), a Part D advise enrollees about what might take see FDA Web site, https://www.fda.gov/ sponsor cannot substitute a generic for place before any changes occur. Drugs/ResourcesForYou/Consumers/ a brand name drug unless it could not When the Part D sponsor substitutes BuyingUsingMedicineSafely/ have previously requested formulary a generic for a brand name drug, the UnderstandingGenericDrugs/ approval for use of that drug. As a proposed direct notice provision, ucm167991.htm, accessed September matter of operations, CMS permits Part § 423.120(b)(5)(iv)(E), would require the 19, 2017, hereafter FDA, ‘‘Abbreviated D sponsors to submit formularies, and Part D sponsor to provide affected New Drug Application (ANDA): their respective change requests, only enrollees with direct notice consistent Generics’’.) Additionally, immediate during certain windows. Under with § 423.120(b)(5)(ii). We currently generic substitution has long been an proposed § 423.120(b)(5)(iv)(B), a Part D require Part D sponsors to provide this established bedrock of commercial sponsor could not remove a brand name information 60 days before such insurance, and we are not aware of any drug or change its preferred or tiered changes are made. Under the proposed harm to the insured resulting from such cost-sharing if that Part D sponsor could changes, enrollees would receive the policies. have included its generic equivalent same information they receive under the Also, we do not believe a transition with its initial formulary submission or current regulation—the only difference policy would be appropriate for these during a later update window. being that the notice could be provided

VerDate Sep<11>2014 20:14 Nov 27, 2017 Jkt 244001 PO 00000 Frm 00080 Fmt 4701 Sfmt 4702 E:\FR\FM\28NOP2.SGM 28NOP2 sradovich on DSK3GMQ082PROD with PROPOSALS2 Federal Register / Vol. 82, No. 227 / Tuesday, November 28, 2017 / Proposed Rules 56415

after the effective date of the generic generic substitutions that affected them As regards content, § 423.128(d)(2)(iii) substitution. As discussed earlier, under and that they would still be able to requires—and would continue to do so the proposed provision Part D sponsors request coverage determinations and under the proposed revisions—that Part seeking to make immediate exceptions. While the timing would D sponsors post online notice regarding substitutions would be newly required most likely mean most enrollees would any removal or change in the preferred to have previously provided general only be able to make such requests after or tiered cost-sharing status of a Part D notice in beneficiary communication receiving a generic drug fill, in the vast drug on its Part D plan’s formulary. materials such as formularies and EOCs majority of cases, an enrollee could not Posting information online related to that certain generic substitutions could be certain that a generic substitution removing a specific drug or changing its take place without additional advance would not work unless he or she cost-sharing solely to meet the content notice. actually tried the generic drug. requirements of § 423.128(d)(2)(iii) We understand there may be concerns Additionally, we are strongly cannot replace general notice under that the direct notice identifying the encouraging Part D sponsors to provide proposed § 423.120(b)(5)(iv)(C); direct specific drug substitution would arrive the retrospective direct notices of these notice to affected enrollees under after the formulary change has already generic substitutions (including direct § 423.120(b)(5)(ii); or notice to CMS taken place. As explained previously, notice to affected enrollees and notice to when required under § 423.120(b)(5). we believe generic substitutions pose no entities including CMS) no later than by For instance, as noted in the January, threat to enrollee safety. Also, as noted the end of the month after which the 28, 2005 final rule (70 FR 4265), we earlier, we are proposing to revise change becomes effective. While view online notification under § 423.120(b)(6) to permit generic sponsors are required to report this § 423.128(d)(2)(iii) on its own as an substitutions to take place throughout information to both enrollees and inadequate means of providing specific the entire year. This means that, under entities including CMS, we currently are information to the enrollees who most the proposed provision, a Part D not proposing to codify the end of need it, and we consider it an additional sponsor meeting all the requirements month timing requirement; however, if way that Part D sponsors provide notice would be able to substitute a generic we were to finalize this provision and of formulary changes to affected drug for a brand name drug well before thereafter find that Part D sponsors were enrollees. the actual start of the plan year (for not timely providing retrospective However, we do not mean to restrict instance, if a generic drug became notice, we would reexamine this policy. or otherwise affect other rules governing available on the market days after the Fourth, enrollees would be protected the provisions of materials online. For summer update). There is nothing in our from higher cost-sharing under instance, if Part D sponsors were able to regulation that would prohibit advance proposed paragraph (b)(5)(iv)(A), which fulfill CMS marketing and beneficiary notice and, in fact, we would encourage would require Part D sponsors to offer communications requirements by Part D sponsors to provide direct notice the generic with the same or lower cost- posting a specific document online as early as possible to any beneficiaries sharing and the same or less restrictive rather than providing it in paper, the who have reenrolled in the same plan utilization management criteria as the fact the document was posted online and are currently taking a brand name brand name drug. would not preclude it from providing drug that will be replaced with a generic We also believe requirements and general notice required under our drug with the start of the next plan year. guidance regarding beneficiary proposed provisions. In other words, if We would also anticipate that Part D communications will continue to otherwise valid, provision of general sponsors will be promptly updating the provide beneficiary protections. Section notice in a document posted online formularies posted online and provided 423.128(e)(5) currently requires Part D could suffice as notice as regards that to potential beneficiaries to reflect any sponsors to furnish directly to enrollees specified document under proposed permitted generic substitutions—and at an explanation of benefits (EOB) that § 423.120(b)(5)(iv)(C). In contrast, we do a minimum meeting any current timing includes any applicable formulary not wish to suggest that posting one requirements provided in applicable changes for which Part D plans are type of notice online would necessarily guidance. At this time we are not required to provide notice as described suffice to meet distinct notice proposing to set a regulatory deadline in § 423.120(b)(5). As noted previously, requirements. For instance, providing by which Part D sponsors must update § 423.128(d)(2)(iii) currently requires the general advance notice that would their formularies before the start of the Part D sponsors to post at least 60 days’ be required under § 423.120(b)(5)(iv)(C) new plan year. However, if we were to notice of removals and cost-sharing in a document posted online could not finalize this provision and thereafter changes online for current and meet the online content requirements of find that Part D sponsors were not prospective Part D enrollees. In light of § 423.128(d)(2)(iii) related to providing timely updating their formularies, we our proposal for generic substitutions information about removing drugs or would reexamine this policy. And we described previously, we propose to changing their cost-sharing. Nor, as would note, as regards timing, that modify § 423.128(d)(2)(iii) to require noted previously, could the opposite § 423.128(d)(2)(iii) requires that the Part D sponsors to provide ‘‘timely’’ apply: Posting the content required current formulary posted online be notice under 423.120(b)(5). This would under § 423.128(d)(2)(iii) online could updated at least monthly. mean that, under the proposed not fulfill the advance general notice In cases in which the Part D sponsor provision, a Part D sponsor would need requirements that would be required would necessarily have to send notice to provide at least 30 days’ online notice under proposed § 423.120(b)(5)(iv)(C) after the fact, for example instances in to affected enrollees before removing (or suffice to provide direct notice to which a drug is not released to the drugs or making cost-sharing changes affected enrollees under market until after the beginning of the except when adding a therapeutically § 423.120(b)(5)(ii) or notice to CMS plan year and the Part D sponsor then equivalent generic as specified, and as under § 423.120(b)(5)). immediately makes a generic has currently been the requirement, In addition to requiring the direct substitution, the proposed general removing unsafe or withdrawn drugs. notice to affected enrollees discussed notice would have already advised Part D sponsors could provide online previously, proposed § 423.120(b)(iv)(D) enrollees that they would receive notice after the effective date of changes would also require Part D sponsors to information about any specific drug only in those limited instances. provide the following entities with

VerDate Sep<11>2014 20:14 Nov 27, 2017 Jkt 244001 PO 00000 Frm 00081 Fmt 4701 Sfmt 4702 E:\FR\FM\28NOP2.SGM 28NOP2 sradovich on DSK3GMQ082PROD with PROPOSALS2 56416 Federal Register / Vol. 82, No. 227 / Tuesday, November 28, 2017 / Proposed Rules

notice of the generic substitutions to enrollees in these instances. But provided after the effective date of the consistent with § 423.120(b)(5)(ii): CMS, again, we believe current CMS change—as follows: State Pharmaceutical Assistance requirements provide the necessary —Direct notice to affected enrollees. Programs (as defined in § 423.454), beneficiary protections, and that 30 —Notice posted online for current and entities providing other prescription (rather than 60) days’ notice still will prospective enrollees. drug coverage (as described in afford enrollees sufficient time to either —Notice to CMS. § 423.464(f)(1)), authorized prescribers, change to a covered alternative drug or —Notice to other entities. network pharmacies, and pharmacists. to obtain needed prior authorization or • Notice and refill required for certain (To avoid repetition, we propose to an exception for the drug affected by the other midyear formulary changes: Part D revise the provision to refer to all of formulary change. Existing CMS sponsors that would be otherwise these entities as ‘‘CMS and other regulations establish robust beneficiary permitted to remove or change the specified entities’’ for the purposes of protections in the coverage and appeals preferred or tiered cost-sharing status of § 423.120(b).) Even though, as proposed, process, including expedited drugs would be required to provide the a Part D sponsor that met all of the adjudication timeframes for exigent below types of notice and refills under requirements would be able to make the circumstances (maximum timeframe of proposed § 423.120(b)(5)(i) and (ii). generic substitution immediately 24 hours for coverage determinations However, these notice requirements do without submitting any formulary and 72 hours for level 1 and 2 appeals), not apply when removing drugs deemed change requests to CMS, the Part D and a requirement that Part D plan unsafe by the FDA or removed from the sponsor must include the generic sponsors automatically forward all market by manufacturers (for applicable substitution in the next available untimely coverage determinations and requirements see § 423.120(b)(5)(iii).) formulary submission to CMS. We note redeterminations to the IRE for • For affected enrollees— that Part D plans can determine the independent review. Further, while 60 ++ Advance direct written notice at most effective means to communicate days’ notice is currently required, we least 30 days prior to the effective date; formulary change information to State have no evidence to suggest that or Pharmaceutical Assistance Programs, beneficiaries are currently utilizing the ++ Written notice of the change and entities providing other prescription full 60 days. The reduction to 30 days a month supply of the brand name drug drug coverage, authorized prescribers, would align these requirements with the under the same terms as provided before network pharmacies, and pharmacists timeframes for transition fills. And, with the change; and and that, under our proposed provision, over 11 years of program experience, we • For entities and other enrollees: we would consider online posting have no evidence to suggest that 30 days ++ Advance notice identifying the sufficient for those purposes. has been an insufficient temporary days specific drug changes to be made at least Lastly as part of our reexamination of supply for transition fills. the need to generally provide Part D (Note we are also proposing to amend 30 days prior to the effective date of the sponsors greater flexibility in formulary the refill amount to months (namely a change as follows: changes, we plan to decrease the month) rather than days (it was 60 days —Notice posted online for current and amount of direct notice required in previously) to conform to a proposed prospective enrollees; cases where the removal of a drug or revision to the transition policy —Notice to CMS; and change in cost-sharing status will affect regulations at § 423.120(b)(3).) For —Notice to other entities. enrollees currently taking the drug. further discussion, see section III.A.15 15. Treatment of Follow-On Biological (This would contrast proposed notice of this proposed rule, Changes to the Products as Generics for Non-LIS requirements that would apply to Transition.) Catastrophic and LIS Cost Sharing immediate substitution of specified Summary: The following provides a generics. There we would also require high level summary of notice changes Similar to the introduction of an advance general notice that such proposed in § 423.120(b). Details on abbreviated approval pathway for changes can occur, and direct notice of these requirements appear in the generic drugs provided by the Hatch- the specific changes could be provided preamble and proposed provisions. This Waxman Act in 1984 to spur more after their effective date.) Section summary does not address other competition through quicker approvals 423.120(b)(5)(i) currently requires at proposed changes (for instance, changes and introduction of lower cost least 60 days’ notice to all entities prior to transition requirements); notice therapeutic alternatives in the to the effective date of changes and at provisions we do not propose to change marketplace, Congress enacted the least 60 days’ direct notice to affected (for instance, notice for safety edits); or ‘‘Biologics Price Competition and enrollees or a 60 day refill upon the other rules that may also apply (for Innovation Act of 2009’’ to balance request of an affected enrollee. We instance, marketing and beneficiary innovation and consumer interests. propose to reduce the notice communications rules regarding Specifically, section 7002 of the ACA requirement in both instances to at least formulary updates). amended section 351 of the Public 30 days and the refill requirement to a • Notice required for expedited Health Service Act (PHS Act) (42 U.S.C. month. Beneficiaries would be affected, substitutions of certain generics: Part D 262), adding a subsection (k) to create and therefore receive the 30 days’ notice sponsors that would otherwise be an abbreviated licensure pathway for or a month refill, in cases in which, for permitted to make certain generic follow-on biological products that are instance, Part D sponsors planned to substitutions as specified under demonstrated to be either ‘‘biosimilar’’ add prior authorization requirements as proposed § 423.120(b)(5)(iv) would be to or ‘‘interchangeable’’ with a United a result of new safety-related required to provide the following types States Food and Drug Administration information or clinical guidelines. This of notice: (FDA) licensed reference biological proposal would permit Part D sponsors ++ Advance general notice in the product. According to the FDA, ‘‘a to institute formulary changes in half formulary and EOC and other applicable biosimilar product is a biological the time. beneficiary communications stating that product that is approved based on a We are, again, aware that some may such changes may occur without notice. showing that it is highly similar to an be concerned that we are reducing the ++ Notice that identifies the specific FDA-approved biological product, number of days advance notice afforded drug substitution made—which may be known as a reference product, and has

VerDate Sep<11>2014 20:14 Nov 27, 2017 Jkt 244001 PO 00000 Frm 00082 Fmt 4701 Sfmt 4702 E:\FR\FM\28NOP2.SGM 28NOP2 sradovich on DSK3GMQ082PROD with PROPOSALS2 Federal Register / Vol. 82, No. 227 / Tuesday, November 28, 2017 / Proposed Rules 56417

no clinically meaningful differences in the CMS definition of a generic drug at generic drug approval (for example, terms of safety and effectiveness from § 423.4. Consequently, follow-on therapeutic equivalence) do not apply to the reference product. Only minor biological products are subject to the biosimilar biological products, currently differences in clinically inactive higher Part D maximum copayments for the only available follow-on biological components are allowable in biosimilar LIS eligible individuals and non-LIS products. Accordingly, CMS currently products.’’ However, ‘‘an Part D enrollees in the catastrophic considers biosimilar biological products interchangeable biological product is portion of the benefit applicable to all more like brand name drugs for biosimilar to an FDA-approved other Part D drugs. While the statutory purposes of transition or midyear reference product and meets additional maximum LIS copayment amounts formulary changes because they are not standards for interchangeability. An apply to all phases of the Part D benefit, interchangeable. In these contexts, interchangeable biological product may the statute only specifies non-LIS treating biosimilar biological products be substituted for the reference product maximum copayments for the the same as generic drugs would by a pharmacist without the catastrophic phase. CMS clarified the incorrectly signal that CMS has deemed intervention of the health care provider applicable LIS and non-LIS catastrophic biosimilar biological products (as who prescribed the reference product.’’ cost sharing in a March 30, 2015 Health differentiated from interchangeable (See http://www.fda.gov/Drugs/ Plan Management System (HPMS) biological products) to be DevelopmentApprovalProcess/ memorandum. We advised that therapeutically equivalent. This could HowDrugsareDevelopedandApproved/ additional guidance may be issued for jeopardize Part D enrollee safety and ApprovalApplications/Therapeutic interchangeable biological products at a may generate confusion in the BiologicApplications/Biosimilars/) later date. marketplace through conflation with Biosimilar biological products are, by Nonetheless, treatment of follow-on other provisions due to the many places definition, not interchangeable, and are biological products, which are generally in the Part D statute and regulation not substitutable without a new high-cost, specialty drugs, as brands for where generic drugs are mentioned. prescription. Follow-on biological the purposes of non-LIS catastrophic Therefore, we believe the proposed products are listed in the FDA’s Purple and LIS cost sharing generated a great change to treat follow-on biological Book: Lists of Licensed Biological deal confusion and concern for plans products as generics should be limited Products with Reference Product and advocates alike, and CMS received to purposes of non-LIS catastrophic and Exclusivity and Biosimilarity or numerous requests to redefine generic LIS cost sharing only. Interchangeability Evaluations, drug at § 423.4. Advocates expressed We propose to modify the definition available at http://www.fda.gov/Drugs/ concerns that LIS enrollees were of generic drug at § 423.4 as follows: DevelopmentApprovalProcess/How required to pay the higher brand • We propose to redesignate the DrugsareDevelopedandApproved/ copayment for biosimilar biological existing definition as paragraph (i). ApprovalApplications/Therapeutic products. Stakeholders who contacted • We propose to add a new paragraph BiologicApplications/Biosimilars/ us asserted treatment of biosimilar (ii) to state ‘‘for purposes of cost sharing ucm411418.htm. Part D plan sponsors biological products as brands for under sections 1860D–2(b)(4) and are also encouraged to monitor the purposes of LIS cost-sharing creates a 1860D–14(a)(1)(D) of the Act only, a FDA’s Web site for new biologic (BLA) disincentive for LIS enrollees to choose biological product for which an approvals at http:// lower cost alternatives. Some of these application under section 351(k) of the www.accessdata.fda.gov/scripts/cder/ stakeholders also expressed similar Public Health Service Act (42 U.S.C. drugsatfda/index.cfm?fuseaction= concerns for non-LIS enrollees in the 262(k)) is approved.’’ Reports.ReportsMenu. catastrophic portion of the benefit. We solicit comment on this proposed Sections 1860D–2(b)(4) and 1860D– We agree and propose to revise the change to the definition of generic drug 14(a)(1)(D)(ii–iii) of the Act specify definition of generic drug at § 423.4 to at § 423.4. lower Part D maximum copayments for include follow-on biological products 16. Eliminating the Requirement To approved under section 351(k) of the low-income subsidy (LIS) eligible Provide PDP Enhanced Alternative (EA) PHS Act (42 U.S.C. 262(k)) solely for individuals for generic drugs and to EA Plan Offerings With Meaningful purposes of cost-sharing under sections preferred drugs that are multiple source Differences (§ 423.265) drugs (as defined in section 1860D–2(b)(4) and 1860D– 1927(k)(7)(A)(i) of the Act) than are 14(a)(1)(D)(ii–iii) of the Act. Lower cost CMS has the authority under section available for all other Part D drugs. sharing for lower cost alternatives will 1857(e)(1) of the Act, incorporated for Currently the statutory cost sharing improve enrollee incentives to choose Part D by section 1860D–12(b)(3)(D) of levels are set at the maximums. CMS follow-on biological products over more the Act, to establish additional contract does not interpret the statutory language expensive reference biological products, terms that CMS finds ‘‘necessary and to mean that each plan can establish and will reduce costs to both Part D appropriate,’’ as well as authority under lower LIS cost sharing on drugs, but enrollees and the Part D program. section 1860D–11(d)(2)(B) of the Act to rather, that CMS, through rulemaking, While CMS generally seeks to propose regulations imposing could establish lower cost sharing than encourage the utilization of lower cost ‘‘reasonable minimum standards’’ for the maximum amount, and it would follow-on biological products, we Part D sponsors. Using this authority we therefore be the same for all Part D propose to limit inclusion of follow-on previously issued regulations to ensure plans. biological products in the definition of that multiple plan offerings by Part D For the Part D program, CMS defines generic drug to purposes of non-LIS sponsors represent meaningful a ‘‘generic drug’’ at § 423.4 as a drug for catastrophic cost sharing and LIS cost differences to beneficiaries with respect which an application under section sharing only because we want to avoid to benefit packages and plan cost 505(j) of the Federal Food, Drug, and causing any confusion or structures. At that time, separate Cosmetic Act (21 U.S.C. 355(j)) is misunderstanding that CMS treats meaningful difference rules were approved. Biosimilar and follow-on biological products as generic concurrently adopted for MA and stand- interchangeable biological products do drugs in all situations. We do not alone PDPs. This section addresses not meet the section 1927(k)(7) believe that would be appropriate proposed changes to our regulations definition of a multiple source drug or because the same FDA requirements for pertaining strictly to meaningful

VerDate Sep<11>2014 20:14 Nov 27, 2017 Jkt 244001 PO 00000 Frm 00083 Fmt 4701 Sfmt 4702 E:\FR\FM\28NOP2.SGM 28NOP2 sradovich on DSK3GMQ082PROD with PROPOSALS2 56418 Federal Register / Vol. 82, No. 227 / Tuesday, November 28, 2017 / Proposed Rules

differences in PDP plan offerings. One For example, in CY 2018, a basic and beneficiary choices. Specifically, it was of the underlying principles in the enhanced plan are required at minimum argued that the meaningful difference establishment of the Medicare Part D to provide for a $20 out-of-pocket test does not recognize premiums as prescription drug benefit is that both difference, while two enhanced plans elements constituting meaningful market competition and the flexibility are required to have at least a $30 differences, despite this being an provided to Part D sponsors in the differential. Over the years, the extremely important factor for statute would result in the offering of a thresholds have ranged from $18 to $23 beneficiaries in making enrollment broad array of cost effective prescription between basic and enhanced plans, and decisions. Another commenter drug coverage options for Medicare from $12 to $34 between two enhanced recommended that we lower the OOPC beneficiaries. We continue to support plans. We issued regulations in 2010, at differentials between basic and the concept of offering a variety of § 423.265(b)(2), that established our enhanced PDP offerings but at a prescription drug coverage choices for authority to deny bids that are not minimum, we should lower the OOPC Medicare beneficiaries consistent with meaningfully different from other bids differential between enhanced PDP our commitment to afford beneficiaries submitted by the same organization in offerings. access to the prescription drugs they the same service area. Our application While we received relatively few need. of this authority has eliminated PDP comments related to meaningful PDP sponsors must offer throughout a sponsors’ ability to offer more than one difference in response to the RFI, we did receive a number of comments both in PDP region a basic plan that consists of: basic plan in a PDP region since all support of and opposing the proposed Standard deductible and cost sharing basic plan benefit packages must be increase in the meaningful difference amounts (or actuarial equivalents); an actuarially equivalent to the standard threshold between enhanced PDP initial coverage limit based on a set benefit structure discussed in the offerings we announced in the Draft CY dollar amount of claims paid on the statute, and in guidance we have also 2018 Call Letter. Those in favor of our beneficiary’s behalf during the plan limited to two the number of enhanced proposal believe that the increase would year; a coverage gap phase; and finally, alternative plans that we approve for a help to ensure that sponsors are offering catastrophic coverage that applies once single PDP sponsor in a PDP region. As meaningfully different plans and would a beneficiary’s out-of-pocket part of the same 2010 rulemaking, we minimize beneficiary confusion. expenditures for the year have reached also established at § 423.507(b)(1)(iii) our authority to terminate existing plan Commenters opposed to the proposal a certain threshold. Prior to our argued that the increase would lead to adopting regulations requiring benefit packages that do not attract a number of enrollees sufficient to more expensive plans and would meaningful differences between each effectively limit plan choice. They PDP sponsor’s plan offerings in a PDP demonstrate their value in the Medicare marketplace. Both of these authorities argued that expanding OOPC Region, our guidance allowed sponsors differentials would ultimately create that offered a basic plan to offer have been effective tools in encouraging the development of a variety of plan more beneficiary disruption as sponsors additional basic plans in the same would have to consolidate plans that do region, as long as they were actuarially offerings that provide meaningful choices to beneficiaries. not meet the new threshold. This result equivalent to the basic plan structure would directly contradict our request described in the statute. These sponsors We continue to be committed to that plan sponsors consider options to could also offer enhanced alternative maintaining benefit flexibility and minimize beneficiary disruption. plans that provide additional value to efficiency throughout both the MA and Commenters suggested that we should beneficiaries in the form of reduced Part D programs. We wish to continue utilize OOPC estimates as they were deductibles, reduced copays, coverage the trend of using transparency, originally intended, to ensure that of some or all drugs while the flexibility, program simplification, and beneficiaries receive a minimum beneficiary is in the gap portion of the innovation to transform the MA and additional value from enhanced plans. benefit, coverage of drugs that are Part D programs for Medicare enrollees They added that steady and reasonable specifically excluded as Part D drugs to have options that fit their individual OOPC thresholds will give beneficiaries under paragraph (2)(ii) of the definition health needs. In our April 2017 Request more consistent benefits and lower of Part D drug under § 423.100, or some for Information (RFI), we offered premiums. combination of those features. As we stakeholders the opportunity to submit We appreciate the importance of have gained experience with the Part D their ideas on how to better accomplish ensuring adequate plan choice for program, we have made consistent these goals. In response to the RFI, we beneficiaries and the value of multiple efforts to ensure that the number and received two comments specific to the plan offerings with a diversity of type of plan benefit packages PDP meaningful difference requirement for benefits, now and in the future. We sponsors may market to beneficiaries are PDPs. One commenter urged us to agree with the argument that two no more numerous than necessary to eliminate meaningful difference enhanced plans offered by a plan afford beneficiaries choices from among requirements to allow market sponsor could vary with respect to their meaningfully different plan options. To competition to determine the plan characteristics and benefit design, that end, CMS sets differential out-of- appropriate number and type of plan such that they might appeal to different pocket cost (OOPC) targets each year, offerings. Alternatively, it was suggested subsets of Medicare enrollees, but in the using an analysis performed on the that if the meaningful difference end have similar out-of-pocket previous year’s bid submissions, to standard is retained, we should revise it beneficiary costs. We continue to ensure contracting organizations submit to allow plans to be treated as believe however that a meaningful bids that clearly offer differences in meaningfully different based on difference, that takes into account out- value to beneficiaries. Published differences in plan characteristics not of-pocket costs, be maintained between annually in the Call Letter, the previously considered by CMS. The basic and enhanced plans to ensure that threshold differentials are defined for a commenter contends that the there is a meaningful value for basic and enhanced plan, as well as for meaningful difference requirement, as beneficiaries given the supplemental two enhanced plans, when offered by a currently applied, unfairly limits the Part D premium associated with the parent organization in the same region. number of plan offerings and enhanced plans. Therefore, effective for

VerDate Sep<11>2014 20:14 Nov 27, 2017 Jkt 244001 PO 00000 Frm 00084 Fmt 4701 Sfmt 4702 E:\FR\FM\28NOP2.SGM 28NOP2 sradovich on DSK3GMQ082PROD with PROPOSALS2 Federal Register / Vol. 82, No. 227 / Tuesday, November 28, 2017 / Proposed Rules 56419

Contract Year (CY) 2019, we propose to in recent years at negotiating price representative of the actual cost of the revise the Part D regulations at § 423.265 concessions from pharmaceutical drug for the sponsor when it does not (b)(2) to eliminate the PDP EA to EA manufacturers, network pharmacies, include such discounts. Finally, meaningful difference requirement, and other such entities. Between 2010 variation in the treatment of rebates and while maintaining the requirement that and 2015, the amount of all forms of price concessions by Part D sponsors enhanced plans be meaningfully price concessions received by Part D may have a negative effect on the different from the basic plan offered by sponsors and their PBMs increased competitive balance under the Medicare a plan sponsor in a service area. We nearly 24 percent per year, about twice Part D program, as explained later in believe these proposed revisions will as fast as total Part D gross drug costs, this section. help us accomplish the balance we wish according to the cost and price At the time the Part D program was to strike with respect to encouraging concession data Part D sponsors established, we believed, as discussed competition and plan flexibilities while submitted to CMS for payment in the Part D final rule that appeared in still providing PDP choices to purposes. the January 28, 2005 Federal Register beneficiaries that represent meaningful The data Part D sponsors submit to (70 FR 4244), that market competition choices in benefit packages. Anticipated CMS as part of the annual required would encourage Part D sponsors to impacts to this change include: (1) A reporting of direct or indirect pass through to beneficiaries at the modest increase in the number of plans remuneration (DIR) show that point of sale a high percentage of the that would be offered by PDP sponsors manufacturer rebates, which comprise manufacturer rebates and other price (if the EA to EA meaningful difference the largest share of all price concessions concessions they received, and that requirement was the sole barrier to a received, have accounted for much of establishing a minimum threshold for PDP sponsors offering a second EA plan this growth.47 The data also show that the rebates to be applied at the point of in a region) and (2) a potential decrease manufacturer rebates have grown sale would only serve to undercut these in the average supplemental Part D dramatically relative to total Part D market forces. However, actual Part D premium. gross drug costs each year since 2010. program experience has not matched We also announce our future intent to Rebate amounts are negotiated between expectations in this regard. In recent reexamine, with the benefit of manufacturers and sponsors or their years, only a handful of plans have additional information, how we define PBMs, independent of CMS, and are passed through a small share of price the meaningful difference requirement often tied to the sponsor driving concessions to beneficiaries at the point between basic and enhanced plans utilization toward a manufacturer’s of sale. Instead, because of the offered by a PDP sponsor within a product through, for instance, favorable advantages that accrue to sponsors in service area. We recognize that the formulary tier placement and cost- terms of premiums (also an advantage current OOPC methodology is only one sharing requirements. for beneficiaries), the shifting of costs, method for evaluating whether the The DIR data show similar trends for and plan revenues, from the way rebates differences between plan offerings are pharmacy price concessions. Pharmacy and other price concessions applied as meaningful, and will investigate price concessions, net of all pharmacy DIR at the end of the coverage year are whether the current OOPC model or an incentive payments, have grown faster treated under the Part D payment alternative methodology should be used than any other category of DIR received methodology, sponsors may have to evaluate meaningful differences by sponsors and PBMs and now buy distorted incentives as compared to between PDP offerings. While we intend down a larger share of total Part D gross what we intended in 2005. Therefore, in this request for to conduct our own analyses, we also drug costs than ever before. Such price information we discuss considerations seek stakeholder input on how to define concessions are negotiated between related to and solicit comment on meaningful difference as it applies to pharmacies and sponsors or their PBMs, requiring sponsors to include at least a basic and enhanced Part D plans. CMS again independent of CMS, and are minimum percentage of manufacturer will continue to provide guidance for often tied to the pharmacy’s rebates and all pharmacy price basic and enhanced plan offering performance on various measures concessions received for a covered Part requirements in the annual Call Letter. defined by the sponsor or its PBM. When manufacturer rebates and D drug in the drug’s negotiated price at Beneficiaries can continue to rely on pharmacy price concessions are not the point of sale. Feedback received will the many resources CMS makes reflected in the price of a drug at the be used for consideration in future available, such as the Medicare Plan point of sale, beneficiaries might see rulemaking on this topic. Finder (MPF), 1–800–MEDICARE and lower premiums, but they do not benefit the Medicare and You Handbook, to b. Background through a reduction in the amount they assist them and their caregivers in must pay in cost-sharing, and thus, end Section 1860D–2(d)(1) of the Act making the best plan choices that meet up paying a larger share of the actual requires that a Part D sponsor provide their individual health needs. To the cost of a drug. Moreover, given the beneficiaries with access to negotiated extent that CMS finds its elimination increase in manufacturer rebates and prices for covered Part D drugs. Under results in potential beneficiary pharmacy price concessions in recent our current regulations at § 423.100, the confusion or harm, CMS will consider years, the point-of-sale price of a drug negotiated price is the price paid to the reinstating the meaningful difference that a Part D sponsor reports on a PDE network pharmacy or other network requirement through future rule making record as the negotiated price is dispensing provider for a covered Part D or consider taking other action. rendered less transparent at the drug dispensed to a plan enrollee that 17. Request for Information Regarding individual prescription level and less is reported to CMS at the point of sale the Application of Manufacturer Rebates by the Part D sponsor. This point of sale and Pharmacy Price Concessions to 47 Sponsors report all DIR to CMS annually by price is used to calculate beneficiary Drug Prices at the Point of Sale category at the plan level. DIR categories include: cost-sharing. More broadly, the Manufacturer rebates, administrative fees above fair negotiated price is the primary basis by a. Introduction market value, price concessions for administrative services, legal settlements affecting Part D drug which the Part D benefit is adjudicated, Part D sponsors and their contracted costs, pharmacy price concessions, drug cost- and is used to determine plan, PBMs have been increasingly successful related risk-sharing settlements, etc. beneficiary, manufacturer (in the

VerDate Sep<11>2014 20:14 Nov 27, 2017 Jkt 244001 PO 00000 Frm 00085 Fmt 4701 Sfmt 4702 E:\FR\FM\28NOP2.SGM 28NOP2 sradovich on DSK3GMQ082PROD with PROPOSALS2 56420 Federal Register / Vol. 82, No. 227 / Tuesday, November 28, 2017 / Proposed Rules

coverage gap), and government liability estimates, the rebates and other price is subject to a copay because Part D during the course of the payment year, concessions that Part D sponsors and rules require that the copay amount be subject to final reconciliation following their PBMs negotiate, but do not include at least actuarially equivalent to the the end of the coverage year. in the negotiated price at the point of coinsurance required under the defined Under current law, when not sale, put downward pressure on plan standard benefit design. For many Part explicitly required to do so for certain premiums, as well as the government’s D beneficiaries who utilize drugs and types of pharmacy price concessions, subsidies of those premiums. The thus incur cost-sharing expenses, this Part D sponsors can choose whether to average Part D basic beneficiary means, on average, higher overall out-of- reflect various price concessions, premium has grown at an average rate pocket costs, even after accounting for including manufacturer rebates, they or of only about 1 percent per year the premium savings tied to higher DIR. their intermediaries receive in the between 2010 and 2015, and is For the millions of low-income negotiated price. Specifically, section projected to decline in 2018, due in part beneficiaries whose out-of-pocket costs 1860D–2(d)(1)(B) of the Act merely to sponsors’ projecting DIR growth to are subsidized by Medicare through the requires that negotiated prices ‘‘shall outpace the growth in projected gross low income cost-sharing subsidy, those take into account negotiated price drug costs each year. The average higher costs are borne by the concessions, such as discounts, direct or Medicare direct subsidy paid by the government. This potential for cost- indirect subsidies, rebates, and direct or government to cover a share of the cost shifting grows increasingly pronounced indirect remunerations, for covered part of coverage under a Part D plan has also as manufacturer rebates and pharmacy D drugs . . . .’’ In other words, Part D declined, by an average of 8.1 percent price concessions increase as a sponsors are allowed, but generally not per year between 2010 and 2015, partly percentage of gross drug costs and currently required, to apply rebates and for the same reason. continue to be applied outside of the other price concessions at the point of However, any DIR received that is negotiated price. Numerous research sale to lower the price upon which above the projected amount factored studies further suggest that the higher beneficiary cost-sharing is calculated. into a plan’s bid contributes primarily to cost-sharing that results can impede To date, sponsors have elected to plan profits, not lower premiums. The beneficiary access to necessary include rebates and other price risk-sharing construct established under medications, which leads to poorer concessions in the negotiated price at Part D by statute allows sponsors to health outcomes and higher medical the point-of-sale only very rarely. All retain as plan profit the majority of all care costs for beneficiaries and rebates and other price concessions that DIR that is above the bid-projected Medicare.49 50 51 These effects of higher are not included in the negotiated price amount.48 Our analysis of Part D plan beneficiary cost-sharing under the must be reported to CMS as DIR at the payment and cost data indicates that in current policies regarding the end of the coverage year and are used recent years, DIR amounts Part D determination of negotiated prices must in our calculation of final plan sponsors and their PBMs actually be weighed against the impact on payments, which, under the statute, are received have consistently exceeded beneficiary access to affordable drugs of required to be based on costs actually bid-projected amounts. the lower premiums that are currently incurred by Part D sponsors, net of all To capture the relative premium and charged for Part D coverage. applicable DIR. other advantages that price concessions Moreover, beneficiaries progress applied as DIR offer sponsors over lower through the four phases of the Part D (1) Premiums and Plan Revenues point-of-sale prices, sponsors sometimes benefit as their total gross drug costs The main benefit to a Part D opt for higher negotiated prices in and cost-sharing obligations increase. beneficiary of price concessions applied exchange for higher DIR and, in some Because both of these values are as DIR at the end of the coverage year cases, even prefer a higher net cost drug calculated based on the negotiated (and not to the negotiated price at the over a cheaper alternative. This may put prices reported at the point of sale, point of sale) comes in the form of a upward pressure on Part D program when manufacturer rebates and lower plan premium. A sponsor must costs and, as explained below, shift pharmacy price concessions are not factor into its plan bid an estimate of the costs from the Part D sponsor to applied at the point of sale, the higher DIR expected to be generated—that is, it beneficiaries who utilize drugs in the negotiated prices that result move Part must lower its estimate of plan liability form of higher cost-sharing and to the D beneficiaries more quickly through by a share of the projected DIR—which government through higher reinsurance the Part D benefit. This, in turn, shifts has the effect of reducing the price of and low-income cost-sharing subsidies. more of the total drug spend into the coverage under the plan. Under the (2) Cost-Shifting catastrophic phase, where Medicare current Part D benefit design, price liability is highest (80 percent, paid as concessions that are applied post-point- When manufacturer rebates and other reinsurance) and plan liability, after the of-sale, as DIR, reduce plan liability, and price concessions are not reflected in closing of the coverage gap, is lowest (15 thus premiums, more than price the negotiated price at the point of sale percent). Part D program experience concessions applied at the point of sale. (that is, applied instead as DIR at the further suggests that sponsors are able to When price concessions are applied to end of the coverage year), beneficiary offset their already limited liability in reduce the negotiated price at the point cost-sharing, which is generally the catastrophic phase by capturing of sale, some of the concession amount calculated as a percentage of the additional rebates from manufacturers, is apportioned to reduce beneficiary negotiated price, becomes larger, cost-sharing, as explained in this covering a larger share of the actual cost 49 Michele Heisler et al., ‘‘The Health Effects of section, instead of plan and government of a drug. Although this is especially Restricting Prescription Medication Use Because of liability; this is not the case when price true when a Part D drug is subject to Cost,’’ Medical Care, 626–634 (2004). 50 Peter Bach, ‘‘Limits on Medicare’s Ability to concessions are applied post-point-of- coinsurance, it is also true when a drug Control Rising Spending on Cancer Drugs,’’ The sale, where the majority of the New England Journal of Medicine, 360, 626–633 concession amount accrues to the plan, 48 Medicare shares risk with Part D sponsors on (2009). and the remainder accrues to the the drug costs for which they are liable using 51 Sonya Blesser Streeter et al., ‘‘Patient and Plan symmetrical risk corridors and through the payment Characteristics Affecting Abandonment of Oral government. Therefore, to the extent of 80 percent reinsurance in the catastrophic phase Oncolytic Prescriptions,’’ Journal of Oncology that plan bids reflect accurate DIR of the benefit. Practice, 7, no. 3S, 46S–51S (2011).

VerDate Sep<11>2014 20:14 Nov 27, 2017 Jkt 244001 PO 00000 Frm 00086 Fmt 4701 Sfmt 4702 E:\FR\FM\28NOP2.SGM 28NOP2 sradovich on DSK3GMQ082PROD with PROPOSALS2 Federal Register / Vol. 82, No. 227 / Tuesday, November 28, 2017 / Proposed Rules 56421

the largest share of which, under current accruing to one sponsor over another in (1) Specified Minimum Percentage Part D rules, as explained previously, this scenario stems only from a We are considering setting the are allocated to reduce plan liability. technical difference in how plan costs minimum percentage of manufacturer Consistent with this benefit, we note are reported to CMS. Therefore, the rebates that must be passed through at that sponsors have negotiated more high opportunity for differential treatment of the point of sale at a point less than 100 price-high rebate arrangements, rebates and price concessions could percent of the applicable average rebate especially in recent years, which has result in bids that are not comparable amount for drugs in the same drug caused the proportion of costs for which and in premiums that are not valid category or class. For operational ease, the plan sponsor is at risk to shrink indicators of relative plan efficiency. we are considering setting the same when those higher rebates are not c. Manufacturer Rebates to the Point of minimum percentage, which we would passed on at the point of sale. Under specify in regulation, for all rebated current rules, therefore, Part D sponsors Sale drugs in all years—that is, the minimum may have weak incentives, and, in some We are soliciting comment from percentage would not change by drug cases even, no incentive, to lower prices stakeholders on how we might most category or class or by year. at the point of sale or to choose lower effectively design a policy requiring Part It is important to note that we are not net cost alternatives to high cost-highly considering requiring that 100 percent rebated drugs when available. D sponsors to pass through at the point of sale a share of the manufacturer of rebates be applied at the point of sale. (3) Transparency and Differential rebates they receive, in order to mitigate As explained earlier, the statutory Treatment the effects of the DIR construct 52 on definition of negotiated price in section Given the significant growth in costs to both beneficiaries and 1860D–2(d)(1)(B) of the Act requires manufacturer rebates and pharmacy Medicare, competition, and efficiency that ‘‘negotiated prices shall take into price concessions in recent years, when under Part D. In this section, we put account negotiated price concessions, such amounts are not reflected in the forth for consideration potential such as discounts, direct or indirect negotiated price, at least to some degree, parameters for such a policy and seek subsidies, rebates, and direct or indirect the true price of a drug to the plan is detailed comments on their merits, as remunerations, for covered part D drugs not available to consumers at the point well as the merits of any alternatives . . .’’ (emphasis added). We believe this of sale, nor is it reflected on the that might better serve our goals of language, particularly when read in the Medicare Prescription Drug Plan Finder reducing beneficiary costs and better context of the requirement in section (Plan Finder) tool. Consequently, aligning incentives for Part D sponsors 1860D–2(d)(2) of the Act that Part D consumers cannot efficiently minimize with the interests of beneficiaries and sponsors report the aggregate price both their costs and costs to the taxpayers. We specifically seek concessions made available ‘‘by a taxpayers by seeking and finding the comment on how this issue could be manufacturer which are passed through lowest-cost drug or the lowest-cost drug addressed without increasing in the form of lower subsidies, lower and pharmacy combination. government costs and without reducing monthly beneficiary prescription drug The quality of information available manufacturer payments under the premiums, and lower prices through to consumers is even less conducive to coverage gap discount program. We pharmacies and other dispensers,’’ producing efficient choices when encourage all commenters to provide contemplates that Part D sponsors have rebates and other price concessions are quantitative analytical support for their some flexibility in determining how to treated differently by different Part D ideas wherever possible. apply manufacturer rebates in order to sponsors; that is, when they are applied reduce costs under the plan. Specifically, we are considering to the point-of-sale price to differing Furthermore, we are cognizant of the degrees and/or estimated and factored requiring, through future rulemaking, fact that while requiring that a higher into plan bids with varying degrees of Part D sponsors to include in the share of rebates be included in the accuracy. First, when some sponsors negotiated price reported to CMS for a negotiated price would more include price concessions in negotiated covered Part D drug a specified meaningfully address the concerns prices while others treat them as DIR, minimum percentage of the cost- highlighted earlier and lead to larger negotiated prices no longer have a weighted average of rebates provided by cost-sharing savings for many consistent meaning across the Part D drug manufacturers for covered Part D beneficiaries, doing so would also result program, undermining meaningful price drugs in the same therapeutic category in larger premium increases for all comparisons and efficient choices by or class. We will refer to the rebate beneficiaries, as discussed in greater consumers. Second, if a sponsor’s bid is amount that we would require be detail later in this section, and lower based on an estimate of net plan liability included in the negotiated price for a flexibility for Part D sponsors in regards that is understated because the sponsor covered Part D drug as the ‘‘point-of-sale to the treatment of manufacturer rebates, has been applying price concessions as rebate.’’ Under such a policy, sponsors and thus, for some sponsors, weaker DIR at the end of the coverage year could apply as DIR at the end of the incentives to participate in the Part D rather than using them to reduce the coverage year only those manufacturer program. We aim to set the minimum negotiated price at the point of sale, it rebates received in excess of the total percentage of rebates that must be follows that the sponsor may be able to point-of-sale rebates. In the unlikely applied at the point of sale at a point submit a lower bid than a competitor event that total manufacturer rebate that allows an appropriate balance that applies price concessions at the dollars received for a drug are less than between these outcomes and thus point of sale or opts for lower net cost the total point-of-sale rebates, the achieves the greatest possible increase alternatives to high cost-highly rebated difference would be reported at the end in beneficiary access to affordable drugs. drugs when available. This lower bid of the coverage year as negative DIR. We are soliciting comment on the results in a lower plan premium that minimum percentage of manufacturer must be paid by enrollees in the plan, 52 We use the term ‘‘DIR construct’’ to refer to rebates that should be reflected in the how DIR is treated under current Part D payment negotiated price in order to achieve this which could allow the sponsor to rules and the advantages that accrue to Part D capture additional market share. The sponsors when they apply rebates and other price balance. We are also seeking comment resulting competitive advantage concessions as DIR at the end of the coverage year. on how and how often, if at all, that

VerDate Sep<11>2014 20:14 Nov 27, 2017 Jkt 244001 PO 00000 Frm 00087 Fmt 4701 Sfmt 4702 E:\FR\FM\28NOP2.SGM 28NOP2 sradovich on DSK3GMQ082PROD with PROPOSALS2 56422 Federal Register / Vol. 82, No. 227 / Tuesday, November 28, 2017 / Proposed Rules

minimum percentage should be updated specifying such a requirement would This approach would also increase price by CMS, and what factors should be also serve to ensure consistency in how transparency over the status quo, considered in making any such change. average rebates are calculated across especially at the drug category or class We request that commenters provide sponsors, which would make prices level, and improve market competition analytical justification for their ideas more comparable across Part D plans and efficiency under Part D as a result. wherever possible. We also are seeking and enforcement easier. In addition to feedback on this general comment on the effect that specifying a • Plan-Level Average: We are approach and our rationale for it, we are minimum percentage of rebates that considering requiring that average seeking comment, in particular, on the must be reflected in the negotiated price rebate amounts be calculated separately drug classification system that Part D would have on the competition for for each plan (that is, calculated at the sponsors should be required to use to rebates under Part D and the total rebate plan-benefit-package level). In other calculate their drug category/class-level dollars received by Part D sponsors and words, the same average rebate amount average rebate amounts and why that PBMs. would not apply to the point-of-sale system would be most appropriate for price for a covered drug across all plans use in such a point-of-sale rebate policy. (2) Applicable Average Rebate Amount under one contract, nor across all We also are seeking comment on the We are also particularly interested in contracts under one sponsor. We believe effect of calculating average rebates at stakeholder feedback regarding the this approach would result in the the drug category/class level on following methodology to calculate the calculation of more accurate average competition and, in turn, on the total applicable average rebate amount, a rebates because the PDE and rebate data rebate dollars received. specified minimum percentage of which that are submitted by sponsors We are also particularly interested in would be required to be applied at the demonstrate that gross drug costs and comments on how an average rebate point of sale: rebate levels are not the same across all amount should be calculated for a drug • Rebate Year: We are considering plans under one contract, nor across all that is the only rebated drug in its drug requiring that point-of-sale rebate contracts under one sponsor. This category or class. An alternative amounts be based on average approach would also largely be approach would be necessary in this manufacturer rebates expected to be consistent with how sponsors develop case because the average rebate amount received for each drug category or class cost estimates for their Part D bids calculated under the general approach under the manufacturer rebate because benefit designs, including we have described above would equal agreements for the current payment formulary structure, and assumptions the drug-specific rebate amount, which, year, not historical rebate experience. about enrollee characteristics and if included in the negotiated price, To the extent that rebate agreements are utilization vary by plan, even for could result in the release of proprietary structured with contingencies that multiple plans under one contract. pricing information. We ask that would be unclear at the point of sale, Similarly, final payments are calculated commenters explain how any sponsors would be required to base the by CMS at the plan level, based on the alternative they suggest for the only point-of-sale rebate amount on a good data submitted by the sponsor. We rebated drug scenario would address faith estimate of the rebates expected to solicit comment on whether the most this concern and comment on the level be received. We solicit comments on appropriate approach for calculating the of price transparency that would be whether this approach would ensure average rebate amount for point-of-sale achieved under the suggested that the price available to beneficiaries application would be to do so at the alternative. at the point of sale reflects the actual plan level, using plan-specific • Weighting: We are considering price of a drug at that time, or if an information, given that moving a requiring that when calculating the alternative approach would do so more portion of manufacturer rebates to the applicable average rebate amount for a effectively. point of sale would impact plan liability particular drug category, the • Rebated Drugs: We are considering and payments, or if another approach manufacturer rebate amount for each requiring that the average rebate amount would be more appropriate. individual drug in that category be be calculated using only drugs for • Drug Category or Class: We are weighted by the total gross drug costs which manufacturers provide rebates. considering requiring that the incurred for that drug, under the plan, We believe including non-rebated drugs manufacturer rebate amount applied to over the most recent month, quarter, in this calculation would serve only to the point-of-sale price for a covered year, or another time period to be drive down the average manufacturer drug be based on the plan’s average specified in future rulemaking for which rebates, which would dampen the rebate amount calculated for the rebated cost data is available. We believe a intended effects of any change. drugs in the same category or class. We weighted average is more accurate than Additionally, we would likely are considering requiring sponsors to a simple average because sponsors do consider each drug product with a determine the average rebate amount at not receive the same level of rebates for unique 11-digit national drug code the therapeutic category or class level, all drugs in a particular drug category or (NDC) separately for purposes of rather than a drug-specific rebate class, and thus, contrary to the calculating the average rebate amount. amount, in order to maintain the assumption underlying a simple PDE and rebate data submitted to CMS confidentiality of any manufacturer- average, not all drugs contribute equally show that gross drug costs and rebate sponsor/PBM pricing relationship with to the final average rebate percentage for rates under a plan can vary even for the respect to an individual drug. Given that a drug category or class received by the same drugs produced by the same rebate rates are typically negotiated at sponsor under a plan at the end of a manufacturer that are packaged the individual drug level, we believe payment year. A gross drug cost- differently and thus have different that the drug category/class-average weighted average ensures that drugs NDC–11 identifiers. Therefore, we approach we are considering would with higher utilization, higher costs, or believe that the average rebate amounts help maintain fair competition among both will be more important to the final are more likely to be accurate when drug manufacturers, as well as Part D average rebate rate realized for the drug calculated based on the gross drug cost sponsors, by preventing competitors category or class than lower utilization, and rebate data at the 11-digit NDC from reverse engineering the particulars lower cost, or lower cost-lower level. We solicit comment on whether of any proprietary pricing arrangement. utilization drugs in the category or class.

VerDate Sep<11>2014 20:14 Nov 27, 2017 Jkt 244001 PO 00000 Frm 00088 Fmt 4701 Sfmt 4702 E:\FR\FM\28NOP2.SGM 28NOP2 sradovich on DSK3GMQ082PROD with PROPOSALS2 Federal Register / Vol. 82, No. 227 / Tuesday, November 28, 2017 / Proposed Rules 56423

In the case of a drug with less time on sale prices for drugs that are rebated, formulary in a particular drug class. The the market than the time period for with each drug identified by its unique negotiated prices, before application of which cost data would be required NDC–11 identifier. The alternative the point-of-sale rebates, for the three under this weighting approach or of a would result in a manufacturer that drugs in the current time period are plan that has not been active in the Part provides no rebates for a particular drug $200, $100, and $75, respectively. The D program for the time period required benefiting from a direct competitor’s manufacturer rebates expected by the under the weighting approach, we are rebate, as the competitor’s rebate would plan in this payment year, given the considering requiring that the drug’s be used to lower the negotiated price information available in the current rebate amount be weighted by a and thereby potentially increasing sales period, for drugs A, B, and C equal 20, sponsor’s projection of total gross drug of the non-rebated drug. However, to be 10, and 5 percent, respectively, of the costs for the plan that takes into account clear, under this potential approach, drugs’ pre-rebate negotiated prices. Over any plan-specific cost experience sponsors would maintain their the previous time period, total gross already available. If no plan-specific flexibility to include in the negotiated drug costs incurred under the plan for cost experience is available when price for any drug, including a non- drug A equaled $2 million, for drug B calculating average rebate amounts, rebated drug, manufacturer rebates and equaled $750,000, and for drug C such as at the beginning of a payment other price concessions above those equaled $150,000. Therefore, the gross year for a new plan, are considering required to be included in the drug cost-weighted average rebate rate requiring sponsors to use the same drug negotiated price for rebated drugs under for this drug class in the current time cost projections on which they base a point-of-sale rebate policy such as the period is calculated as the following: their Part D bids. Further, for one we describe here. [($2 million × 20 percent) + ($750,000 operational ease, it appears the Moreover, in order to limit the impact × 10 percent) + ($150,000 × 5 percent)]/ manufacturer rebates used in the on premiums for all beneficiaries of ($2 million + $750,000 + $150,000), or calculation of the average rebate amount adopting a requirement that sponsors 16.64 percent. If we were to require that would need to include all manufacturer include a portion of manufacturer a minimum 50 percent of the average rebates received for the drug, including rebates in the negotiated price at the rebate be applied at the point of sale for all point-of-sale rebates. Then, in order point of sale, we are also seeking all rebated drugs in this drug class (and not to double count the point-of-sale comment on the merits or limitations of, the plan only applies the minimum rebates, the total gross drug costs used a more targeted version of the policy required percentage), the final to weight the average under this approach that would require sponsors to negotiated prices for drugs A, B, and C, methodology would have to be based on pass through a minimum percentage of now equal to $183.36, $91.68, and the drug’s price at the point of sale rebates at the point of sale only for $68.76, respectively, would be 8.32 before it is lowered by any manufacturer specific drugs or drug categories or percent (50 percent of 16.64 percent) rebates or other price concessions classes. Under this alternative approach, lower than the pre-rebated prices. applied at the point of sale. We are the point-of-sale rebate policy would For each of the three drugs in this interested in stakeholder feedback on apply only for drugs or drug categories example, beneficiary out-of-pocket costs these considerations. or classes that most directly contribute would be lower under the approach we For an illustration of how the to increasing Part D drug costs in the are considering than under the status weighted-average rebate amount for a catastrophic phase of coverage or drugs quo. Assuming, for instance, these drugs particular drug category or class would with high price-high rebate are subject to a 25 percent coinsurance, be calculated, see the point-of-sale arrangements; such drugs or drug the enrollee’s costs for the three drugs rebate example later in this section. categories or classes are likely to have under this approach would be $45.84 • Timing: We are considering the most significant impact on (25 percent of $183.36) for drug A, requiring Part D sponsors to recalculate beneficiary costs and serve to increase $22.92 (25 percent of $91.68) for drug B, the applicable average rebate amount program costs overall, as discussed and $17.19 (25 percent of $68.76) for every month, quarter, year, or another previously. We are interested in drug C. Under the status quo, the time period to be specified in future stakeholder feedback on whether enrollee’s costs would be $50 for drug rulemaking, in order to ensure that the targeting the rebate requirement in such A ($4.16 higher), $25 for drug B ($2.08 average reflects current cost experience a way would effectively address the higher), and $18.75 for drug C ($1.56 and manufacturer rebate information. misaligned sponsor incentives and higher). We believe that a requirement to market inefficiencies that exist under Any difference between the rebates recalculate the average rebate amount Part D today as a result of the DIR applied at the point of sale and those should balance the need to sustain a construct. In addition to general actually received would be captured as level of price transparency throughout comments on the alternative, more DIR through reporting at the end of the the entire year with the additional targeted policy approach, we are coverage year. Assume, for instance, burden on sponsors associated with particularly interested in that total gross drug costs for drugs A, more frequent updates. We are seeking recommendations for the criteria that B, and C equal $1.5 million, $1 million, comment on how often the applicable we might use to determine which drugs and $200,000, respectively, in this cost-weighted drug category/class- or drug categories or classes to target period. The actual manufacturer rebates average rebate amount, and thus the under such an alternative approach. received, therefore, will equal $300,000, point-of-sale rebate for any drug, should $100,000, and $10,000, respectively, for (4) Point-of-Sale Rebate Example be recalculated. drugs A, B, and C in this period, based To illustrate how the weighted- on the plan’s expected rebate rates of 20, (3) Point-of-Sale Rebate Drugs average rebate amount for a particular 10, and 5 percent, respectively, for the We are considering limiting the drug class would be calculated under a three drugs in this payment year. Based application of any point-of-sale rebate point-of-sale rebate requirement that on the point-of-sale rebate rate requirement to only rebated drugs. includes the features described earlier, calculated above for the applicable drug Under this approach, the calculated we provide the following example: class and the total gross drug cost average rebate amount would only be suppose drugs A, B, and C are the only assumptions provided for the three required to be applied to the point-of- three rebated drugs on the plan’s drugs, we calculate the total point-of-

VerDate Sep<11>2014 20:14 Nov 27, 2017 Jkt 244001 PO 00000 Frm 00089 Fmt 4701 Sfmt 4702 E:\FR\FM\28NOP2.SGM 28NOP2 sradovich on DSK3GMQ082PROD with PROPOSALS2 56424 Federal Register / Vol. 82, No. 227 / Tuesday, November 28, 2017 / Proposed Rules

sale rebates in this period to be complete, and truthful data regarding manufacturer rebates at the point of sale $124,786.48 (8.32 percent of $1.5 the average rebate amount included in would have on the EGWP market, as million) for drug A, $83,189.66 (8.32 the negotiated price would be necessary well as on how such a requirement percent of $1 million) for drug B, and to ensure accurate reinsurance and risk might impact the retiree drug subsidy $16,637.93 (8.32 percent of $200,000) corridor payments. program. for drug C. Therefore, the manufacturer Under the approach we are Finally, we note that the negotiated rebates applied by the plan as DIR at the considering, if a Part D sponsor price is also the basis by which end of the coverage year for the three discovers errors after the certification manufacturer liability for discounts in drugs, respectively, would be has been made (that is, after the the coverage gap is determined. Under $175,215.52, $16,810.34, and –$6,637.93 attestation has been signed), the Part D section 1860D–14A(g)(6) of the Act, the and total $185,387.93 across the drug sponsor would submit corrected PDE negotiated price used for coverage gap class. data, and, under most circumstances, discounts is based on the definition of CMS would reconcile the error through negotiated price in the version of (5) Additional Considerations the reopening process described at § 423.100 that was in effect as of the Under the policy approach that we are § 423.346. All reopenings are at the passage of the Patient Protection and considering here for moving discretion of CMS. CMS performs a Affordable Care Act (PPACA). Under manufacturer rebates to the point of global reopening approximately 4 years this definition, the negotiated price is sale, the responsibility for calculating after the initial reconciliation for that ‘‘reduced by those discounts, direct or the appropriate point-of-sale rebate contract year. A Part D sponsor’s indirect subsidies, rebates, other price amount over the course of the year reopening request resulting from errors concessions, and direct or indirect would fall on Part D sponsors given in PDE data discovered after the global remuneration that the Part D sponsor their role in administering the Medicare reopening for the contract year in which has elected to pass through to Part D drug benefit. We would leverage the error occurred would be evaluated enrollees at the point of sale’’ (emphasis existing reporting mechanisms to review by CMS on a case by case basis. Any added). Because this definition of the sponsors’ calculations, as we do errors in the calculation of the average negotiated price only references the with other cost data required to be rebate amount that result in price concessions that the Part D reported. Specifically, we would likely overpayments would be required to be sponsor has elected to pass through at use the estimated rebates at point-of-sale reported and returned consistent with the point of sale, we are uncertain as to field on the PDE record to collect point- § 423.360 and the applicable whether we would have the authority to of-sale rebate information, and the subregulatory guidance on require sponsors include in the manufacturer rebates fields on the overpayments. negotiated price the weighted-average Summary and Detailed DIR Reports to We note that prior to the submission rebate amounts that would be required collect final manufacturer rebate of the attestation, and more specifically, to be passed through under any information at the plan and NDC levels. prior to the PDE submission deadline potential point-of-sale rebate policy, for Differences between the manufacturer for the initial reconciliation for a purposes of determining manufacturer rebate amounts applied at the point of contract year, if a Part D sponsor coverage gap discounts. We intend to sale and rebates actually received would discovers an issue with the average consider this issue further and will become apparent when comparing the rebate amount included in the address it in any future rulemaking data collected through those means at negotiated price and reported on the regarding the requirements for the end of the coverage year. PDE, all affected PDEs would need to be determining the negotiated price that is Additionally, we note that in adjusted or deleted in accordance with available at the point of sale. accordance with § 423.505(k) of the Part applicable CMS guidance. As of the D regulations, a Part D sponsor is publication of this request for (6) Impacts of Applying Manufacturer required to certify the accuracy, information, the applicable guidance is Rebates at the Point of Sale completeness, and truthfulness of all October 6, 2011 CMS memorandum, Under a point-of-sale rebate policy data related to payment, including the Revision to Previous Guidance Titled designed as we have described in this PDE data and information on allowable ‘‘Timely Submission of Prescription comment solicitation, beneficiaries costs that it submits for purposes of risk Drug Event (PDE) Records and would see lower prices at the pharmacy corridor and reinsurance payment. A Resolution of Rejected PDEs.’’ point-of-sale, and on Plan Finder, Part D sponsor certifies its Part D cost We encourage stakeholders to beginning immediately in the year the data by signing and submitting comment on what other enforcement policy takes effect. Lower point-of-sale attestations to CMS. By signing the and oversight mechanisms should be prices would result directly in lower attestations, the Part D sponsor certifies instituted to ensure compliance with cost-sharing costs for non-low income (based on best knowledge, information, any potential point-of-sale rebate beneficiaries, especially for those who and belief) that the PDE data, DIR data, requirement. We are particularly use drugs in highly competitive, highly- and any other information provided for interested in stakeholder feedback on rebated categories or classes. For low the purposes of determining payment to how we might ensure accurate rebate income beneficiaries whose out-of- the plan for the applicable contract year amounts are applied at the point of sale pocket costs are subsidized through are accurate, complete, and truthful. If when rebate agreements are structured Medicare’s low-income cost-sharing we were to move forward with a point- with contingencies that would be subsidy, cost-sharing savings resulting of-sale rebate policy, we would also unclear at the point of sale. from lower point-of-sale prices would consider amending § 423.505(k) to add a We also seek stakeholder comment on accrue to the government. Plan new requirement that the CEO, CFO, or what, if any, special considerations premiums would likely increase as a COO attest (based on best knowledge, should be taken into account in the result of such a point-of-sale rebate information, and belief) to the accuracy, design of a point-of-sale rebate policy, policy—if some rebates are required to completeness, and truthfulness of the for Part D employer group waiver plans be passed through to beneficiaries at the average rebate amount included in the (EGWPs). We are also interested in point of sale, fewer such concessions negotiated price and reported on the feedback on what particular effects could be apportioned to reduce plan PDE. The submission of accurate, requiring Part D sponsors to apply some liability, which would have the effect of

VerDate Sep<11>2014 20:14 Nov 27, 2017 Jkt 244001 PO 00000 Frm 00090 Fmt 4701 Sfmt 4702 E:\FR\FM\28NOP2.SGM 28NOP2 sradovich on DSK3GMQ082PROD with PROPOSALS2 Federal Register / Vol. 82, No. 227 / Tuesday, November 28, 2017 / Proposed Rules 56425

increasing the cost of coverage under Partially offsetting the increase in sharing subsidies would decrease if the plan. At the same time, the direct subsidy and low income premium beneficiary cost-sharing obligations reduction in cost-sharing obligations for subsidy costs for the government would decline due to the reduction in prices at the average beneficiary would likely be be decreases in Medicare’s reinsurance the point of sale. Finally, the slower large enough to lower their overall out- and low income cost-sharing subsidies. progression of beneficiaries through the of-pocket costs. The increasing cost of Decreases in Medicare’s reinsurance Part D benefit would also have the effect coverage under Part D plans as a result subsidy result when lower negotiated of reducing manufacturer gap discount of rebates being applied at the point of prices slow down the progression of payments as fewer beneficiaries would sale likely would have a more beneficiaries through the Part D benefit enter the coverage gap phase or progress significant impact on government costs, and into the catastrophic phase, and entirely through it. which would increase overall due to the when the government’s 80 percent The following tables summarize the significant growth in Medicare’s direct reinsurance payments for allowable 10-year impacts we have modeled for drug costs incurred in the catastrophic when 33, 66, 90, and 100 percent of all subsidies of plan premiums and low phase are based on lower negotiated manufacturer rebates are applied at the income premium subsidies. prices. Similarly, low income cost- point of sale: 53

TABLE 10A—TOTAL IMPACTS FOR 2019 THROUGH 2028 [In $billions]

33% 66% 90% 100%

Beneficiary Costs ...... ¥$19.6 ¥$39.1 ¥$53.2 ¥$56.9 Cost-Sharing ...... ¥28.8 ¥57.8 ¥78.9 ¥85.2 Premium ...... 9.2 18.7 25.7 28.3 Government Costs ...... 27.3 55.1 75.5 82.1 Direct Subsidy...... 62.8 128.1 177.4 200.0 Reinsurance ...... ¥21.7 ¥44.7 ¥62.2 ¥73.1 LI Cost-Sharing Subsidy ...... ¥16.6 ¥34.2 ¥47.7 ¥53.7 LI Premium Subsidy ...... 2.9 5.9 8.1 8.9 Manufacturer Gap Discount ...... ¥9.7 ¥19.4 ¥26.4 ¥29.4

TABLE 10B—2019–2028 PER MEMBER-PER MONTH IMPACTS

33% 66% 90% 100%

Beneficiary Costs ...... ¥$30.33 ¥$60.58 ¥$82.42 ¥$88.13 Cost-Sharing ...... ¥44.61 ¥89.50 ¥122.26 ¥131.97 Premium ...... 14.29 28.92 39.83 43.84 Government Costs ...... 42.38 85.40 117.01 127.22 Direct Subsidy ...... 97.45 198.93 275.43 310.58 Reinsurance ...... ¥33.76 ¥69.57 ¥96.84 ¥113.75 LI Cost-Sharing Subsidy ...... ¥25.80 ¥53.06 ¥74.11 ¥83.42 LI Premium Subsidy ...... 4.49 9.10 12.53 13.81 Manufacturer Gap Discount ...... ¥15.01 ¥30.02 ¥40.93 ¥45.48

TABLE 10C—2019–2028 IMPACTS—PERCENT CHANGE

33% 66% 90% 100%

Beneficiary Costs ...... ¥3 ¥5 ¥7 ¥8 Cost-Sharing ...... ¥6 ¥12 ¥16 ¥17 Premium ...... 4 7 10 11 Government Costs ...... 2 4 5 6 Direct Subsidy ...... 24 49 67 76 Reinsurance ...... ¥3 ¥7 ¥9 ¥11 LI Cost-Sharing Subsidy ...... ¥4 ¥9 ¥12 ¥14 LI Premium Subsidy ...... 4 8 11 12 Manufacturer Gap Discount ...... ¥7 ¥13 ¥18 ¥20

While we did not account for drug pricing that would further reduce rebates be used to lower the price at the behavioral changes when modeling the cost of the Part D program for point of sale could limit the potential these impacts, requiring rebates to be beneficiaries and taxpayers. for sponsors to leverage the benefits that applied at the point of sale might induce Specifically, requiring that at least a accrue to them when price concessions changes in sponsor behavior related to minimum percentage of manufacturer are applied as DIR at the end of the

53 Assumptions: (1) For purposes of calculating rebates are perfectly substituted with the point-of- (2) Used 2016 distribution of costs by benefit impacts only, we assume that total rebates will sale discount in all phases of the Part D benefit, phase to form assumptions. equal about 20 percent of allowable Part D drug including the coverage gap phase. (3) Assumed no other behavioral changes by costs projected for each year modeled, and that sponsors, beneficiaries, or others.

VerDate Sep<11>2014 20:14 Nov 27, 2017 Jkt 244001 PO 00000 Frm 00091 Fmt 4701 Sfmt 4702 E:\FR\FM\28NOP2.SGM 28NOP2 sradovich on DSK3GMQ082PROD with PROPOSALS2 56426 Federal Register / Vol. 82, No. 227 / Tuesday, November 28, 2017 / Proposed Rules

coverage year rather than as discounts at aggregate pharmacy payment adjustment was subject to later the point of sale, and thus potentially adjustment data submitted to CMS by reconciliation and thus not known in better align sponsors’ incentives with Part D sponsors as part of the annual full at the point of sale. However, we those of beneficiaries and taxpayers. For required reporting of DIR, which show did not finalize that interpretation example, we believe such an approach that performance-based pharmacy price because we determined that it was could reduce the incentive for sponsors concessions, net of all pharmacy inconsistent with the existing regulation to favor high cost-highly rebated drugs incentive payments, increased most given that it would have effectively to lower net cost alternatives, when dramatically after 2012. eliminated the reasonably determined such alternatives are available, and also In order to address the effects of the exception from inclusion in the potentially increase the incentive for DIR construct, as it relates to pharmacy negotiated price for all pharmacy price sponsors and PBMs to negotiate lower payment adjustments, on cost, concessions, as we stated in our follow- prices at the point of sale instead of competition, and efficiency under Part up memorandum of the same name higher DIR. We seek comment on the D, in the Part C and Part D final rule that released on November 5, 2014. extent to which a point-of-sale rebate appeared in the May 23, 2014 Federal Given the predominance of policy might be expected to further Register (79 FR 29844), we amended the performance-contingent pharmacy align the incentives for beneficiaries, definition of ‘‘negotiated prices’’ at payment arrangements, we do not sponsors, and taxpayers. § 423.100 to require Part D sponsors to believe that the existing requirement Finally, we believe requiring that include in the negotiated price at the that pharmacy price concessions be some manufacturer rebates be applied at point of sale all pharmacy price included in the negotiated price can be the point of sale as we are considering concessions and incentive payments to implemented in a manner that achieves doing would improve price pharmacies, with an exception, which meaningful price transparency, ensures transparency and limit the opportunity was intended to be narrow, allowed for that all pharmacy payment adjustments for differential reporting of costs and contingent pharmacy payment are taken into account consistently by price concessions, which may have a adjustments that cannot reasonably be all Part D sponsors, and prevents the positive effect on market competition determined at the point of sale (the shifting of costs onto beneficiaries and and efficiency. We solicit comment on reasonably determined exception). taxpayers. Therefore, we are soliciting whether basing the rebate applied at the However, when we formulated these comment from stakeholders on how we point of sale on average rebates at the requirements in 2014, the most recent might update the requirements drug category/class level, as described year for which DIR data was available governing the determination of previously, would meaningfully was 2012 and we did not anticipate the negotiated prices, to better reflect increase price transparency over the growth of performance-based pharmacy current pharmacy payment status quo by ensuring a consistent payment arrangements that we have arrangements, so as to ensure that the percentage of the rebates received are observed in subsequent years. We now reported price at the point of sale reflected in the price at the point of sale, understand that the reasonably includes all pharmacy price while also protecting the details of any determined exception we currently concessions. In this section, we put manufacturer-sponsor pricing allow applies more broadly than we had forth for consideration one potential relationship. initially envisioned because of the shift approach for doing so and seek by Part D sponsors and their PBMs comments on its merits, as well as the d. Pharmacy Price Concessions to Point towards these types of contingent merits of any alternatives that might of Sale pharmacy payment arrangements, and, better serve our goals of reducing In recent years, a growing proportion as a result, this exception prevents the beneficiary costs and better aligning of Part D sponsors and their contracted current policy from having the intended incentives for Part D sponsors with the PBMs have entered into payment effect on price transparency, interests of beneficiaries and taxpayers. arrangements with Part D network consistency, and beneficiary costs. We encourage all commenters to pharmacies in which a pharmacy’s Specifically, we have heard from provide quantitative analytical support reimbursement for a covered Part D drug several stakeholders that have suggested for their ideas wherever possible. is adjusted after the point of sale based that the reasonably determined on the pharmacy’s performance on exception applies to all performance- (1) All Pharmacy Price Concessions various measures defined by the based pharmacy payment adjustments. We are considering revising the sponsor or its PBM. Furthermore, we The amount of these adjustments, by definition of negotiated price at understand that the share of definition, is contingent upon § 423.100 to remove the reasonably pharmacies’ reimbursements that is performance measured over a period determined exception and to require contingent upon their performance that extends beyond the point of sale that all price concessions from under such arrangements has also and, thus, cannot be known in full at the pharmacies be reflected in the grown steadily each year. As a result, point of sale. Therefore, performance- negotiated price that is made available sponsors and PBMs have been based pharmacy payment adjustments at the point of sale and reported to CMS recouping increasing sums from cannot ‘‘reasonably be determined’’ at on a PDE record, even when such network pharmacies after the point of the point of sale as they cannot be concessions are contingent upon sale (pharmacy price concessions) for known in full at the point of sale. We performance by the pharmacy. We ‘‘poor performance’’ relative to initially proposed, in a September 29, believe we have the discretion to require standards defined by the sponsor or 2014 memorandum entitled Direct and that all pharmacy price concessions be PBM. These sums are far greater than Indirect Remuneration (DIR) and applied at the point of sale, and not just those paid to network pharmacies after Pharmacy Price Concessions, that if the a share of the amounts as we discussed the point of sale (pharmacy incentive amount of the post-point of sale earlier for manufacturer rebates. Such a payments) for ‘‘high performance.’’ We pharmacy payment adjustment could be requirement would preserve the refer to pharmacy price concessions and reasonably approximated at the point of flexibilities provided under section incentive payments collectively as sale, the adjustment should be reflected 1860D–2(d)(1)(B) of the Act with respect pharmacy payment adjustments. These in the negotiated price, even if the to the treatment of manufacturer rebates, findings are largely based on the actual amount of the payment while also allowing for greater

VerDate Sep<11>2014 20:14 Nov 27, 2017 Jkt 244001 PO 00000 Frm 00092 Fmt 4701 Sfmt 4702 E:\FR\FM\28NOP2.SGM 28NOP2 sradovich on DSK3GMQ082PROD with PROPOSALS2 Federal Register / Vol. 82, No. 227 / Tuesday, November 28, 2017 / Proposed Rules 56427

transparency and consistency in the where a pharmacy’s performance under of pricing information available across reporting of pharmacy price a performance-based arrangement Part D plans and thus improve market concessions. First, section 1860D– triggers a bonus payment or a smaller competition and cost-efficiency under 2(d)(2) of the Act, which provides the penalty than that assessed for the lowest Part D. context critical to our interpretation that level of performance), the difference Requiring the negotiated price to sponsors are granted flexibility in how between the negotiated price reported to reflect the lowest possible pharmacy to apply manufacturer rebates, does not CMS on the PDE record and the final reimbursement, would move the contemplate price concessions from payment to the pharmacy would need to negotiated price closer to the final sources other than manufacturers, such be reported as negative DIR. For an reimbursement for most network as pharmacies, being passed through in illustration of how negotiated prices pharmacies under current pharmacy various ways. Second, even when all would be reported under such an payment arrangements and thus closer price concessions from pharmacies are approach, see the example provided to the actual cost of the drug for the Part required to be applied at the point of later in this section. D sponsor. We are interested in public sale, sponsors would retain the We are interested in public comment comment on whether such an outcome flexibility to determine how to apply on whether requiring the negotiated would help us to achieve meaningful manufacturer rebates and other price price at the point of sale to reflect the price transparency. We have learned concessions received from sources other lowest possible pharmacy from the DIR data reported to CMS and than pharmacies in order to reduce costs reimbursement would effectively feedback from numerous stakeholders under the plan. Finally, we believe that address recent developments in that pharmacies rarely receive an requiring that all pharmacy price industry practices, that is, the growing incentive payment above the original concessions be applied at the point of prevalence of performance-based reimbursement rate for a covered claim. sale would ensure that negotiated prices pharmacy payment arrangements, and We gather that performance under most ‘‘take into account’’ at least some price ensure that all pharmacy price arrangements dictates only the concessions and, therefore, would be concessions are included in the magnitude of the amount by which the consistent with the plain language of negotiated price, and thus shared with original reimbursement is reduced, and section 1860D–2(d)(1)(B) of the Act. We beneficiaries, in a consistent manner by most pharmacies do not achieve are considering requiring all, and not all Part D sponsors. By requiring that performance scores high enough to only a share of, pharmacy price sponsors assume the lowest possible qualify for a substantial, if any, concessions be included in the pharmacy performance when reporting reduction in penalties. Therefore, we negotiated price in order to maximize the negotiated price, we would be seek comment on whether a the level of price transparency and prescribing a standardized way for Part requirement that the negotiated price consistency in the determination of D sponsors to treat the unknown (final reflect the lowest possible negotiated prices and bids and pharmacy performance) at the point of reimbursement to a network pharmacy, meaningfully reduce the shifting of sale under a performance-based including all potential pharmacy price costs from sponsors to beneficiaries and payment arrangement, which many Part concessions, is likely to capture the taxpayers. D sponsors and PBMs have identified as actual price of the drug at a network the most substantial operational barrier pharmacy, or at least move closer to it. (2) Lowest Possible Reimbursement to including such concessions at the Finally, we are considering requiring In order to effectively capture all point of sale. We are also interested in that all contingent incentive payments pharmacy price concessions at the point public comment on whether requiring be excluded from the negotiated price of sale consistently across sponsors, we the negotiated price to be the lowest because including the actual amount of are considering requiring the negotiated possible pharmacy reimbursement any contingent incentive payments to price to reflect the lowest possible would serve to maximize the cost- pharmacies in the negotiated price reimbursement that a network pharmacy sharing savings accruing to beneficiaries would make drug prices appear higher could receive from a particular Part D by passing through all potential at a ‘‘high performing’’ pharmacy, sponsor for a covered Part D drug. pharmacy price concessions at the point which receives an incentive payment, Under this approach, the price reported of sale. than at a ‘‘poor performing’’ pharmacy, at the point of sale would need to Further, we are interested in public which is assessed a penalty. This include all price concessions that could comment on whether this approach pricing differential could potentially potentially flow from network would be clearer for Part D sponsors to create a perverse incentive for pharmacies, as well as any dispensing follow than the requirements in place beneficiaries to choose a lower fees, but exclude any additional today, which require Part D sponsors to performing pharmacy for the advantage contingent amounts that could flow to assess which types of pharmacy of a lower price. We seek comment on network pharmacies and increase prices payment adjustments fall under the whether such an approach would over the lowest reimbursement level, reasonably determined exception. We prevent this unintended consequence such as incentive fees. That is, if a are interested in public comment on and thus avoid reducing the performance-based payment whether providing such additional competitiveness of high performing arrangement exists between a sponsor clarity and thus limiting the need for pharmacies by increasing the negotiated and a network pharmacy, the point-of- interpretation of the requirements by price charged to the beneficiary at those sale price of a drug reported to CMS Part D sponsors would improve pharmacies. would need to equal the final consistency in the application of the reimbursement that the network requirements regarding pharmacy price (3) Lowest Possible Reimbursement pharmacy would receive for that concessions across sponsors, as well as Example prescription under the arrangement if reducing sponsor burden in terms of the To illustrate how Part D sponsors and the pharmacy’s performance score were resources necessary to ensure their intermediaries would report costs the lowest possible. If a pharmacy is compliance in the absence of clear under the approach we are considering, ultimately paid an amount above the guidance. In addition, we welcome we provide the following example: lowest possible contingent incentive feedback on whether the change we Suppose that under a performance- reimbursement (such as in situations describe here would improve the quality based payment arrangement between a

VerDate Sep<11>2014 20:14 Nov 27, 2017 Jkt 244001 PO 00000 Frm 00093 Fmt 4701 Sfmt 4702 E:\FR\FM\28NOP2.SGM 28NOP2 sradovich on DSK3GMQ082PROD with PROPOSALS2 56428 Federal Register / Vol. 82, No. 227 / Tuesday, November 28, 2017 / Proposed Rules

Part D sponsor and its network performance scenario ($95 minus $100), version of § 423.100 that was in effect as pharmacy, the sponsor will: (1) Recoup and ¥ $6 as DIR under the high of the passage of the PPACA. As 5 percent of its total Part D-related performance scenario ($95 minus $101), discussed previously, this definition of payments to the pharmacy at the end of for every covered claim for this drug negotiated price only references the the contract year for the pharmacy’s purchased at this pharmacy. price concessions that the Part D failure to meet performance standards; (4) Additional Considerations sponsor has elected to pass through at (2) recoup no payments for average the point of sale. As such, we are performance; or (3) provide a bonus As with the policy approach that we uncertain as to whether we would have equal to 1 percent of total payments to described previously for moving the authority to require sponsors the pharmacy for high performance. For manufacturer rebates to the point of include pharmacy price concessions in a drug that the sponsor has agreed to sale, we would leverage existing the negotiated price for purposes of pay the pharmacy $100 at the point of reporting mechanisms to confirm that determining manufacturer coverage gap sale, the pharmacy’s final sponsors are appropriately applying discounts. We intend to consider this pharmacy price concessions at the point reimbursement under this arrangement issue further and will address it in any of sale, as we do with other cost data would be: (1) $95 for poor performance; future rulemaking regarding the required to be reported. Specifically, we (2) $100 for average performance; or (3) requirements for determining the would likely use the estimated rebates $101 for high performance. However, negotiated price that is available at the at point-of-sale field on the PDE record point of sale. under all performance scenarios, the to also collect point-of-sale pharmacy negotiated price reported to CMS on the price concessions information, and (5) Impacts for Applying Pharmacy PDE at the point of sale for this drug fields on the Summary and Detailed DIR Price Concessions at the Point of Sale would be $95, or the lowest Reports to collect final pharmacy price reimbursement possible under the concession information at the plan and Requiring that all pharmacy price arrangement. Thus, if a plan enrollee NDC levels. Differences between the concessions that sponsors and PBMs were required to pay 25 percent amounts applied at the point of sale and receive be used to lower the price at the coinsurance for this drug, then the amounts actually received, therefore, point of sale, as we described earlier, enrollee’s costs under all scenarios would become apparent when would affect beneficiary, government, would be 25 percent of $95, or $23.75, comparing the data collected through and manufacturer costs largely in the which is less than the $25 the enrollee those means at the end of the coverage same manner as discussed previously in would pay today (when the negotiated year. regards to moving manufacturer rebates price is likely to be reported as $100). Finally, as noted previously, the to the point of sale. The difference is in Any difference between the reported negotiated price is also the basis by the magnitude of the impacts given that negotiated price and the pharmacy’s which manufacturer liability for sponsors and PBMs receive significantly final reimbursement for this drug would discounts in the coverage gap higher sums of manufacturer rebates be reported as DIR at the end of the determined. Under section 1860D– than of pharmacy price concessions. coverage year. The sponsor would 14A(g)(6) of the Act, the definition of The following table summarizes the 10- report $0 as DIR under the poor negotiated price used for coverage gap year impacts we have modeled for performance scenario ($95 minus $95), discounts is based on the regulatory moving all pharmacy price concessions ¥ $5 as DIR under the average definition of the negotiated price in the to the point of sale: 54

TABLE 11—2019–2028 POINT-OF-SALE PHARMACY PRICE CONCESSIONS IMPACTS

Total Per member- Percent (billions) per month change

Beneficiary Costs ...... ¥$10.4 ¥$16.09 ¥1 Cost-Sharing ...... ¥16.1 ¥24.89 ¥3 Premium ...... 5.7 8.79 2 Government Costs ...... 16.6 25.65 1 Direct Subsidy ...... 33.5 51.89 13 Reinsurance ...... ¥8.8 ¥13.74 ¥1 LI Cost-Sharing Subsidy ...... ¥9.9 ¥15.23 ¥3 LI Premium Subsidy ...... 1.8 2.73 2 Manufacturer Gap Discount ...... ¥5.0 ¥7.69 ¥3

Moreover, while not accounted for competitive advantage accruing to one B. Improving the CMS Customer when modeling these impacts, we seek sponsor over another based on a Experience comment on whether requiring that all technical difference in how costs are 1. Restoration of the Medicare pharmacy price concessions be included reported. We are further interested in Advantage Open Enrollment Period in the negotiated price, as we have comments on whether this outcome (§§ 422.60, 422.62, 422.68, 423.38 and described, would also lead to prices and could make the Part D market more 423.40) Part D bids and premiums being more competitive and efficient. accurately comparable and reflective of Section 4001 of the Balanced Budget relative plan efficiencies, with no unfair Act of 1997 (BBA), added section

54 Assumptions: (1) For purposes of calculating that the concession amounts are perfectly (2) Used 2016 distribution of costs by benefit impacts only, we assume that pharmacy price substituted with the point-of-sale discount in all phase to form assumptions. concession will equal about 3 percent of allowable phases of the Part D benefit, including the coverage (3) Assumed no other behavioral changes by Part D costs projected for each year modeled, and gap phase. sponsors, beneficiaries, or others.

VerDate Sep<11>2014 20:14 Nov 27, 2017 Jkt 244001 PO 00000 Frm 00094 Fmt 4701 Sfmt 4702 E:\FR\FM\28NOP2.SGM 28NOP2 sradovich on DSK3GMQ082PROD with PROPOSALS2 Federal Register / Vol. 82, No. 227 / Tuesday, November 28, 2017 / Proposed Rules 56429

1851(e) of the Act establishing specific Section 17005 of the 21st Century to switch to—(1) another MA-only plan; parameters in which elections can be Cures Act (the Cures Act) modified (2) an MA–PD plan; or (3) Original made and/or changed during open section 1851(e)(2) of the Act to Medicare with or without a PDP. enrollment and disenrollment periods eliminate the MADP and to establish, However, this enrollment period does under the Medicare Advantage (MA) beginning in 2019, a new OEP— not allow for Part D changes for program. In addition, section 1851(e)(6) hereafter referred to as the ‘‘new OEP’’— individuals enrolled in Original of the Act permits MA organizations, at to be held from January 1 to March 31 Medicare, including those with their discretion, to choose not to accept each year. Subject to the MA plan being enrollment in stand-alone PDPs. enrollment requests during the open open to enrollees as provided under In addition, individuals with enrollment period (that is, choose to be § 422.60(a)(2), this new OEP allows enrollment in Original Medicare or closed to accept enrollments for all or a individuals enrolled in an MA plan to other Medicare health plan types, such portion of the enrollment period). The make a one-time election during the first as cost plans, are not able use the new Medicare Prescription Drug, 3 months of the calendar year to switch OEP to enroll in an MA plan, regardless Improvement, and Modernization Act of MA plans or to disenroll from an MA of whether or not they have Part D. We 2003 (MMA) amended section plan and obtain coverage through note that the inability for an individual 1851(e)(2) of the Act to further establish Original Medicare. In addition, this enrolled in Original Medicare to use the open enrollment periods during which provision affords newly MA-eligible new OEP is a significant difference from MA-eligible individuals were limited to individuals (those with Part A and Part the old OEP. Furthermore, and a single election to (that is, enroll, B) who enroll in a MA plan, the significantly different from the old OEP, disenroll, or change MA plans) during opportunity to also make a one-time unsolicited marketing is prohibited by such period. election to change MA plans or drop statute during this period. From 2007 to 2010, the Act outlined MA coverage and obtain Original To implement the changes required an Open Enrollment Period (OEP)— Medicare. Newly eligible MA by the Cures Act, we propose the referred to hereafter as the ‘‘old OEP’’— individuals can only use this new OEP following revisions: • which provided MA-eligible individuals during the first 3 months in which they Amend current § 422.62(a)(5) and one opportunity to make an enrollment have both Part A and Part B. Similar to add §§ 423.38(e) and 423.40(e) to change between January 1 and March the old OEP, enrollments made using establish the new OEP starting 2019 and 31. It permitted new enrollment into an the new OEP are effective the first of the the corresponding limited Part D MA plan from Original Medicare, enrollment period. month following the month in which • switches between MA plans, and the enrollment is made, as outlined in Amend §§ 422.62(a)(7), 422.68(f), disenrollment from a MA plan to § 422.68(c). In addition, an MA 423.38(d) and 423.40(d) to end the Original Medicare. During this old OEP, MADP at the end of 2018. organization has the option under • individuals were not allowed to make section 1851(e)(6) of the Act to Remove current regulations in changes to their Part D coverage. Hence, voluntarily close one or more of its MA § 422.62(a)(3) and (a)(4) that outline an individual who had Part D coverage plans to OEP enrollment requests. If an historical OEPs which have not been in through a Medicare Advantage MA plan is closed for OEP enrollments, existence for more than a decade. As Prescription Drug plan (MA–PD plan) then it is closed to all individuals in the these past enrollment periods are no could only use the old OEP to switch to entire plan service area who are making longer relevant to the current (1) another MA–PD plan; or (2) Original OEP enrollment requests. All MA plans enrollment periods available to MA- Medicare with a Prescription Drug Plan must accept OEP disenrollment eligible individuals, we are proposing to (PDP). This old OEP did not permit requests, regardless of whether or not it delete these paragraphs and renumber someone enrolled in either an MA-only is open for enrollment. the enrollment periods which follow plan or Original Medicare without a them. As such, we propose that § 422.62 PDP to enroll in Part D coverage through There are a few key differences (a)(5) become § 422.62 (a)(3), and both this enrollment opportunity. The old between the old OEP and the new OEP §§ 422.62 (a)(6) and (a)(7) be OEP was codified at § 422.62(a)(5) in as authorized by the Cures Act. Unlike renumbered as §§ 422.62(a)(4) and 2005 (see 70 FR 4587). the old OEP, this new OEP permits (a)(5), respectively. In 2010, section 3204 of the Patient changes to Part D coverage for • Amend new redesignated paragraph Protection and Affordable Care Act individuals who, prior to the change in (a)(4) (proposed to be redesignated from modified section 1851(e)(2)(C) of the election during the new OEP, were (a)(6)) to make two technical changes to Act to no longer offer the old OEP and enrolled in an MA plan. As eligibility to replace the phrase ‘‘as defined by CMS’’ instead provide a different enrollment use the new OEP is available only for with ‘‘as defined in § 422.2’’ and to period for MA enrollees to leave the MA MA enrollees, the ability to make capitalize ‘‘original Medicare.’’ program and return to Original changes to Part D coverage is limited to • As noted previously, and discussed Medicare in the first 45 days of the any individual who uses the OEP; in section III.C.7, §§ 422.2268 and calendar year. The statute further however, the new OEP does not provide 423.2268 would be revised to prohibit permitted individuals who utilized this enrollment rights to any individual who marketing to MA enrollees during the disenrollment opportunity to enroll in a is not enrolled in an MA plan during the OEP. Part D plan upon their return to Original applicable 3-month period. Individuals • Conforming technical edits to Medicare. On April 15, 2011, we who use the new OEP to make changes update cross references in amended § 422.62(a)(5) and codified to their MA coverage may also enroll in §§ 422.60(a)(2), 422.62(a)(5)(iii), and §§ 422.62(a)(7) and 423.38(d) to conform or disenroll from Part D coverage. For 422.68(c). with this statutory change and to example, an individual enrolled in an establish the current Medicare MA–PD plan may use the new OEP to 2. Reducing the Burden of the Advantage Disenrollment Period switch to: (1) Another MA–PD plan; (2) Compliance Program Training (MADP) with its coordinating Part D an MA-only plan; or (3) Original Requirements (§§ 422.503 and 423.504) enrollment period. These changes were Medicare with or without a PDP. The Sections 1857(e) and 1860D– effective for the 2011 plan year (76 FR new OEP would also allow an 12(b)(3)(D) of the Act specify that 21442 and43). individual enrolled in an MA-only plan contracts with MA organizations and

VerDate Sep<11>2014 20:14 Nov 27, 2017 Jkt 244001 PO 00000 Frm 00095 Fmt 4701 Sfmt 4702 E:\FR\FM\28NOP2.SGM 28NOP2 sradovich on DSK3GMQ082PROD with PROPOSALS2 56430 Federal Register / Vol. 82, No. 227 / Tuesday, November 28, 2017 / Proposed Rules

Part D sponsors shall contain other difficulties with adopting CMS’ greatly and their compliance program terms and conditions that the Secretary compliance training to satisfy the operations and systems are well may find necessary and appropriate. We compliance program training established. Many of these organizations have previously established that all Part requirement. While CMS’ previous have developed effective training and C and Part D contracting organizations market research indicated that this learning models to communicate must have the necessary administrative provision would mitigate the problems compliance expectations and ensure and management arrangements to have raised by FDRs who held contracts with that employees and FDRs are aware of an effective compliance program, as multiple sponsors and who completed the Medicare program requirements. reflected in § 422.503(b)(4)(vi) and repetitive trainings for each sponsor Also, the attention focused on § 423.504(b)(4)(vi). Effective compliance with which they contract, in practice, compliance program effectiveness by programs are those designed and we learned that the problems persisted. CMS’ Part C and Part D program audits implemented to prevent, detect and Many sponsors are unwilling to accept has further encouraged sponsors to correct Medicare non-compliance, fraud completion of the CMS training as continually improve their compliance waste and abuse and address improper fulfillment of the training requirement operations. conduct in a timely and well- and identify which critical positions CMS does not generally interfere in documented manner. Medicare non- within the FDR are subject to the private contractual matters between compliance may include inaccurate and training requirement. As a result, FDRs sponsoring organizations and their untimely payment or delivery of items are still being subjected to multiple FDRs. Our contract is with the or medical services, complaints from sponsors’ specific training programs. sponsoring organization, and sponsoring providers and enrollees, illegal activities FDRs have the additional burden of organizations are ultimately responsible and unethical behavior. While there is taking CMS training and reporting for compliance with all applicable no ‘‘one-size fits all’’ program for every completion back to the sponsor or statutes, regulations and sub-regulatory contracting organization, there are seven sponsors with which they contract. guidance, regardless who is performing core elements that must exist to have an Furthermore, the industry has indicated the work. Additionally, delegated effective compliance program that is that the requirement has increased the entities range in size, structure, risks, tailored to the organization’s unique burden for various Part C and Part D staffing, functions, and contractual operations, compliance risks, resources program stakeholders, including arrangements which necessitates the and circumstances. These 7 core hospitals, suppliers, health care sponsoring organization have discretion elements are codified in current providers, pharmacists and physicians, in its method of oversight to ensure regulations at §§ 422.503(b)(4)(vi)(A) all of which may be considered FDRs. compliance with program requirements. through (G) and 423.504(b)(4)(vi)(A) Since the implementation of the This may be accomplished through through (G). One of the 7 core elements mandatory CMS-developed training has routine monitoring and implementing is training and education. Compliance not achieved the intended efficiencies corrective action, which may include programs for Part C and Part D in the administration of the Part C and training or retraining as appropriate, organizations must include training and Part D programs, we propose to delete when non-compliance or misconduct is education between the compliance the provisions from the Part C and Part identified. We will continue to hold MA officer and the sponsoring D regulations that require use of the organizations and Part D sponsors organization’s employees, senior CMS-developed training. Additionally accountable for the failures of their administrators, governing body we propose to restructure FDRs to comply with Medicare program members as well as their first-tier, § 422.503(b)(4)(vi)(C)(1) (with the requirements, even with these proposed downstream and related entities (FDRs). proposed revisions) into two paragraphs FDRs have long complained of the changes. Existing regulations at (that is, paragraph (C)(1) and (C)(2)) to burden of having to complete multiple § 422.503(b)(4)(vi) and separate the scope of the compliance sponsoring organizations’ compliance § 423.504(b)(4)(vi) require that every training from the frequency with which trainings and the amount of time it can sponsor’s contract must specify that the training must occur, as these are two take away from providing care to FDRs must comply with all applicable distinct requirements. With this beneficiaries. We attempted to resolve federal laws, regulations and CMS proposed revision, the organization of this burden by developing our own web- instructions. Additionally, we audit § 422.503(b)(4)(vi)(C) will mirror that of based standardized compliance program sponsors’ compliance programs when training modules and establishing, in a § 423.504(b)(4)(vi)(C). Further, we we conduct routine program audits, and May 23, 2014 final rule (79 FR 29853 propose to revise the text in our audit process includes evaluations and 29855), which was effective January § 423.504(b)(4)(vi)(C)(2) to track the of sponsoring organizations’ monitoring 1, 2016, that FDRs were required to phrasing in § 422.503(b)(4)(vi)(C)(2), as and auditing of their FDRs as well as complete the CMS training to satisfy the reorganized. The technical changes in FDR oversight. Our audits also evaluate compliance training requirement. The the text eliminate any potential formulary administration and mandatory use of the CMS training by ambiguity created by different phrasing processing of coverage and appeal FDRs was a means to ensure that FDRs in what we intend to be identical requests in the Part C and Part D would only have to complete the requirements as to the timing programs. FDRs often perform some or compliance training once on an annual requirements for the training. We all of these functions for sponsors, so if basis. The FDRs could then provide the believe these technical changes make they are non-compliant, it will come to certificate of completion to all Part C the requirements easier to understand. light during the program audit and the and Part D contracting organizations Furthermore, we believe that the sponsoring organization is ultimately they served, hence, eliminating the prior broader requirement that plan sponsors held responsible for the FDRs’ failure to duplication of effort that so many FDRs provide compliance training to their comply with program requirements. stated was creating a huge burden on FDRs no longer promotes the effective Given that compliance programs are their operation. and efficient administration of the very well established and have grown However, CMS continues to receive Medicare Advantage and Prescription more sophisticated since their hundreds of inquiries and concerns Drug programs. Part C and Part D inception, coupled with the industry’s from sponsors and FDRs regarding their sponsoring organizations have evolved desire to perform well on audit, the

VerDate Sep<11>2014 20:14 Nov 27, 2017 Jkt 244001 PO 00000 Frm 00096 Fmt 4701 Sfmt 4702 E:\FR\FM\28NOP2.SGM 28NOP2 sradovich on DSK3GMQ082PROD with PROPOSALS2 Federal Register / Vol. 82, No. 227 / Tuesday, November 28, 2017 / Proposed Rules 56431

CMS training requirement is not the applicant. We have codified this terminate the PBP absent an approved driver of performance improvement or authority at § 422.514(b) and limited it waiver from CMS during the first 3 FDR compliance with key CMS to circumstances where the MA contract years of the contract pursuant to requirements. Given this accumulated applicant is capable of administering § 422.510(a). program experience and the growing and managing an MA contract and is Under our proposal, we would only sophistication of the industry’s able to manage the level of risk required review and approve waivers through the compliance operations, as well as our under the contract. We are proposing to MA application process as opposed to continuing requirements on sponsors for revise § 422.514 regarding the minimum the current practice of reviewing annual oversight and monitoring of FDRs, we enrollment requirements to improve requests and, potentially, requests from are proposing to delete not just the program efficiencies. existing MA organizations that fail to regulatory provision requiring Currently, MA organizations, maintain enrollment in the second or acceptance of CMS’ training as meeting including PSOs, with an approved third year of operation. the compliance training requirements, minimum enrollment waiver for their We are proposing to revise the text in but also the reference to FDRs in the first contract year have the option to § 422.514(b) to provide that the waiver compliance training requirements resubmit the waiver request for CMS in of the minimum enrollment requirement codified at §§ 422.503(b)(4)(vi)(C) and the second and third year of the may be in effect for the first 3 years of 423.504(b)(4)(vi)(C). Specifically, we contract. In conjunction with the waiver the contract. Further, we are proposing propose to remove the phrases in request, the MA organization must to delete all references to ‘‘MA paragraphs (C)(1) and (C)(2) that refer to continue to demonstrate the organizations’’ in paragraph (b) to reflect first tier, downstream and related organization’s ability to operate and our proposal that we would only review entities and remove the paragraphs demonstrate that it has and uses an and approve waiver requests during the specific to FDR training at effective marketing and enrollment contract application process. We also §§ 422.503(b)(4)(vi)(C)(2) and (3) and system, despite continued failure to propose to delete current paragraphs 423.504(b)(4)(vi)(C)(3) and (4); we are meet the minimum enrollment (b)(2) and (b)(3) in their entirety to also proposing technical revisions to requirement. In addition, the current remove the requirement for MA restructure § 422.503(b)(4)(vi)(C)(1) into regulation limits our authority to grant organizations to submit an additional two paragraphs and ensure that the the waiver in the third year to situations minimum enrollment waiver annually remaining text is grammatically correct where the MA organization has at least for the second and third years of the and consistent with Office of the attained a projected number of enrollees contract. Finally, the proposed text also Federal Register style. Compliance in the second year. Since 2012, we have includes technical changes to training would still be required of MA not received any waiver to the redesignate paragraphs (b)(1)(i) through and Part D sponsors, their employees, minimum enrollment requirement (iii) as (b)(1) through (3), consistent with chief executives or senior during the second and third year of the regulation style requirements of the administrators, managers, and governing contract. Rather, we only received Office of the Federal Register. body members. This change will allow minimum enrollment waiver requests 4. Revisions to Timing and Method of sponsoring organizations, and the FDRs through the initial application process. Disclosure Requirements (§§ 422.111 We believe the current requirement to with which they contract, the maximum and 423.128) flexibility in developing and meeting resubmit the waiver in the second and training requirements associated with third year of the contract is unnecessary. As provided in sections 1852(c)(1) effective compliance programs. We The statute does not require a and 1860D–4(a)(1)(A) of the Act, invite comments concerning this reevaluation of the minimum Medicare Advantage (MA) organizations proposal and suggestions on other enrollment standard each year and and Part D sponsors must disclose options we can implement to plainly authorizes a waiver ‘‘during the detailed information about the plans accomplish the desired outcome. first 3 contract years with respect to an they offer to their enrollees ‘‘at the time organization.’’ The current minimum of enrollment and at least annually 3. Medicare Advantage Plan Minimum enrollment waiver review in the initial thereafter.’’ This detailed information is Enrollment Waiver (§ 422.514(b)) MA contract application provides CMS specified in section 1852(c)(1) of the Under section 1857(b) of the Act, the confidence to determine whether an Act, with additional information CMS may not enter into a contract with MA organization may operate for the specific to the Part D benefit also a MA organization unless the first 3 years of the contract without required under section 1860D–4(a)(1)(B) organization complies with the meeting the minimum enrollment of the Act. Under § 422.111(a)(3), CMS minimum enrollment requirement. requirement. CMS currently monitors requires MA plans to disclose this Under the basic rule at § 422.514(a), to low enrollment at the plan benefit information to each enrollee ‘‘at the provide health care benefits under the package (PBP) level. We note that a time of enrollment and at least annually MA program, MA organizations must similar provision in current thereafter, 15 days before the annual demonstrate that they have the § 422.506(b)(1)(iv) permits CMS to coordinated election period.’’ A similar capability to enroll at least 5,000 terminate an MA contract (or terminate rule for Part D sponsors is found at individuals, and provider sponsored a specific plan benefit package) if the § 423.128(a)(3). Additionally, § 417.427 organizations (PSOs) must demonstrate MA plan fails to maintain a sufficient directs 1876 cost plans to follow the that they have the capability to enroll at number of enrollees to establish that it disclosure requirements in § 422.111 least 1,500 individuals. If an MA is a viable independent plan option for and § 423.128. In making the changes organization intends to offer health care existing or new enrollees. In addition, proposed here, we will also affect 1876 benefits outside urbanized areas as compliance with § 422.514 is required cost plans, though it is not necessary to defined in § 422.62(f), then the under § 422.503(a)(13). If an change the regulatory text at § 417.427. minimum enrollment level is reduced to organization’s PBP does not achieve and Sections 422.111(b) and 423.128(b) of 1,500 for MA organizations and to 500 maintain enrollment levels in the Part C and Part D program for PSOs. The statute permits CMS to accordance with the applicable low and regulations, respectively, describe the waive this requirement in the first 3 minimum enrollment policies in information plans must disclose. The years of the contract for an MA contract existing regulations, CMS may move to content listed in § 422.111(b) is found in

VerDate Sep<11>2014 20:14 Nov 27, 2017 Jkt 244001 PO 00000 Frm 00097 Fmt 4701 Sfmt 4702 E:\FR\FM\28NOP2.SGM 28NOP2 sradovich on DSK3GMQ082PROD with PROPOSALS2 56432 Federal Register / Vol. 82, No. 227 / Tuesday, November 28, 2017 / Proposed Rules

an MA plan’s Evidence of Coverage annual coordinated election period the EOC important due to the high (EOC) and provider directory. The (AEP) (73 FR 54216). The rationale for number errors plans self-identify in the content listed in § 423.128(b) is found in this requirement was to provide document through errata sheets they a Part D Sponsor’s EOC, formulary, and beneficiaries with comprehensive submit to CMS and mail to pharmacy directory. Section information prior to the AEP so that beneficiaries. In 2017, plans submitted 422.111(h)(2)(i) requires that plans must they could make informed enrollment 166 ANOC/EOC errata, which identified maintain an internet Web site that decisions. 221 ANOC errors and 553 EOC errors. contains the information listed in However, we have found through Additional time to produce the EOC § 422.111(b) and also states that posting consumer testing that the large size of will give plans more time to conduct the EOC, Summary of Benefits, and these mailings overwhelmed enrollees. quality assurance and improve accuracy provider network information on the In particular, the EOC is a long and result in fewer errata sheets in the plan’s Web site ‘‘does not relieve the document that enrollees found difficult future. MA organization of its responsibility to navigate. Enrollees were more likely In addition to the proposed changes under § 422.111(a) to provide hard to review the Annual Notice of Change in §§ 422.111(a)(3) and 423.128(a)(3), we copies to enrollees.’’ (ANOC), a shorter document also propose to give plans more We propose two changes to the summarizing any changes to plan flexibility to provide the materials disclosure requirements. First, we benefits beginning on January 1 of the specified in § 422.111(b) electronically. propose to revise §§ 422.111(a)(3) and upcoming year, if it was separate from The language in § 422.111(h)(2)(ii) 423.128(a)(3) to require MA plans and the EOC. Sections 422.111(d) and requiring hard copies of the specified Part D Sponsors to provide the 423.128(g)(2) require MA organizations documents first appeared in the January information in paragraph (b) of the and Part D sponsors to provide the 28, 2005, final rule (70 FR 4587) in respective regulations by the first day of ANOC to all enrollees at least 15 days § 422.111(f)(12). At that time, MA plans the annual enrollment period, rather before the AEP. were not required to maintain a Web than 15 days before. In addition, we The ANOC is intended to convey all site, but if they chose to they were propose to modify the sentence in of the information essential to an required to include the EOC, Summary § 422.111(h)(2)(ii) which states that enrollee’s decision to remain enrolled in of Benefits, and provider network posting the EOC, Summary of Benefits, the same plan for the following year or information on the Web site. However, and provider network information on choose another plan during the AEP. plans were prohibited from posting the plan’s Web site does not relieve the CMS’s research and experience have these documents online as a substitute plan of responsibility to provide hard indicated that the ANOC is particularly for providing hard copies to enrollees. A copies to enrollees. We propose to useful to and used by enrollees. subsequent final rule, published April revise the sentence slightly and add Therefore, we are not proposing to 15, 2011, established that MA plans are ‘‘upon request’’ to the existing change the §§ 422.111(d) and 423.128(g) required to maintain an internet Web regulatory language to make it clear requirements that the ANOC be received site at § 422.111(h)(2) and moved the when any document that is required to 15 days prior to AEP. requirement that posting documents on be delivered under paragraph (a) in a Unlike the ANOC, the EOC is a the plan Web site did not substitute for manner that includes provision of a document akin to a contract that hard copies from § 422.111(f)(12) to hard copy upon request, posting the provides enrollees with exhaustive § 422.111(h)(2)(ii) (76 FR 21502). document on the Web site (whether that information about their medical There is no parallel to document is the EOC, SB, directory coverage and rights and responsibilities § 422.111(h)(2)(ii) in § 423.128. Instead, information or other materials) does not as members of a plan. The provider § 423.128(a) states that Part D sponsors relieve the MA organizations of a directory, pharmacy directory, and must disclose the information in responsibility to deliver hard copies formulary also contain information paragraph (b) in the manner specified by upon request. We intend these necessary to access care and benefits. As CMS. Section 423.128(d)(2)(i) requires proposals to provide CMS with the such, CMS requires MA organizations Part D sponsors to maintain an internet flexibility to permit delivery other than and Part D sponsors to make these Web site that includes information through mailing hard copies (which is documents available at the start of the listed in § 423.128(b). CMS sub- the requirement today for all materials AEP, so CMS proposes to amend regulatory guidance has instructed plans and information covered by §§ 422.111(a)(3) and 423.128(a)(3) to to provide the EOC in hard copy, but we § 422.111(a)), including through remove the current deadline and insert believe that the regulatory text would electronic delivery or posting on the ‘‘by the first day of the annual permit delivery by notifying enrollees of Web site in conjunction with delivery of coordinated election period.’’ To the the internet posting of the documents, a hard copy notice describing how the extent that enrollees find the EOC, subject to the right to request hard information and materials are available. provider directory, pharmacy directory, copies.55 As explained previously We believe this proposal will ultimately and formulary useful in making regarding the changes to § 422.111, we provide additional flexibility to plans to informed enrollment decisions, CMS intend for plans to have the flexibility take advantage of technological believes that receipt of these documents to provide documents such as the developments and reduce the amount of by the first day of the AEP is sufficient. Summary of Benefits, the EOC, and the mail enrollees receive from plans. Any changes in the plan rules reflected provider network information in Prior to the 2009 contract year, in these documents for the next year electronic format. We intend to change §§ 422.111(a) and 423.128(a) required should be adequately described in the the relevant sub-regulatory guidance to the provision of the materials in their ANOC, which will be provided earlier. coincide with this as well. respective paragraphs (b) at the time of This change would also provide an In the preamble to the 2005 final rule, enrollment and at least annually additional 2 weeks for MA organizations we noted that the prohibition on thereafter, but did not specify a and Part D plan sponsors to prepare, deadline. In the September 18, 2008, review, and ensure the accuracy of the 55 Medicare Marketing Guidelines, section 60.6, final rule, CMS required MA EOC, provider directory, pharmacy issued July 20, 2017, https://www.cms.gov/ Medicare/Health-Plans/ManagedCareMarketing/ organizations to send this material to directory, and formulary documents. Downloads/CY-2018-Medicare-Marketing- current enrollees 15 days before the CMS considers the additional time for Guidelines_Final072017.pdf.

VerDate Sep<11>2014 20:14 Nov 27, 2017 Jkt 244001 PO 00000 Frm 00098 Fmt 4701 Sfmt 4702 E:\FR\FM\28NOP2.SGM 28NOP2 sradovich on DSK3GMQ082PROD with PROPOSALS2 Federal Register / Vol. 82, No. 227 / Tuesday, November 28, 2017 / Proposed Rules 56433

substituting electronic posting on the To begin addressing this, in the MA plans and Part D sponsors to use MA plan’s internet site for delivery of Medicare Marketing Guidelines released technology to provide beneficiaries with hardcopy documents was in response to July 2, 2015, CMS notified plans that information. CMS intends to use this comments recommending this change they could mail either a hardcopy flexibility to provide sponsoring (70 FR 4623). At the time, we did not provider and/or pharmacy directory or a organizations with the ability to think enough Medicare beneficiaries hardcopy notice to enrollees instructing electronically deliver plan documents used the internet to permit posting the them where to find the directories (for example, the Summary of Benefits) documents online in place of mailing online and how to request a hard copy. to enrollees while maintaining the them. That guidance has been moved to protection of a hard copy for any In the 12 years since the rule was Chapter 4, section 110.2.3, of the enrollee who requests such hard copy. finalized, research indicates that Medicare Managed Care Manual. If As the current version of § 422.111(a) internet use has increased significantly plans choose to mail a notice with the and (h)(2) require hard copies, we among Medicare beneficiaries. Drawing location of the online directory rather believe this proposal will ultimately on nationally representative surveys, the than a hard copy, the notice must result in reducing burden and providing Pew Research Center found that 67 include: A direct link to the online more flexibility for sponsoring percent of American adults age 65 and directory, the customer service number organizations. to call and request a hard copy, and if older use the internet. Half of seniors 5. Revisions to §§ 422 and 423 Subpart available the email address to request a have broadband available at home. V, Communication/Marketing Materials hard copy. The notice must be distinct, Internet use increases even more among and Activities seniors age 65–69, of which 82 percent separate, and mailed with the ANOC/ 57 Section 1851(h) of the Act prohibits use the internet and 66 percent have EOC. Section 60.4 of the Medicare Marketing Guidelines released July 20, Medicare Advantage (MA) organizations broadband at home.56 Electronic 2017, extends the same flexibility to from distributing marketing materials documents include advantages such as formularies, with the same required and application forms to (or for the use word search tools, the ability to magnify content in the notice identifying the of) MA eligible individuals unless the text, screen reader capabilities, and location of the online formulary. As document has been submitted to the bookmarks or embedded links, all of CMS has received few complaints from Secretary at least 45 days (10 days for which make documents easier to any source about this new process, certain materials) prior to use and the navigate. Given that the younger range allowing plans the option to use a document has not been disapproved. of Medicare beneficiaries have a higher similar strategy for additional materials Further, in section 1851(j), the Secretary rate of internet access, we believe the is appropriate. is authorized to adopt standards number of beneficiaries who ‘‘use the Upon finalizing this rule, we would regarding marketing activities, and the internet’’ will only continue to grow issue sub-regulatory guidance to statute identifies certain prohibited with time. Posted electronic documents identify permissible manners of activities. While the Act requires the can also be accessed from anywhere the disclosure; we expect that guidance submission and review of the marketing internet is available. would be similar to the current materials and applications, it does not As mentioned previously, the EOC guidance for the provider directory, provide a definition of what materials sometimes contains errors. To correct pharmacy directory, and formulary fall under the umbrella term these, MA and Part D plans currently regarding dissemination of the EOC. ‘‘marketing.’’ Sections 1806D– have to mail errata sheets and post an Importantly, this provision does not 1(d)(3)(B)(iv) and 1860D–4(l) of the Act updated version online. The hardcopy eliminate the requirement for plans to provide similar restrictions on use of version of the EOC is then out-of-date. provide accessible formats of required marketing and enrollment materials and Beneficiaries either have to refer to documents. As recipients of federal activities to promote enrollment in Part errata sheets in addition to the hardcopy funding, plans are obligated to provide D plans. EOC or go online to access a corrected materials in accessible formats upon Section 1876(c)(3)(C) of the Act states EOC. Increasing beneficiary use of the request, at no cost to the individual, to that no brochures, application forms, or electronic EOC ensures that individuals with disabilities, under other promotional or informational beneficiaries are using the most accurate Section 504 of the Rehabilitation Act of material may be distributed by cost plan information. Under this proposal to 1973 and to take reasonable steps to to (or for the use of individuals eligible permit flexibility for us to approve non- provide meaningful access, including to enroll with the organization under hard-copy delivery in some cases, we translation services, to individuals who this section unless (i) at least 45 days intend to continue requiring hardcopy have limited English proficiency under before its distribution, the organization mailings of any ANOC or EOC errata. Title VI of the Civil Rights Act of 1964. has submitted the material to the Secretary for review, and (ii) the Plans have also continued to request To create this flexibility, CMS Secretary has not disapproved the CMS give plans the flexibility to provide proposes modifying the sentence, ‘‘Such distribution of the material. As the EOC electronically. They have posting does not relieve the MA delegated this authority by the frequently cited the expense of printing organization of its responsibility under Secretary, CMS reviews all such and mailing large documents. Medicaid § 422.111(a) to provide hard copies to material submitted and disapproves managed care plans already have the enrollees,’’ to include ‘‘upon request’’ in such material upon determination that flexibility to provide directories, § 422.111(h)(2)(ii) and to revise the material is materially inaccurate or formularies, and member handbooks § 422.111(a) by inserting ‘‘in the manner misleading or otherwise makes a (similar to the EOC) electronically, per specified by CMS.’’ These changes will align §§ 422.111(a) and 423.128(a) to material misrepresentation. Similar to §§ 438.10(h)(1), 438.10(h)4)(i), and authorize CMS to provide flexibility to 1851(h) of the Act, section 1876(c)(3)(C) 438.10(g)(3) respectively. of the Act focuses more on the review 57 Medicare Managed Care Manual Chapter 4— and approval of materials as opposed to 56 Pew Research Center, May 2017, ‘‘Tech Benefits and Beneficiary Protections, Rev. 121, providing an exhaustive list of materials 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/ that would qualify as marketing or climbs-among-older-adults/. downloads/mc86c04.pdf. promotional information and materials.

VerDate Sep<11>2014 20:14 Nov 27, 2017 Jkt 244001 PO 00000 Frm 00099 Fmt 4701 Sfmt 4702 E:\FR\FM\28NOP2.SGM 28NOP2 sradovich on DSK3GMQ082PROD with PROPOSALS2 56434 Federal Register / Vol. 82, No. 227 / Tuesday, November 28, 2017 / Proposed Rules

As part of the implementation of section We are proposing several changes to changing the title of each Subpart V by 1876(c)(3)(C) of the Act, the regulation Subpart V of the part 422 and 423 replacing the term ‘‘Marketing’’ with governing cost plans at § 417.428(a) regulations. To better outline these ‘‘Communication.’’ We propose to refers to Subpart V of part 422 for proposed changes, they are addressed in define in §§ 422.2260(a) and 423.2260(a) marketing guidance. Throughout this four areas of focus: (1) Including definitions of ‘‘communications’’ proposal, the changes discussed for MA ‘‘communication requirements’’ in the (activities and use of materials to organizations/MA plans and scope of Subpart V or parts 422 and 423, provide information to current and prescription drug plan (PDP) sponsors/ which will include new definitions for prospective enrollees) and Part D plans applies as well to cost ‘‘communications’’ and ‘‘communications materials’’ (materials plans subject to the same requirements ‘‘communication materials;’’ (2) that include all information provided to as a result of this cross-reference. amending §§ 422.2260 and 423.2260 to current members and prospective Section 422.2260(1)–(4) of the Part C add (at a new paragraph (b)) a definition beneficiaries). We propose that program regulations currently identifies of ‘‘marketing’’ in place of the current marketing materials (discussed later in marketing materials as any materials definition of ‘‘marketing materials’’ and this section) would be a subset of that: (1) Promote the MA organization, to provide lists identifying marketing communications materials. In many or any MA plan offered by the MA materials and non-marketing materials; ways, the proposed definition of organization; (2) inform Medicare (3) adding new regulation text to communications materials is similar to beneficiaries that they may enroll, or prohibit marketing during the Open the current definition of marketing remain enrolled in, an MA plan offered Enrollment Period proposed in section materials; the proposed definition has a by the MA organization; (3) explain the III.B.1 of this proposed rule; (4) broad scope and would include both benefits of enrollment in an MA plan, or technical changes to other regulatory mandatory disclosures that are rules that apply to enrollees; and (4) provisions as a result of the changes to primarily informative and materials that explain how Medicare services are Subpart V. To the extent necessary, are primarily geared to encourage covered under an MA plan, including CMS relies on its authority to add enrollment. conditions that apply to such coverage. regulatory and contract requirements to CMS also proposes, through revisions Section 423.2260(1)–(4) applies the cost plan, MA, and Part D programs to §§ 422.2268 and 423.2268, to apply identical regulatory provisions to the to propose and (ultimately) adopt these some of the current standards and Part D program. changes. We note as well that sections prohibitions related to marketing to all 1851(h) and (j) of the Act (cross- communications and to apply others Sections 422.2260(5) and 423.2260(5) referenced in sections 1860D–1 and only to marketing. Marketing and provide specific examples of materials 1860D–4(l)) of the Act address activities marketing materials would be subject to under the ‘‘marketing materials’’ and direct that the Secretary adopt the more stringent requirements, definition, which include: General standards limiting marketing activities, including the need for submission to audience materials such as general which CMS interprets as permitting and review by CMS. Under this circulation brochures, newspapers, regulation of communications about the proposal, those materials that are not magazines, television, radio, billboards, plan that do not rise to the level of considered marketing, per the proposed yellow pages, or the internet; marketing activities and materials that specifically definition of marketing, would fall representative materials such as scripts promote enrollment. under the less stringent communication or outlines for telemarketing or other requirements. presentations; presentation materials a. Revising the Scope of Subpart V To In addition to these proposals related such as slides and charts; promotional Include Communications and to defined terms and revising the scope materials such as brochures or leaflets, Communications Materials of Subparts V in parts 422 and 423, we including materials for circulation by The current version of Subpart V of are proposing changes to the current third parties (for example, physicians or parts 422 and 423 regulation focuses on regulations at §§ 422.2264 and 423.2264 other providers); membership marketing materials, as opposed to other and §§ 422.2268 and 423.2268 that are communication materials such as materials currently referred to as ‘‘non- related to our proposal to distinguish membership rules, subscriber marketing’’ in the sub-regulatory between marketing and agreements, member handbooks and Medicare Marketing Guidelines. This communications. wallet card instructions to enrollees; leaves a regulatory void for the With regard to §§ 422.2264 and letters to members about contractual requirements that pertain to those 423.2264, we are proposing the changes; changes in providers, materials that are not considered following changes: premiums, benefits, plan procedures marketing. Historically, the impact of • Deletion of paragraph (a)(3), which etc.; and membership activities (for not having regulatory guidance for currently provides for an adequate example, materials on rules involving materials other than marketing has been written explanation of the grievance and non-payment of premiums, muted because the current regulatory appeals process to be provided as part confirmation of enrollment or definition of marketing is so broad, of marketing materials. In our view disenrollment, or no claim specific resulting in most materials falling under grievance and appeals communications notification information). Finally, the definition. The overall effect of this would not be within the scope of §§ 422.2260(6) and 423.2260(6) provide combination—no definition of materials marketing as proposed in this rule. a list of materials that are not other than marketing and a broad • Deletion of paragraph (a)(4), which considered marketing materials, marketing definition—is that marketing provides for CMS to determine that including materials that are targeted to and communications with enrollees marketing materials include any other current enrollees; are customized or became synonymous. information necessary to enable limited to a subset of enrollees or apply With this CMS proposal to narrow the beneficiaries to make an informed to a specific situation; do not include marketing definition, we believe there is decision about enrollment. The intent of information about the plan’s benefit a need to continue to apply the current this section was to ensure that materials structure; and apply to a specific standards to and develop guidance for which include measuring or ranking situation or cover claims processing or those materials that fall outside of the mechanisms such as Star Ratings were other operational issues. proposed definition. We propose a part of CMS’s marketing review. We

VerDate Sep<11>2014 20:14 Nov 27, 2017 Jkt 244001 PO 00000 Frm 00100 Fmt 4701 Sfmt 4702 E:\FR\FM\28NOP2.SGM 28NOP2 sradovich on DSK3GMQ082PROD with PROPOSALS2 Federal Register / Vol. 82, No. 227 / Tuesday, November 28, 2017 / Proposed Rules 56435

propose deleting this section as the materials are proposed here to apply to adoption of §§ 422.2260 and 423.2260, exclusion list to be codified at communications activities and CMS has reviewed thousands of § 422.2260(c)(2)(ii) ensures materials communication materials; this list of marketing materials, tracked and that include measuring or ranking prohibitions is proposed as paragraph resolved thousands of beneficiary standards will be considered marketing, (a) Conversely, prohibitions that are complaints through the complaints thus making §§ 422.2264(a)(4) and currently targeted to activities and tracking module (CTM), conducted § 423.2264(a)(4) duplicative. materials that are within the narrower secret shopping programs of MA plan • Deletion of paragraph (e), which scope of marketing and marketing sales events, and investigated numerous requires sponsoring organizations to materials are proposed at paragraph (b) marketing complaints. These efforts provide translated materials in certain as prohibitions on marketing. We are have provided CMS insight into the areas where there is a significant non- not proposing to expand the list of types of plan materials that present the English speaking population. We prohibitions but are proposing to notate greatest risk of misleading or confusing propose to recodify these requirement as which prohibitions are applicable to beneficiaries. Based on this experience, a general communication standard in which category. The only substantive we believe that the current regulatory §§ 422.2268 and 423.2268, at new change is in connection with paragraph definition of marketing materials is paragraph (a)(7). As part of the (a)(7), which we discuss earlier in this overly broad. As a result, materials that redesignation of this requirement as a section. We welcome comment on our pose little to no threat of a detrimental standard applicable to all proposed distinctions between these enrollment decision fall under the communications and communication types of prohibitions and whether current broad marketing definition. As materials, we are also proposing certain standards or prohibitions from such, the materials are also required to revisions. First, we are proposing to current §§ 422.2268 and 423.2268 follow the associated marketing revise the text so that it is stated as a should apply more narrowly or broadly requirements, including submission to prohibition on sponsoring than we have proposed. CMS for potential review under limited organizations: For markets with a statutory timeframes. CMS believes that significant non-English speaking b. Amending the Regulatory Definition of Marketing and Marketing Materials the level of scrutiny required on population, provide materials, as numerous documents that are not defined by CMS, unless in the language In conjunction with adding new intended to influence an enrollment of these individuals. We propose adding proposed communication requirements, decision, combined with associated the statement of ‘‘as defined by CMS’’ to we also propose a definition of burden to sponsoring organizations and ‘‘marketing’’ be codified in the first sentence to allow the agency CMS, is not justified. By narrowing the §§ 422.2260(b) and 423.2260(b). Under the ability to define the significant materials that fall under the scope of this proposal, we would delete the materials that would require translation. marketing, this proposal will allow us to current text in that section defining only We propose deleting the word better focus its review on those ‘‘marketing materials’’ to add a new ‘‘marketing’’ so the second sentence materials that present the greatest definition of ‘‘marketing’’ and lists of now reads as ‘‘materials’’, to make it likelihood for a negative beneficiary materials that are ‘‘marketing materials’’ clear that the updated section applies to experience. the broader term of communications and that are not. Specifically, the term rather than the more narrow term of ‘‘marketing’’ would be defined as the We propose to more appropriately marketing. use of materials or activities by the implement the statute by narrowing the In addition, we are proposing to sponsoring organization (that is, the MA definition of marketing to focus on revise §§ 422.2262(d) and 423.2262(d) to organization, Part D Sponsor, or cost materials and activities that aim to delete the term ‘‘ad hoc’’ from the plan, depending on the specific part) or influence enrollment decisions. We heading and regulation text in favor of downstream entities that are intended to believe this is consistent with referring to ‘‘communication materials’’ draw a beneficiary’s attention to the Congress’s intent. Moreover, the new to conform to the addition of plan or plans and influence a definition differentiates between communication materials under Subpart beneficiary’s decision making process factually providing information about V. when making a plan selection; this last the plan or benefits (that is, the Current regulations at §§ 422.2268 criterion would also be met when the Evidence of Coverage (EOC)) versus and 423.2268 list prohibited marketing intent is to influence an enrollee’s persuasively conveying information in a activities. These activities include items decision to remain in a plan (that is, manner designed to prompt the such as providing meals to potential retention-based marketing). beneficiary to make a new plan decision enrollees, soliciting door to door, and The current regulations address both or to stay with their current plan (for marketing in provider settings. With the prohibited marketing activities and example, a flyer that touts a low proposal to distinguish between overall marketing materials. The prohibited monthly premium). As discussed later, communications and marketing activities are directly related to the majority of member materials would activities, we are proposing to break out marketing activities, but the current no longer fall within the definition of the prohibitions into categories: those definition of ‘‘marketing materials’’ is marketing under this proposal. The applicable to all communications overly broad and has resulted in a EOC, subscriber agreements, and wallet (activities and materials) and those that significant number of documents being card 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 would 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 to the new definitions under Subpart V. Congress’ intent was to target those safeguards potential and current Prohibitions that offer broader materials that could mislead or confuse enrollees while not placing an undue beneficiary protections and are beneficiaries into making an adverse burden on sponsoring organizations. currently applicable to a wide variety of enrollment decision. Since the original Moreover, those materials that would be

VerDate Sep<11>2014 20:14 Nov 27, 2017 Jkt 244001 PO 00000 Frm 00101 Fmt 4701 Sfmt 4702 E:\FR\FM\28NOP2.SGM 28NOP2 sradovich on DSK3GMQ082PROD with PROPOSALS2 56436 Federal Register / Vol. 82, No. 227 / Tuesday, November 28, 2017 / Proposed Rules

excluded from the marketing definition current beneficiary protections that protections and negates the need for our would fall under the proposed apply to marketing materials but to review of these materials before definition of communication materials, narrow the scope to exclude materials distribution to enrollees. with what we believe are more that are unlikely to lead to or influence The proposed changes do not release appropriate requirements. CMS notes an enrollment decision. cost plans, MA organizations, or Part D that enrollment and mandatory In the proposed changes to the sponsors from the requirements in disclosure materials continue to be exclusions from marketing materials, we sections 1876(c)(3)(C), 1851(h), and subject to requirements in §§ 422.60(c), intend to exclude materials that do not 422.111, 423.32(b), and 423.128. include information about the plan’s 1860D–1(b)(1)(B)(vi) of the Act to have Second, we propose to revise the list benefit structure or cost-sharing. We application forms reviewed by CMS as of marketing materials, currently believe that materials that do not well. To clarify this requirement, we are codified at §§ 422.2260(5) and mention benefit structure or cost sharing proposing to revise § 417.430(a)(1) and 423.2260(5), and to include it in the would not be used to make an § 423.32(b), which pertain to application proposed new §§ 422.2260(c)(1) and enrollment decision in a specific and enrollment processes, to add a cross 423.2260(c)(1). The current list of Medicare plan, rather they would be reference to §§ 422.2262 and 423.2262, examples includes: brochures; used to drive beneficiaries to request respectively. The cross references advertisements in newspapers and additional information that would fall directly link enrollment applications magazines, and on television, under the new definition of marketing. back to requirements related to review billboards, radio, or the internet, and Similarly, we want to be sure it is clear and distribution of marketing materials. billboards; social media content; that the use of measuring or ranking These proposed changes update an old marketing representative materials, such standards, such as the CMS Star Ratings, cross-reference, codify existing as scripts or outlines for telemarketing even when not accompanied by other practices, and are consistent with or other presentations; and presentation plan benefit structure or cost sharing language already in § 422.60(c). materials such as slides and charts. In information, could lead a beneficiary to conjunction with the proposed new make an enrollment decision. It should c. Prohibition of Marketing During the definition of marketing, we are be noted that our authority for similar Open Enrollment Period proposing to remove from the list of requirements can be found under the examples items such as membership current §§ 422.2264(a)(4) and The 21st Century Cures Act (the Cures communication materials, subscriber 423.2264(a)(4). We believe this is clearer Act) amended section 1851(e)(2) of the agreements, member handbooks, and and more appropriately housed under Act by adding a new continuous open wallet card instructions to enrollees, as the regulatory definition of marketing. enrollment and disenrollment period they would no longer fall under the As such, together with the proposed (OEP) for MA and certain PDP members. proposed regulatory definition of update to excluded materials, we will See section III.A.X for CMS’s other marketing. The proposed text make the technical change to remove proposal related to that provision. As complements the new definition by (a)(4) from §§ 422.2264 and 423.2264. In part of establishing this OEP, the Cures providing a concise non-exhaustive list addition, we propose to exclude Act prohibits unsolicited marketing and of example material types that would be materials that mention benefits or cost mailing marketing materials to considered marketing. sharing but do not meet the proposed individuals who are eligible for the new Third, we propose to revise the list of definition of marketing. The goal of this OEP. We are proposing to add a new exclusions from marketing materials, proposal is to exclude member paragraph (b)(9) to both proposed currently codified at §§ 422.2260(6) and communications that convey important §§ 422.2268 and 423.2268 to apply this 423.2260(6), and to include it in the factual information that is not intended prohibition on marketing. However, we proposed new §§ 422.2260(c)(2) and to influence the enrollee’s decision to request comment on how the agency 423.2260(c)(2) to identify the types of make a plan selection or to stay enrolled could implement this statutory materials that would not be considered in their current plan. An example is a requirement. The new OEP is not marketing. Materials that do not include monthly newsletter to current enrollees available for enrollees in Medicare cost information about the plan’s benefit reminding them of preventive services plans; therefore, these limitations would structure or cost sharing or do not at $0 cost sharing. apply to MA enrollees and to any PDP include information about measuring or In addition, we note the proposal enrollee who was enrolled in an MA ranking standards (for example, star excludes those materials required under plan the prior year. CMS is concerned ratings) will be excluded from § 422.111 (for MA plans) and § 423.128 that it may be difficult for a sponsoring marketing. In addition, materials that do (for Part D sponsors), unless otherwise organization to limit marketing to only mention benefits or cost sharing, but do specified by CMS because of their use not meet the definition of marketing as or purpose. This proposal is intended to those individuals who have not yet proposed here, would also be excluded exclude post-enrollment materials that enrolled in a plan during the OEP. One from marketing. We also propose that we require be disclosed and distributed mechanism could be to limit marketing required materials in § 422.111 and to enrollees, such as the EOC. Such entirely during that period, but we are § 423.128 not be considered marketing, materials convey important plan concerned that such a prohibition unless otherwise specified. Lastly, we information in a factual manner rather would be too broad We believe that are proposing to exclude materials than to entice a prospective enrollee to using a ‘‘knowing’’ standard will both specifically designated by us as not choose a specific plan or an existing effectuate the statutory provision and meeting the definition of the proposed enrollee to stay in a specific plan. In avoid against overly broad marketing definition based on their use addition, either these materials use implementation. We welcome comment or purpose. The purpose of this model formats and text developed by us on how a sponsoring organization could proposed revision of the list of or are developed by plans based on appropriately control who would or exclusions from marketing materials, as detailed instructions on the required should be marketed to during the new with the proposed marketing definition content from us; this high level of OEP, such as through as mailing and proposed non-exhaustive list of standardization by us on the front-end campaigns aimed at a more general marketing materials, is to maintain the provides the necessary beneficiary audience.

VerDate Sep<11>2014 20:14 Nov 27, 2017 Jkt 244001 PO 00000 Frm 00102 Fmt 4701 Sfmt 4702 E:\FR\FM\28NOP2.SGM 28NOP2 sradovich on DSK3GMQ082PROD with PROPOSALS2 Federal Register / Vol. 82, No. 227 / Tuesday, November 28, 2017 / Proposed Rules 56437

d. Technical Changes to Other CMS is proposing the following changes between prohibitions applicable to Regulatory Provisions as a Result of the to §§ 422.750 and 422.752: communications and those applicable to Changes to Subpart V • In § 422.750, we propose to revise marketing; and to conform As previously stated, because of the paragraph (a)(3) to refer to suspension of § 417.430(a)(1) and § 423.32(b) to broad regulatory definition of ‘‘communication activities.’’ § 422.60(c) and reflect the statutory • In § 422.752, we propose to replace marketing, the term marketing and direction regarding enrollment the term ‘‘marketing’’ in paragraph communication became synonymous. materials; all maintain the appropriate (a)(11) and the heading for paragraph (b) level of beneficiary protection. These With the proposed updates to Subpart V with the term ‘‘communications.’’ proposals will facilitate and focus our in both part 422 and part 423, a We are not proposing any changes to oversight of marketing materials, while definition of the broader term the use of the term ‘‘marketing’’ in appropriately narrowing the scope of communication would be added and the §§ 422.384, 422.504(a)(17), what is considered marketing. We definition of marketing, as well as the 422.504(d)(2)(vi), or 422.514, as those believe beneficiary protections are materials that fall within the scope of regulations use the term in a way that further enhanced by adding that definition, would be narrowed. As is consistent with the proposed communication materials and a result, a number of technical changes definition of the term ‘‘marketing,’’ and associated standards under Subpart V. will be needed to update certain the underlying requirements and These changes allow us to focus its sections of the regulation that use the standards do not need to be extended to oversight efforts on plan marketing term marketing. Accordingly, we all communications from an MA materials that have the highest potential propose the following technical changes organization. for influencing a beneficiary to make an in Part C: • We also propose the following enrollment decision that is not in the In § 422.54, we propose to update technical changes in Part D: beneficiary’s best interest. We solicit paragraphs (c)(1)(i) and (d)(4)(ii) to • In § 423.38(c)(8)(i)(C), we propose comment on these proposals and replace ‘‘marketing materials’’ with to revise the paragraph to read: ‘‘The whether the appropriate balance is ‘‘communication materials.’’ • organization (or its agent, achieved with the proposed regulation In § 422.62, we propose to update representative, or plan provider) text. paragraph (b)(3)(B)(ii) by replacing ‘‘in materially misrepresented the plan’s marketing the plans to the individual’’ provisions in communication 6. Lengthening Adjudication with ‘‘in communication materials.’’ Timeframes for Part D Payment • materials.’’ In § 422.102(d), we propose to use • In § 423.504(b)(4)(ii), we propose to Redeterminations and IRE ‘‘supplemental benefits packaging’’ replace ‘‘marketing’’ with Reconsiderations (§§ 423.590 and instead of ‘‘marketing of supplemental ‘‘communications’’ to reflect the change 423.636) benefits.’’ to Subpart V. Sections 1860D–4(g) and (h) of the • In § 422.206(b)(2)(i), we propose to For the reasons explained in Act require the Secretary to establish replace ‘‘§ 422.80 (concerning approval connection with our proposal to revise processes for initial coverage of marketing materials and election the Part C sanction regulations, we also determinations and appeals similar to forms)’’ with ‘‘all applicable propose the following changes: those used in the Medicare Advantage requirements under subpart V’’. • In § 423.505(b)(25), we propose to program. In accordance with section • In § 422.503(b)(4)(ii), we propose to replace ‘‘marketing’’ with 1860D–4(g) of the Act, § 423.590 replace the term ‘‘marketing’’ with the ‘‘communications’’ to reflect the change establishes Part D plan sponsors’ term ‘‘communication.’’ to Subpart V. responsibilities for processing • In § 422.510(a)(4)(iii), we propose to • In § 423.509(a)(4)(V)(A), we propose redeterminations, including remove the word ‘‘marketing’’ so that to delete the word ‘‘marketing’’ and adjudication timeframes. Pursuant to the reference is to the broader Subpart instead simply refer to Subpart V. section 1860D–4(h) of the Act, § 423.600 V. We are not proposing any changes to sets forth the requirements for an CMS has had longstanding authority the use of the term ‘‘marketing’’ in independent review entity (IRE) for to initiate ‘‘marketing sanctions’’ in §§ 423.505(d)(2)(vi), 423.871(c), or processing reconsiderations. conjunction with enrollment sanctions 423.756(c)(3)(ii), as those regulations We are proposing changes to the as a means of protecting beneficiaries use the term in a way that is consistent adjudication timeframe for Part D from the confusion that stems from with the proposed definition of the term standard redetermination requests for receiving information provided by a ‘‘marketing,’’ and the underlying payment at § 423.590(b) and the related plan that is—as a result of enrollment requirements and standards do not need effectuation provision § 423.636(a)(2). sanctions—unable to accept to be extended to all communications Specifically, we are proposing to change enrollments. In this rulemaking, CMS is from a PDP sponsor. the timeframe for issuing decisions on proposing to replace the term We solicit comment on the proposed payment redeterminations from 7 ‘‘marketing’’ with ‘‘communications’’ in technical changes, particularly whether calendar days from the date the plan § 422.750 and 422.752 to reflect its a proposed revision here would be more sponsor receives the request to 14 proposal for Subpart V. The intent of expansive than anticipated or have calendar days from the date the plan this proposal to change the terminology unintended consequences for sponsor receives the request. This is not to expand the scope of CMS’s sponsoring organizations or for CMS’s proposed 14-day timeframe for issuing a authority with respect to sanction oversight and monitoring of the MA and decision related to a payment request regulations. Rather, CMS intends to Part D programs. would also apply to the IRE preserve the existing reach of its In conclusion, we believe that our reconsideration pursuant to sanction authority it currently has—to proposal here—the proposed definitions § 423.600(d). We are not proposing to prohibit any communications under the of ‘‘communications,’’ make changes to the existing current broad definition of ‘‘marketing ‘‘communications materials,’’ requirements for making payment. materials’’ from being issued by a ‘‘marketing,’’ and ‘‘marketing When applicable, the Part D plan sponsoring organization while that materials;’’ and the various proposed sponsor must make payment no later entity is under sanction. For this reason, changes to Subpart V; to distinguish than 30 days from receipt of the request

VerDate Sep<11>2014 20:14 Nov 27, 2017 Jkt 244001 PO 00000 Frm 00103 Fmt 4701 Sfmt 4702 E:\FR\FM\28NOP2.SGM 28NOP2 sradovich on DSK3GMQ082PROD with PROPOSALS2 56438 Federal Register / Vol. 82, No. 227 / Tuesday, November 28, 2017 / Proposed Rules

for redetermination, or the IRE whether an enrollee is entitled to proposed change will help further these reconsideration notice, respectively. receive a health service and any amount goals by easing burden on MA plans Some of the feedback received from the enrollee is required to pay for such without compromising informing the the RFI published in the 2018 Call service. Under this statutory provision, beneficiary of the progress of his or her Letter related to simplifying and the MA plan also is required to provide appeal. If this proposal is finalized, and establishing greater consistency in Part for reconsideration of that plans are no longer required to notify an D coverage and appeals processes. The determination upon enrollee request. enrollee that his or her case has been proposed change to a 14 calendar day In accordance with section 1852(g) of sent to the IRE, we would expect plans adjudication timeframe for payment the Act, our current regulations at to redirect resources previously redeterminations, which would also §§ 422.578, 422.582, and 422.584 allocated to issuing this notice to more apply to payment requests at the IRE provide MA enrollees with the right to time-sensitive activities such as review reconsideration level of appeal, will request reconsideration of a health of pre-service and post-service coverage establish consistency in the plan’s initial decision to deny Medicare requests, improved efficiency in appeals adjudication timeframes for payment coverage. Pursuant to § 422.590, when processing, and provision of health requests throughout the plan level and the MA plan upholds initial payment or benefits in an optimal, effective, and IRE processes, as § 423.568(c) requires a service denials, in whole or in part, it efficient manner. plan sponsor to notify the enrollee of its must forward member case files to an determination no later than 14 calendar independent review entity (IRE) that 8. E-Prescribing and the Part D days after receipt of the request for contracts with CMS to review plan-level Prescription Drug Program; Updating payment. We believe affording more appeals decisions; that is, plans are Part D E-Prescribing Standards time to adjudicate payment required to automatically forward to the a. Legislative Background redetermination requests (including IRE any reconsidered decisions that are obtaining necessary documentation to adverse or partially adverse for an Section 101 of the Medicare support the request) will ease burden on enrollee without the enrollee taking any Prescription Drug, Improvement, and plan sponsors because it could reduce action. Modernization Act of 2003 (MMA) (Pub. the need to deny payment Currently, MA plans are required to L. 108–173) amended title XVIII of the redeterminations due to missing notify enrollees upon forwarding cases Act to establish a voluntary prescription information. We also expect the to the IRE, as set forth at § 422.590(f). drug benefit program at section 1860D– proposed change to the payment CMS sub-regulatory guidance, set forth 4(e) of the Act. Among other things, redetermination timeframe would in Chapter 13 of the Medicare Managed these provisions required the adoption reduce the volume of untimely payment Care Manual, specifically directs plans of Part D e-prescribing standards. redeterminations that must be auto- to mail a notice to the enrollee Prescription Drug Plan (PDP) sponsors forwarded to the IRE. informing the individual that the plan and Medicare Advantage (MA) In addition, having more time to has upheld its decision to deny organizations offering Medicare gather information and process these coverage, in whole or in part, and thus Advantage-Prescription Drug Plans requests could be beneficial to enrollees is forwarding the enrollee’s case file to (MA–PD) are required to establish because decisions will be more fully the IRE for review. We have made a electronic prescription drug programs informed, potentially resulting in fewer model notice available for plans to use that comply with the e-prescribing decisions having to undergo further for this purpose. (See Medicare standards that are adopted under this appeal. While we acknowledge that Managed Care Manual, Chapter 13, authority. There is no requirement that some enrollees would have to wait § 10.3.3, 80.3, and Appendix 10.) In prescribers or dispensers implement e- longer for a decision, we note that the addition, the Part C IRE is required, prescribing. However, prescribers and proposed changes are limited to under its contract with CMS, to notify dispensers who electronically transmit payment requests where the enrollee the enrollee when the IRE receives the prescription and certain other has already received the drug, ensuring reconsidered decision for review. We information for covered drugs any delay would not adversely affect the are proposing to revise § 422.590 to prescribed for Medicare Part D eligible enrollee’s health. As noted previously, remove paragraph (f) and redesignate beneficiaries, directly or through an when coverage is approved, the plan the existing paragraphs (g) and (h) as (f) intermediary, are required to comply would remain obligated to remit and (g), respectively. The Part C IRE is with any applicable standards that are payment to affected enrollees within 30 contractually responsible for notifying in effect. days. Allowing plan sponsors and the an enrollee that the IRE has received For a further discussion of the IRE additional time to process payment and will be reviewing the enrollee’s statutory basis for this proposed rule appeal requests may assist these case; thus, we believe the plan notice is and the statutory requirements at adjudicators in allocating resources in a duplicative and nonessential. Under section 1860D–4(e) of the Act, please manner that is most efficient and this proposal, the IRE would be refer to section I. (Background) of the E- enrollee friendly, for example, ensuring responsible for notifying enrollees upon Prescribing and the Prescription Drug adequate resources are directed to forwarding all cases—including both Program proposed rule, published processing more time-sensitive pre- standard and expedited cases. We will February 4, 2005 (70 FR 6256). continue to closely monitor the service requests where the enrollee has b. Regulatory History not yet obtained the drug, particularly performance of the IRE and beneficiary during periods of increased case complaints related to timely and Transaction standards are periodically volume. appropriate notification that the IRE has updated to take new knowledge, received and will be reviewing the technology and other considerations 7. Elimination of Medicare Advantage enrollee’s case. into account. As CMS adopted specific Plan Notice for Cases Sent to the IRE We received feedback in response to versions of the standards when it (§ 422.590) the Request for Information included in adopted the foundation and final e- Section 1852(g) of Act requires MA the 2018 Call Letter related to prescribing standards, there was a need organizations to have a procedure for simplifying and streamlining appeals to establish a process by which the making timely determinations regarding processes. To that end, we believe this standards could be updated or replaced

VerDate Sep<11>2014 20:14 Nov 27, 2017 Jkt 244001 PO 00000 Frm 00104 Fmt 4701 Sfmt 4702 E:\FR\FM\28NOP2.SGM 28NOP2 sradovich on DSK3GMQ082PROD with PROPOSALS2 Federal Register / Vol. 82, No. 227 / Tuesday, November 28, 2017 / Proposed Rules 56439

over time to ensure that the standards text which occurred when NCPDP and pharmacy. The ability to process did not hold back progress in the SCRIPT 10.6 was initially adopted. prescriptions for compounds industry. We discussed these processes The National Council for Prescription electronically in lieu of relying on more in the November 7, 2005 final rule (70 Drug Programs (NCPDP) is a not-for- time intensive interpersonal interactions FR 67579). profit ANSI-Accredited Standards would be expected to improve The discussion noted that the Development Organization (SDO) efficiency. rulemaking process will generally be consisting of more than 1,600 members While we do not propose mandating used to retire, replace or adopt a new e- who are interested in electronic its use at this time, one transaction prescribing standard, but it also standardization within the pharmacy supported by the proposed version of provided for a simplified ‘‘updating services sector of the healthcare NCPDP SCRIPT would also provide process’’ when a non-HIPAA standard industry. NCPDP provides a forum interested users with a Census could be updated with a newer wherein our diverse membership can transaction functionality which is ‘‘backward-compatible’’ version of the develop solutions, including ANSI- designed to service beneficiaries adopted standard. In instances in which accredited standards, and guidance for residing in long term care. The Census the user of the later version can promoting information exchanges feature would trigger timely notification accommodate users of the earlier related to medications, supplies, and of a beneficiary’s absence from a long version of the adopted non-HIPAA services within the healthcare system. term care facility, which would enable standard without modification, NCPDP has developed the NCPDP discontinuation of daily medication however, it noted that notice and SCRIPT standard for use by prescribers, dispensing when a leave of absence comment rulemaking could be waived, dispensers, pharmacy benefit managers occurs, thereby preventing the in which case the use of either the new (PBMs), payers and other entities who dispensing of unneeded medications. or old version of the adopted standard wish to electronically transmit Version 2017071 also contains an would be considered compliant upon information about prescriptions and enhanced Prescription Fill Status the effective date of the newer version’s prescription-related information. Notification that allows the prescriber to NCPDP has periodically updated its incorporation by reference in the specify if/when they want to receive the SCRIPT standard over time, and three Federal Register. We utilized this notifications from the dispenser. It now separate versions of the NCPDP SCRIPT streamlined process when we published supports data elements for diabetic standard, versions 5.0, 8.1 and most an interim final rule with comment on supply prescriptions and includes recently 10.6 have been adopted by June 23, 2006 (71 FR 36020). That rule elements which could be required for CMS for the part D e-prescribing recognized NCPDP SCRIPT 8.1 as a the pharmacy during the dispensing program through the notice and backward compatible update to the process which may be of value to comment rulemaking process. We NCPDP SCRIPT 5.0 for the specified prescribers who need to closely monitor believe that our current proposal to transactions, thereby allowing for use of medication adherence. adopt the NCPDP SCRIPT 2017071 as We therefore believe that the either of the two versions in the Part D the official part D e-prescribing standard program. Then, on April 7, 2008, we functionalities offered by NCPDP for certain specified transactions, and to SCRPT 2017071 could offer efficiencies used notice and comment rulemaking retire the current standard for those (73 FR 18918) to finalize the to the industry, and believe that it transactions would, among other things, would be an appropriate e-prescribing identification of the NCPDP SCRIPT 8.1 improve communications between the as a backward compatible update of the standard for the transactions currently prescriber and dispensers, and we covered by the Medicare Part D NCPDP SCRIPT 5.0, and, effective April welcome public comment on these 1, 2009, retire NCPDP SCRIPT 5.0 and program. Furthermore, NCPDP SCRIPT proposals. 2017071 supports transactions new to adopt NCPDP SCRIPT 8.1 as the official Our actions were, in part, precipitated the part D e-prescribing program that we Part D e-prescribing standard for the by a May 24, 2017, letter from the believe would prove beneficial to the specified transactions. On July 1, 2010, NCPDP that requested our adoption of industry. Therefore, in addition to the CMS utilized the streamlined process to NCPDP SCRIPT Standard Version transactions for which prior versions of recognize NCPDP SCRIPT 10.6 as a 2017071. This version was balloted and NCPDP SCRIPT were adopted (as backward compatible update of NCPDP approved July 28, 2017. The letter noted reflected in the current regulations at SCRIPT 8.1 in an interim final rule (75 the considerable amount of time that FR 38026). had passed since the last update to the 423.160(b)), we propose to require use We finalized the NCPDP SCRIPT 10.6 current adopted standard (NCPDP of NCPDP SCRPT 2017071 for the as a Backward Compatible Version of SCRIPT 10.6), and that there were many following transactions: • Prescription drug administration NCPDP SCRIPT 8.1, and retired NCPDP changes to the NCPDP SCRIPT Standard message, SCRIPT 8.1 and adopted the NCPDP version 2017071 that would benefit its • SCRIPT 10.6 as the official Part D e- New prescription requests, users. • New prescription response denials, Prescribing Standard for the specified CMS reviewed the specifications for • Prescription transfer message, transactions in the CY 2013 Physician NCPDP SCRIPT Standard Version • Prescription fill indicator change, Fee Schedule, effective November 1, 2017071 and found that this version • Prescription recertification, 2013. For a more detailed discussion, would allow users substantial • Risk Evaluation and Mitigation see the CY 2013 PFS final rule (77 FR improvements in efficiency. Version Strategy (REMS) initiation request, 69329 through 69333). 2017071 supports communications • REMS initiation response, REMS c. Proposed adoption of NCPDP regarding multi-ingredient compounds, request, and SCRIPT version 2017071 as the official thereby allowing compounded • REMS response. Part D E-Prescribing Standard for certain medication to be prescribed We believe that transitioning to the specified transactions, retirement of electronically. Previously prescriptions new 2017071 versions of the NCPDP SCRIPT 10.6, proposed for compounds were handwritten and transactions already covered by the conforming changes elsewhere in sent via fax to the dispenser, which current part D e-prescribing standard 423.160, and correction of a historic often required follow up (version 10.6 of the NCPDP SCRIPT) typographical error in the regulatory communications between the prescriber will impose deminimus cost on the

VerDate Sep<11>2014 20:14 Nov 27, 2017 Jkt 244001 PO 00000 Frm 00105 Fmt 4701 Sfmt 4702 E:\FR\FM\28NOP2.SGM 28NOP2 sradovich on DSK3GMQ082PROD with PROPOSALS2 56440 Federal Register / Vol. 82, No. 227 / Tuesday, November 28, 2017 / Proposed Rules

industry as the burden in using the • Risk Evaluation and Mitigation In proposing updates to the Part D E- updated standards is anticipated to be Strategy (REMS) initiation request. Prescribing Standards CMS has the same as using the old standards for • REMS initiation response, REMS reviewed specification documents the transactions currently covered by request developed by the National Council for the program. We are also proposing • REMS initiation response. Prescription Drug Programs (NCPDP). • REMS request. adoption of version 2017071 of the • The Office of the Federal Register (OFR) NCPDP SCRIPT standards for the nine REMS response. has regulations concerning new transactions to replace manual We are also proposing to adopt incorporation by reference. 1 CFR part processes that currently occur. Reducing NCPDP SCRIPT 2017071 as the official 51. For a proposed rule, agencies must the manual processes currently used to part D e-prescribing standard for the discuss in the preamble to the NPR support these transactions will improve medication history transaction at ways that the materials the agency § 423.160(b)(4). As a result, we are also efficiency, accuracy, and user proposes to incorporate by reference are proposing to retire NCPDP SCRIPT satisfaction with the system. While reasonably available to interested versions 8.1 and 10.6 for medication system implementation may result in persons or how the agency worked to history transactions transmitted on or minimal expenses, we believe that these make the materials reasonably available. after January 1, 2019. minimal expenses will be more than Furthermore, we propose to amend In addition, the preamble to the offset by rendering these manual § 423.160(b)(1) by modifying proposed rule must summarize the transactions obsolete. That is, we § 423.160(b)(1)(iv) to limit usage of materials. believe that prescribers and dispensers NCPDP SCRIPT version 10.6 to Consistent with those requirements that are now e-prescribing largely transactions before January 1, 2019. CMS has established procedures to invested in the hardware, software, and In addition, we propose to add ensure that interested parties can review connectivity necessary to e-prescribe. § 423.160(b)(1)(v) to provide that and inspect relevant materials. The We do not anticipate that the retirement NCPDP Version 2017071 must be used proposed update to the Part D of NCPDP SCRIPT 10.6 in favor of to conduct the covered transactions on prescribing standards has relied on the NCPDP SCRIPT 2017071 will result in or after January 1, 2019. Furthermore, NCPDP SCRIPT Implementation Guide significant costs. we are proposing to amend Version 2017071 approved July 28, As such, we are proposing to revise § 423.160(b)(2) by adding 2017. Members of the NCPDP may § 423.160(b)(1)(iv) so as to limit its § 423.160(b)(2)(iv) to name NCPDP access these materials through the application to transactions before SCRIPT Version 2017071 for the member portal at www.ncpdp.org; non- January 1, 2019 and add a new applicable transactions. Finally, we NCPDP members may obtain these § 423.160(b)(1)(v). The requirement at propose to incorporate NCPDP SCRIPT materials for information purposes by § 423.160(b)(1)(v) would identify the version 2017071 by reference in our contacting the Centers for Medicare & standards that will be in effect on or regulations. We seek comment regarding Medicaid Services (CMS), 7500 Security after January 1, 2019, for those that our proposed retirement of NCPDP Boulevard, Baltimore, Maryland 21244, conduct e-prescribing for part D covered SCRIPT version 10.6 on December 31, Mailstop C1–26–05, or by calling (410) drugs for part D eligible beneficiaries. If 2018 and adoption of NCPDP SCRIPT 786– 3694. finalized, those individuals and entities Version 2017071 on January 1, 2019 as 9. Reduction of Past Performance would be required to use NCPDP the official Part D e-prescribing standard Review Period for Applications SCRIPT 2017071 to convey for the e-prescribing functions outlined Submitted by Current Medicare prescriptions and prescription-related in our proposed § 423.160(b)(1)(v) and Contracting Organizations (§§ 422.502 information for the following (b)(2)(v), and for medication history as and 423.503) transactions: • outlined in our proposed Get message transaction. § 423.160(b)(4), effective January 1, In April 2010, we clarified our • Status response transaction. authority to deny contract qualification • 2019. We are also soliciting comments Error response transaction. regarding the impact of these proposed applications from organizations that • New prescription request effective dates on industry and other have failed to comply with the transaction. requirements of a Medicare Advantage • interested stakeholders. Prescription change request We are also proposing a technical or Part D plan sponsor contract they transaction. correction of a prior regulation. On July currently hold, even if the submitted • Prescription change response 30, 2012, we published regulation application otherwise demonstrates that transaction. (CMS–1590–P), which established the organization meets the relevant • Refill/Resupply prescription version 10.6 as the Part D e-prescribing program requirements. As part of that request transaction. rulemaking, we established, at • Refill/Resupply prescription standard effective March 1, 2015 for certain electronic transactions that § 422.502(b)(1) and § 423.503(b)(1), that response transaction. we would review an applicant’s prior • Verification transaction. convey prescription or prescription • related information, as listed in contract performance for the 14-month Password change transaction. period preceding the application • Cancel prescription request § 423.160(b)(2)(iii). However, despite the regulation clearly noting adoption of submission deadline (see 75 FR 19684 transaction. through 19686). We conduct that review • Cancel prescription response NCPDP SCRIPT 10.6 as the part D e- prescribing standard for the listed in accordance with a methodology we transaction. publish each year 58 and use to score • Fill status notification. transactions, due to a typographical each applicant’s performance by • Prescription drug administration error, § 423.160(b)(1)(iv) references assigning weights based on the severity message. (b)(2)(ii) (NCPDP SCRIPT 8.1), rather of its non-compliance in several • New prescription requests. than (b)(2)(iii) (NCPDP SCRIPT 10.6). • New prescription response denials. We propose a correction of this • 58 https://www.cms.gov/Medicare/Compliance- Prescription transfer message. typographical error by changing the and-Audits/Part-C-and-Part-D-Compliance-and- • Prescription fill indicator change. reference at § 423.160 (b)(1)(iv) to Audits/Downloads/Final_2018_Application_Cycle_ • Prescription recertification. reference (b)(2)(iii) instead of (b)(2)(ii). Past_Performance_Methodology.pdf.

VerDate Sep<11>2014 20:14 Nov 27, 2017 Jkt 244001 PO 00000 Frm 00106 Fmt 4701 Sfmt 4702 E:\FR\FM\28NOP2.SGM 28NOP2 sradovich on DSK3GMQ082PROD with PROPOSALS2 Federal Register / Vol. 82, No. 227 / Tuesday, November 28, 2017 / Proposed Rules 56441

performance categories. Under the state that CMS may deny an application providers and suppliers who wish to annual contract qualification from an existing Medicare Advantage or enroll in Medicare, we believed that application submission and review Part D plan sponsor in the absence of a forging a closer link between Medicare’s process we conduct, organizations must record of at least 12, rather than 14, coverage of Part D drugs and the submit their application by a date, months of Medicare contract provider enrollment process would usually in mid-February, announced by performance by the applicant. We do enable CMS to confirm the us. We now propose to reduce the past not intend to change any other aspect of qualifications of the prescribers of such performance review period from 14 our consideration of past performance drugs. That is, requiring Part D months to 12 months. in the application process. prescribers to enroll in Medicare would We originally established the 14- provide CMS with sufficient 10. Preclusion List—Part D Provisions month review period because it covered information to determine whether a the time period from the start of the a. Background physician or eligible professional is preceding contract year through the date (1) 2014 Final Rule qualified to prescribe Part D drugs. on which CMS receives contract We stated in the May 23, 2014 final applications for the upcoming contract On May 23, 2014, we published a rule that the compliance date for our year. We believed at the time that the final rule in the Federal Register titled revisions to new § 423.120(c)(6) would combination of the most recent ‘‘Medicare Program; Contract Year 2015 be June 1, 2015. We believed that this complete contract year and the 2 Policy and Technical Changes to the delayed date would give physicians and months preceding the application Medicare Advantage and the Medicare eligible professionals who would be submission provided us with the most Prescription Drug Benefit Programs’’ (79 affected by these provisions adequate complete picture of the most relevant FR 29844). Among other things, this time to enroll in or opt-out of Medicare. information about an applicant’s past final rule implemented section 6405(c) It would also allow CMS, A/B MACs, contract performance. Our application of the Affordable Care Act, which Medicare beneficiaries, and other of this authority since its publication provides the Secretary with the impacted stakeholders sufficient has prompted comments from authority to require that prescriptions opportunity to prepare for these contracting organizations that the 14- for covered Part D drugs be prescribed requirements. month period is too long and is unfair by a physician enrolled in Medicare (2) 2015 Interim Final Rule as it is applied. In particular, under section 1866(j) of the Act (42 organizations have noted that non- U.S.C. 1395cc(j)) or an eligible On May 6, 2015, we published in the compliance that occurs during January professional as defined at section Federal Register an interim final rule and February of a given year is counted 1848(k)(3)(B) of the Act (42 U.S.C. with comment period (IFC) titled against an organization in 2 consecutive 1395w–4(k)(3)(B)). More specifically, ‘‘Medicare Program; Changes to the past performance review cycles while the final rule revised § 423.120(c)(5) and Requirements for Part D Prescribers’’ (80 non-compliance occurring in all other added new § 423.120(c)(6), the latter of FR 25958). This IFC made changes to months is counted in only one review which stated that for a prescription to be certain requirements outlined in the cycle. The result is that some non- eligible for coverage under the Part D May 23, 2014 final rule related to compliance is ‘‘double counted’’ based program, the prescriber must have (1) an beneficiary access to covered Part D solely on the timing of the non- approved enrollment record in the drugs. compliance and can, depending on the Medicare fee for service program (that First, we changed the compliance date severity of the non-compliance, prevent is, original Medicare); or (2) a valid opt of § 423.120(c)(6) from June 1, 2015 to an organization from receiving CMS out affidavit on file with a Part A/Part January 1, 2016. This was designed to approval of their application for 2 B Medicare Administrative Contractor give all affected parties more time to consecutive years. (A/B MAC). prepare for the additional provisions Rather than creating a gap in the look- The purpose of this change was to included in the IFC before Part D drugs back period, as we were concerned in help ensure that Part D drugs are prescribed by individuals who are 2010, 75 FR 19685, we now believe a prescribed only by qualified prescribers. neither enrolled in nor opted-out of 12-month look-back period provides a In a June 2013 report titled ‘‘Medicare Medicare are no longer covered. more accurate period to consider. We Inappropriately Paid for Drugs Ordered Second, we revised paragraph believe it is still important to capture in by Individuals Without Prescribing § 423.120(c)(6)(ii) to address a gap in each review cycle an applicant’s most Authority’’ (OEI–02–09–00608), the § 423.120(c)(6) regarding certain types of recent contract performance. Therefore, Office of Inspector General (OIG) found prescribers; such prescribers included we propose to revise § 422.502(b)(1) and that the Part D program improperly paid pharmacists who may be authorized § 423.503(b)(1) to reduce the review for drugs prescribed by persons who did under state law to prescribe medications period from 14 to 12 months. This not appear to have the authority to but are ineligible to enroll in Medicare would effectively establish a new prescribe. We also noted in the final and thus, under § 423.120(c)(6), would review period for every application rule the reports we received of not have their prescriptions covered. review cycle of March 1 of the year prescriptions written by physicians with Revised paragraph (c)(6)(ii) stated that preceding the application submission suspended licenses having been covered pharmacy claims and beneficiary deadline through February 28 (February by the Part D program. These reports requests for reimbursement for Part D 29 in leap years) of the year in which raised concerns within CMS about the prescriptions written by prescribers the application is submitted and would propriety of Part D payments and the other than physicians and eligible eliminate the counting of instances of potential for Part D beneficiaries to be professionals who are nonetheless non-compliance in January and prescribed dangerous or unnecessary permitted by state or other applicable February of each year in 2 separate drugs by individuals who lack the law to prescribe medications (defined in application cycles. We also propose to authority or qualifications to prescribe § 423.100 as ‘‘other authorized have this review period change reflected medications. Given that the Medicare prescribers’’) will not be rejected or consistently in the Part C and D FFS provider enrollment process, as denied, as applicable, by the pharmacy regulation by revising the provisions of outlined in 42 CFR part 424, subpart P, benefit manager (PBM) if all other § 422.502(b)(2) and § 423.503(b)(2) to collects identifying information about requirements are met. This meant that

VerDate Sep<11>2014 20:14 Nov 27, 2017 Jkt 244001 PO 00000 Frm 00107 Fmt 4701 Sfmt 4702 E:\FR\FM\28NOP2.SGM 28NOP2 sradovich on DSK3GMQ082PROD with PROPOSALS2 56442 Federal Register / Vol. 82, No. 227 / Tuesday, November 28, 2017 / Proposed Rules

the enrollment requirement specified in of Medicare, and we are appreciative of publish a notice of a different timeline. § 423.120(c)(6) would not apply to other their cooperation in this effort. If we finalize the proposals described in authorized prescribers—that is, to However, based on internal CMS data, this notice of proposed rulemaking, we individuals who are ineligible to enroll as of July 2016 approximately 420,000 would not finalize the provisions of the in or opt out of Medicare because they prescribers—or 35 percent of the total IFC. Instead, the proposals described in do not meet the statutory definition of 1.2 million prescribers of Part D drugs— this publication would supersede our ‘‘physician’’ or ‘‘eligible professional’’ whose prescriptions for Part D drugs earlier rulemaking. yet who are otherwise legally authorized would be affected by the requirements The effective date of our proposed to prescribe drugs. of § 423.120(c)(6) have yet to enroll or provisions in § 423.120(c)(5) would be Third, and to help ensure that opt out. Of these prescribers, 32 percent 60 days after the publication of a final beneficiaries would not experience a are dentists, 11 percent are student rule. The effective date of our proposed sudden lapse in Part D prescription trainees, 7 percent are nurse revisions to § 423.120(c)(6) would be coverage upon the January 1, 2016 practitioners, 6 percent are pediatric January 1, 2019. effective date, we added a new physicians, and 5 percent are internal (1) Prescriber NPI Validation on Part D paragraph § 423.120(c)(6)(v). This medicine physicians. Claims provision stated that a Part D sponsor or Several provider organizations, its PBM must, beginning on January 1, moreover, have expressed concerns (a) Provisions of § 423.120(c)(5) 2016 and upon receipt of a pharmacy about the enrollment requirements. Section 423.120(c)(5) states that claim or beneficiary request for They have contended that (1) most before January 1, 2016, the following are reimbursement for a Part D drug that a prescribers pose no risk to the Medicare applicable: Part D sponsor or PBM would otherwise program; and (2) certain types of • In paragraph (c)(5)(i), we state that be required to reject or deny, as physicians and eligible professionals a Part D sponsor must submit to CMS applicable, under § 423.120(c)(6): prescribe Part D drugs only very only a prescription drug event (PDE) • Provide the beneficiary with: infrequently. Their general position, in record that contains an active and valid ++ A 3-month provisional supply of short, is that the burden to the individual prescriber NPI. the drug (as prescribed by the prescriber prescriber community would outweigh • In paragraph (c)(5)(ii), we state that and if allowed by applicable law); and the payment safeguard benefits of a Part D sponsor must ensure that the ++ Written notice within 3 business § 423.120(c)(6). After the publication of lack of an active and valid individual days after adjudication of the claim or the IFC, and based on our desire to give prescriber NPI on a network pharmacy request in a form and manner specified prescribers and other stakeholders more claim does not unreasonably delay a by CMS; and time to prepare for the enrollment beneficiary’s access to a covered Part D • Ensure that reasonable efforts are requirements, we announced a phased- drug, by taking the steps described in made to notify the prescriber of a in enforcement of the enrollment paragraph (c)(5)(iii) of this section. beneficiary who was sent the notice requirements and stated that full • In paragraph (c)(5)(iii), we state that referred to in the previous paragraph. enforcement would be delayed until the sponsor must communicate at point- The 3-month provisional supply and January 1, 2019. (Information was of-sale whether or not a submitted NPI written notice were intended to (1) posted at the following link: https:// is active and valid in accordance with notify beneficiaries that a future www.cms.gov/Medicare/Provider- this paragraph (c)(5)(iii). prescription written by the same Enrollment-and-Certification/ ++ In paragraph (c)(5)(iii)(A), we state prescriber would not be covered unless MedicareProviderSupEnroll/Prescriber- that if the sponsor communicates that the prescriber enrolled in or opted-out Enrollment-Information.html.) However, the NPI is not active and valid, the of Medicare, and (2) give beneficiaries the concerns of these provider sponsor must permit the pharmacy to time to make arrangements to continue organizations remain. (1) confirm that the NPI is active and receiving the prescription if the We do recognize these concerns. We valid; or (2) correct the NPI. prescriber of the medication did not wish to reduce as much burden as ++ In paragraph (c)(5)(iii)(B), we state intend to enroll in or opt-out of possible for providers without that if the pharmacy: Medicare. compromising our program integrity ++ Confirms that the NPI is active and objectives. In addition, over 400,000 (3) Preparations for Enforcement of Part valid or corrects the NPI, the sponsor prescribers remain unenrolled and, as a D Prescriber Enrollment Requirement must pay the claim if it is otherwise consequence, approximately 4.2 million payable; or Immediately after the publication of Part D beneficiaries (based on analysis ++ Cannot or does not correct or the previously mentioned May 23, 2014 performed on 2015 and 2016 PDE data) confirm that the NPI is active and valid, final rule, we undertook major efforts to could lose access to needed the sponsor must require the pharmacy educate affected stakeholders about the prescriptions when full enforcement of to resubmit the claim (when necessary), forthcoming enrollment requirement. the enrollment requirement begins on which the sponsor must pay, if it is Particular focus was placed on reaching January 1, 2019 unless their prescriber otherwise payable, unless there is an out to Part D prescribers with enrolls or opt outs or they change indication of fraud or the claim involves information regarding (1) the overall prescribers. We believe that an a prescription written by a foreign purpose of the enrollment process; (2) appropriate balance is possible between prescriber (where permitted by State the important program integrity burden reduction and the need to law). objectives behind § 423.120(c)(6); (3) the protect Medicare beneficiaries and the • In paragraph (c)(5)(iv), we state that mechanisms by which prescribers may Trust Funds. To this end, we propose a Part D sponsor must not later recoup enroll in Medicare (for example, via the several changes to § 423.120(c)(6). payment from a network pharmacy for Internet based Provider Enrollment, a claim that does not contain an active Chain and Ownership System (PECOS); b. Proposed Provisions and valid individual prescriber NPI on and (4) how to complete an enrollment In accordance with section 1871 of the basis that it does not contain one, application. Numerous prescribers have, the Act, within 3 years of the unless the sponsor— in preparation for the enforcement of publication of the May 6, 2015 IFC, we ++ Has complied with paragraphs § 423.120(c)(6), enrolled in or opted out must either publish a final rule or (c)(5)(ii) and (iii) of this section;

VerDate Sep<11>2014 20:14 Nov 27, 2017 Jkt 244001 PO 00000 Frm 00108 Fmt 4701 Sfmt 4702 E:\FR\FM\28NOP2.SGM 28NOP2 sradovich on DSK3GMQ082PROD with PROPOSALS2 Federal Register / Vol. 82, No. 227 / Tuesday, November 28, 2017 / Proposed Rules 56443

++ Has verified that a submitted NPI The provisions in § 423.120(c)(5) that Applications submitted by provider and was not in fact active and valid; and reflected the procedures that would supplier types that have historically ++ The agreement between the parties comply with section 507 of MACRA are posed higher risks to the Medicare explicitly permits such recoupment. the following: program are subjected to a more • In paragraph (c)(5)(v), we state that • Paragraph (c)(5)(iii). rigorous screening and review process • Paragraph (c)(5)(iii)(A). than those that present limited risks. with respect to requests for • reimbursement submitted by Medicare Paragraph (c)(5)(iii)(B)(1). (Note that Moreover, § 424.518 states that beneficiaries, a Part D sponsor may not paragraph (c)(5)(iii)(B)(2) would not providers and suppliers that have had make payment to a beneficiary comply with section 507 because the certain adverse actions imposed against dependent upon the sponsor’s sponsor has no evidence that the NPI is them, such as felony convictions or acquisition of an active and valid active or valid.) revocations of enrollment, are placed • Paragraph (c)(5)(iv). individual prescriber NPI, unless there • into the highest and most rigorous Paragraph (c)(5)(v). screening level. We recognize that the is an indication of fraud. If the sponsor Given this, we are proposing to risk based approach in § 424.518 applies is unable to retrospectively acquire an include these provisions in new to enrollment application screening active and valid individual prescriber paragraph (c)(5). They would be rather than payment denials. However, NPI, the sponsor may not seek recovery enumerated as, respectively, new we believe that using a risk-based of any payment to the beneficiary solely paragraphs (c)(5)(ii), (c)(5)(ii)(A), approach would enable CMS to focus on on that basis. (c)(5)(ii)(B), (c)(5)(iii), and (c)(5)(iv). prescribers who pose threats to the These provisions, which focus on NPI Current paragraphs (c)(5)(i), (c)(5)(ii), Medicare program and its beneficiaries, submission and validation, are no and (c)(5)(iii)(B)(2) would not be while minimizing the burden on those longer effective because the January 1, included in new paragraph (c)(5). 2016 end-date for their applicability has We also note that in the May 6, 2015 who do not. The process we envision passed. Since that time, however, and as IFC, we revised § 423.120(c)(6)(i) to and propose, which would replace the explained in detail in section (b)(1)(b) require a Part D plan sponsor to reject, prescriber enrollment requirement below, congressional legislation requires or require its pharmaceutical benefit outlined in § 423.120(c)(6) with a claims us to revisit some of the provisions in manager (PBM) to reject, a pharmacy payment-oriented approach, would former paragraph (c)(5) and, as consist of the following components: claim for a Part D drug, unless the claim • warranted, to re-propose them in what contains the NPI of the prescriber who Step 1: We would research our would constitute a new paragraph (c)(5). prescribed the drug. This provision, too, internal systems and other relevant data We believe that these new provisions reflects existing Part D claims for prescribers who have engaged in would not only effectively implement procedures and policies that comply behavior for which CMS: the legislation in question but also with section 507 of MACRA. We thus ++ Has revoked the prescriber’s enhance Part D program integrity by propose to retain this provision and enrollment and the prescriber is under streamlining and strengthening seek comment on associated burdens or a reenrollment bar; or procedures for ensuring the identity of unintended consequences and ++ Could have revoked the prescriber prescribers of Part D drugs. This would alternative approaches. However, we (to the extent applicable) if he or she be particularly important in light of our wish to move it from paragraph (c)(6) to had been enrolled in Medicare. preclusion list proposals. paragraph (c)(5) so that most of the NPI Concerning revocations, we have the provisions in § 423.120 are included in authority to revoke a provider’s or (b) Medicare Access and CHIP supplier’s Medicare enrollment for any Reauthorization Act of 2015 (MACRA) one subsection. We believe this would improve clarity. of the applicable reasons listed in MACRA was signed into law on April § 424.535(a). There are currently 14 16, 2015, just before the IFC was (2) Targeted Approach to Part D such reasons. When revoked, the finalized. Section 507 of MACRA Prescribers provider or supplier is barred under amends section 1860D–4(c) of the Act We believe that the most effective § 424.535(c) from reenrolling in (42 U.S.C. 1395w–104(6)) by requiring means of reducing the burden of the Medicare for a period of 1 to 3 years, that pharmacy claims for covered Part D Part D enrollment requirement on depending upon the severity of the drugs include prescriber NPIs that are prescribers, Part D plan sponsors, and underlying behavior. We have an determined to be valid under beneficiaries without compromising our obligation to protect the Trust Funds procedures established by the Secretary payment safeguard aims would be to from providers and suppliers that in consultation with appropriate concentrate our efforts on preventing engage in activities that could threaten stakeholders, beginning with plan year Part D coverage of prescriptions written the Medicare program, its beneficiaries, 2016. by prescribers who pose an elevated risk and the taxpayers. In light of the In light of the enactment of MACRA, to Medicare beneficiaries and the Trust significance of behavior that could serve on June 1, 2015, we issued a guidance Funds. In other words, rather than as grounds for revocation, we believe memo, ‘‘Medicare Prescriber Enrollment require the enrollment of Part D that prescribers who have engaged in Requirement Update’’ (memo). The prescribers regardless of the possible inappropriate activities should be the memo noted that § 423.120(c)(5) would level of risk posed, we propose to focus focus of our Part D program integrity no longer be applicable beginning on preventing payment for Part D drugs efforts under § 423.120(c)(6). January 1, 2016 due to the IFC we had prescribed by demonstrably problematic • Step 2—We would review, on a just published, but that its provisions prescribers. case-by-case basis, each prescriber reflected certain existing Part D claims There is precedent for such a risk who— procedures established by the Secretary based approach. For instance, consistent ++ Is currently revoked from in consultation with stakeholders with § 424.518, A/B MACs are required Medicare and is under a reenrollment through the National Council for to screen applications for enrollment in bar. We would examine the reason for Prescription Drug Programs (NCPDP) accordance with a CMS assessment of the prescriber’s revocation. that would comply with section 507 of risk and assignment to a level of ++ Has engaged in behavior for MACRA, except one. ‘‘limited,’’ ‘‘moderate,’’ or ‘‘high.’’ which CMS could have revoked the

VerDate Sep<11>2014 20:14 Nov 27, 2017 Jkt 244001 PO 00000 Frm 00109 Fmt 4701 Sfmt 4702 E:\FR\FM\28NOP2.SGM 28NOP2 sradovich on DSK3GMQ082PROD with PROPOSALS2 56444 Federal Register / Vol. 82, No. 227 / Tuesday, November 28, 2017 / Proposed Rules

prescriber to the extent applicable if he beneficiaries and the Trust Funds. We circumstances exist pertaining to or she had been enrolled in Medicare. thus propose to revise § 423.120(c)(6), as beneficiary access to prescriptions. This The prescribers to be reviewed would further specified in this proposed rule, could include circumstances similar to be those who, according to PDE data to require that a Part D plan sponsor those described in section 1128(c)(3)(B) and CMS’ internal systems, are eligible must reject, or must require its PBM to of the Act, whereby the Secretary may to prescribe drugs covered under the reject, a pharmacy claim (or deny a waive an OIG exclusion under section Part D program. That is, our review beneficiary request for reimbursement) 1128(a)(1), (a)(3), or (a)(4) of the in the would not be limited to those persons for a Part D drug prescribed by an case of an individual or entity that is the who are actually prescribing Part D individual on the preclusion list. We sole community physician or sole drug, but would include those that believe we have the legal authority for source of essential specialized services potentially could prescribe drugs. We such a provision because sections 1102 in a community. In making a believe that the inclusion of these and 1871 of the Act provide general determination as to whether such individuals in our review would help authority for the Secretary to prescribe circumstances exist, we would take into further protect the integrity of the Part regulations for the efficient account— (1) the degree to which D program. administration of the Medicare program; beneficiary access to Part D drugs would We are also seeking comment on an also, section 1860D–12(b)(3)(D) of the be impaired; and (2) any other evidence alternative by which we would first Act authorizes the Secretary to add that CMS deems relevant to its identify, through PDE data, those additional Part D contract terms as determination. providers who are prescribing drugs to necessary and appropriate, so long as With respect to the foregoing, we Medicare beneficiaries. This would they are not inconsistent with the Part solicit comment on the following issues: significantly reduce the universe of D statute. We note also that our proposal ++ Whether the actions referenced in prescribers who are on the preclusion is of particular importance when § 424.535(a) are appropriate grounds for list and reduce the government’s considering the current nationwide inclusion on the preclusion list. surveillance of prescribers. We opioid crisis. We believe that the ++ Whether actions other than those anticipate that this could create delays inclusion of problematic prescribers on referenced in § 424.535(a) should in our ability to screen providers due to the preclusion list could reduce the constitute grounds for inclusion on the data lags and may introduce some amount of opioids that are improperly preclusion and, if so, what those program integrity risks. We are or unnecessarily prescribed by persons specific grounds are. particularly interested in hearing from who pose a heightened risk to the Part ++ Suggestions for means of the public on the potential risks this D program and Medicare beneficiaries. monitoring abusive prescribing could pose to beneficiaries, especially in All grounds for revocation under practices and appropriate processes for light of our efforts to address the opioids § 424.535(a) reflect behavior or including such prescribers on the epidemic. circumstances that are of concern to us. preclusion list. • However, considering the variety of Step 3—Based on the results of (b) Replacement of Enrollment factual scenarios that CMS may come Steps 1 and 2, we would compile a Requirement With Preclusion List across, we believe it is necessary for ‘‘preclusion list’’ of prescribers who fall Requirement within either of the following categories: CMS to have the flexibility to take into ++ Are currently revoked from account the specific circumstances We are proposing to delete the current Medicare, are under a reenrollment bar, involved when determining whether the regulations that require prescribers to and CMS determines that the underlying conduct is detrimental to the enroll in or opt out of Medicare for a underlying conduct that led to the best interests of the Medicare program. pharmacy claim (or beneficiary request revocation is detrimental to the best Accordingly, CMS would consider the for reimbursement) for a Part D drug interests of the Medicare program. following factors in making this prescribed by a physician or eligible ++ Have engaged in behavior for determination: professional to be covered. We also which CMS could have revoked the • The seriousness of the conduct propose to generally streamline the prescriber to the extent applicable if he involved; existing regulations because, given that or she had been enrolled in Medicare, • The degree to which the we would no longer be requiring certain and CMS determines that the prescriber’s conduct could affect the prescribers to enroll or opt out, we underlying conduct that would have led integrity of the Part D program; and would no longer need an exception for to the revocation is detrimental to the • Any other evidence that CMS ‘‘other authorized providers,’’ as defined best interests of the Medicare program. deems relevant to its determination. in § 423.100, for there would be no We propose to adopt this preclusion We emphasize that in situations enrollment requirement from which to list approach as an alternative to where the prescriber was enrolled and exempt them. Instead, we would require enrollment in part to reflect the more then revoked, CMS’ determination plan sponsors to reject claims for Part D indirect connection of prescribers in the would not negate the revocation itself. drugs prescribed by prescribers on the Medicare Part D program. We seek The prescriber would remain revoked preclusion list. We believe this latter comment on whether some of the bases from Medicare. approach would better facilitate our for revocation should not apply to the We also recognize that unique dual goals of reducing prescriber burden preclusion list in whole or in part and circumstances behind the potential or and protecting the Medicare program whether the final regulation (or future actual inclusion of a particular and its beneficiaries from prescribers guidance) should specify which bases prescriber on the preclusion list could who could present risks. are or are not applicable and under what exist. Of foremost importance would be (ii) Updates to Preclusion List circumstances. situations pertaining to beneficiary access to Part D drugs. We believe that The preclusion list would be updated (i) Preclusion List we should have the discretion not to on a monthly basis. Prescribers would Considering the program integrity risk include (or, if warranted, to remove) a be added or removed from the list based that the two previously mentioned sets particular individual on the preclusion on CMS’ internal data that indicate, for of prescribers present, we must be able list (who otherwise meets the standards instance: (1) Prescribers who have to accordingly protect Medicare for said inclusion) should exceptional recently been convicted of a felony that,

VerDate Sep<11>2014 20:14 Nov 27, 2017 Jkt 244001 PO 00000 Frm 00110 Fmt 4701 Sfmt 4702 E:\FR\FM\28NOP2.SGM 28NOP2 sradovich on DSK3GMQ082PROD with PROPOSALS2 Federal Register / Vol. 82, No. 227 / Tuesday, November 28, 2017 / Proposed Rules 56445

consistent with § 424.535(a)(33), CMS behavior that could serve as a basis for for particular clinical presentations determines to be detrimental to the best an applicable revocation regardless of (including acute pain, chronic pain, interests of the Medicare program, and whether that date occurred before or hospice setting and so forth). (2) prescribers whose reenrollment bars after the effective date of this rule. An alternative method of ensuring have expired. As a particular We do seek comment on a reasonable beneficiaries have access to opioids as prescriber’s status with respect to the time period for Part D sponsors/PBMs to necessary would be to require the preclusion list changes, the applicable incorporate the preclusion list into their sponsor immediately provide a transfer provisions of § 423.120(c)(6) would claims adjudication systems, and to a new provider when the first control. To illustrate, suppose a whether and how our proposed provider is on the preclusion list. The prescriber in March 2020 is convicted of regulatory text needs to be modified to new provider should be able to make an a felony that CMS deems detrimental to accommodate such a time period. We assessment and either provide Medicare’s best interests. Pharmacy wish to avoid a situation where a Part appropriate SUD treatment or continue claims for prescriptions written by the D sponsor/PBM pays for prescriptions the opioid or pain management regimen, individual would thus be rejected by written by individuals on the preclusion as medically appropriate. We are Part D sponsors or their PBMs upon the list before the sponsors/PBMs have interested to hear from commenters how prescriber being added to the preclusion incorporated the list but later are unable to operationalize this and whether there list. Conversely, a prescriber who was to submit their PDEs, which CMS is a better method to ensure appropriate revoked under § 424.535(a)(4) but whose typically edits based on date of service. medication is provided without transferring the beneficiary to a new reenrollment bar has expired would be (3) Provisional Coverage removed from the preclusion list; claims provider. We are proposing a 90-day for prescriptions written by the The current text of § 423.120(c)(6)(v) provisional coverage period in lieu of a individual would therefore no longer be states that a Part D sponsor or its PBM 3-month drug supply/90-day time rejected based solely on his or her must, upon receipt of a pharmacy claim period established in existing inclusion on the preclusion list. CMS or beneficiary request for § 423.120(c)(6), which was described on would regularly review the preclusion reimbursement for a Part D drug that a page 6 in the Technical Guidance on list to determine whether certain Part D sponsor would otherwise be Implementation of the Part D Prescriber individuals should be added to or required to deny in accordance with Enrollment Requirement (Technical removed therefrom based on changes to § 423.120(c)(6), furnish the beneficiary Guidance) issued on December 29, their status. with (a) a provisional supply of the drug 2015.59 Under the existing regulation Consistent with our application of a (as prescribed by the prescriber and if (which, as noted above, we have not reenrollment bar to providers and allowed by applicable law); and (b) enforced), a sponsor or MA–PD must suppliers that are enrolled in and then written notice within 3 business days track a separate 90-day consecutive time revoked from Medicare, we propose to after adjudication of the claim or request period for each drug covered as a keep an unenrolled prescriber on the in a form and manner specified by CMS. provisional supply from the initial date- preclusion list for the same length of The purpose of this provisional supply of-service; the sponsor or MA–PD must time as the reenrollment bar that we requirement is to give beneficiaries not reject a claim or deny a beneficiary’s could have imposed on the prescriber notice that there is an issue with respect request for reimbursement until the 90- had he or she been enrolled and then to future Part D coverage of a day time period has passed or a 3-month revoked. For example, suppose an prescription written by a particular supply has been dispensed, whichever unenrolled prescriber engaged in prescriber. comes first. Under our proposal, behavior that, had he or she been Although CMS’ proposed changes to however, a beneficiary would have one enrolled, would have warranted a 2-year § 423.120(c)(6) would significantly 90-day provisional coverage period with reenrollment bar. The prescriber would reduce the number of affected respect to an individual on the remain on the preclusion list for that prescribers and, by extension, the preclusion list. Accordingly, a sponsor/ same period of time. We note that in number of impacted beneficiaries, we PBM would track one 90-day time establishing such a time period, we remain concerned that beneficiaries period from the date the first drug is would use the same criteria that we do who receive prescriptions written by dispensed to the beneficiary pursuant to in establishing reenrollment bars. individuals on the preclusion list might a prescription written by the individual Prescribers who were revoked from suddenly no longer have access to these on the preclusion list. This dispensing Medicare or, for unenrolled prescribers, medications without provisional event would trigger a written notice and engaged in behavior that could serve as coverage and without notice, which a 90-day time period for the beneficiary a basis for an applicable revocation gives beneficiaries time to find a new to fill any prescriptions from that prior to the effective date of this rule (if prescriber. Therefore, we propose to particular precluded prescriber and to finalized) could, if the requirements of maintain the provisional coverage find another prescriber during that 90- § 423.120(c)(6) are met, be added to the requirement consistent with what was day time period. preclusion list upon said effective date finalized in the IFC, but with a Our rationale for this change is that even though the underlying action (for modification. Additionally, many individuals on the preclusion list are instance, felony conviction) occurred commercial plans are pursuing policies demonstrably problematic. This has prior to that date. However, the Part D to address the opioid epidemic, such as negative implications not only for the claim rejections by Part D sponsors and limiting the amount of initial opioid Trust Funds but also for beneficiary their PBMs under § 423.120(c)(6) would prescriptions. Given the opioid safety. Thus, it is imperative that a only apply to claims for Part D epidemic, we are considering other beneficiary switch to a new prescriber prescriptions filled or refilled on or after solutions for when a beneficiary tries to who is not on the preclusion list as soon the date he or she was added to the fill an opioid prescription from a as practicable. Under the current preclusion list; that is, sponsors and provider on the preclusion list. We seek PBMs would not be required to comment as to what limits or other 59 See https://www.cms.gov/Medicare/ retroactively reject claims based on the guardrails CMS should set with respect Prescription-Drug-Coverage/ PrescriptionDrugCovGenIn/Downloads/Technical- effective date of the revocation or, for to number of doses, initial dosing, and Guidance-on-Implementation-of-the-Part-D- unenrolled prescribers, the date of the type of product for opioid prescriptions Prescriber-Enrollment-Requirement.pdf.

VerDate Sep<11>2014 20:14 Nov 27, 2017 Jkt 244001 PO 00000 Frm 00111 Fmt 4701 Sfmt 4702 E:\FR\FM\28NOP2.SGM 28NOP2 sradovich on DSK3GMQ082PROD with PROPOSALS2 56446 Federal Register / Vol. 82, No. 227 / Tuesday, November 28, 2017 / Proposed Rules

prescriber enrollment requirement, the separate appeals processes for these c. Specific Regulatory Changes vast majority of prescribers who are not actions. In addition, wewould send Given the foregoing discussion, we enrolled in or opted-out of Medicare written notice to the prescriber of his or propose the following regulatory likely do not pose a risk to the her inclusion on the preclusion list. The changes: beneficiary or the Trust Funds, and notice would contain the reason for the • In § 423.100, we propose to delete therefore we can allow a 3-month inclusion and would inform the the definition of ‘‘other authorized provisional supply/90-day time period prescriber of his or her appeal rights. prescriber’’ and add the following: for each prescription written by such a This is to ensure that the prescriber is ++ Preclusion List means a CMS prescriber. In addition, our proposed duly notified of the action, why it was compiled list of prescribers who: policy would eliminate the difficulty taken, and his or her ability to challenge (1) Meet all of the following sponsors and PBMs have under the our determination. requirements: (A) The prescriber is current ‘‘per drug’’ provisional supply Consistent with our proposed currently revoked from the Medicare policy in determining whether the provision in § 423.120(c)(6) regarding program under § 424.535. beneficiary already received a appeal rights, we propose to update (B) The prescriber is currently under provisional supply of a drug. We seek several other regulatory provisions a reenrollment bar under § 424.535(c). specific comment on the modifications regarding appeals: (C) CMS determines that underlying we are proposing as to the provisional • conduct that led to the revocation is coverage and time period. We propose to revise § 498.3(b) to detrimental to the best interests of the With respect to beneficiaries who add a new paragraph (20) stating that a Medicare program. In making this would also be entitled to a transition, CMS determination to include a determination under this paragraph, we are not proposing any change to the prescriber on the preclusion list CMS considers the following factors: current policy. If a Part D sponsor constitutes an initial determination. (i) The seriousness of the conduct determines when adjudicating a This revision would help enable underlying the prescriber’s revocation; pharmacy claim that a beneficiary is prescribers to utilize the appeals (ii) The degree to which the entitled to provisional coverage because processes described in § 498.5. prescriber’s conduct could affect the the prescriber is on the preclusion list, • In § 498.5, we propose to add a new integrity of the Part D program; and but the drug is off-formulary and the paragraph (n) that would state as (iii) Any other evidence that CMS transition requirements set forth in follows: deems relevant to its determination; or § 423.120(b)(3) are also triggered, the ++ In paragraph (n)(1), we propose (2) Meet both of the following beneficiary would not receive more than that any prescriber dissatisfied with an requirements: the applicable transition supply of the (i) The prescriber has engaged in initial determination or revised initial drug, unless a formulary exception is behavior for which CMS could have determination that he or she is to be approved. We note that we considered revoked the prescriber to the extent included on the preclusion list may proposing that the transition applicable if he or she had been request a reconsideration in accordance requirements would not apply during enrolled in Medicare. with § 498.22(a). the provisional supply period in order (ii) CMS determines that the to simplify the policy for situations ++ In paragraph (n)(2), we propose underlying conduct that would have led when both apply to reduce beneficiary that if CMS or the prescriber under to the revocation is detrimental to the confusion. We seek comment on this or paragraph (n)(1) is dissatisfied with a best interests of the Medicare program. other alternatives for these situations. reconsidered determination under In making this determination under this We intend to allow the normal Part D § 498.5(n)(1), or a revised reconsidered paragraph, CMS considers the following rules (for example, edits, prior determination under § 498.30, CMS or factors: authorization, quantity limits) to apply the prescriber is entitled to a hearing (i) The seriousness of the conduct during the 90-day provisional coverage before an administrative law judge involved. period, but solicit comment on whether (ALJ). (ii) The degree to which the different limits should apply when ++ In paragraph (n)(3), we propose prescriber’s conduct could affect the opioids are involved, particularly when that if CMS or the prescriber under integrity of the Part D program; and the reason for precluding the provider/ paragraph (n)(2) is dissatisfied with a (iii) Any other evidence that CMS prescriber relates to opioid prescribing. hearing decision as described in deems relevant to its determination • In paragraph (c)(5)(i), we propose (4) Appeals paragraph (n)(2), CMS or the prescriber may request review by the Departmental that a Part D plan sponsor must reject, In our revisions to § 423.120(c)(6), we Appeals Board (DAB) and the prescriber or must require its pharmacy benefit propose to permit prescribers who are may seek judicial review of the DAB’s manager (PBM) to reject, a pharmacy on the preclusion list to appeal their decision. claim for a Part D drug unless the claim inclusion on this list in accordance with contains the active and valid National 42 CFR part 498. We believe that given These revisions are designed to Provider Identifier (NPI) of the the aforementioned pharmacy claim include preclusion list determinations prescriber who prescribed the drug. rejections that would be associated with within the scope of appeal rights This requirement is consistent with a prescriber’s appearance on the described in § 498.5. However, we existing policy. preclusion list, due process warrants solicit comment on whether a different • In paragraph (c)(5)(ii), we propose that the prescriber have the ability to appeals process is warranted and, if so, that the sponsor must communicate at challenge this via appeal. Any appeal what its components should be. point-of sale whether or not a submitted under this proposed provision, In addition, given that a beneficiary’s NPI is active and valid in accordance however, would be limited strictly to access to a drug may be denied because with this paragraph (c)(5)(ii). the individual’s inclusion on the of the application of the preclusion list • In paragraph (c)(5)(ii)(A), we preclusion list. The proposed appeals to his or her prescription, we believe the propose that if the sponsor process would neither include nor affect beneficiary should be permitted to communicates that the NPI is not active appeals of payment denials or appeal alleged errors in applying the and valid, the sponsor must permit the enrollment revocations, for there are preclusion list. pharmacy to—

VerDate Sep<11>2014 20:14 Nov 27, 2017 Jkt 244001 PO 00000 Frm 00112 Fmt 4701 Sfmt 4702 E:\FR\FM\28NOP2.SGM 28NOP2 sradovich on DSK3GMQ082PROD with PROPOSALS2 Federal Register / Vol. 82, No. 227 / Tuesday, November 28, 2017 / Proposed Rules 56447

++ Confirm that the NPI is active and record to CMS unless it includes on the determine that exceptional valid; or PDE record the active and valid circumstances exist regarding ++ Correct the NPI. individual NPI of the prescriber of the beneficiary access to prescriptions. In • In paragraph (c)(5)(ii)(B), we drug, and the prescriber is not included making a determination as to whether propose that if the pharmacy confirms on the preclusion list, defined in such circumstances exist, CMS would that the NPI is active and valid or § 423.100, for the date of service.’’ This take into account—(1) the degree to corrects the NPI, the sponsor must pay is to help ensure that— (1) the which beneficiary access to Part D drugs the claim if it is otherwise payable. prescriber can be properly identified, would be impaired; and (2) any other • In paragraph (iii), we propose that and (2) prescribers who are on the evidence that CMS deems relevant to its a Part D sponsor must not later recoup preclusion list are not included in PDEs. determination. payment from a network pharmacy for • In paragraph (c)(6)(iv), we propose • In § 498.3(b), we propose to add a a claim that does not contain an active to address the provisional coverage new paragraph (20) stating that a CMS and valid individual prescriber NPI on period and notice provisions as follows: determination that a prescriber is to be the basis that it does not contain one, ‘‘(iv)(A) A Part D sponsor or its PBM included on the preclusion list unless the sponsor— must not reject a pharmacy claim for a constitutes an initial determination. ++ Has complied with paragraph (ii) Part D drug under paragraph (c)(6)(i) of • In § 498.5, we propose to add a new of this section; this section or deny a request for paragraph (n) that would state as ++ Has verified that a submitted NPI reimbursement under paragraph follows: was not in fact active and valid; and (c)(6)(ii) of this section unless the ++ In paragraph (n)(1), we propose ++ The agreement between the sponsor has provided the provisional that any prescriber dissatisfied with an parties explicitly permits such coverage of the drug and written notice initial determination or revised initial recoupment. to the beneficiary required by paragraph • determination that he or she is to be In paragraph (iv), we propose that (c)(6)(iv)(B) of this section. included on the preclusion list may with respect to requests for (B) Upon receipt of a pharmacy claim request a reconsideration in accordance reimbursement submitted by Medicare or beneficiary request for with § 498.22(a). beneficiaries, a Part D sponsor may not reimbursement for a Part D drug that a ++ In paragraph (n)(2), we propose make payment to a beneficiary Part D sponsor would otherwise be that if CMS or the prescriber under dependent upon the sponsor’s required to reject or deny in accordance paragraph (n)(1) is dissatisfied with a acquisition of an active and valid with paragraphs (c)(6)(i) or (ii) of this reconsidered determination under individual prescriber NPI, unless there section, a Part D sponsor or its PBM § 498.5(n)(1), or a revised reconsidered is an indication of fraud. If the sponsor must do the following: (1) Provide the determination under § 498.30, CMS or is unable to retrospectively acquire an beneficiary with the following, subject the prescriber is entitled to a hearing active and valid individual prescriber to all other Part D rules and plan before an ALJ. NPI, the sponsor may not seek recovery coverage requirements: ++ In paragraph (n)(3), we propose of any payment to the beneficiary solely (i) A 90-day provisional supply that if CMS or the prescriber under on that basis. coverage period during which the paragraph (n)(2) is dissatisfied with a • In paragraph (c)(6)(i), we propose to sponsor must cover all drugs dispensed hearing decision as described in state: ‘‘Except as provided in paragraph to the beneficiary pursuant to paragraph (n)(2), CMS or the prescriber (c)(6)(iv) of this section, a Part D prescriptions written by the individual may request review by the DAB and the sponsor must reject, or must require its on the preclusion list. The provisional prescriber may seek judicial review of PBM to reject, a pharmacy claim for a supply period begins on the date-of- the DAB’s decision. Part D drug if the individual who service the first drug is dispensed prescribed the drug is included on the pursuant to a prescription written by the 11. Preclusion List—Part C/Medicare preclusion list, defined in § 423.100.’’ individual on the preclusion list. Advantage Cost Plan and PACE This would help ensure that Part D (ii) Written notice within 3 business Provisions sponsors comply with our proposed days after adjudication of the first claim a. Background requirement that claims involving or request for the drug in a form and (1) 2016 Final Rule prescribers who are on the preclusion manner specified by CMS. list should not be paid. (2) Ensure that reasonable efforts are On November 15, 2016, CMS • In paragraph (c)(6)(ii), we propose made to notify the prescriber of a published a final rule in the Federal to state as follows: ‘‘Except as provided beneficiary who was sent a notice under Register titled ‘‘Medicare Program; in paragraph (c)(6)(iv) of this section, a paragraph (c)(6)(iv)(B)(1)(ii) of this Revisions to Payment Policies Under the Part D sponsor must deny, or must section.’’ Physician Fee Schedule and Other require its PBM to deny, a request for • In new § 423.120(c)(6)(v), we Revisions to Part B for CY 2017; reimbursement from a Medicare propose that CMS would send written Medicare Advantage Bid Pricing Data beneficiary if the request pertains to a notice to the prescriber via letter of his Release; Medicare Advantage and Part D Part D drug that was prescribed by an or her inclusion on the preclusion list. Medical Loss Ratio Data Release; individual who is identified by name in The notice would contain the reason for Medicare Advantage Provider Network the request and who is included on the the inclusion on the preclusion list and Requirements; Expansion of Medicare preclusion list, defined in § 423.100.’’ would inform the prescriber of his or Diabetes Prevention Program Model; As with paragraph (c)(6)(i), this would her appeal rights. A prescriber may Medicare Shared Savings Program help ensure that Part D sponsors comply appeal his or her inclusion on the Requirements’’ (81 FR 80169). This rule with our proposed requirement that preclusion list in accordance with 42 contained a number of requirements payments not be made for prescriptions CFR part 498. related to provider enrollment, written by prescribers who are on the • In new § 423.120(c)(6)(vi), we including, but not limited to, the preclusion list. propose that CMS has the discretion not following: • In paragraph (c)(6)(iii), we propose to include a particular individual on (or, • We added a new § 422.222 to to state: ‘‘A Part D plan sponsor may not if warranted, remove the individual require providers and suppliers that submit a prescription drug event (PDE) from) the preclusion list should it furnish health care items or services to

VerDate Sep<11>2014 20:14 Nov 27, 2017 Jkt 244001 PO 00000 Frm 00113 Fmt 4701 Sfmt 4702 E:\FR\FM\28NOP2.SGM 28NOP2 sradovich on DSK3GMQ082PROD with PROPOSALS2 56448 Federal Register / Vol. 82, No. 227 / Tuesday, November 28, 2017 / Proposed Rules

a Medicare enrollee who receives his or already take in the Medicare Part A and believe, minimize the burden on MA her Medicare benefit through an MA Part B provider and supplier enrollment providers and suppliers. organization to be enrolled in Medicare arenas. The fact that CMS also has b. Proposed Provisions and be in an approved status no later access to information and data not than January 1, 2019. (The term ‘‘MA available to MA organizations was also (1) Process organization’’ refers to both MA plans relevant to our decision. The process we envision and propose and MA plans that provide drug (2) Preparations for Part C Enrollment would, similar to the proposed Part D coverage, otherwise known as MA–PD process, consist of the following plans.) We also updated §§ 417.478, As with our Part D enrollment components: 460.70, and 460.71 to reflect this requirement, we promptly commenced • Step 1: We would research our requirement. outreach efforts after the publication of internal systems and other relevant data • We added a requirement in new the November 15, 2016 final rule. We for individuals and entities that have § 422.204(b)(5) that required MA communicated with Part C provider engaged in behavior for which CMS: organizations to comply with the associations and MA organizations ++ Has revoked the individual’s or provider and supplier enrollment regarding, among other things, the entity’s enrollment and the individual requirements referenced in § 422.222. A general purpose of the enrollment or entity is under a reenrollment bar; or similar requirement was added to process, the rationale for § 422.222, and ++ Could have revoked the § 422.504. • the mechanics of completing and individual or entity to the extent We revised §§ 422.510, 422.752, submitting an enrollment application. 460.40, and 460.50 to state that applicable if they had been enrolled in According to recent CMS internal data, Medicare. organizations and programs that do not approximately 933,000 MA providers ensure that providers and suppliers In light of the significance of any and suppliers are already enrolled in activity that would result in a comply with the provider and supplier Medicare and meeting the MA provider enrollment requirements may be subject revocation under § 424.535(a), we enrollment requirements. However, believe that individual and entities that to sanctions and termination. roughly 120,000 MA-only providers and • We revised § 422.501 to require that have engaged in inappropriate behavior suppliers remain unenrolled in MA organization applications include should be the focus of our Part C Medicare, and concerns have been documentation demonstrating that all program integrity efforts. raised by the MA community over the • applicable providers and suppliers are Step 2—CMS would review, on a enrollment requirement, principally enrolled in Medicare in an approved case-by-case basis, each individual and status. We believed that these new over the burden involved in enrolling in entity that: requirements, as they pertained to MA, Medicare while having to also undergo ++ Is currently revoked from were necessary to help ensure that credentialing by their respective health Medicare and is under a reenrollment Medicare enrollees receive items or plans. bar. We would examine the reason for services from providers and suppliers We understand and share these the revocation. that are fully compliant with the concerns. We believe that the Medicare ++ Has engaged in behavior for requirements for Medicare enrollment. enrollment requirement could result in which CMS could have revoked the We also believed it would assist our a duplication of effort and, individual or entity to the extent efforts to prevent fraud, waste, and consequently, impose a burden on MA applicable if he or she had been abuse, and to protect Medicare providers and suppliers as well as MA enrolled in Medicare. enrollees, by allowing us to carefully organizations and beneficiaries in the Similar to our approach with Part D screen all providers and suppliers form of limiting access to providers. and for the same reason, the individuals (especially those that potentially pose While we maintain that Medicare and entities to be reviewed would be an elevated risk to Medicare) to confirm enrollment, in conjunction with MA those that— according to CMS’ internal that they are qualified to furnish credentialing, is the most thorough systems MA organization data, state Medicare items and services. Indeed, means of confirming a provider’s board information, and other relevant although § 422.204(a) requires MA compliance with Medicare requirements data for individuals and entities who are organizations to have written policies and of verifying the provider’s or who could become eligible to furnish and procedures for the selection and qualifications to furnish services and health care services or items. To avoid evaluation of providers and suppliers items, we believe that an appropriate confusion, we refer to such parties in that conform with the credentialing and balance can be achieved between this our proposed Part C preclusion list recredentialing requirements in program integrity objective and the provisions as ‘‘individuals’’ and § 422.204(b), CMS has not historically desire to reduce the burden on the ‘‘entities’’ rather than ‘‘providers’’ and had direct oversight over all network provider and supplier communities. ‘‘suppliers.’’ This is because the latter providers and suppliers under contract Given this, we propose to utilize the two terms could convey the impression with MA organizations. While there are same ‘‘preclusion list’’ concept in MA that the party in question must be CMS regulations governing how and that we are proposing for Part D actively furnishing health care services when MA organizations can pay for (described in section III.B.9.) and to or items to be included on the covered services, those are tied to eliminate the current enrollment preclusion list. statutory provisions. We concluded that requirement in § 422.222. We believe Similar to the Part D approach, we are requiring Medicare enrollment in this approach would allow us to also seeking comment on an alternative addition to the existing MA concentrate our efforts on preventing by which CMS would first identify credentialing requirements would MA payment for items and services through encounter data those providers permit a closer review of MA providers furnished by providers and suppliers or suppliers furnishing services or items and suppliers, which could, as that could pose an elevated risk to to Medicare beneficiaries. This would warranted, involve rigorous screening Medicare beneficiaries and the Trust significantly reduce the universe of practices such as risk-based site visits Funds, an approach, as previously prescribers who are on the preclusion and, in some cases, fingerprint-based mentioned, similar to the risk-based list and reduce the government’s background checks, an approach we process in § 424.518. This would, we surveillance of prescribers. We

VerDate Sep<11>2014 20:14 Nov 27, 2017 Jkt 244001 PO 00000 Frm 00114 Fmt 4701 Sfmt 4702 E:\FR\FM\28NOP2.SGM 28NOP2 sradovich on DSK3GMQ082PROD with PROPOSALS2 Federal Register / Vol. 82, No. 227 / Tuesday, November 28, 2017 / Proposed Rules 56449

anticipate that this could create delays • First-tier, downstream, and related Individuals and entities that were in CMS’ ability to screen providers or entities (FDR). revoked from Medicare or, for suppliers due to data lags and may • Providers and suppliers in Cost unenrolled individuals and entities, had introduce some program integrity risks. HMOs or CMPs, as defined in 42 CFR engaged in conduct that could serve as We are particularly interested in hearing part 417. a basis for an applicable revocation from the public on the potential risks • Providers and suppliers prior to the effective date of this rule (if this could pose to beneficiaries. participating in demonstration finalized) could, if the requirements of Based on the results of Steps 1 and 2, programs. § 422.222(a) are met, be added to the we would compile a preclusion list of • Providers and suppliers in pilot preclusion list upon said effective date individuals and entities that fall within program. even though the underlying action (for either of the following categories: • Locum tenens suppliers. instance, felony conviction) occurred ++ Are currently revoked from • Incident-to suppliers. prior to that date. The proposed Medicare, are under a reenrollment bar, We propose to revise this requirement payment denials under § 422.222(a), and CMS determines that the to state than an MA organization shall however, would only apply to health underlying conduct that led to the not make payment for an item or service care items or services furnished on or revocation is detrimental to the best furnished by an individual or entity that after the date the individual or entity interests of the Medicare program. is on the preclusion list (as defined in was added to the preclusion list; that is, ++ Have engaged in behavior for § 422.2). We also propose to remove the payment denials would not be made which CMS could have revoked the language beginning with ‘‘This retroactive to the date of the revocation individual or entity to the extent requirement applies to all of the or, for unenrolled individuals and applicable if they had been enrolled in following providers and suppliers’’ entities, the conduct that could serve as Medicare, and CMS determines that the along with the list of applicable a basis for an applicable revocation underlying conduct that would have led providers, suppliers, and FDRs. This is occurring before the effective date of the to the revocation is detrimental to the consistent with our previously final rule. Likewise, health care items best interests of the Medicare program. mentioned intention to use the terms and services furnished by individuals We propose to update § 422.2 to add ‘‘individuals’’ and ‘‘entities’’ in lieu of and entities revoked from Medicare or a definition of ‘‘preclusion list’’ ‘‘providers’’ and ‘‘suppliers.’’ engaging in conduct that could serve as consistent with both the foregoing We also propose that both basic and a basis for an applicable revocation after discussion as well as our proposed supplemental benefits should be subject the rule’s effective date and that are definition of the same term for the Part to the payment prohibition that is tied subsequently added to the preclusion D program. to the preclusion list. We believe that list would not be subject to retroactive payment denials under § 422.222(a); We propose to adopt this preclusion restricting the payment prohibition to only the date on which the affected list approach as an alternative to only one of these two categories would individual or entity is added to the enrollment in part to reflect the more undercut the effectiveness of our preclusion list would be used to indirect connection of providers and preclusion list proposal. determine payment and the start date of suppliers in Medicare Advantage. We We solicit comment on the following payment denials under this proposal. seek comment on whether some of the issues: We believe that this approach is the bases for revocation should not apply to ++ Whether the actions referenced in most consistent with principles of due the preclusion list in whole or in part § 424.535(a) are appropriate grounds for process. and whether the final regulation (or inclusion on the preclusion list. future guidance) should specify which ++ Whether actions other than those (3) MA Organization Compliance bases are or are not applicable and referenced in § 424.535(a) should Section 422.222 currently states that under what circumstances. constitute grounds for inclusion on the MA organizations that do not ensure In addition, we note that while there preclusion and, if so, what those that providers and suppliers comply would be separate regulatory provisions specific grounds are. with paragraph (a) may be subject to for Part C and Part D, there would not ++ Suggestions for means of sanctions under § 422.750 and be two separate preclusion lists: one for monitoring potentially abusive MA termination under § 422.510. We Part C and one for Part D. Rather, there practices involving providers and propose to revise this to state that MA would be a single preclusion list that suppliers, and appropriate processes for organizations that do not comply with includes all affected individuals and including such providers and suppliers paragraph (a) may be subject to entities. Having one joint list, we on the preclusion list. sanctions under § 422.750 and believe, would make the preclusion list As stated earlier in reference to termination under § 422.510. This is to process easier to administer. prescribers, the preclusion list would be help ensure that MA organizations do (2) Denial of Payment updated on a monthly basis. Individuals not make improper payments for items Section 422.222(a) currently states and entities would be added or removed and services furnished by individuals that providers or suppliers that are types from the list based on CMS’ internal and entities on the preclusion list. of individuals or entities that can enroll data or other informational sources that in Medicare in accordance with section indicate, for instance— (1) persons (4) Related Revisions 1861 of the Act, must be enrolled in eligible to provide medical services who As discussed previously, in the Medicare and be in an approved status have recently been convicted of a felony November 15, 2016 final rule, we added in Medicare in order to provide health that CMS determines to be detrimental or updated a number of other MA care items or services to a Medicare to the best interests of the Medicare regulatory provisions (for example, enrollee who receives his or her program; and (2) entities whose § 422.501 and 422.510) in order to fully Medicare benefit through an MA reenrollment bars have expired. As a incorporate our new enrollment organization. This requirement applies particular individual’s or entity’s status requirements. Because we are proposing to all of the following providers and with respect to the preclusion list to replace these enrollment suppliers: changes, the applicable provisions of requirements with an approach centered • Network providers and suppliers. § 422.222 would control. upon a preclusion list—and to help

VerDate Sep<11>2014 20:14 Nov 27, 2017 Jkt 244001 PO 00000 Frm 00115 Fmt 4701 Sfmt 4702 E:\FR\FM\28NOP2.SGM 28NOP2 sradovich on DSK3GMQ082PROD with PROPOSALS2 56450 Federal Register / Vol. 82, No. 227 / Tuesday, November 28, 2017 / Proposed Rules

ensure that providers, suppliers, MA providers or suppliers that are types of terms of its PACE program agreement, organizations, PACE organizations, and individuals or entities that can enroll in including employing or contracting with other applicable stakeholders comply Medicare in accordance with section any provider or supplier that are types with our proposed requirements—we 1861 of the Act, are enrolled in of individuals or entities that can enroll believe that these other MA regulatory Medicare in an approved status.’’ We in Medicare in accordance with section provisions must also be revised to accordingly propose the following 1861 of the Act, that is not enrolled in reflect this change. To this end, we revisions: Medicare in an approved status.’’ We propose the following revisions: ++ We propose to revise § 417.478(e) propose to revise paragraph (b)(1)(ii) by • Section 422.204(a) states that an to state as follows: changing the current language beginning MA organization must have written ++ In new paragraph (e)(1), we with ‘‘including’’ to read ‘‘including policies and procedures for the selection propose to state that the prohibitions, making payment to an individual or and evaluation of providers and procedures and requirements relating to entity that is included on the preclusion suppliers. These policies must conform payment to individual and entities on list, defined in § 422.2 of this chapter.’’ with the credentialing and the preclusion list (defined in § 422.2 of We note that this change would not recredentialing requirements in this part) apply to HMOs and CMPs that prohibit a PACE organization from § 422.204(b). Under paragraph (b)(5), an contract with CMS under section 1876 employing or contracting with an MA organization must follow a of the Act. individual or entity on the preclusion documented process with respect to ++ In new paragraph (e)(2), we list. As previously discussed, the focus providers and suppliers that have propose to state that in applying the of our preclusion list proposals is on the signed contracts or participation provisions of §§ 422.2, 422.222, and denial of payment. agreements that ensures compliance 422.224 under paragraph (e)(1) of this ++ Section 460.68(a) lists certain with the provider and supplier section, references to part 422 of this categories of individuals who a PACE enrollment requirements in § 422.222. chapter must be read as references to organization may not employ, as well as To achieve consistency with our this part, and references to MA individuals and organizations with preclusion list proposals and to help organizations as references to HMOs whom a PACE organization may not facilitate MA organizations’ compliance and CMPs. contract. Among these parties are those therewith, we propose to: ++ We propose to revise listed in paragraph (a)(4); specifically, ++ Establish a new § 422.204(c) that § 417.484(b)(3) to state: ‘‘That payments those ‘‘that are not enrolled in Medicare would require MA organizations to must not be made to individuals and in an approved status, if the providers follow a documented process that entities that are included on the or suppliers are of the types of ensures compliance with the preclusion preclusion list (as defined in § 422.2).’’ individuals or entities that can enroll in • list provisions in § 422.222. In 42 CFR part 460, we address Medicare in accordance with section ++ Delete § 422.204(b)(5) because it requirements relating to Programs of 1861 of the Act.’’ We propose to delete applies to the Part C enrollment process, All-Inclusive Care for the Elderly paragraph (a)(4), given our proposed which we are proposing to eliminate. (PACE). The PACE program is a state removal of the Part C enrollment Further, revising paragraph (b)(5) to option under Medicaid to provide for requirement. address the preclusion list requirements Medicaid payments to, and coverage of ++ Section 460.70(a) states that a could cause confusion, for paragraph (b) benefits under, PACE. We propose to PACE organization must have a written references providers and suppliers. We make the following changes to Part 460: contract with each outside organization, thus believe that creating a new ++ Section 460.40 states that, in agency, or individual that furnishes paragraph (c) would better clarify our addition to other remedies authorized administrative or care-related services expectations. by law, CMS may impose any of the not furnished directly by the PACE • In 42 CFR part 417, subpart L, we sanctions specified in §§ 460.42 and organization, except for emergency address certain contractual 460.46 if CMS determines that a PACE services as described in § 460.100; requirements concerning health organization commits certain violations, various requirements that a contract maintenance organizations (HMOs) and one of which is outlined in paragraph (j) between a PACE organization and a competitive medical plans (CMPs) that and reads: ‘‘Employs or contracts with contractor must meet are listed in contract with CMS to furnish covered any provider or supplier that is a type § 460.70(b). Paragraph (b)(1) states that services to Medicare beneficiaries. of individual or entity that can enroll in the PACE organization must contract Under § 417.478(e), the contract Medicare in accordance with section only with an entity that meets all between CMS and the HMO or CMP 1861 of the Act, that is not enrolled in applicable Federal and State must, among other things, provide that Medicare in an approved status.’’ We requirements, including, but not limited the HMO or CMP agrees to comply with propose to revise paragraph (j) to state: to, those listed in paragraphs (b)(1)(i) ‘‘Sections 422.222 and 422.224, which ‘‘Makes payment to any individual or through (iv). Paragraph (b)(1)(iv) reads: require all providers and suppliers that entity that is included on the preclusion ‘‘Providers or suppliers that are types of are types of individuals or entities that list, defined in § 422.2 of this chapter.’’ individuals or entities that can enroll in can enroll in Medicare in accordance ++ Section 460.50(b) addresses Medicare in accordance with section with section 1861 of the Act, to be grounds for which CMS or the state 1861 of the Act, must be enrolled in enrolled in Medicare in an approved administering agency may terminate a Medicare and be in an approved status status and prohibits payment to PACE program agreement if CMS or the in Medicare in order to provide health providers and suppliers that are state administering agency determines care items or services to a PACE excluded or revoked.’’ Paragraph (e) that the conditions of paragraphs (b)(1) participant who receives his or her adds that this requirement includes and (2) are met. In (b)(1), one of two Medicare benefit through a PACE ‘‘locum tenens suppliers and, if conditions, outlined in paragraphs organization.’’ Consistent with our applicable, incident-to suppliers.’’ (b)(1)(i) and (ii), must be met. Paragraph proposed deletion of § 460.68(a)(4), we Furthermore, § 417.484(b)(3) requires (b)(1)(ii) states: ‘‘The PACE organization propose to delete § 460.70(b)(1)(iv). We that the contract must provide that the failed to comply substantially with note that we are not proposing to HMO or CMP agrees to require all conditions for a PACE program or PACE prohibit individuals and entities on the related entities to agree that ‘‘All organization under this part, or with preclusion list from furnishing services

VerDate Sep<11>2014 20:14 Nov 27, 2017 Jkt 244001 PO 00000 Frm 00116 Fmt 4701 Sfmt 4702 E:\FR\FM\28NOP2.SGM 28NOP2 sradovich on DSK3GMQ082PROD with PROPOSALS2 Federal Register / Vol. 82, No. 227 / Tuesday, November 28, 2017 / Proposed Rules 56451

and items to PACE participants; we are under revised § 422.222 where a organization to ensure that providers merely proposing to prohibit payment revoked individual or entity would not and suppliers are enrolled in Medicare for such services and items if provided be included on the preclusion list. and not make payment to excluded or by an individual or entity on the ++ Paragraph (b) would state: ‘‘If a revoked individuals or entities.’’ We preclusion list. PACE organization receives a request for propose to revise paragraph (a)(13) to ++ Section 460.71(b) states that a payment by, or on behalf of, an read: ‘‘Fails to comply with §§ 422.222 PACE organization must develop a individual or entity that is excluded by and 422.224, that requires the MA program to ensure that all staff the OIG or is included on the preclusion organization not to make payment to furnishing direct participant care list, defined in § 422.2 of this chapter, excluded individuals or entities, nor to services meets the requirements the PACE organization must notify the individuals or entities on the preclusion outlined in paragraph (b). One of these enrollee and the excluded individual or list, defined in § 422.2.’’ requirements, listed in paragraph (b)(7), entity or the individual or entity • Section 422.510(a)(4) lists various reads: ‘‘Providers or suppliers that are included on the preclusion list in grounds by which CMS may terminate types of individuals or entities that can writing, as directed by contract or other a contract with an MA organization. enroll in Medicare in accordance with direction provided by CMS, that Paragraph (a)(4)(xiii) refers to the MA section 1861 of the Act, must be payments will not be made. Payment organization’s failure ‘‘to meet the enrolled in Medicare and be in an may not be made to, or on behalf of, an preclusion list requirements in approved status in Medicare in order to individual or entity that is excluded by accordance with §§ 422.222 and provide health care items or services to the OIG or is included on the preclusion 422.224.’’ We propose to revise this a PACE participant who receives his or list.’’ paragraph to read: ‘‘Fails to meet the her Medicare benefit through a PACE • Section 422.501(c) states that in preclusion list requirements in organization.’’ Similar to our proposed order to obtain a determination on accordance with §§ 422.222 and deletion of § 460.68(a)(4), we propose to whether it meets the requirements to 422.224.’’ delete paragraph (b)(7). become an MA organization and is • Section 422.504 outlines provisions ++ Section 460.86 addresses qualified to provide a particular type of that the contract between the MA payments to excluded or revoked MA plan, an entity (or an individual organization and CMS must contain. providers and suppliers as follows: authorized to act for the entity (the Under paragraph (a)(6), the MA ++ Paragraph (a) states that a PACE applicant)), must fully complete all organization must agree to adhere to, organization may not pay, directly or parts of a certified application. As part among other things, ‘‘Medicare provider indirectly, on any basis, for items or of the application, paragraph (c)(1)(iv) and supplier enrollment requirements.’’ services (other than emergency or requires ‘‘(d)ocumentation that all Pursuant to paragraph (i)(2)(v), urgently needed services as defined in providers or suppliers in the MA or moreover, the MA organization agrees to § 460.100) furnished to a Medicare MA–PD plan that are types of require all first tier, downstream, and enrollee by any individual or entity that individuals or entities that can enroll in related entities to agree that ‘‘they will is excluded by the Office of the Medicare in accordance with section require all of their providers and Inspector General (OIG) or is revoked 1861 of the Act, are enrolled in an suppliers to be enrolled in Medicare in from the Medicare program. approved status.’’ Also, paragraph (c)(2) an approved status consistent with ++ Paragraph (b) states: ‘‘If a PACE requires the following: ‘‘The authorized § 422.222.’’ We propose to revise these organization receives a request for individual must thoroughly describe two paragraphs as follows: payment by, or on behalf of, an how the entity and MA plan meet, or ++ Paragraph (a)(6) would be revised individual or entity that is excluded by will meet, all the requirements to replace the language ‘‘Medicare the OIG or is revoked from the Medicare described in this part, including provider and supplier enrollment program, the PACE organization must providing documentation that all requirements’’ with ‘‘the preclusion list notify the enrollee and the excluded or providers and suppliers referenced in requirements in 422.222.’’ revoked individual or entity in writing, § 422.222 are enrolled in Medicare in an ++ Paragraph (i)(2)(v) would be as directed by contract or other approved status.’’ revised to replace the language direction provided by CMS, that We propose to: following ‘‘they will’’ with ‘‘ensure that payments will not be made. Payment ++ Revise paragraph (c)(1)(iv) to read: payments are not made to individuals may not be made to, or on behalf of, an ‘‘Documentation that payment for health and entities included on the preclusion individual or entity that is excluded by care services or items is not being and list, defined in § 422.2.’’ the OIG or is revoked from the Medicare will not be made to individuals and • Section 422.224, which applies to program.’’ entities included on the preclusion list, MA organizations and pertains to We propose to revise these paragraphs defined in § 422.2.’’ payments to excluded or revoked as follows: ++ Revise paragraph (c)(2) to replace providers or suppliers, contains ++ Paragraph (a) would state: ‘‘A the language beginning with ‘‘including provisions very similar to those in PACE organization may not pay, providing documentation . . . ’’ with § 460.86: directly or indirectly, on any basis, for ‘‘including providing documentation ++ Paragraph (a) states that an MA items or services (other than emergency that payment for health care services or organization ‘‘may not pay, directly or or urgently needed services as defined items is not being and will not be made indirectly, on any basis, for items or in § 460.100) furnished to a Medicare to individuals and entities included on services (other than emergency or enrollee by any individual or entity that the preclusion list, defined in § 422.2.’’ urgently needed services as defined in is excluded by the Office of the • Section 422.752(a) lists certain § 422.113) furnished to a Medicare Inspector General (OIG) or is included violations for which CMS may impose enrollee by any individual or entity that on the preclusion list, defined in § 422.2 sanctions (as specified in § 422.750(a)) is excluded by the Office of the of this chapter.’’ We are not proposing on any MA organization with a contract. Inspector General (OIG) or is revoked to include the current regulatory One violation, listed in paragraph from the Medicare program except as language ‘‘or revoked’’ in our revised (a)(13), is that the MA organization provided.’’ paragraph. This is because, as outlined ‘‘(f)ails to comply with § 422.222 and ++ Paragraph (b) states: ‘‘If an MA previously, there could be situations 422.224, that requires the MA organization receives a request for

VerDate Sep<11>2014 20:14 Nov 27, 2017 Jkt 244001 PO 00000 Frm 00117 Fmt 4701 Sfmt 4702 E:\FR\FM\28NOP2.SGM 28NOP2 sradovich on DSK3GMQ082PROD with PROPOSALS2 56452 Federal Register / Vol. 82, No. 227 / Tuesday, November 28, 2017 / Proposed Rules

payment by, or on behalf of, an characterize the context and purposes of paragraph (d)(1) as data equivalent to individual or entity that is excluded by items and services provided to their Medicare fee-for-service data (which is the OIG or is revoked from the Medicare enrollees by a provider, supplier, also known as MA encounter data), MA program, the MA organization must physician, or other practitioner (OMB organizations must submit a National notify the enrollee and the excluded or Control No. 0938–1152). Currently, risk Provider Identifier in a Billing Provider revoked individual or entity in writing, adjustment data is submitted in two field on each MA encounter data record, as directed by contract or other formats: comprehensive data equivalent per CMS guidance. While the NPI is a direction provided by CMS, that to Medicare fee-for-service claims data required data element for the X12 837 payments will not be made. Payment (often referred to as encounter data); and 5010 format (as set forth in the TR3 may not be made to, or on behalf of, an data in abbreviated formats (often guides cited in the Background), CMS individual or entity that is excluded by referred to as RAPS data). has not codified a regulatory the OIG or is revoked in the Medicare CMS requires that MA organizations requirement that MA organizations program. and other entities submit encounter data include the Billing Provider NPI in We propose to revise these paragraphs using the X12 837 5010 format to fulfill encounter data records. The proposed as follows: the reporting requirements at 42 CFR amendment would implement that ++ Paragraph (a) would state: ‘‘An 422.310, where ‘‘X12’’ refers to requirement. MA organization may not pay, directly healthcare transactions, ‘‘837’’ refers to We propose to include the phrase or indirectly, on any basis, for items or an electronic format for institutional ‘‘per CMS guidance’’ to allow CMS to services (other than emergency or (‘‘837–I’’) and professional (‘‘837–P’’) take into account situations where there urgently needed services as defined in encounters, and ‘‘5010’’ refers to the is no bill (no claim for payment) in an § 422.113 of this chapter) furnished to a most recent version of this national MA organization’s system. For example, Medicare enrollee by any individual or standard. The X12 837 5010 is one of CMS allows submission of chart review entity that is excluded by the Office of the national standard HIPAA records (also submitted to CMS in the the Inspector General (OIG) or is transaction and code set formats for X12 837 5010 format) only for the included on the preclusion list, defined electronic transmission of healthcare purpose of submitting, correcting, and in § 422.2. transactions. Records that MA ++ Paragraph (b) would state: ‘‘If an deleting diagnoses from encounter data organziations and other submitters send records for the purposes of risk MA organization receives a request for to CMS in the X12 837 5010 format are payment by, or on behalf of, an adjustment payment, based on medical known as ‘‘encounter data records.’’ record reviews (chart reviews). Thus, individual or entity that is excluded by One of the required data elements on chart review records and encounters the OIG or an individual or entity that the X12 837 5010 encounter data record that are capitated (when there is no bill) is included on the preclusion list, is the ‘‘Billing Provider.’’ The Billing defined in § 422.2, the MA organization Provider is identified through several would have different guidance for must notify the enrollee and the data fields (for example, name field and populating the Billing Provider NPI excluded individual or entity or the address field), but a key data field for field than encounters for which a bill individual or entity included on the identifying the Billing Provider is the was received and adjudicated by the preclusion list in writing, as directed by National Provider Identifier (NPI). The MA organization. contract or other direction provided by NPI was established as a national (5) Appeals CMS, that payments will not be made. standard for a unique health identifier Payment may not be made to, or on for health care providers, as part of We propose to add a provision to behalf of, an individual or entity that is HIPAA Administrative Simplification § 422.222(a) that would permit excluded by the OIG or is included on efforts for electronic transactions among individuals or entities that are on the the preclusion list.’’ trading partners. CMS announced its preclusion list to appeal their inclusion In addition to the aforementioned decision to implement the NPI for on this list in accordance with 42 CFR proposals, CMS proposes to amend Medicare, in the final rule 69 FR 3434, part 498. Given the aforementioned existing data submission requirements published January 23, 2004. Billing payment denial that would ensue with for risk adjustment to require MA Provider NPIs are required for X12N 837 the individual’s or entity’s inclusion on organizations to include provider NPIs 5010 transactions (both institutional and the preclusion list, due process warrants as part of encounter data submissions; professional), as established in the that the individual or entity have the CMS intends to use the NPI data to national implementation guides (known ability to appeal this initial identify individuals and entities that, by the shorthand ‘‘TR3 guides’’): determination. Any appeal under this depending on the results of CMS Standards for Electronic Data proposed provision, however, would be investigation, may be included on the Interchange Technical Report Type 3, limited strictly to the individual’s or preclusion list proposed in this section. Health Care Claim: Institutional (837) entity’s inclusion on the preclusion list. Pursuant to section 1853(a)(1)(C) and and Standards for Electronic Data It would neither include nor affect (a)(3)(B) of the Act, CMS adjusts the Interchange Technical Report Type 3, appeals of payment denials or capitation rates paid to MA Health Care Claim: Professional (837). enrollment revocations, for there are organizations to account for such risk However, CMS has not incorporated this separate appeals processes for these factors as age, disability status, gender, Billing Provider NPI requirement into actions. Individuals and entities that file institutional status, and health status its Part C MA regulations for submission an appeal pursuant to § 422.222(a) and requires MA organizations to of risk adjustment data. CMS has would be able to avail themselves of any submit data regarding the services incorporated the Part D program other appeals processes permitted by provided to MA enrollees. requirement that plan sponsors submit law. Implementing regulations at 42 CFR NPIs on the Prescription Drug Event CMS would send written notice to the 422.310 set forth the requirements for Record (77 FR 22072, published April individual or entity of their inclusion on the submission of risk adjustment data 12, 2012). the preclusion list. The notice would that CMS uses to risk-adjust payments. We are proposing to amend § 422.310 contain the reason for the inclusion and MA organizations must submit data, in by adding a new paragraph (d)(5) to would inform the individual or entity of accordance with CMS instructions, to require that, for data described in their appeal rights.

VerDate Sep<11>2014 20:14 Nov 27, 2017 Jkt 244001 PO 00000 Frm 00118 Fmt 4701 Sfmt 4702 E:\FR\FM\28NOP2.SGM 28NOP2 sradovich on DSK3GMQ082PROD with PROPOSALS2 Federal Register / Vol. 82, No. 227 / Tuesday, November 28, 2017 / Proposed Rules 56453

We also propose to update the covered treatment, should also be revocation is detrimental to the best following regulatory provisions included these rules upon finalization. interests of the Medicare program. In regarding appeals. Note that these making this determination under this (6) Technical Changes provisions would include references to paragraph, CMS would consider the preclusion list inclusions under The title of § 422.222 reads: following factors: § 422.222 (MA) and, as previously ‘‘Enrollment of MA organization (A) The seriousness of the conduct mentioned, § 423.120(c)(6). network providers and suppliers; first- underlying the individual’s or entity’s • We propose to revise § 498.3(b) to tier, downstream, and related entities revocation. add a new paragraph (20) stating that a (FDRs); cost HMO or CMP, and (B) The degree to which the CMS determination that an individual demonstration and pilot programs.’’ We individual’s or entity’s conduct could or entity is to be included on the propose to change this to simply state affect the integrity of the Medicare preclusion list constitutes an initial ‘‘Preclusion list’’ so as to accord with program. determination. This change would help our previously mentioned proposed (C) Any other evidence that CMS enable individuals and entities to utilize changes. For this same reason, we deems relevant to its determination; or (2) Meet both of the following the appeals processes described in propose to: requirements: § 498.5: ++ Change the title of § 422.224 from ‘‘Payment to providers or suppliers (i) The individual or entity has • In § 498.5, we propose to add a new excluded or revoked’’ to ‘‘Payment to engaged in behavior for which CMS paragraph (n) that would state as individuals and entities excluded by the could have revoked the individual or follows: OIG or included on the preclusion list.’’ entity to the extent applicable had they ++ In paragraph (n)(1), we propose ++ Change the title of § 460.86 from been enrolled in Medicare. that any individual or entity dissatisfied ‘‘Payment to providers or suppliers (ii) CMS determines that the with an initial determination or revised excluded or revoked’’ to ‘‘Payment to underlying conduct that would have led initial determination that they are to be individuals or entities excluded by the to the revocation is detrimental to the included on the preclusion list may OIG or included on the preclusion list.’’ best interests of the Medicare program. request a reconsideration in accordance In making this determination under this with § 498.22(a). c. Specific Regulatory Changes paragraph, CMS considers the following ++ In paragraph (n)(2), we propose Given the foregoing discussion, we factors: that if CMS or the individual or entity propose the following regulatory (i) The seriousness of the conduct under paragraph (n)(1) is dissatisfied changes: involved. with a reconsidered determination • In § 417.478, we propose to revise (ii) The degree to which the under § 498.5(n)(1), or a revised paragraph (e) as follows: individual’s or entity’s conduct could reconsidered determination under ++ In new paragraph (e)(1), we affect the integrity of the Medicare § 498.30, CMS or the individual or propose to state that the prohibitions, program; and entity is entitled to a hearing before an procedures and requirements relating to (iii) Any other evidence that CMS ALJ. payment to individuals and entities on deems relevant to its determination ++ In paragraph (n)(3), we propose the preclusion list (defined in § 422.2 of • We propose to delete that if CMS or the individual or entity this chapter) apply to HMOs and CMPs § 422.204(b)(5). • under paragraph (n)(2) is dissatisfied that contract with CMS under section We propose to establish a new with a hearing decision as described in 1876 of the Act. § 422.204(c) that would require MA paragraph (n)(2), CMS or the individual ++ In new paragraph (e)(2), we organizations to follow a documented or entity may request review by the propose to state that in applying the process that ensures compliance with Departmental Appeals Board (DAB) and provisions of §§ 422.2, 422.222, and the preclusion list provisions in 422.224 under paragraph (e)(1) of this § 422.222. the individual or entity may seek • judicial review of the DAB’s decision. section, references to part 422 of this We propose to delete the existing version of § 422.222(a) and replace it These revisions are designed to chapter must be read as references to with the following: include preclusion list determinations this part, and references to MA organizations as references to HMOs ++ In § 422.222, we propose to within the scope of appeal rights change the title thereof to ‘‘Preclusion described in § 498.5. However, we and CMPs. • In § 417.484, we propose to revise list’’. solicit comment on whether a different ++ In paragraph (a)(1), we propose to appeals process is warranted and, if so, paragraph (b)(3) to state: ‘‘That payments must not be made to state that an MA organization shall not what its components should be. individuals and entities included on the make payment for a health care item or In addition, given that a beneficiary’s preclusion list, defined in § 422.2.’’ service furnished by an individual or access to health care items or services • In § 422.2, we propose to add a entity that is included on the preclusion may be impaired because of the definition of ‘‘preclusion list’’ that reads list, defined in § 422.2. application of the preclusion list to his as follows: ++ In paragraph (a)(2), we propose to or her item or service, we believe the ++ Preclusion list means a CMS replace the existing language therein beneficiary should be permitted to compiled list of individuals and entities with a provision stating that CMS would appeal alleged errors in applying the that: send written notice to the individual or preclusion list. We solicit comment (1) Meet all of the following entity via letter of their inclusion on the whether additional beneficiary requirements: preclusion list. The notice would protections, such as notices to enrollees (i) The individual or entity is contain the reason for the inclusion and when an individual or entity that has currently revoked from Medicare under would inform the individual or entity of recently furnished services or items to § 424.535. their appeal rights. An individual or the enrollee is placed on the preclusion (ii) The individual or entity is entity may appeal their inclusion on the list or a limited and temporary coverage currently under a reenrollment bar preclusion list, defined in § 422.2, in approval when an individual or entity is under § 424.535(c). accordance with Part 498. first placed on the preclusion list but is (iii) CMS determines that the ++ In paragraph (b), we propose to in the middle of a course of previously underlying conduct that led to the state that an MA organization that does

VerDate Sep<11>2014 20:14 Nov 27, 2017 Jkt 244001 PO 00000 Frm 00119 Fmt 4701 Sfmt 4702 E:\FR\FM\28NOP2.SGM 28NOP2 sradovich on DSK3GMQ082PROD with PROPOSALS2 56454 Federal Register / Vol. 82, No. 227 / Tuesday, November 28, 2017 / Proposed Rules

not comply with paragraph (a) of ++ Revise paragraph (i)(2)(v) to read, • In § 498.3(b), we propose to add a § 422.222 may be subject to sanctions ‘‘they will ensure that payments are not new paragraph (20) stating that a CMS under § 422.750 and termination under made to individuals and entities determination that an individual or § 422.510. included on the preclusion list, defined entity is to be included on the • In § 422.224, we propose to: in § 422.2.’’ preclusion list constitutes an initial ++ Change the title thereof to • In § 422.510(a)(4), we propose to determination. ‘‘Payment to individuals and entities revise paragraph (xiii) to read: ‘‘Fails to • In § 498.5, we propose to add a new excluded by the OIG or included on the meet the preclusion list requirements in paragraph (n) that would state as preclusion list.’’ accordance with §§ 422.222 and follows: ++ Revise paragraph (a) to state: ‘‘An 422.224.’’ ++ In paragraph (n)(1), we propose • MA organization may not pay, directly In § 422.752, we propose to revise that any individual or entity dissatisfied or indirectly, on any basis, for items or paragraph (a)(13) to read: ‘‘Fails to with an initial determination or revised services (other than emergency or comply with §§ 422.222 and 422.224, initial determination that they are to be urgently needed services as defined in that requires the MA organization not to included on the preclusion list may § 422.113 of this chapter) furnished to a make payment to excluded individuals request a reconsideration in accordance Medicare enrollee by any individual or and entities, nor to individuals and with § 498.22(a). entity that is excluded by the Office of entities included on the preclusion list, + In paragraph (n)(2), we propose that the Inspector General (OIG) or is defined in § 422.2.’’ if CMS or the individual or entity under • included on the preclusion list, defined In § 460.40, we propose to revise paragraph (n)(1) is dissatisfied with a in § 422.2’’. paragraph (j) to state: ‘‘Makes payment reconsidered determination under (n)(1), or a revised reconsidered ++ Revise paragraph (b) to state: ‘‘If to any individual or entity that is determination under § 498.30, CMS or an MA organization receives a request included on the preclusion list, defined the individual or entity is entitled to a for payment by, or on behalf of, an in § 422.2 of this chapter.’’ • hearing before an ALJ. individual or entity that is excluded by In § 460.50, we propose to revise ++ In paragraph (n)(3), we propose the OIG or an individual or entity that paragraph (b)(1)(ii) by changing the that if CMS or the individual or entity is included on the preclusion list, current language following ‘‘including’’ under paragraph (n)(2) is dissatisfied defined in § 422.2, the MA organization to read ‘‘making payment to an with a hearing decision as described in must notify the enrollee and the individual or entity that is included on paragraph (n)(2), CMS or the individual excluded individual or entity or the the preclusion list, defined in § 422.2 of or entity may request review by the DAB individual or entity included on the this chapter.’’ ’’ • We propose to delete § 460.68(a)(4). and the individual or entity may seek preclusion list in writing, as directed by • We propose to delete judicial review of the DAB’s decision. contract or other direction provided by § 460.70(b)(1)(iv). CMS, that payments will not be made. • We propose to delete § 460.71(b)(7). 12. Removal of Quality Improvement Payment may not be made to, or on • In § 460.86, we propose to revise Project for Medicare Advantage behalf of, an individual or entity that is paragraphs (a) and (b) to state as Organizations (§ 422.152) excluded by the OIG or is included on follows: Section 1852(e) of the Act requires the preclusion list.’’ ++ Paragraph (a) would state: ‘‘A that Medicare Advantage (MA) • We propose to revise § 422.310 to PACE organization may not pay, organizations have an ongoing Quality add a new paragraph (d)(5) to require directly or indirectly, on any basis, for Improvement (QI) Program for the that, for data described in paragraph items or services (other than emergency purpose of improving the quality of care (d)(1) as data equivalent to Medicare or urgently needed services as defined provided to enrollees in the fee-for-service data (which is also in § 460.100) furnished to a Medicare organization’s MA plans. The statute known as MA encounter data), MA enrollee by any individual or entity that requires that the MA organization organizations must submit a National is excluded by the OIG or is included on include a Chronic Care Improvement Provider Identifier in a Billing Provider the preclusion list, defined in § 422.2 of Program (CCIP) as part of the overall QI field on each MA encounter data record, this chapter.’’ Program per CMS guidance. ++ Paragraph (b) would state: ‘‘If a Our regulations at § 422.152 outline • In § 422.501(c), we propose to: PACE organization receives a request for the QI Program requirements for MA ++ Revise paragraph (c)(1)(iv) to read: payment by, or on behalf of, an organizations, which include the ‘‘Documentation that payment for health individual or entity that is excluded by development and implementation of care services or items is not being and the OIG or is included on the preclusion both Quality Improvement Projects will not be made to individuals and list, defined in § 422.2 of this chapter, (QIPs), at paragraphs (a)(3) and (d), and entities included on the preclusion list, the PACE organization must notify the a CCIP, at paragraphs (a)(2) and (c). Both defined in § 422.2.’’ enrollee and the excluded individual or provisions require that the MA ++ Revise paragraph (c)(2) to replace entity or the individual or entity that is organization’s QIP and CCIP address the language beginning with ‘‘including included on the preclusion list in areas or populations identified by CMS. providing documentation . . .’’ with writing, as directed by contract or other The January 2005 final rule (70 FR ‘‘including providing documentation direction provided by CMS, that 4587) addressed the QI provisions that payment for health care services or payments will not be made. Payment added to section 1852(e) of the Act by items is not being and will not be made may not be made to, or on behalf of, an the Medicare Modernization Act of 2003 to individuals and entities included on individual or entity that is excluded by (MMA). In the final rule, we specified the preclusion list, defined in § 422.2.’’ the OIG or is included on the preclusion in § 422.152 that MA organizations must • In section 422.504, we propose to: list.’’ have ongoing QI Programs, which ++ Replace the language in paragraph ++ We also propose to change the include chronic care programs. In (a)(6) that reads ‘‘Medicare provider and title of § 460.86 to ‘‘Payment to addition, CMS provided MA supplier enrollment requirements’’ with individuals and entities that are organizations the flexibility to shape ‘‘the preclusion list requirements in excluded by the OIG or are included on their QI efforts to the needs of their § 422.222 and § 422.224.’’ the preclusion list.’’ enrollees.

VerDate Sep<11>2014 20:14 Nov 27, 2017 Jkt 244001 PO 00000 Frm 00120 Fmt 4701 Sfmt 4702 E:\FR\FM\28NOP2.SGM 28NOP2 sradovich on DSK3GMQ082PROD with PROPOSALS2 Federal Register / Vol. 82, No. 227 / Tuesday, November 28, 2017 / Proposed Rules 56455

In the April 2010 final rule (75 FR has found that a number of QIPs effectiveness of the QI Program at least 19677), CMS indicated concern that MA implemented are duplicative of annually; correct all problems that come organizations were choosing QIPs and activities MA organizations are already to its attention through internal, CCIPs that did not address QI areas that doing to meet other plan needs and surveillance, complaints, or other best reflected enrollee needs. requirements, such as the CCIP and mechanisms; contract with an approved Additionally, there were concerns that internal organizational focus on STAR Medicare Consumer Assessment of some projects focused more on Rating metrics. For example, we Health Providers and Systems improving processes rather than designated ‘‘Reducing All-Cause (CAHPS®) survey vendor to conduct the improving clinical outcomes. Therefore, Hospital Readmissions’’ as the 2012 QIP Medicare CAHPS® satisfaction survey of we modified the regulation to provide topic. The QIPs for this topic often Medicare plan enrollees; measure for CMS to identify focus areas for QIPs duplicated other CMS and MA performance under the plan using and population areas for CCIPs. MA organization care coordination standard measures required by CMS and organizations retained the flexibility to initiatives aimed to improve transition report its performance to CMS; develop, identify topics for development of QIPs of care across health care settings and compile, evaluate, and report certain and CCIPs based on the needs of their reduce hospital readmissions. We found measures and other information to CMS, population, but also had to implement that many plans were already engaged its enrollees, and the general public; and QIPs and CCIPs as directed by CMS, in activities to reduce hospital develop and implement a CCIP. Further, which could identify general areas of readmissions because they are annually CMS emphasizes here that MA focus that supported CMS quality scored on their performance in this area organizations must have QI Programs strategies and initiatives. (and many other areas) through that go beyond only performance of During this time, CMS was also Healthcare Effectiveness Data and CCIPs that focus on populations concerned that MA organizations were Information Set (HEDIS). HEDIS are a identified by CMS. The CCIP is only one employing inconsistent methods in set of plan performance and quality component of the QI Program, which developing criteria for QIPs and CCIPs. measures. Each year, MA organizations has the purpose of improving care and As a result, CMS further modified the are required to report HEDIS data and provides for the collection, analysis, and regulation to require MA organizations are evaluated annually based on these reporting of data that permits the to report progress in a manner identified measures. High performance on these measurement of health outcomes and by CMS. This allowed CMS to review measures also plays a large role in other indices of quality under section results and extrapolate lessons learned achieving high Star Ratings, which has 1852(e) of the Act. and best practices consistently across beneficial payment consequences for We believe this proposed change will the MA program. MA organizations. This suggests that allow MA organizations to maintain After making these regulation CMS direction and detailed regulation existing health improvement initiatives modifications, CMS issued a number of QIPs is unnecessary as the Star and take steps to reduce the risk of sub-regulatory QIP and CCIP guidance Ratings program use of HEDIS measures redundancies or duplication. The documents to ensure that MA (and other measures) incentivizes MA remaining elements of the QI Program, organizations measured progress in a organizations sufficiently to focus on including the CCIP, will still maintain consistent and meaningful way. For desired improvements and outcomes. the intended purpose of the QI Program: example, the new Plan-Do-Study-Act QI Therefore, we believe the removal of That plans have the necessary model required MA organizations to the QIP and the continued CMS infrastructure to coordinate care and place some structure and parameters direction of populations for required promote quality, performance, and around their QIPs and CCIPs, ultimately CCIPs would allow MA organizations to efficiency on an ongoing basis. leading to more consistency. focus on one project that supports This proposal does not eliminate the Over time, CMS found its improving the management of chronic CCIP requirements that MA implementation of the QIP and CCIP conditions, a CMS priority, while organizations address populations requirements had become burdensome reducing the duplication of other QI identified by CMS and report project and complex, rather than streamlining initiatives. We propose to delete status to CMS as requested. Per the and conforming MA organizations’ §§ 422.152(a)(3) and 422.152(d), which April 2010 rule (75 FR 19677), we still implementation of QIPs and CCIPs. For outline the QIP requirements. In believe that these requirements are example, the complex sub-regulatory addition, in order to ensure that necessary to ensure that MA guidance led to a wide range of MA remaining cross references for other organizations are developing projects organization interpretations, resulting in provisions in this section remain that positively impact populations extraneous, irrelevant, voluminous, and accurate, we will reserve paragraphs identified by CMS and that progress is redundant information being reported to (a)(3) and (d). The removal of these documented and reported in a way that CMS. We gained little value from this requirements would reduce burden on is consistent with our requirements. information. As a result, we scaled both MA organizations and CMS. In conclusion, we are proposing to down our sub-regulatory guidance in Even with this proposed removal of amend § 422.152 by: order to gain more concise and useful the QIP requirements, the MA • Deleting and reserving paragraphs information with which to evaluate the requirements for QI Programs would (a)(3) and (d). outcomes and show any sort of remain in place and be robust and We solicit comments on this proposal, attribution. However, we also found that sufficient to ensure that the including whether additional revision to the complex guidance did not requirements of section 1852(e) of the § 422.152 is necessary to eliminate necessarily produce better outcomes in Act are met. As a part of the QI Program, redundancies CMS has identified in this the review of annual updates. each MA organization would still be preamble. Continued evaluation through annual required to develop and maintain a review of plan reported updates of the health information system; encourage 13. Reducing Provider Burden— QIPs and CCIPs has led CMS to believe providers to participate in CMS and Comment Solicitation that the QIPs in particular do not add HHS QI initiatives; implement a Health care providers are key partners significant value. Through annual program review process for formal in the delivery of Medicare benefits, and review of plan-reported updates, CMS evaluation of the impact and we are exploring ways to reduce burden

VerDate Sep<11>2014 20:14 Nov 27, 2017 Jkt 244001 PO 00000 Frm 00121 Fmt 4701 Sfmt 4702 E:\FR\FM\28NOP2.SGM 28NOP2 sradovich on DSK3GMQ082PROD with PROPOSALS2 56456 Federal Register / Vol. 82, No. 227 / Tuesday, November 28, 2017 / Proposed Rules

on providers (meaning institutions, ++ Volume of medical records in a providers, associations for these entities, physicians, and other practitioners) given request. and companies assisting MA arising from requests for medical record ++ Method of collection and organizations, providers, and hospitals documentation by MA organizations, submission of medical records. with handling medical record requests. particularly in connection with MA ++ How narrowly or broadly the C. Implementing Other Changes program requirements. We are requests are framed (for example, interested in stakeholder feedback on whether the request is for a single visit, 1. Reducing the Burden of the Medicare the nature and extent of this burden of a specific condition, and for what Part C and Part D Medical Loss Ratio producing medical record timeframe). Requirements ++ Extent to which requests are made documentation and on ideas to address a. Background the burden. We are particularly pursuant to a CMS-conducted RADV interested in burden experienced by audit, other CMS activities, or for other Section 1103 of Title I, Subpart B of solo providers. Please note that this is purposes (please specify what the other the Health Care and Education a solicitation for comment only and purposes are). Reconciliation Act (Pub. L. 111–152) does not commit CMS to adopt any ++ Considerations that may be amends section 1857(e) of the Act to ideas submitted nor to making any unique to solo providers. add medical loss ratio (MLR) changes to CMS audits or activities, ++ Impact on burden due to requirements to Medicare Part C (MA including risk adjustment data increased adoption of electronic health program). An MLR is expressed as a validation (RADV) processes. record systems. percentage, generally representing the By law, CMS is required to adjust ++ Specific examples of medical percentage of revenue used for patient payments to MA organizations for their record requests (for example, anecdotes care rather than for such other items as enrollees’ risk factors, such as age, and/or the requests themselves, administrative expenses or profit. disability status, gender, institutional appropriately redacted of confidential Because section 1860D–12(b)(3)(D) of status, and health status. To this end, information and PII/PHI). the Act incorporates by reference the MA organizations are required in • The nature and extent of requests requirements of section 1857(e) of the regulation (§ 422.310) to submit risk related to medical record attestations, Act, these MLR requirements also apply adjustment data to CMS—including including the following: to the Medicare Part D program. In the diagnosis codes—to characterize the ++ Reasoning behind the attestation May 23, 2013 Federal Register (78 FR context and purposes of items and request. 31284), we published a final rule that services provided to MA organization ++ Amount of time afforded to codified the MLR requirements for Part plan enrollees. Risk adjustment data providers to respond to such requests. C MA organizations, and Part D refers to data submitted in two formats: ++ Frequency of requests for sponsors (including organizations Comprehensive data equivalent to providers to sign attestations. offering cost plans that provide the Part Medicare fee-for-service claims data ++ Volume of requests. D benefit) in the regulations at 42 CFR (often referred to as encounter data) and ++ Level and duration for which part 422, subpart X and part 423, data in abbreviated formats (often attestations are requested (for example, subpart X. referred to as RAPS data). Under for each medical record, for all medical For contract year 2014 and § 422.310, risk adjustment data that is records for a beneficiary for a particular subsequent contract years, MA submitted must be documented in the date of service or for a particular year). organizations and Part D sponsors are medical record and MA organizations ++ Whether there is reduced burden required to report their MLRs and are will be required to submit medical associated with electronic signatures. subject to financial and other penalties records to validate the risk adjustment ++ Specific examples of medical for a failure to meet the statutory data. Finally, at § 422.310(d)(4), MA record attestations and attestation requirement that they have an MLR of requests. at least 85 percent (see §§ 422.2410 and organizations may include in their • contracts with providers, suppliers, Ideas for improving the process 423.2410). The statute imposes several physicians, and other practitioners, around MA organizations requesting levels of sanctions for failure to meet the provisions that require submission of medical records and/or attestations that 85 percent minimum MLR requirement, complete and accurate risk adjustment are not directly pursuant to CMS- including remittance of funds to CMS, data as required by CMS. These conducted RADV audits. Specify the a prohibition on enrolling new provisions may include financial type of change the idea would members, and ultimately contract penalties for failure to submit complete necessitate: a statutory, regulatory, termination. The minimum MLR data. subregulatory, operational, or CMS- requirement in section 1857(e)(4) of the To address concerns from providers issued guidance such as best practices Act creates incentives for MA about burdensome requests from MA for MA organizations when requesting organizations and Part D sponsors to organizations for their patients’ medical medical records and/or attestations, and reduce administrative costs, such as record documentation, we are soliciting how such a change may interact with marketing costs, profits, and other uses comment from stakeholders to more other provisions, such as state law or of the funds earned by plan sponsors, fully understand the issue and for ideas Joint Commission requirements. If the and helps to ensure that taxpayers and to accomplish reductions in provider ideas involve novel legal questions, enrolled beneficiaries receive value burden. Specifically, we seek comment analysis regarding our authority is from Medicare health and drug plans. on the following: welcome for our consideration. For each Section 1001(5) of the Patient • The nature and extent of medical idea, describe the extent of provider Protection and Affordable Care Act record requests, including the following: burden reduction, quantitatively where (Pub. L. 111–148), as amended by ++ Reasoning behind the request sent possible, and any other consequences section 10101(f) of the Health Care by the MA organization to the provider. that implementing the idea may have on Reconciliation Act, also established a ++ Amount of time afforded to beneficiaries, providers, MA new MLR requirement under section providers to respond to such requests. organizations, or CMS. Further, we 2718 of the Public Health Service Act ++ Frequency of requests for encourage all relevant parties to respond (PHSA) that applies to issuers of providers to submit medical records. to this request: MA organizations, employer group and individual market

VerDate Sep<11>2014 20:14 Nov 27, 2017 Jkt 244001 PO 00000 Frm 00122 Fmt 4701 Sfmt 4702 E:\FR\FM\28NOP2.SGM 28NOP2 sradovich on DSK3GMQ082PROD with PROPOSALS2 Federal Register / Vol. 82, No. 227 / Tuesday, November 28, 2017 / Proposed Rules 56457

private insurance. We will refer to the adjustment to incurred claims. The activities as a condition of participation MLR requirements that apply to issuers Medicare MLR proposed rule (78 FR in the MA and Part D programs. of private insurance as the ‘‘commercial 12433) explained that we considered MA organizations and Part D sponsors MLR rules.’’ Regulations implementing this approach to be appropriate because are required at §§ 422.503(b)(4)(vi) and the commercial MLR rules are without such an adjustment, the 423.504(b)(4)(vi), respectively, to adopt published at 45 CFR part 158. recovery of paid fraudulent claims an effective compliance program which This proposed rule sets forth our would reduce an MLR and could create includes measures that prevent, detect, proposed modifications to certain MLR a disincentive to engage in fraud and correct fraud. We believe that the requirements in the Medicare Part C and reduction efforts. Allowing an proposed change to include all Part D programs. adjustment to incurred claims to reflect expenditures in connection with fraud claims payments recoveries up to the reduction activities as QIA-related b. Proposed Regulatory Changes to the limit of fraud reduction expenses would expenditures in the MLR numerator best Calculation of the Medical Loss Ratio help mitigate whatever disincentive aligns with this Medicare contracting (§§ 422.2420, 422.2430, 423.2420, and might occur if fraud reduction expenses requirement. We are concerned that the 423.2430) were treated solely as nonclaims and current rules could create a disincentive (1) Fraud Reduction Activities nonquality improving expenses. The to invest in fraud reduction activities, which is only partly mitigated by the As explained in the February 22, 2013 Medicare MLR proposed rule echoed current adjustment to incurred claims proposed rule (78 FR 12428), we used the December 7, 2011 commercial MLR for amounts recovered as a result of the commercial MLR rules as a reference final rule with comment period (76 FR fraud reduction activities, up to the point for developing the Medicare MLR 76577), where we had earlier expressed amount of fraud reduction expenses. We rules. We sought to align the the view that allowing an unlimited believe that it is particularly important commercial and Medicare MLR rules in adjustment for fraud reduction expenses that MA organizations and Part D order to limit the burden on would undermine the purpose of requiring issuers to meet the MLR sponsors invest in fraud reduction organizations that participate in both activities as the Medicare trust funds are markets, and to make commercial and standard. We have reconsidered this position used to finance the MA and Part D Medicare MLRs as comparable as programs. We believe that including the possible for comparison and evaluation based on the specific characteristics of the MA and Part D programs, and are full amount of expenses for fraud purposes, including by Medicare reduction activities as QIA will provide now proposing certain changes to the beneficiaries. Although we believe it is additional incentive to encourage MA treatment of expenses for fraud important to maintain consistency organizations and Part D sponsors to reduction activities in the Medicare between the commercial and Medicare develop innovative and more effective MLR calculation. First, we are MLR requirements, we also recognized ways to detect and deter fraud. that some areas of the commercial MLR proposing to revise the MA and Part D We continue to believe that the rules would need to be revised to fit the regulations by removing the current minimum MLR requirement in section unique characteristics of the MA and exclusion of fraud prevention activities 1857(e)(4) of the Act is intended to Part D programs. from QIA at §§ 422.2430(b)(8) and create an incentive to reduce One area of alignment between the 423.2430(b)(8). Second, we are administrative costs, marketing, profits, commercial and Medicare MLR rules is proposing to expand the definition of and other such uses of the funds that the treatment of expenditures related to QIA in §§ 422.2430 and 423.2430 to plan sponsors receive, and to ensure fraud reduction efforts, which we include all fraud reduction activities, that taxpayers and enrolled beneficiaries defined to include both fraud including fraud prevention, fraud receive value from Medicare health prevention and fraud recovery in both detection, and fraud recovery. Third, we plans. However, we also believe that rules (see 78 FR 12433). The Medicare are proposing to no longer include in MA organizations’ and Part D sponsors’ MLR regulations adopted the same incurred claims the amount of claims fraud reduction activities can definitions of activities that improve payments recovered through fraud potentially provide significant value to healthcare quality (also referred to as reduction efforts, up to the amount of the government and taxpayers by quality improvement activities, or QIA), fraud reduction expenses, in reducing trust fund expenditures. When as had been adopted in the commercial §§ 422.2420(b)(2)(ix) and MA organizations and Part D sponsors MLR regulations at 45 CFR 158.150 and 423.2420(b)(2)(viii). We note that the prevent fraud and recover amounts paid 158.151, in order to facilitate uniform commercial MLR rules and the for fraudulent claims, this lowers the accounting for the costs of these Medicaid MLR rules are outside the overall cost of providing coverage to MA activities across lines of business (see 78 scope of this proposed rule. and Part D enrollees. Because MA FR 12435). Consistent with this policy We are proposing these changes to the organizations’ and Part D sponsors’ of alignment, the Medicare MLR Medicare MLR rules because we believe monthly payments are based in part on regulations at §§ 422.2430(b)(8) and that limiting or excluding amounts their claims experience in prior years, if 423.2430(b)(8) adopted the commercial invested in fraud reduction undermines MA organizations and Part D sponsors MLR rules’ exclusion of fraud the federal government’s efforts to pay fewer fraudulent claims, this should prevention activities from QIA. The combat fraud in the Medicare program, be reflected in their subsequent cost Medicare MLR regulations and reduces the potential savings to the projections, which would ultimately (§§ 422.2420(b)(2)(ix) and government, taxpayers, and result in lower payments to MA 423.2420(b)(2)(viii)) further aligned with beneficiaries that robust fraud organizations and Part D sponsors out of the commercial MLR rules’ treatment of prevention efforts in the MA and Part D the Medicare trust funds, and could also fraud-related expenditures by allowing programs can provide. Fraud prevention result in lower premiums or additional the amount of claim payments activities can improve patient safety, supplemental benefits for beneficiaries. recovered through fraud reduction deter the use of medically unnecessary Given the proposed change to include efforts, not to exceed the amount of services, and can lead to higher levels expenditures for fraud reduction fraud reduction expenses, to be of health care quality, which is part of activities in the QIA portion of the MLR included in the MLR numerator as an the reason why we require such numerator, we no longer believe that it

VerDate Sep<11>2014 20:14 Nov 27, 2017 Jkt 244001 PO 00000 Frm 00123 Fmt 4701 Sfmt 4702 E:\FR\FM\28NOP2.SGM 28NOP2 sradovich on DSK3GMQ082PROD with PROPOSALS2 56458 Federal Register / Vol. 82, No. 227 / Tuesday, November 28, 2017 / Proposed Rules

would be necessary or appropriate to • In §§ 422.2430 and 423.2430, add increase the likelihood of desired health include in incurred claims the amount new paragraph (a)(4) that lists activities outcomes in ways that are capable of of claim payments recovered through that are automatically included in QIA. being objectively measured and of fraud reduction efforts, up to the • Designate the introductory text of producing verifiable results; (3) be amount of fraud reduction expenses. As §§ 422.2430(a) and 423.2430(a) as directed toward individual enrollees, noted previously, we originally paragraph (a)(1), and revise newly specific groups of enrollees, or other included an adjustment to incurred designated paragraph (a)(1) to specify populations as long as enrollees do not claims for claims payments recovered that, for an activity to be included in incur additional costs for population- through fraud reduction efforts based on QIA, it must either fall into one of the based activities; and (4) be grounded in the rationale that, because the recovery categories listed in newly redesignated evidence-based medicine, widely of paid fraudulent claims reduces the (a)(2) and meet all of the requirements accepted best clinical practice, or amount of incurred claims in the MLR in newly redesignated (a)(3), or be listed criteria issued by recognized numerator, if expenditures for fraud in paragraph (a)(4). professional medical associations, reduction efforts were treated solely as • Remove and reserve accreditation bodies, government nonclaims and nonquality improvement §§ 422.2430(b)(8) and 423.2430(b)(8). agencies or other nationally recognized activities, this could create a We solicit comment on these health care quality organizations. In our disincentive to engage in fraud proposed changes, particularly whether prior MLR rulemaking, we did not reduction activities. The adjustments to our proposal is based on the best attempt to determine whether all MTM incurred claims under current understanding of the motives and programs that comply with § 423.153(d) §§ 422.2420(b)(2)(ix) and incentives applicable to MA would necessarily meet the QIA 423.2420(b)(2)(viii) mitigate the organizations and Part D sponsors to requirements at § 422.2430 (for MA–PD potential disincentive to invest in fraud engage in fraud reduction activities. We contracts) and § 423.2430 (for stand- reduction activities insofar as MA also solicit comment on the types of alone Part D contracts). Subsequent to organizations’ and Part D sponsors’ activities that should be included in, or publication of the May 23, 2013 final recoveries of paid fraudulent claims do excluded from, fraud reduction rule, we have received numerous not result in a reduction to incurred activities. In addition, we solicit inquiries seeking clarification regarding claims. Because this adjustment to comment on alternative approaches to whether MTM programs are QIA. To incurred claims is only available to the accounting for fraud reduction activities address those questions and resolve any extent that an MA organization or Part in the MLR calculation. In particular, ambiguities or uncertainties, we are now D sponsor recovers paid fraudulent we are interested in receiving input on: proposing to specifically address MTM claims, it encourages MA organizations • Whether fraud reduction activities programs in the MLR regulations. and Part D sponsors to invest in tracking should be included in quality We propose to modify our regulations down and recouping amounts that have improvement activities as proposed, or at §§ 422.2430 and 423.2430 by adding already been paid, rather than in whether we should create a separate new paragraph (a)(4)(i), which specifies preventing payment of fraudulent MLR numerator category for fraud that all MTM programs that comply claims. Under our proposal, claim reduction activities; with § 423.153(d) and are offered by Part • payments recovered through fraud Whether fraud reduction activities D sponsors (including MA organizations reduction efforts, up to the amount of should be subject to any or all of the that offer MA–PD plans (described in fraud reduction expenses, would no exclusions at §§ 422.2430(b) and § 422.2420(a)(2)) are QIA. Each Part D longer be included in the MLR 422.2430(b). Although our proposal sponsor is required to incorporate an numerator as an adjustment to incurred removes the exclusion of fraud MTM program into its plans’ benefit claims. Instead, all expenditures for prevention activities from QIA at structure, and the MTM Program fraud reduction activities would be §§ 422.2430(b)(8) and 423.2430(b)(8), it Completion Rate for Comprehensive included in the MLR numerator as QIA, is possible that fraud reduction Medication Reviews (CMR) measure has even if such expenditures exceed the activities would be subject to one of the been included in the Star Ratings as a amount recovered through fraud other exclusions under §§ 422.2430(b) metric of plan quality since 2016. We reduction efforts. As a result, MA and 423.2430(b), such as the exclusion believe that the MTM programs that we organizations and Part D sponsors will that applies to activities that are require improve quality and care no longer have an incentive to use designed primarily to control or contain coordination for Medicare beneficiaries. contract revenue to pursue recovery of costs (§§ 422.2430(b)(1) and We also believe that allowing Part D paid fraudulent claims instead of 423.2430(b)(1)) or the exclusion of sponsors to include compliant MTM investing in fraud prevention. We activities that were paid for with grant programs as QIA in the calculation of believe that effective fraud reduction money or other funding separate from the Medicare MLR would encourage strategies will include efforts to prevent premium revenue (§§ 422.2430(b)(1) and sponsors to ensure that MTM is better payment of fraudulent claims, and we 423.2430(b)(3).) utilized, particularly among standalone PDPs that may currently lack strong believe that the proposed inclusion of (2) Medication Therapy Management incentives to promote MTM. all fraud reduction activities as QIA in (MTM) (§§ 422.2430 and 423.2430) the MLR numerator will strengthen the Furthermore, we have expressed incentive to engage in these vital In the May 23, 2013 final rule (78 FR concern that Part D sponsors may be activities. 31294), we stated that Medication restricting MTM eligibility criteria to In summary, we are proposing the Therapy Management (MTM) activities limit the number of qualified enrollees, following regulatory revisions: (defined at § 423.153(d)) qualify as QIA, and we believe that explicitly including • Remove and reserve provided they meet the requirements set MTM program expenditures in the MLR §§ 422.2420(b)(2)(ix) and forth in §§ 422.2430 and 423.2430. To numerator as QIA-related expenditures 423.2420(b)(2)(viii). meet these requirements, the activity could provide an incentive to reduce • In §§ 422.2430 and 423.2430, must fall into one of the categories listed any such restrictions. This is redesignate existing paragraphs (a)(1) in current paragraph (a)(1) of those particularly important in providing and (a)(2) as (a)(2) and (a)(3), regulations, which means the activity individualized disease management in respectively. must: (1) Improve health quality; (2) conjunction with the ongoing opioid

VerDate Sep<11>2014 20:14 Nov 27, 2017 Jkt 244001 PO 00000 Frm 00124 Fmt 4701 Sfmt 4702 E:\FR\FM\28NOP2.SGM 28NOP2 sradovich on DSK3GMQ082PROD with PROPOSALS2 Federal Register / Vol. 82, No. 227 / Tuesday, November 28, 2017 / Proposed Rules 56459

crisis evolving within the Medicare • Revise paragraph (d)(2)(i) by adding concerned, after having received two population. We hope that, by removing at the end the text of the first paragraph annual Medicare MLR reports at the any restrictions or uncertainty about designated as (d)(2)(ii). time that this proposed rule is being whether compliant MTM programs will • Remove the first paragraph published, that requiring health qualify for inclusion in the MLR designated as (d)(2)(ii). insurance issuers to complete a substantially different set of forms for numerator as QIA, the proposed changes c. Proposed Regulatory Changes to will encourage Part D sponsors to Medicare MLR purposes has created an Medicare MLR Reporting Requirements unnecessary additional burden. Our strengthen their MTM programs by (§§ 422.2460 and 423.2460) implementing innovative strategies for proposal to reduce the burden of the this potentially vulnerable population. Our general approach when current Medicare requirement for MLR We believe that beneficiaries with developing the current Medicare MLR reporting aligns with the directive in the higher rates of medication adherence regulations was to align the Medicare January 30, 2017 Presidential Executive have better health outcomes, and that MLR requirements with the commercial Order on Reducing Regulation and medication adherence can also produce MLR requirements. Consistent with this Controlling Regulatory Costs to manage medical spending offsets, which could policy, we attempted to model the the costs associated with the lead to government and taxpayer Medicare MLR reporting format on the governmental imposition of private savings in the trust fund, as well as tools used to report commercial MLR expenditures required to comply with beneficiary savings in the form of data in order to limit the burden on Federal regulations. reduced premiums. We solicit comment organizations that participate in both It is with these concerns in mind that markets. However, as noted previously, we are proposing to reduce the current on these proposed changes. we also recognized that there are some reporting burden to require the (3) Additional Technical Changes to areas where the unique characteristics minimum amount of information Calculation of the Medical Loss Ratio of the MA and Part D programs make it needed for MLR reporting by (§§ 422.2420 and 423.2420) appropriate for the Medicare MLR organizations with contracts to offer reporting requirements to deviate from Medicare benefits. Specifically, we are We are also proposing technical the rules that apply to commercial MLR proposing that the Medicare MLR changes to the MLR provisions at reporting. Most beneficiaries are reporting requirements would be §§ 422.2420 and 423.2420. In enrolled in plans offered by MA limited to the following data fields, as § 422.2420(d)(2)(i), we are replacing the organizations and Part D sponsors that shown in Table 12: Organization name, phrase ‘‘in § 422.2420(b) or (c)’’ with the also participate in the commercial contract number, adjusted MLR (which phrase ‘‘in paragraph (b) or (c) of this market, and these entities are familiar would be populated as ‘‘Not section’’. In § 423.2430, the regulatory with the commercial MLR forms that Applicable’’ or ‘‘N/A’’ for non-credible text includes two paragraphs designated they have had to submit since 2012 for contracts as determined in accordance as (d)(2)(ii). We propose to resolve this the 2011 benefit year. In practice, with §§ 422.2440(d) and 423.2440(d)), error by amending § 423.2420 as however, these forms and reports have and remittance amount. We solicit follows: not been identical. We have become comment on these proposed changes.

TABLE 12—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 believe that it is important to note whether the data and amounts change. Although we explicitly that although we are proposing a submitted with respect to the Medicare proposed that both MA organizations significant reduction in the amount of MLR are accurate and valid, in and Part D sponsors would be required data that MA organizations and Part D accordance with §§ 422.504 and to report their revenues net of all sponsors must report to us, we are not 423.505. projected reconciliations (78 FR 12435), proposing to change our authority under In addition, we have realized that the and we did not indicate that only Part § 422.2480 or § 423.2480 to conduct MLR Reporting Requirements at D sponsors would be affected by our selected audit reviews of the data § 422.2460 do not include provisions proposal for each contract’s MLR to be reported under §§ 422.2460 and that correspond to the provisions reported once and not reopened as a 423.2460 to determine that remittance currently codified at § 423.2460(b) and result of any payment reconciliation amounts under §§ 422.2410(b) and (c). In the February 22, 2013 proposed process (our discussion of this proposal 423.2410(b) and sanctions under rule (78 FR 12435), we proposed that in the final rule addressed how this §§ 422.2410(c), 422.2410(d), the total revenue reported by MA policy would apply to both MA 423.2410(c), and 423.2410(d) were organizations and Part D sponsors for organizations and Part D sponsors (78 accurately calculated, reported, and MLR purposes would be net of all FR 31293)), regulatory provisions applied. Moreover, MA organizations projected reconciliations, and that each implementing the finalized proposals and Part D sponsors would continue to MA and Part D contract’s MLR would were only included in the Part D be required to retain documentation only be reported once and would not be regulations, where they currently appear supporting the MLR figure reported and reopened as a result of any payment at § 423.2460(b) and (c); corresponding to make available to CMS, HHS, the reconciliation processes. In the May 23, regulatory text was not added to the MA Comptroller General, or their designees 2013 final rule (78 FR 31293), we regulations. We are proposing to make any information needed to determine finalized these proposals without a technical change to § 422.2460 by

VerDate Sep<11>2014 20:14 Nov 27, 2017 Jkt 244001 PO 00000 Frm 00125 Fmt 4701 Sfmt 4702 E:\FR\FM\28NOP2.SGM 28NOP2 sradovich on DSK3GMQ082PROD with PROPOSALS2 56460 Federal Register / Vol. 82, No. 227 / Tuesday, November 28, 2017 / Proposed Rules

incorporating provisions which parallel new rules or requirements for MA approval and consent necessary the language of current paragraphs (b) organizations or Part D sponsors. The depending on the timeframe of the and (c) of § 423.2460 for purposes of the proposed technical changes revise sponsoring organization’s notice to CMS reporting requirements for contract year references to MLR reports in conformity that a non-renewal is desired. We are 2014 and subsequent contract years. with our proposal to scale back proposing to clarify its operational This proposed technical change does Medicare MLR reporting so that we only policy that any request to terminate a not establish any new rules or require the submission of a limited contract after the first Monday in June requirements for MA organizations; it number of data points, as opposed to a is considered a request for termination merely updates regulatory references full report. by mutual consent. that were overlooked in previous Under § 422.506(a)(2)(i) and 2. Medicare Advantage Contract § 423.507(a)(2)(i), contract non-renewals rulemaking. Provisions (§ 422.504) In summary, we are proposing to effective at the end of the 1-year revise the regulations at §§ 422.2460 and Under the authority of section 1857(b) contract term must be submitted to CMS 423.2460 as follows: of the Act, CMS may enter into a in writing by the first Monday in June. • In § 422.2460, redesignate the contract with a Medicare Advantage There may be instances where CMS existing regulation text as paragraph (a). (MA) organization, through which the accepts a late non-renewal notice after • Revise newly designated organization agrees to comply with the first Monday in June for an MA §§ 422.2460(a) and 423.2460(a) by applicable requirements and standards. contract if the non-renewal is consistent adding ‘‘from 2014 through 2017’’ after CMS has established and codified with the effective and efficient the phrase ‘‘For each contract year’’ in provisions of contracts between the MA administration of the contract under the first sentence to limit the more organization and CMS at § 422.504. This § 422.506(a)(3). There is no detailed MLR reporting requirement to proposed rule seeks to correct an corresponding regulatory provision that period, making minor grammatical inconsistency in the text that identifies affording CMS such discretion for Part changes to clarify the text, and by the contract provisions deemed material D contracts. adding ‘‘under this part’’ to modify the to the performance of an MA contract. We have seen that many MA phrase ‘‘for each contract’’. Section 422.504(a) sets forth organizations do not understand that • In § 423.2460, redesignate existing regulations and instructions at CMS treats non-renewals requested after paragraphs (b) and (c) as paragraphs (c) paragraphs (1) through (15) that are the first Monday in June as an and (d), respectively. material to the performance of the MA organization’s request for a mutual • In §§ 422.2460 and 423.2460, add a contract in accordance to termination pursuant to § 422.508 when new paragraph (b) to require MA § 422.504(a)(16). This is inconsistent determining whether it is in the best organizations and Part D plan sponsors with the introductory regulatory text at interest of the Medicare program to with— § 422.504(a), which provides, ‘‘An MA permit non-renewals in applying ++ Fully credible and partially organization’s compliance with § 422.506(a)(3). Organizations that credible experience to report the MLR paragraphs (a)(1) through (a)(13) of this request a non-renewal of their contract for each contract for the contract year section is material to performance of the after the first Monday in June, must along with the amount of any owed contract.’’ Further, both paragraphs (a) receive written confirmation from CMS remittance; and and (a)(15) fail to mention paragraphs of the termination by mutual consent ++ Non-credible experience, to report (a)(17) and (a)(18). pursuant to § 422.508(a) (and that such experience was non-credible. We propose to correct the inconsistent § 423.508(a) if an MA–PD plan) to be For each, the proposed text cross- language by revising the language in the effectively relieved of their obligation to references the applicable regulations for introductory text in § 422.504(a) and participate in the MA or Part D the determination of credibility, and for deleting paragraph § 422.504(a)(16). programs during the upcoming contract the general remittance requirement. With this revision, We will renumber year. CMS has received a number of late • In newly redesignated current paragraphs §§ 422.504(a)(17) non-renewal requests and has received § 423.2460(c), revise the text to refer to and (a)(18). The proposed revision to questions from MA organizations total revenue included in the MLR the paragraph (a) introductory text inquiring why their request was not calculation rather than reports of that would provide that compliance with all treated as a contract non-renewal, but information. contract terms listed in paragraph (a) is rather as a termination by mutual • Add new paragraphs (c) and (d) to material. consent. § 422.2460 that mirror the text in We propose to modify § 422.506(a)(3) 3. Late Contract Non-Renewal § 423.2460(c) and (d), as redesignated to remove language that indicates late Notifications (§§ 422.506, 422.508, and and revised. non-renewals may be permitted by CMS 423.508) so that there would only be one d. Proposed Technical Changes to Pursuant to section 1857(c)(1) of the process—mutual termination under Medicare MLR Review and Non- Act, CMS enters into contracts with MA §§ 422.508—that is applicable if CMS is Compliance and the Release of MLR organizations for a period of 1 year. As not taking action under § 422.506(b) or Data (§§ 422.2410, 422.2480, 422.2490, implemented by CMS pursuant to that § 422.510. Also, we propose to amend 423.2410, 423.2480, and 423.2490) provision, these contracts automatically §§ 422.508 and 423.508 to clarify that We are proposing technical changes to renew absent notification by either CMS organizations that request to non-renew the General Requirements, MLR review or the MA organization to terminate the a contract after the first Monday in June and non-compliance, and Release of contract at the end of the year. Section are in effect requesting that CMS agree MLR data provisions at §§ 422.2410, 1860D–12(b)(3)(B) of the Act makes this to mutually terminate their contract. 422.2480, 422.2490, 423.2410, 423.2480, same process applicable to CMS and 423.2490. These changes are being contracts with Part D plan sponsors. 4. Contract Request for a Hearing proposed in conformity with the more CMS has implemented these provisions (§§ 422.664(b) and 423.652(b)) substantive regulatory text changes in regulations that permit MA Under the authority of section 1857(a) being proposed herein. These proposed organizations and Part D plan sponsors of the Act, CMS enters into contracts technical changes do not establish any to non-renew their contracts, with CMS with MA organizations which authorize

VerDate Sep<11>2014 20:14 Nov 27, 2017 Jkt 244001 PO 00000 Frm 00126 Fmt 4701 Sfmt 4702 E:\FR\FM\28NOP2.SGM 28NOP2 sradovich on DSK3GMQ082PROD with PROPOSALS2 Federal Register / Vol. 82, No. 227 / Tuesday, November 28, 2017 / Proposed Rules 56461

them to offer MA plans to Medicare September 1 to be effective on January of potential income to all physicians beneficiaries. Similarly, CMS contracts 1. However, § 423.652(b)(1) specifies and physician groups at financial risk with Part D plan sponsors according to that if a final decision is not reached on under the PIP and that no stop-loss section 1860D–12(a) of the Act. CMS CMS’s determination for an initial protection is required when the panel determines that an organization is contract by July 15, CMS will not enter size of the physician or physician group qualified to hold an MA contract into a contract with the applicant for the is above 25,000. We are proposing three through the application process following year. changes to update the existing established at 42 CFR 422, Subpart K. We propose to modify § 422.664(b)(1) regulation: CMS evaluates the qualifications of and § 423.652(b)(1) to align with the • Update the stop-loss deductible potential Part D plan sponsors according September 1 date codified in limits at § 422.208(f)(2)(iii) and codify to Subpart K of 42 CFR, part 423. If CMS § 422.660(c) and § 423.650(c), which the methodology that CMS would use to denies an application, organizations was codified on April 15, 2010. update the stop-loss deductible limits in the future to account for changes in have the right to appeal CMS’s decision 5. Physician Incentive Plans—Update (under § 422.502(c)(3)(iii) and medical cost and utilization; Stop-Loss Protection Requirements • Authorize, at paragraph § 423.503(c)(3)(iii) using the procedures (§ 422.208) in subparts N of part 422 and part 423). § 422.208(f)(3), MA organizations to use This proposed rule seeks to correct an Pursuant to section 1852(j)(4), MA actuarially equivalent arrangements to inconsistency in the text that identifies organizations that operate physician protect against substantial financial loss CMS’s deadline for rendering its incentive plans must meet certain under the PIP due to the risks associated determination on appeals of application requirements, which CMS has with serving particular groups of denials. implemented in § 422.208. MA patients. According to § 422.660(c) and organizations must provide adequate • Modify paragraph 422.208(f)(2) to § 423.650(c), CMS must issue a and appropriate stop-loss insurance to allow non-risk patient equivalents determination on appealed application all physicians or physician groups that (NPEs), such as Medicare Fee-For- denials by September 1 in order to enter are at substantial financial risk under Service patients (FFS), who obtain some into an MA contract for coverage the MA organization’s physician services from the physician or physician starting January 1 of the following year. incentive plan (PIP). The current stop- group to be included when determining We codified this September 1 deadline loss insurance deductible limits are the deductible. in the April 15, 2010, final rule (45 FR identified in a table codified at We do not believe that other 19699). As stated in the in the 2009 § 422.208(f)(2)(iii). substantive requirements set forth in the proposed rule (74 FR 54650 and 54651), Under the current regulation, an MA PIP regulation, such as the we proposed to modify § 422.660(c) and organization that operates a PIP must determination of substantial financial § 423.660(c), which then specified that provide stop-loss protection for 90 risk based on a risk threshold of 25 the notice of any decision favorable to percenter of actual costs of referral percent of potential payments (see a Part C or D applicant must be issued services that exceed the per patient § 422.208(d)(2)), need to be updated by July 15 for the contract in question deductible limit to all physicians and regularly or have been rendered obsolete to be effective on January 1 of the physician groups at financial risk under in the years since the regulation was following year. However, in that the PIP. The stop-loss protection may be initially adopted. Although we are not rulemaking, we inadvertently per patient or aggregate. The current proposing a change to the determination overlooked other regulatory provisions regulation contains a chart that of ‘‘substantial financial risk,’’ we that address the date by which a identifies per-patient stop-loss appreciate that the regulatory standard favorable decision must be made on an deductible limits for single combined; (25% of potential payments) in appeal of a CMS determination that an separate institutional; and separate § 422.208(d)(2) was adopted many years entity is not qualified for a Part C or Part professional insurance. The current ago. Therefore, we seek comment on D contract. regulation establishes requirements for whether the definitions of ‘‘substantial There is an inconsistency in stop-loss attachment points financial risk’’ and ‘‘risk threshold’’ regulations regarding the date by which (deductibles) based on the patient panel contained in the current regulation an MA organization must receive a size and does not distinguish between should be revisited, including whether decision from CMS on an appeal. at-risk or non-at-risk patients in that the current identification of 25 percent Section 422.660(c) specifies that a panel. There is no requirement for an of potential payments codified in notice of any decision favorable to the MA organization to provide stop-loss paragraph (d)(2) remains appropriate as MA organization appealing a protection when the physician or the standard in light of changes in determination that it is not qualified to physician group has a panel of risk medical cost. enter into a contract with CMS must be patients of more than 25,000; we are not issued by September 1 for the contract proposing to change to this requirement. b. Update Deductible Limits and Codify to be effective on January 1. However, In recent years, CMS has received a Methodology § 422.664(b)(1) specifies that if a final number of requests to update the stop- Because of increases in medical costs decision is not reached by July 15, CMS loss insurance limits associated with and changes in utilization since the will not enter into a contract with the PIP arrangements to better account for current regulatory standards for PIP applicant for the following year. medical costs and utilization changes stop-loss insurance were adopted, we Similarly, there is an inconsistency in that have occurred since the final rule are concerned that the current regulations regarding the date by which was published in the June 29, 2000 regulation requires stop-loss insurance a Part D sponsor must receive a CMS Federal Register (65 FR 40325) on. on more generous and more expensive decision on an appeal. Section We are not proposing to change the terms than is necessary. Our goal in 423.650(c) specifies that a notice of any requirements that the MAO (in developing this proposal was to identify decision favorable to the MA connection with the PIP) must provide the point at which most, if not all, organization appealing a determination aggregate stop-loss protection for 90 physicians and physician groups would that it is not qualified to enter into a percentage of actual costs of referral be subject to the substantial loss so that contract with CMS must be issued by services that are greater than 25 percent the requirement for the provision of

VerDate Sep<11>2014 20:14 Nov 27, 2017 Jkt 244001 PO 00000 Frm 00127 Fmt 4701 Sfmt 4702 E:\FR\FM\28NOP2.SGM 28NOP2 sradovich on DSK3GMQ082PROD with PROPOSALS2 56462 Federal Register / Vol. 82, No. 227 / Tuesday, November 28, 2017 / Proposed Rules

stop-loss protection and the parameters Part B services. We used the central so that the table itself may be updated of that protection would be tailored to limit theorem to calculate the by CMS as necessary. Nonetheless, address that risk. We intend to avoid distribution of claim means for a multi- Table 13 would be the table applicable regulatory requirements that require specialty group of any given panel size. for contract years beginning on or after protection that is broader than the This distribution was used to obtain, January 1, 2019 until CMS reapplied the minimum required under the statute. In with 98% confidence, the point at methodology and published an updated developing the new minimum which a multi-specialty group of a given table under our proposal. We performed attachment points for the stop-loss panel size would, through referral the analysis for multiple panel sizes, protection that is required under the services, lose more than 25% of its which are listed on Table 13. Table 13 statute, one goal is to provide flexibility income derived from services that the also includes a ‘net benefit premium’ to MA organizations and the physicians physician or physician group personally (NBP) column, which is used under our and physician groups that participate in rendered. We used projections of total PIPs in selecting between combined income based on services provided proposal to identify the attachment stop-loss insurance and separate personally by individual physicians and points for separate stop-loss insurance professional services and institutional directly by physician groups because for institutional services and services stop loss insurance. that is how we interpret ‘‘potential professional services. This NBP column In order to develop the specific payments’’ as defined in the existing is not needed for identification of the attachment points, we engaged in a regulation. The point at which loss minimum attachment point (maximum data-driven analysis using Part A and would exceed 25% of potential deductible) for combined aggregate Part B claims data from 340,000 payments was set as the single insurance. The NBP is computed by randomly selected beneficiaries from combined per patient deductible in dividing the total amount of stop-loss 2016. We assumed a multi-specialty Table 13, which we describe in our claims (90 percent of claims above the practice and we estimated medical proposed text at § 422.208(f)(2)(iii); we deductible) for that panel size by the group income based on FFS claims, are not proposing to codify the table, but panel size. including payments for all Part A and to codify the methodology for creating it

TABLE 13—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 1400 ...... 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 ...... 428 16,800 ...... 1,000,000 ...... 12 17,400–25,000 ...... 2,000,000 ...... 4 >25,000 ...... No Stop Loss ..... 0

We propose, at paragraph § 422.208 propose that linear interpolation may be methodology similar to the calculation (f)(2)(iii), other significant provisions. used to identify the required deductible of Table 13. The source for our estimate Proposed paragraph § 422.208 for panel sizes between the table values. of medical group income and (f)(2)(iii)(A) provides that the table In addition, proposed paragraph institutional income is derived from (published by CMS using the § 422.208(f)(2)(iii)(B) provides that the CMS claims files which includes methodology proposed in paragraph table applies only for capitated risk. payments for all Part A and Part B § 422.208(f)(2)(iv)) identifies the In order to provide the attachment services. The central limit theorem was maximum attachment point/maximum points for separate per patient insurance used to obtain the distribution of claim deductible for per-patient-combined for institutional services and means, and deductibles were obtained insurance coverage that must be professional services, we propose to use at the 98 percent confidence level. We provided for 90% of the costs above the the NBP from Table 13. This second propose to codify the methodology and deductible or an actuarial equivalent table provides separate deductibles for assumptions for Table 14 in § 422.208 amount. For panel sizes and deductible physician and institutional services. (f)(2)(vi) and (f)(2)(vii). amounts not shown in the tables, we Table 14 was calculated using a BILLING CODE 4120–01–P

VerDate Sep<11>2014 20:14 Nov 27, 2017 Jkt 244001 PO 00000 Frm 00128 Fmt 4701 Sfmt 4702 E:\FR\FM\28NOP2.SGM 28NOP2 sradovich on DSK3GMQ082PROD with PROPOSALS2 Federal Register / Vol. 82, No. 227 / Tuesday, November 28, 2017 / Proposed Rules 56463 4 0 !2 l9 5•1 80 3,1 134 191 104 10! 558 229 752 321 .w; Stop Loss No 5 9 17 24 59 85 39 139 lOG 169 1% 563 451 234 32G 757 2,000 11 15 29 23 '14 90 M 144 175 112 762 569 457 239 J.ll 202 1,000 45 26 38 60 80 :JO lOG 190 !60 127 254 217 778 '\84 472 347 500 76 84 'Jl 72 !52 !73 126 106 518 23() 824 263 2:16 ()jQ 393 301 300 ]96 146 161 154 176 222 243 700 588 894 4GJ J7J 276 306 :;33 200 127 2J6 400 464 289 269 254 248 240 31() 987 794 337 682 556 :no 150 I 802 710 582 535 500 5!5 5(;l 493 485 672 927 645 615 DEDUCTIBLES !,039 1,2B 100 Premiums 980 947 926 900 858 880 850 86' Thousands) 70 l,(liO U67 L037 ]J)75 1,404 1,292 1598 (In B~ndlt )g6 373 .l\d I LLJ2 60 [,281 1,()7! 1,153 1,216 1.086 t6H1 1,804 1.243 1.498 1.106 1 1,064 1.056 INSURANCE exad Deductibles LG5J 50 !.412 U85 UG6 L778 ],560 L344 1.496 U'il 1,890 1.523 1,433 1,)36 !466 2.083 ~:ontain ICdb Institutional 40 1.910 !.799 L948 L77J L75.l L738 L723 J,gg} L73l l.R53 1.820 2.471 2.165 2.1)40 2,277 STOP-LOSS 30 2A3l 2.~28 2,71G 2.•161 2,303 2.590 2,498 2.403 2.370 2,323 2,288 2,282 2.274 2.349 3,021 20 J,g17 3,078 ~U12 3.38(, 3.294 3,257 3.145 3,084 3.070 3,060 3.!99 3.!67 3,!19 3,099 :1,624 :u:10 SEPARATE g 14: 90 7 15 3,61 1:733 4351 4,045 JJOO 4J57 J,6:l3 3,7(,3 3.920 3,828 3,679 3,653 3.603 3. :1,61! TABLE 4,30•1 5,022 4,27~ 4,499 4,462 4.350 4,32•1 4,289 4,717 4.371 4.829 4.591 4,434 4.404 4,283 10 59 147 5 '<,899 5,705 5.28! 5.375 5.166 5.593 5,468 5.338 5311 5.248 5.227 5,20! 5,181 5,i 5,15! loss stop 12 1 15 10 100 5 50 8 2 20 25 200 3 75 35 No thousands) Dodnctibk Prof{'ssional (in

BILLING CODE 4120–01–C The physician or physician group in the second column of Table 13 and would look up the combined deductible select the corresponding NBP in the

VerDate Sep<11>2014 20:14 Nov 27, 2017 Jkt 244001 PO 00000 Frm 00129 Fmt 4701 Sfmt 4702 E:\FR\FM\28NOP2.SGM 28NOP2 sradovich on DSK3GMQ082PROD with PROPOSALS2 EP28NO17.013 56464 Federal Register / Vol. 82, No. 227 / Tuesday, November 28, 2017 / Proposed Rules

third column. If necessary, linear organizations to use other stop-loss 6. Changes to the Agent/Broker interpolation would be used. Finally, protection arrangements; the proposal Compensation Requirements the physician or physician group would would allow actuaries to develop (§§ 422.2274 and 423.2274) select any cell in the table in Table 14 actuarially equivalent special Sections 103(b)(1)(B) and 103(b)(2) of whose numerical entry is greater than or insurances that are: Appropriately the Medicare Improvements for Patients equal to that NBP. The row and column developed for the population and and Providers Act (MIPPA) revised labels for this cell are the corresponding services furnished; in accordance with section 1851(j)(2)(D) of the Act to charge professional and institutional generally accepted actuarial principles the Secretary with establishing deductibles for that selection. Any such and practices; and certified as meeting guidelines to ‘‘ensure that the use of selection would meet the requirement of these requirements by actuaries who compensation creates incentives for the basic rule stated in paragraph meet the qualification standards agents/brokers to enroll individuals in (f)(2)(i). We are proposing to codify the established by the American Academy the MA plan that is intended to best use of this table of deductibles for of Actuaries and follow the practice meet their health care needs.’’ Section separate stop-loss insurance standards established by the Actuarial 103(b)(2) of MIPPA revised section professional services and institutional Standards Board. Under this proposal, 1860D–4(l)(2) of the Act to apply these services based on the NBP in paragraph CMS would review the attestation of the same guidelines to Part D sponsors. We (f)(2)(v). actuary certifying the special insurance believe agents/brokers play a significant We solicit comment on our proposal, arrangement. We solicit comment role in providing guidance and are, as specifically the following: whether these proposed standards such, in a unique position to influence • Whether our proposed regulation provide sufficient flexibility to MA beneficiary choice. CMS implemented text at paragraphs (f)(2)(iv), (vi) and (vii) organizations and physicians. details the methodology for developing these MIPPA-related changes in a May Tables 13 and 14 in sufficient detail. c. Non-Risk Patient Equivalents 23, 2014 final rule (79 FR 29960). The • Whether our proposed regulation Included in Panel Size 2014 final rule revised the provisions text clearly identifies how the tables We believe that the number of a previously established in the interim would be used. physician group’s non-risk patients final rule (IFR) adopted on September • Whether we should finalize a should be taken into account when 18, 2008 (73 FR 554226). specific schedule, such as annually or setting stop loss deductibles for risk The IFR had established the previous every 3 years for updating the tables patients. For example a group with compensation structure for agents/ using the proposed methodologies in 50,000 non-risk patients and 5,000 risk brokers as it applied to the MA and Part order to ensure that the maximum patients needs less protection than a D programs. In particular, the IFR deductibles are consistent with medical group with only 3,000 non-risk patients limited compensation for renewal cost and utilization trends. and 5,000 risk patients. We propose, at enrollments to no greater than 50 percent of the rate paid for the initial d. Actuarially Equivalent Arrangements § 422.208(f)(2)(iii) and (v), to allow non- risk patient equivalents (NPEs), such as enrollment on a 6-year cycle. This Over the past several years, MA Medicare Fee-For-Service patients, who structure had proven to be complicated organizations, have requested an update obtain some services from the physician to implement and monitor, as it to the tables as well as additional or physician group to be included in the required the MA organization or Part D flexibilities around protection panel size when determining the sponsor to track the compensation paid arrangements other than combined and deductible. Under our proposal, NPEs for every enrollee’s initial enrollment separate per-patient stop-loss insurance. are equal to the projected annual and calculate the renewal rate based on CMS believes that providing the aggregate payments to a physician or that initial payment. To the extent that flexibility to MA organizations to use physician group for non-global risk there was confusion about the required actuarially equivalent arrangements is patients, divided by an estimate of the levels of compensation or the timing of appropriate as the nature of the PIP average capitation per member per year compensation, it seemed that there was negotiated between the MA organization (PMPY) for all non-global risk patients, an uneven playing field for MA and physicians or physician groups whether or not they are capitated. Both organizations and Part D sponsors might necessitate other arrangements to the numerator and denominator are for operating in the same geographic area. properly and adequately protect physician services that are rendered by In addition to the many inquiries from physicians from substantial financial the physician or physician group. We MA organizations and Part D sponsors risk. Examples where actuarially propose that the deductible for the stop- regarding the correct calculation of equivalent modifications might be loss insurance that is required under agent/broker compensation, CMS found necessary, include: Global capitation this regulation would be the lesser of: it necessary to take compliance actions arrangements that include some, but not (1) The deductible for globally capitated against MA organizations and Part D all Parts A and B services; stop-loss patients plus up to $100,000 or (2) the sponsors for failure to comply with the policies with different coinsurances; deductible calculated for globally compensation requirements. CMS’s stop-loss policies that use medical loss capitated patients plus NPEs. The audit findings and monitoring efforts ratios (MLR), which generally pay deductible for these groups would be performed after implementation of the specific stop-loss amounts only to the separately calculated using the tables IFR showed that MA organizations and extent that the overall aggregate MLR for and requirements in our proposed Part D sponsors were having difficulty the physician group exceeds a certain regulation at paragraph (f)(2)(iii) and (v) correctly administering the amount; stop-loss policies for and treating the two groups (globally compensation requirements. exclusively primary care physicians; capitated patients and globally capitated Also, we were concerned that the and risk arrangements on a quota share patients plus NPEs) separately as the structure as it existed before the 2014 basis, which occurs when less than full panel size. We propose the same revisions created an incentive for capitation risk is transferred from a plan flexibility for combined per-patient agents/brokers to move enrollees from a to a physician or physician group. stop-loss insurance and the separate plan of one parent organization to a plan Therefore, we propose to add stop-loss insurances. We solicit of another parent organization, even for § 422.208(f)(3) to permit MA comment on this proposal. like plan-type changes. That

VerDate Sep<11>2014 20:14 Nov 27, 2017 Jkt 244001 PO 00000 Frm 00130 Fmt 4701 Sfmt 4702 E:\FR\FM\28NOP2.SGM 28NOP2 sradovich on DSK3GMQ082PROD with PROPOSALS2 Federal Register / Vol. 82, No. 227 / Tuesday, November 28, 2017 / Proposed Rules 56465

compensation structure resulted in states to address fraudulent or their license and have sold MA/Part D different payments when a beneficiary inappropriate marketing practices. In products while unlicensed, so long as moved from one plan to another like particular, section 1851(h)(7)(A)(i) of the the MA organization or Part D plan plan in a different organization. In such Act requires that MA organizations only complies with the remaining statutory situations, the new parent organization use agents/brokers who have been and regulatory requirements. would pay the agent 50 percent of the licensed under state law to sell MA We propose to delete §§ 422.2272(e) current initial rate of the new parent plans offered by those organizations. and 423.2272(e), the provisions that organization; not 50 percent of the Section 1860D–4(l)(4) of the Act limit what MA organizations and Part D initial rate paid by the prior parent references the requirements in section sponsors can do when they have organization. Thus, in cases where the 1851(h)(7) of the Act and applies them discovered that a previously licensed fair market value (FMV) for to Part D sponsors. We have codified the agent/broker has become unlicensed. compensation had increased, or the requirement in §§ 422.2272(c) and Nonetheless, CMS may pursue other parent organization paid a higher 423.2272(c). compliance actions upon discovery of commission, an incentive existed for the In the April 15, 2011, final rule (76 FR MA organizations and Part D sponsors agent to move beneficiaries from one 21503 and 21504), we codified a who allow unlicensed agents/brokers to parent organization to another, rather provision in §§ 422.2272(e) and continue selling their products in than supporting the beneficiary’s 423.2272(e) that required MA violation of §§ 422.2272(c) and continued enrollment in the prior organizations and Part D sponsors to 423.2272(c). parent organization. terminate any employed agent/broker Note that deleting paragraph (e) from In a 2014 proposed rule (79 FR 1918), who became unlicensed. The provision §§ 422.2272 and 423.2272 removes we proposed to simplify agent/broker also required MA organizations and Part language describing the opportunity compensation rules to help ensure that D sponsors to notify any beneficiaries beneficiaries have to select a different plan payments were correct and enrolled by the unqualified agent/broker MA or Part D plan when the broker who establish a level playing field that of that agent/broker’s status. Finally, the enrolled them was unlicensed at the further limited the incentive for agents/ provision specified that the MA time the beneficiaries enrolled. brokers to move enrollees for financial organization or Part D sponsor must Removing paragraph (e) from gain rather than for the beneficiary’s comply with any request from the §§ 422.2272 and 423.2272 does not best interest. In the final rule published beneficiary regarding the beneficiary’s eliminate the special enrollment period on May 23, 2014, we codified technical options to confirm enrollment or make (SEP) that enrollees receive when it is changes to the language established by a plan change if the beneficiary requests later discovered that their agent/broker the IFR relating to agent/broker such upon notification of the agent/ was not licensed at the time of the compensation, choosing instead to link broker’s status. enrollment as that SEP exists under the payment rates for renewal enrollments Since implementation of the authority of § 422.62(b)(4). provision in §§ 422.2272(e) and to current FMV rates rather than the rate 8. Codification of Certain Medicare 423.2272(e), we have become aware that paid for the original (that is, initial) Premium Adjustments as Initial the regulation does not allow latitude enrollment. These changes also Determinations (§ 405.924) effectively removed the 6-year cycle for punitive action in situations when a from the payment structure. We codified license lapses. The MA organization or Current regulations at § 405.924(a) set these changes in §§ 422.2274(a), (b), and Part D sponsor may terminate the agent/ forth Social Security Administration (h) for MA organizations and broker and immediately rehire the (SSA) actions that constitute initial §§ 423.2274(a), (b), and (h) for Part D individual thereafter if licensure has determinations under section 1869(a)(1) sponsors. been already reinstated or prohibit the of the Act. These actions at § 405.924(a) At that time, we should have also agent/broker from ever selling the MA include determinations with respect to proposed to remove the language at organization’s or Part D sponsor’s entitlement to Medicare hospital (Part § 422.2274(b)(2)(i), § 422.2274(b)(2)(ii), products again. Discussions with the A) or supplementary medical insurance § 423.2274(b)(2)(i), and industry indicate that these two options (Part B), disallowance of an application § 423.2274(b)(2)(ii), but we failed to do are impractical due to their narrow for entitlement; a denial of a request for so. Since then, this language is no limits. We believe agents/brokers play a withdrawal of an application for longer relevant, as the current significant role in providing guidance to Medicare Part A or Part B, or denial of compensation structure is not based on beneficiaries and are in a unique a request for cancellation of a request for the initial payment. However, it has position to positively influence withdrawal; or a determination as to created confusion among plan staff and beneficiary choice. However, the statute whether an individual, previously brokers. directs CMS to require MA determined as entitled to Part A or Part We propose to make a technical organizations and Part D sponsors to B, is no longer entitled to these benefits, correction to the existing regulatory only use agents/brokers who are including a determination based on language at § 422.2274(b) and licensed under state law. We do not nonpayment of premiums. § 423.2274(b). We propose to remove the intend to change the regulation, at In addition to the actions set forth at language at §§ 422.2274(b)(2)(i), §§ 422.2272(c) and 423.2272(c), § 405.924(a), SSA, the Office of 422.2274(b)(2)(ii), 423.2274(b)(2)(i), and requiring agent/broker licensure as a Medicare Hearings and Appeals 423.2274(b)(2)(ii). Additionally, we condition of being hired by a plan, and (OMHA), and the Departmental Appeals would renumber the existing provisions will continue to review the licensure Board (DAB) also treat certain Medicare under § 422.2274(b) and § 423.2274(b) status of agents/brokers during those premium adjustments as initial for clarity. monitoring activities that focus on MA determinations under section 1869(a)(1) organizations’ and Part D sponsors’ of the Act. These Medicare premium 7. Changes to the Agent/Broker marketing activities. CMS believes MA adjustments include Medicare Part A Requirements (§§ 422.2272(e) and organizations and Part D sponsors and Part B late enrollment and 423.2272(e)) should determine the level of reenrollment premium increases made Section 1851(h)(7) of the Act directs disciplinary action to take against in accordance with sections 1818, CMS to act in collaboration with the agents/brokers who fail to maintain 1839(b) of the Act, §§ 406.32(d),

VerDate Sep<11>2014 20:14 Nov 27, 2017 Jkt 244001 PO 00000 Frm 00131 Fmt 4701 Sfmt 4702 E:\FR\FM\28NOP2.SGM 28NOP2 sradovich on DSK3GMQ082PROD with PROPOSALS2 56466 Federal Register / Vol. 82, No. 227 / Tuesday, November 28, 2017 / Proposed Rules

408.20(e), and 408.22 of this chapter, nonrenewals initiated by a sponsoring The termination authority allows us and 20 CFR 418.1301. Due to the effect organization and another governing to provide notice of such an action at that these premium adjustments have on nonrenewals initiated by CMS. Two any time and make it effective at least individuals’ entitlement to Medicare features of the nonrenewal provisions 30 days after providing such notice to benefits, they constitute initial have created multiple meanings for the the contracting organization. By determinations under section 1869(a)(1) term ‘‘nonrenewal’’ in the operation of contrast, CMS may issue a nonrenewal of the Act. the Part C and D programs, contributing, notice of a contract no later than August Accordingly, we are proposing to add in some instances, to confusion within 1, and the nonrenewal takes effect at the a new paragraph (5) to § 405.924(a) to CMS and among contracting end of the current contract year. Yet, the clarify that these premium adjustments, organizations surrounding the use of the result of both actions taken by CMS is made in accordance with sections 1818 term. The first feature is the difference the discontinuation, for cause (although and 1839(b) of the Act, §§ 406.32(d) and between non renewals initiated by the basis of that cause might be 408.22 of this chapter, and 20 CFR sponsoring organizations and those different), of an organization’s MA or 418.1301, constitute initial initiated by CMS with respect to the Part D contract. determinations under section 1869(a)(1) need to establish cause for such an The similarities between nonrenewal of the Act. Because this proposed action. The second is the partial overlap and termination are demonstrated by change seeks only to codify existing between CMS’ termination authority the extensive but not complete overlap processes related to premium and our nonrenewal authority. We in bases for CMS action under both adjustments, and not to alter existing propose to revise our use of terminology processes. For example, both processes or procedures, it applies only such that that the term ‘‘nonrenewal’’ nonrenewal authorities incorporate by to Part A and Part B late enrollment and only refers to elections by contracting reference the bases for CMS initiated reenrollment penalties. Based on organizations to discontinue their terminations stated in § 422.510 and 1860D–13(b)(6)(C) of the Act, CMS does contracts at the end of a given year. We § 423.509. The remaining CMS initiated not consider Part D late enrollment and propose to remove the CMS initiated nonrenewal bases (any of the bases that reenrollment penalties to be initial nonrenewal authority stated at support the imposition of intermediate determinations. As a result, their appeal paragraph (b) from both §§ 422.506 and sanctions or civil money penalties rights stop at the reconsideration level. 423.507 and modify the existing CMS (§§ 422.506(b)(iii) and § 423.507(b)(1)(ii)), low enrollment in an 9. Eliminate Use of the Term ‘‘Non- initiated termination authority at individual MA plan or PDP Renewal’’ To Refer to a CMS-Initiated §§ 422.510 and 423.509 to reflect this (§§ 422.506(b)(iv) and 423.507(b)(1)(iii)), Termination (§§ 422.506, 422.510, change. or failure to fully implement or make 423.507 and 423.509) MA organizations and Part D plan significant progress on quality sponsors may elect to end the automatic Section 1857(c)(2) of the Act provides improvement projects (§ 422.506(b)(i))) renewal provision in Part C or Part D the bases upon which CMS may make were all promulgated in accordance contracts and discontinue those a decision to terminate a contract with with our statutory termination authority contracts with CMS without cause, an MA organization. Under section at sections 1857(c)(2) and 1860D– simply by providing notice in the 1860D 12(b)(3) of the Act, these same 12(b)(3) of the Act and are all more manner and within the timeframes bases are available for a CMS specific examples of an organization’s termination of a Part D sponsor contract, stated at § 422.506(a) and § 423.507(a). substantial failure to carry out the terms as section 1860D–12(b)(3) of the Act Thus, organizations are free to make a of its MA or Part D contract or its incorporates into the Part D program the business decision to end their Medicare carrying out the contract in an Part C bases by reference to section contract at the end of a given year and inefficient or ineffective manner. 1857(c)(2). Also, sections 1857(h) and need not provide CMS with a rationale Therefore, we propose striking these 1860D 12(b)(3)(F) of the Act provide the for their decision. By contrast, CMS may provisions from the nonrenewal portion procedures CMS must follow in carrying not end an MA organization or Part D of the regulation and adding them to the out MA organization or Part D sponsor plan sponsor’s contract through list of bases for CMS initiated contract contract terminations. nonrenewal without establishing that terminations. Although the Act only expressly the contracting organization’s Finally, there are aspects of the notice refers to terminations, through performance has met the criteria for at requirements related to the CMS rulemaking and subregulatory guidance, least one of the stated bases for a CMS initiated nonrenewal authority that are we have created two different processes initiated contract nonrenewal in useful in the administration of the Part relating to severing the contractual paragraphs (b) of those sections. C and D programs and which we agreement between CMS and an MA Contracting organizations often propose preserving in the revised organization or Part D sponsor. In respond to changes in the Medicare termination provision. Specifically, accordance with sections 1857(h) and markets or changes in their own § 422.506(b)(2)(ii) requires notice to be 1860D–12(b)(3)(F) of the Act, we have business objectives by making decisions provided by mail to a contracting adopted regulations providing for to end or modify their participation in organization’s enrollees at least 90 days distinct contract termination and bases the Part C and D programs. Thus, these prior to the effective date of the and procedures for nonrenewal if organizations exercise their nonrenewal nonrenewal, while § 422.510(b)(1)(ii) contracts. Our regulations at §§ 422.506 rights under § 422.506(a) and requires affected plan enrollees to be and 422.510 provide for the nonrenewal § 423.507(a) much more frequently than notified within 30 days of the effective and termination, respectively, of CMS CMS conducts contract non renewals date of the termination. We see a contracts with MA organizations. The under § 422.506(b) and § 423.507(b). As continuing benefit to the administration Part D regulations provide for similar a result, within CMS and among of the Part C and D programs in procedures with respect to Part D industry stakeholders, the term retaining the authority to ensure that, sponsor contracts at §§ 423.507 and ‘‘nonrenewal’’ has effectively come to when possible, enrollees can be made 423.509. refer almost exclusively to MA aware of their plan’s discontinuation at Each nonrenewal provision is divided organization and Part D plan sponsor least by October 1 of a given year so that into two parts, one governing initiated contract non renewals. they can make the necessary plan choice

VerDate Sep<11>2014 20:14 Nov 27, 2017 Jkt 244001 PO 00000 Frm 00132 Fmt 4701 Sfmt 4702 E:\FR\FM\28NOP2.SGM 28NOP2 sradovich on DSK3GMQ082PROD with PROPOSALS2 Federal Register / Vol. 82, No. 227 / Tuesday, November 28, 2017 / Proposed Rules 56467

during the annual election period. the Office of Management and Budget In this proposed rule, we are Therefore, we propose adding (OMB) for review and approval. In order soliciting public comment on each of provisions at §§ 422.510(b)(2)(v) and to fairly evaluate whether an these issues for the following sections of 423.509(b)(2)(v) to require that enrollees information collection should be this document that contain information receive notice no later than 90 days approved by OMB, section 3506(c)(2)(A) collection requirements (ICRs). prior to the December 31 effective date of the Paperwork Reduction Act of 1995 of a contract termination when we make requires that we solicit comment on the A. Wage Data such determination on or before August following issues: • To derive average costs, we used data 1 of the same year. The need for the information collection and its usefulness in carrying from the U.S. Bureau of Labor Statistics’ III. Collection of Information out the proper functions of our agency. (BLS’) May 2016 National Occupational Requirements • The accuracy of our estimate of the Employment and Wage Estimates for all information collection burden. salary estimates (http://www.bls.gov/ Under the Paperwork Reduction Act • The quality, utility, and clarity of oes/current/oes_nat.htm). In this regard, of 1995 (44 U.S.C. 3501 et seq.), we are the information to be collected. the following table presents the mean required to provide 60-day notice in the • Recommendations to minimize the hourly wage, the cost of fringe benefits Federal Register and solicit public information collection burden on the and overhead (calculated at 100 percent comment before a collection of affected public, including automated of salary), and the adjusted hourly wage. information requirement is submitted to collection techniques.

TABLE 15—NATIONAL OCCUPATIONAL EMPLOYMENT AND WAGE ESTIMATES

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

As indicated, we are adjusting our enrollment procedures in situations mailing notices and responding to any employee hourly wage estimates by a where criteria identified in the beneficiary questions regarding factor of 100 percent. This is necessarily regulation text are met. We propose the enrollment. a rough adjustment, both because fringe criteria based on our policy We anticipate that there will be benefits and overhead costs vary determination that passive enrollment is relatively few instances each year in significantly from employer to appropriate in those cases to promote which passive enrollment occurs under employer, and because methods of integrated care and continuity of care the new provisions at § 422.60(g). This estimating these costs vary widely from for full-benefit dual eligible is informed by our experience in study to study. Nonetheless, there is no beneficiaries who are currently enrolled implementing passive enrollments practical alternative and we believe that in an integrated D–SNP. under the existing regulations at doubling the hourly wage to estimate Under passive enrollment procedures, § 422.60(g), where in recent years there total cost is a reasonably accurate a beneficiary who is offered a passive have been only one to two contract estimation method. enrollment is deemed to have elected terminations annually where CMS enrollment in a plan if he or she does allows passive enrollment. We estimate B. Proposed Information Collection not affirmatively elect to receive that approximately one percent of the Requirements (ICRs) Medicare coverage in another way. 373 active D–SNPs would meet the 1. ICRs Regarding Passive Enrollment Plans to which individuals are passively criteria identified in the regulation text, Flexibilities To Protect Continuity of enrolled under the proposed provision and operate in a market where all of the Integrated Care for Dually Eligible would be required to comply with the conditions of passive enrollment are Beneficiaries (§ 422.60(g)) existing requirement under § 422.60(g) met and where CMS, in consultation to provide a notification. The notice with a state Medicaid agency, In section II.A.9 of this proposed rule, must explain the beneficiaries’ right to implements passive enrollment. we are proposing a limited expansion of choose another plan, describe the costs Therefore, under the new provisions at passive enrollment authority. More and benefits of the new plan, how to § 422.60(g), we anticipate only four specifically, the new provisions at access care under the plan, and the additional instances in which CMS § 422.60(g) would allow CMS, in beneficiary’s ability to decline the allows passive enrollment each year. consultation with a state Medicaid enrollment or choose another plan. We estimate it would take 10 hours at agency, to implement passive Providing notification would include $69.08/hr for a business operations

VerDate Sep<11>2014 20:14 Nov 27, 2017 Jkt 244001 PO 00000 Frm 00133 Fmt 4701 Sfmt 4702 E:\FR\FM\28NOP2.SGM 28NOP2 sradovich on DSK3GMQ082PROD with PROPOSALS2 56468 Federal Register / Vol. 82, No. 227 / Tuesday, November 28, 2017 / Proposed Rules

specialist to develop the initial notice. For 2010, the final year the OEP existed complete the notices is 9,300 hours We also estimate it would take 1 minute before the MADP took effect, we found (558,000 notices × 1 min/60) at a cost of for a business operations specialist to that approximately 3 percent of $642,444 (9,300 hour × $69.08/hour) or electronically generate and submit a individuals used the OEP. While the $1.15 per notice ($642,444/558,000 notice for each beneficiary that is parameters of the old OEP and new OEP notices) or $1,372.74 per organization offered passive enrollment. We estimate differ slightly, we believe that this ($642,444/468 MA organizations). that approximately 5,520 full-benefit percentage is the best approximation to The burden associated with electronic dual eligible beneficiaries would be sent determine the burden associated with submission of enrollment information to a notice in each instance in which this change. In January 2017, there were CMS is estimated at 1 minute at $69.08/ passive enrollment occurs, which approximately 18,600,000 individuals hour for a business operations specialist reflects the average enrollment of enrolled in MA plans. Using the 3 to submit the enrollment information to currently active D–SNP plans. Four percent adjustment, we expect that CMS during the open enrollment instances of passive enrollment 558,000 individuals (18.6 million MA period. The total burden is estimated at annually would result in 22,080 beneficiaries × 0.03), would use the OEP 9,300 hours (558,000 notices × 1 min/ beneficiaries being sent the notice to make an enrollment change. 60) at a cost of $642,444 (9,300 hour × (5,520 × 4 organizations) each year. $69.08/hour) or $1.15 per notice To develop the initial notice, we a. Beneficiary Estimate (Current OMB ($642,444/558,000 notices) or $1,372.74 estimate a one-time burden of 40 hours Control Number 0938–0753 (CMS–R– per organization ($642,444/468 MA (4 organizations × 10 hr) at a cost of 267)) organizations). $2,763.20 (40 hr × $69.08/hr) or $690.80 We estimate it would take a Additionally, MA organizations will per organization ($2,763.20/4 beneficiary approximately 30 minutes have to retain a copy of the notice in the organizations). To electronically (0.5 hours) at $7.25/hour to complete an beneficiary’s records. The burden generate and submit a notice to each enrollment request. While there may be associated with this task is estimated at beneficiary, we estimate a total burden some cost to the respondents, there are 5 minutes at $34.66/hour for an office of 368 hours (22,080 beneficiaries × 1 individuals completing this form who and administrative support worker to min/60) at a cost of $25,421.44 (368 hr are working currently, may not be perform record retention for the open × $69.08/hr) or $6,355.36 per working currently or never worked. enrollment period. In aggregate we organization ($25,421.44/4 Therefore, we used the current federal estimate an annual burden of 46,500 organizations) annually. minimum wage outlined by the U.S. hours (558,000 beneficiaries × 5 min/60) Since we estimate fewer than 10 Department of Labor (https:// at a cost of $1,606,110 (46,500 hour × respondents, the information collection www.dol.gov/whd/minimumwage.htm) $34.66/hour) or $3,431.86 per requirements are exempt (5 CFR to calculate costs. The burden for all organization ($1,606,110/468 MA 1320.3(c)) from the requirements of the beneficiaries is estimated at 279,000 organizations). Paperwork Reduction Act of 1995. hours (558,000 beneficiaries × 0.5 hour) We estimate a total annual burden for However, we seek comment on our at a cost of $2,022,750 (279,000 hour × all MA organizations resulting from this estimates for the overall number of $7.25/hour) or $3.63 per beneficiary proposed provision to be 111,600 hours respondents and the associated burden. ($2,022,750/558,000 beneficiaries). (46,500 hour + 9,300 hour + 9,300 hour + 46,500 hour) at a cost of $6,103,218 2. ICRs Regarding the Restoration of the b. MA Organization Estimate (Current ($3,212,220 + $642,444 + $642,444 + MA Open Enrollment Period (§§ 422.60, OMB Ctrl# 0938–0753 (CMS–R–267)) $1,606,110). Per organization, we 422.62, 422.68, 423.38, and 423.40) There are currently 468 MA estimate an annual burden of 238 hours In section II.B.1. of this rule, we are organizations in 2017. Not all MA (111,600 hour/468 MA organizations) at proposing to codify the requirements for organizations are required to be open for a cost of $13,041 ($6,103,218/468 open enrollment and disenrollment enrollment during the OEP. However, organizations). For beneficiaries we opportunities at §§ 422.60, 422.62, for those that are, we estimate that this estimate a total annual burden of 422.68, 423.38, and 423.40 that would enrollment period would result in 279,000 hours at a cost of $2,022,750 eliminate the existing MADP and approximately 1,192 enrollments per and a per beneficiary burden of 30 establish a MA Open Enrollment Period organization (558,000 individuals/468 minutes at $3.63. (OEP). This new OEP revises a previous organizations) during the OEP each The proposed requirements and OEP which would allow MA-enrolled year. burden will be submitted to OMB for individuals the opportunity to make a We estimate it would take approval under control number 0938– one-time election during the first 3 approximately 5 minutes at $69.08/hour 0753 (CMS–R–267). months of the calendar year to switch for a business operations specialist to 3. ICRs Regarding Coordination of MA plans, or disenroll from an MA plan determine eligibility and effectuate the Enrollment and Disenrollment Through and obtain coverage through Original changes for open enrollment. The MA Organizations and Effective Dates of Medicare. Although no new data would burden for all organizations is estimated × Coverage and Change of Coverage be collected, the burden associated with at 46,500 hours (558,000 beneficiaries (§§ 422.66 and 422.68) OMB Control this requirement would be the time and 5 min/60) at a cost of $3,212,220 (46,500 Number 0938–0753 (CMS–R–267) effort that it takes an MA organization hour × $69.08/hour) or $6,864 per to process an increased number of organization ($3,212,220/468 MA In section II.A.8. of this rule we enrollment and disenrollment requests organizations). propose to revise § 422.66 and 422.68 by individuals using this OEP, which is Once the enrollment change is by: Codifying the requirements for first available in 2019. completed, we estimate that it will take default enrollment that are currently set To estimate the potential increase in 1 minute at $69.08/hour for a business out in subregulatory guidance,60 the number of enrollments and operations specialist to electronically disenrollments from the new OEP, we generate and submit a notice to convey 60 Chapter 2 of the Medicare Managed Care Manual found at https://www.cms.gov/Medicare/ considered the percentage of MA- the enrollment or disenrollment Eligibility-and-Enrollment/MedicareMangCare enrollees who used the old OEP that decision for each of the 558,000 EligEnrol/index.html?redirect=/MedicareMangCare was available from 2007 through 2010. beneficiaries. The total burden to EligEnrol/.

VerDate Sep<11>2014 20:14 Nov 27, 2017 Jkt 244001 PO 00000 Frm 00134 Fmt 4701 Sfmt 4702 E:\FR\FM\28NOP2.SGM 28NOP2 sradovich on DSK3GMQ082PROD with PROPOSALS2 Federal Register / Vol. 82, No. 227 / Tuesday, November 28, 2017 / Proposed Rules 56469

revising current practice to limit the use maintain a Web site which contains the these beneficiaries who are in MA and of this type of enrollment mechanism, information listed in §§ 422.111(b) and Prescription Drug contracts would and clarifying the effective date for ICEP 423.128(b). Section 422.111(h)(2)(ii) prefer to opt in to receiving hard copies elections. This would provide an MA states that the posting of the EOC, to receiving electronic copies. Thus, the organization the option to enroll its Summary of Benefits, and provider savings comes from the 67 percent of Medicaid managed care enrollees who network information on the plan’s Web beneficiaries who are in MA and are newly eligible for Medicare into an site ‘‘does not relieve the MA Prescription Drug contracts that will not integrated D–SNP administered by the organization of its responsibility under opt in to having printed copies mailed same MA organization that operates the § 422.111(a) to provide hard copies to to them, namely 67 percent × 47.8 = Medicaid managed care plan. While our enrollees.’’ There is no parallel to 32,026,000 individuals. proposal restricts its use to individuals § 422.111(h)(2)(ii) in § 423.128 for Part D The major expenses in printing an in the organization’s Medicaid managed sponsors. Further, § 423.128(a) includes EOC include paper, toner, and mailing care plan that can be enrolled into an language providing that disclosures costs. The typical EOC has 150 pages. integrated D–SNP, the estimated burden required under that section be ‘‘in the Typical wholesale costs of paper are for an organization that desires to use manner specified by CMS.’’ between $2.50 and $5.00 for a ream of default enrollment and obtain CMS In § 422.111(h)(2)(ii), we propose to 500 sheets. We assume $2.50 per ream approval would not change. For those modify the sentence which states that of 500 sheets. Since each EOC has 150 MA organizations that want to use this posting the EOC, Summary of Benefits, pages, we are estimating a cost of $0.75 enrollment mechanism and request and and provider network information on per EOC [$2.50/(150 pages per EOC/500 obtain CMS approval, the administrative the plan’s Web site does not relieve the sheets per ream)]. Thus, we estimate requirements would remain unchanged plan of its responsibility to provide hard that the total savings from paper is × from the current practice. Enrollment copies of these documents to $24,019,500 (32,026,000 EOCs $0.75 requirements and burden are currently beneficiaries ‘‘upon request.’’ In per EOC). approved by OMB under control addition, we propose to add the phrase Toner costs can range from $50 to number 0938–0753 (CMS–R–267). Since ‘‘in the manner specified by CMS’’ in $200 and each toner can last 4,000 to this proposed rule would not impose paragraph (a). These proposed revisions 10,000 pages. We conservatively any new or revised requirements/ would give CMS the authority to permit assumes a cost of $50 for 10,000 pages. burden, we are not making any changes MA plans the flexibility to provide the Each toner would print 66.67 EOCs to that control number. information in § 422.111(b) (10,000 pages per toner/150 pages per EOC) at a cost of $0.005 per page ($50/ 4. ICRs Regarding Timing and Method electronically when specified by CMS as a permissible delivery option, and better 10,000 pages) or $0.75 per EOC ($0.005 of Disclosure Requirements per page × 150 pages). Thus, we (§§ 422.111(a)(3) and (h)(2)(ii) and aligns with the provisions under § 423.128. We intend to continue to estimate that the total savings on toner 423.128(a)(3) and 423.128(d)(2)) (OMB is $24,019,500 ($0.75 per EOC × Control Number 0938–1051) specify hardcopy mailing, as opposed to electronic delivery, for most documents 32,026,000 EOCs). Regarding mailing costs, since a ream a. Timing of Disclosure (§§ 422.111(a)(3) that convey the type of information of paper with 2,000 8.5 inches by 11 and 423.128(a)(3)) described in paragraph (b). CMS intends inches pages weighs 20 pounds or 320 that provider and pharmacy directories, In section II.B.4. of this rule, we ounces it then follows that 1 sheet of the plan’s Summary of Benefits, and propose to revise the timing and method paper weighs 0.16 ounces (320 ounces/ EOC documents would be those for of disclosing the information as required 2,000 pages). Therefore, a typical EOC of which electronic posting and delivery of under § 422.111(a) and (b) and the 150 pages weighs 24 ounces (0.016 a hard copy upon request are timing of such disclosures under ounces/page × 150 pages) or 1.5 pounds. permissible. Electronic delivery would § 423.128(a) and (b). These regulations Since commercial mailing rates are 13.8 reduce plan burden by reducing provide for disclosure of plan content cents per pound, the total savings in printing and mailing costs. information to beneficiaries. We would mailings is $6,629,382 ($0.138/pounds × Additionally, the IT systems of the revise §§ 422.111(a)(3) and 423.128(a)(3) 1.5 pound × 32,026,000 EOCs). plans are already set up to format and by requiring MA plans and Part D In aggregate, we estimate a savings (to print these documents. Also, plans must sponsors to provide the information in plans for not producing and mailing provide hard copies upon request. To §§ 422.111(b) and 423.128(b) by the first hardcopy EOCs) of $54,668,382 estimate the cost of printing these day of the annual enrollment period, ($24,019,500 + $24,019,500 + documents, we note that the CMS rather than 15 days before that period. $6,629,382). We will submit the Trustee’s report, accessible at https:// Plans must still distribute the ANOC 15 proposed requirements and burden to www.cms.gov/Research-Statistics-Data- days prior to the AEP. In other words, OMB for approval under OMB control and-Systems/Statistics-Trends-and- the proposed provision would provide number 0938–1051 (CMS–10260). the option of either submitting the EOC Reports/ReportsTrustFunds/, lists 47.8 with the ANOC or waiting until the first million beneficiaries in MA, Section 5. ICRs Regarding the Removal of day of the AEP, or sooner, for 1876 cost,61 and Prescription Drug Quality Improvement Project for distribution. The provision simply gives contracts for contract year 2019. Medicare Advantage Organizations plans that may need some flexibility the Based on reports from the (§ 422.152) (OMB Control Number ability to rearrange schedules and defer InternetSociety.org and Pew Research 0938–1023) a deadline. Consequently, there is no Center,62 we estimate that 33 percent of In section II.B.12. of this rule, we are change in burden. proposing the removal of the Quality 61 Per 42 CFR 417.427, cost plans must comply b. Method of Disclosure Improvement Project (QIP) requirements with § 422.111 and § 423.128. (and CMS-direction of QIPs) from the (§§ 422.111(h)(2) and 423.128(d)(2)) 62 Global Internet Report, 2017, Internet Society, (OMB Control Number 0938–1051) http://www.internetsociety.org/globalinternetreport/ Quality Improvement (QI) Program 2016/?gclid=EAIaIQobChMI-tz1nN_W1QIVgoKzCh1 Sections 422.111(h)(2)(i) and EVggBEAAYASAAEgLpj_D_BwE and ‘‘Tech Research Center, http://www.pewinternet.org/2017/ 423.128(d)(2)(i) require that plans Adoption Climbs Among Older Adults,’’ Pew 05/17/tech-adoption-climbs-among-older-adults/.

VerDate Sep<11>2014 20:14 Nov 27, 2017 Jkt 244001 PO 00000 Frm 00135 Fmt 4701 Sfmt 4702 E:\FR\FM\28NOP2.SGM 28NOP2 sradovich on DSK3GMQ082PROD with PROPOSALS2 56470 Federal Register / Vol. 82, No. 227 / Tuesday, November 28, 2017 / Proposed Rules

requirements, which would result in an 7. ICRs Regarding Medicare Advantage would provide a narrower definition annual savings of $12,663.75 to MA Plan Minimum Enrollment Waiver than is currently provided for organizations. The driver of the (§ 422.514(b)) ‘‘marketing materials.’’ Consequently, anticipated savings is the removal of CMS regulations provide Medicare this change decreases the number of requirements to attest having a QIP Advantage (MA) organizations, marketing materials that must be annually. including provider sponsored reviewed by CMS before use. To derive our savings, we estimate organizations, with the opportunity to Additionally, the proposal would more that it takes 1 MA organization staff request a waiver of CMS’s minimum specifically outline the materials that member (BLS: Compliance Officer) 15 enrollment requirements at § 422.514(a) are and are not considered marketing minutes (0.25 hour) at $67.54/hour to during the first 3 years of the contract. materials. submit a QIP attestation. Currently, Regulations also require that MA We believe the net effects of the there are 750 MA contracts, and each organizations reapply for the minimum proposed changes would reduce the contract is required to submit a QIP enrollment waiver in the second and burden to MA organizations and Part D attestation. Therefore, we anticipate that third years of their contract. However, sponsors by reducing the number of there will be 750 QIP attestations since CMS has not received or approved materials required to be submitted to us annually. any waivers outside of the application for review. Using these assumptions, we estimate process, CMS proposes to remove the To estimate the savings, we reviewed that the removal of the QIP provision requirement for MA organizations to the most recent 12-month period of will result in a total savings of 187.5 reapply for the minimum enrollment marketing material submissions from hours (750 contracts × 0.25 hour) at waiver during years 2 and 3 of the the Health Plan Management System, $12,663.75 (187.5 hour × $67.54/hour) contract under § 422.514(b)(2) and (3). July 2016 through and including June or $16.89 per contact ($12,663.75/750 CMS also proposes to modify 2017. As documented in the currently contracts). § 422.514(b)(2) to clarify that CMS will approved PRA package, we also The proposed requirements and only accept a waiver through the estimates that it takes a plan 30 minutes burden will be submitted to OMB for application process and allow the at $69.08/hour for a business operations approval under control number 0938– minimum enrollment waiver, if specialist to submit the marketing 1023 (CMS–10209). approved by CMS, to remain effective materials. To complete the savings for the first 3 years of the contract. The analysis, we also must estimate the 6. ICRs Regarding Medicare Advantage requirement and burden associated with number of marketing materials that Quality Rating System (§§ 422.162, the submission of the minimum would have been submitted to and 422.164, 422.166, 422.182, 422.184, and enrollment waiver in the application is reviewed by CMS under the current 422.186) currently approved by OMB under regulatory marketing definition (note control number 0938–0935 (CMS– In section II.A.11. of this rule, we are that while all materials that meet the 10237) which does not need to be proposing to codify the existing regulatory definition of marketing must revised. measures and methodology for the Part be submitted to CMS, not all marketing C and D Star Ratings program. The 8. ICRs Regarding Revisions to §§ 422 materials are prospectively reviewed by proposed provisions would not change and 423 Subpart V, Communication/ CMS). Certain marketing materials any respondent requirements or burden Marketing Materials and Activities qualify for ‘‘File and Use’’ status, which pertaining to any of CMS’ Star Ratings- In section II.B.5. of this rule, we are means the material can be submitted to related PRA packages including: OMB proposing to narrow the definition of CMS and used 5 days after submission, control number 0938–0701 for CAHPS ‘‘marketing materials’’ under without being prospectively reviewed (CMS–10203), OMB control number §§ 422.2260 and 423.2260 to only by CMS. We estimates 90 percent of 0938–0732 for HOS (CMS–R–246), OMB include materials and activities that aim marketing materials are exempt from control number 0938–1028 for HEDIS to influence enrollment decisions. We our prospective review because of the (CMS–10219), OMB control number believe the proposed definitions file and use process. Thus, we only 0938–1054 for Part C Reporting appropriately safeguard potential and prospectively review about 10 percent Requirements (CMS–10261), and OMB current MA/PDP enrollees from of the marketing materials submitted. control number 0938–0992 for Part D inappropriate steering of beneficiary Marketing materials are coded using Reporting Requirements (CMS–10185). choice, while not including materials 4- or 5-digit numbers, based on Since this rule would not impose any that pose little risk to current or marketing material type. The relevant new or revised requirements/burden, we potential enrollees and are not codes and counts are summarized in are not making changes to any of the traditionally considered ‘‘marketing.’’ Table 16. aforementioned control numbers. Revisions to §§ 422.2260 and 423.2260 BILLING CODE 4120–01–P

VerDate Sep<11>2014 20:14 Nov 27, 2017 Jkt 244001 PO 00000 Frm 00136 Fmt 4701 Sfmt 4702 E:\FR\FM\28NOP2.SGM 28NOP2 sradovich on DSK3GMQ082PROD with PROPOSALS2 Federal Register / Vol. 82, No. 227 / Tuesday, November 28, 2017 / Proposed Rules 56471 0 0 379,629 Saved 19107.X6 56,169.2X 54,020.56 49,397.66 48,597.78 (in$) 535,853.56 205,236.68 Cost $1,348,372.52 Rate Honr) $G9.08 $69.08 $69.08 $69.08 $69.08 $69.0X $69.08 $69.0X $69.08 $69.08 $69.08 (Per Wage 0 0 X16 782 279.5 2,971 714.5 7,757 703.5 19,912 5,495.5 Total Saved Hours 0.5 0.5 0.5 0.5 0.5 0.5 0.5 0.5 0.5 0.5 0.5 per Honrs Response 0 0 ANALYSIS 559 of 1564 that 5942 L429 L407 1,612 be no 10,991 15,514 39,824 would longer Submitted Number Materials BURDEN 0 0 0 0 981 1,169 5,162 of 40,28G 32,974 Number Excluded Materials benefits SUBMISSION Material(s)* includes that ofExclnded scripts forms MATERIAL advertising Description nla n/a n/a Enrollment Enrollment information General n/a n/a of Code Under MARKETING Number rcvrcw. Materials 16: Marl

BILLING CODE 4120–01–C By reducing the number of marketing documents (80,110 current¥40,286 materials submitted to CMS by 39,824 excluded) we estimate a savings of

VerDate Sep<11>2014 20:14 Nov 27, 2017 Jkt 244001 PO 00000 Frm 00137 Fmt 4701 Sfmt 4702 E:\FR\FM\28NOP2.SGM 28NOP2 sradovich on DSK3GMQ082PROD with PROPOSALS2 EP28NO17.014 56472 Federal Register / Vol. 82, No. 227 / Tuesday, November 28, 2017 / Proposed Rules

19,912 hours (39,824 materials * 0.5 from the 80,110 total marketing number 0938–1232 (CMS–10476), hours per material) at a cost savings of materials. where we estimated that, on average, $1,348,372.52 (19,912 hours * 69.08 per • Marketing code 8000 includes MA organizations and Part D sponsors hour). Some key points in the creditable coverage and late enrollment would spend approximately 47 hours calculations are as follows: penalty (LEP) notices that will fall per contract on administrative work • There were a total of 80,110 outside of the new regulatory definition related to Medicare MLR reporting, marketing materials submitted to CMS of marketing and no longer require including: Collecting data, populating during the 12-month period sampled. submission. Over the 12-month period the MLR reporting forms, conducting a These materials already exclude PACE sampled, this represents 559 material final internal review, submitting the program marketing materials (30000 submissions. reports to the Secretary, and conducting Code) which are governed by a different The proposed requirements and internal audits. Inadvertently, our authority and not affected by the burden will be submitted to OMB under currently approved estimate did not proposed provision. The 80,110 figure control number 0938–1051 (CMS– specify (or break out) the portion of the also excludes codes 16000 and 1700 10260). overall reporting burden that could be Medicare-Medicaid Plan (MMP) 9. ICRs Regarding Medical Loss Ratio attributed solely to the tasks of materials. The MMP materials are not Reporting Requirements (§§ 422.2460 preparing and submitting the MLR being counted as the decision for review and 423.2460) report. We are correcting that oversight rests with the states and CMS. by estimating that the burden for • In section II.C.1. of this rule, we note preparing and submitting the MLR The statute is clear that that under current §§ 422.2460 and ‘‘applications,’’ which CMS also refers report is approximately 11.5 hours (or 423.2460, for each contract year, MA 24.4 percent of the estimated 47 total to as enrollment or election forms, must organizations and Part D sponsors must be reviewed. Thus the 981 materials hours spent on all administrative work report to CMS the information needed to related to the MLR reporting submitted under marketing code 1070, verify the MLR and remittance amount, enrollment forms, must be subtracted requirements) per contact. if any, for each contract, such as: We arrived at the 11.5-hour estimate from the 80,110. Incurred claims, total revenue, • Marketing code 1100 includes the by considering the amount of time it expenditures on quality improving would take an MA organization or Part combined ANOC/EOC as well as the D– activities, non-claims costs, taxes, SNP standalone ANOC. CMS intends to D sponsor to perform each of the licensing and regulatory fees, and any following tasks: (1) Review the MLR split the ANOC and EOC and will still remittance owed to CMS under report filing instructions and external require the ANOC be submitted as a § 422.2410 or § 423.2410. Our proposed materials referenced therein and to marketing material, whereas the EOC amendments to §§ 422.2460 and input all figures and plan-level data in will no longer be considered marketing 423.2460 would reduce the MLR accordance with the instructions; (2) and not require submission. To account reporting burden by requiring that MA draft narrative descriptions of for the ANOC submission, CMS organizations and Part D sponsors methodologies used to allocate estimates that 5,162 ANOCs will still report, for each contract year, only the expenses; (3) perform an internal review require submission. MLR and the amount of any remittance • of the MLR report form prior to We do not expect any disenrollment owed to us for each contract with submission; (4) upload and submit the or grievance forms (the 2000 and 3000 credible or partially credible experience. MLR report and attestation; and (5) codes) to be required submissions under For each non-credible contract, MA correct or provide explanations for any this proposal. organizations and Part D sponsors • suspected errors or omissions Marketing code 4000 covers all would be required to report only that discovered by CMS or our contractor advertisements which constitute 55 the contract is non-credible. during initial review of the submitted percent (43,965) of the 80,110 materials. Our analysis of the estimated MLR report. The majority of these advertisements administrative costs related to the MLR We estimate that our proposal to scale deal with benefits and enrollment. We reporting requirements is based on the back the MLR reporting requirements estimate 25 percent of the 43,965 code average number of MA and Part D would reduce the amount of time spent 4000 documents (that is, 10,991 contracts subject to the reporting on administrative work by 11 hours, documents) would fall outside of the requirements for each contract year. The from 47 hours to 36 hours. new regulatory definition of marketing average number of MA and Part D Table 17 compares the estimated and no longer require submission. Thus, contracts subject to the annual MLR administrative costs related to the MLR we must subtract these 32,974 (43,965 reporting requirements for contract reporting requirements under the ¥ 10,991) from the 80,110. years 2014 to 2018 is 587. The total current regulation and under this • Marketing code 5000 covers number of MA and Part D contracts is proposed rule. As indicated, this formulary drugs. Although, as is relatively stable year over year. To proposed rule estimates that MA currently the case, formularies will calculate the estimated administrative organizations and Part D sponsors will continue to be submitted to us for costs of MLR reporting under the spend on average 36 hours per MA or review in capacities outside of proposed amendments to §§ 422.2460 Part D contract on administrative work, marketing, they will no longer fall under and 423.2460, we assume that 587 MA compared to 47 hours per contract the new regulatory definition of and Part D contracts would be subject to under the current rule. We estimate the marketing and hence would not be the MLR reporting requirements in each average cost per hour of MLR reporting submitted separately for review as contract year. using wage data for computer and marketing materials. Our estimate for the amount of time information systems managers, as we • Marketing code 6000 includes sales that MAOs and Part D sponsors would believe that the tasks associated with scripts which are predominantly used to spend on administrative tasks related to MLR reporting generally fall within the encourage enrollment, and would likely the MLR reporting requirements under fields of data processing, computer still fall under the scope of the new this proposed rule is based on our programming, information systems, and marketing definition. As such, we must current burden estimates that are systems analysis. Based on computer subtract 1,169 documents (code 6013) approved by OMB under control and information systems managers wage

VerDate Sep<11>2014 20:14 Nov 27, 2017 Jkt 244001 PO 00000 Frm 00138 Fmt 4701 Sfmt 4702 E:\FR\FM\28NOP2.SGM 28NOP2 sradovich on DSK3GMQ082PROD with PROPOSALS2 Federal Register / Vol. 82, No. 227 / Tuesday, November 28, 2017 / Proposed Rules 56473

data from BLS, we estimate that MA to $6,587 per contract under the current contracts, we estimate that the proposed organizations and Part D sponsors regulations. Consequently, the proposed changes would reduce the annual would incur annual MLR reporting costs changes would, on average, reduce the administrative burden related to MLR of approximately $5,045 per contract on annual administrative costs by $1,542 reporting by 6,457 hours, resulting in a average under our proposal, as opposed per contract. Across all MA and Part D savings of $904,884.

TABLE 17—ESTIMATED ADMINISTRATIVE BURDEN RELATED TO MEDICAL LOSS RATIO (MLR) REPORTING REQUIREMENTS

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

Ongoing Costs (current regulations) ...... 587 ...... 47 27,589 $140.14 ...... $3,866,322 $6,587 Ongoing Costs (proposed regulation 587 ...... 36 21,132 140.14...... 2,961,438 5,045 changes). Change ...... 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.

The proposed requirements and requirements are codified at § 423.32(c) efforts in addition to routine updates to burden will be submitted to OMB for and (d) and are not being revised as part beneficiary communications materials approval under control number 0938– of this rulemaking. Therefore, no new or and Web sites. In theory, if Part D 1232 (CMS–10476). additional information collection sponsors that would have been denied requirements are being imposed. requests to make generic changes could 10. ICRs Regarding Establishing Moreover, the requirements and burden do so under the proposed provision, Limitations for the Part D Special are currently approved by OMB under they would have somewhat more of a Enrollment Period for Dual Eligible control number 0938–0964 (CMS– burden since the proposed provision Beneficiaries (§ 423.38(c)(4)) OMB 10141). Since this rule would not does require notice including direct Under Control Number 0938–0964 impose any new or revised notice to affected enrollees. However, In section II.A.11. of this rule, we requirements/burden, we are not our practice has been to approve all or propose to revise § 423.38(c)(4) to limit making any changes to that control virtually all generic substitutions that the SEP for dual- and LIS-eligible number. would meet the requirements of this individuals. The provision would make 11. ICRs Related to Expedited proposed provision—which again the SEP for FBDE or other subsidy- means that the proposed provisions eligible individuals available only in the Substitutions of Certain Generics and Other Midyear Formulary Changes would just permit those substitutions to following circumstances: take place sooner. • For beneficiaries who are making an (§§ 423.100, 423.120, and 423.128) OMB Under Control Number 0938–0964 The general notice requirements and allowable onetime-per-calendar-year burden are currently approved by OMB election. In section II.A.15 of this rule, we under control number 0938–0964 • For beneficiaries who have been propose to expedite certain generic (CMS–10141). Since this rule would not assigned to a plan by CMS or a state substitutions and other midyear impose any new or revised (that is, through auto enrollment, formulary changes and except requirements/burden, we are not facilitated enrollment, passive applicable generic substitutions from making any changes to that control enrollment, or reassignment) and decide the transition process. Excepting generic number. to change plans following notification of substitutions that would otherwise the change or within 2 months of the require transition fills from the 12. ICRs Related to Preclusion List election effective date. transition process would lessen the Requirements for Prescribers in Part D • For beneficiaries who have a change burden for Part D sponsors because they and Individuals and Entities in in their dual or LIS-eligible status. would no longer need to provide such Medicare Advantage, Cost Plans, and In instances where an individual is fills. Permitting Part D sponsors to PACE not able to utilize the dual SEP because immediately substitute newly approved a. Preclusion List Requirements for Part of the proposed limitations, we generic drugs or to make other D Sponsors anticipate that there will be no change formulary changes sooner than has been (1) Burden and Costs in burden. Under current requirements, required would allow Part D sponsors to if a beneficiary uses the dual SEP to take action sooner, but would not In sections II.D.10 and 11. of this disenroll from their plan, the plan increase nor decrease paperwork. proposed rule, we are proposing in would send a notice to the beneficiary While the proposed provisions would § 423.120(c)(6) to require that Part D to acknowledge the voluntary additionally require general notice that sponsors cover a provisional supply of disenrollment request. If the beneficiary certain generic substitutions could take a drug before they reject a claim based is subject to the dual SEP limitation, the place immediately, Part D sponsors are on a prescriber’s inclusion on the plan would send a notice to deny their already creating the documents in preclusion list. The proposed provision voluntary disenrollment request. The which that notice would appear such as would also require that Part D sponsors requirement to acknowledge the formularies and EOCs. Similarly, provide written notice to the beneficiary beneficiary request and address the § 423.128(d)(2)(ii) already requires Web of the prescriber’s presence on the resolution would be the same in both sites to include information about drug preclusion list and take reasonable scenarios, but the content of the notice removals and changes to cost-sharing. In efforts to furnish written notice to the would be different. Enrollment other words, the proposed general prescriber. The burden associated with processing and notification notice requirement would not require these provisions would be the time and

VerDate Sep<11>2014 20:14 Nov 27, 2017 Jkt 244001 PO 00000 Frm 00139 Fmt 4701 Sfmt 4702 E:\FR\FM\28NOP2.SGM 28NOP2 sradovich on DSK3GMQ082PROD with PROPOSALS2 56474 Federal Register / Vol. 82, No. 227 / Tuesday, November 28, 2017 / Proposed Rules

effort necessary for Part D adjudication (b) Creation of Template Notices to list in early 2019 with roughly 80,000 systems to be programmed and for Beneficiaries and Prescribers Part D beneficiaries affected; that is, model notices to be created, generated, As stated in the May 6, 2015 IFC, we 80,000 beneficiaries would have been and disseminated. estimate that 212 parent organizations receiving prescriptions written by these prescribers and would therefore receive (a) Part D System Programming would need to create two template notices to notify beneficiaries and the notice referenced in § 423.120(c)(6). prescribers under proposed In 2019 we estimate a total burden of We estimate that it would take all 30 × sponsors and PBMs with Part D § 423.120(c)(6). We project that it would 6,640 hours (0.083 hour 80,000 take each organization 3 hours at responses) at a cost of $260,421 (6,640 adjudication systems a total of × approximately 93,600 hours in 2019 for $69.08/hour for a business operations hour $39.22/hour) or $1,228.40 per organization ($260,421/212 software developers and programmers to specialist to create the two model organizations). program their systems to comply with notices. For 2019, we estimate a onetime total burden of 636 hours (212 In 2020 and 2021, we estimate that the requirements of § 423.120(c)(6). In × organizations 3 hours) at a cost of roughly 150 prescribers each year would 2020 and 2021, we do not anticipate any × $43,935 (636 hour $69.08/hour) or be added to the preclusion list, though system costs. The sponsors and PBMs $207.24 per organization ($43,935/212 would need approximately 6 to 12 this would be largely offset by the same organizations). There would be no number of prescribers being removed months to perform system changes and burden associated with 2020 and 2021. testing. The total hour figures are based from the list (for example, based on The proposed system programing and reenrollment after the expiration of a on a 6-month preparation and testing notice development requirements and period. There are roughly 1,040 full- reenrollment bar or decision to remove burden will be submitted to OMB for them from the preclusion list) with time working hours in a 6-month approval under control number 0938– 15,000 affected beneficiaries. In period. Using an estimate of 3 full-time 0964 (CMS–10141). aggregate, we estimate an annual burden software developers and programmers at (c) Preparation and Issuance of the of 1,245 hours (15,000 beneficiaries × $96.22/hour resulted in the Notices 0.083 hours) at a cost of $48,829 (1,245 aforementioned 93,600 hour figure (3 × × × We estimate that it would take an hour $39.22/hour) or $325.53 per workers 1,040 hour 30 sponsors/ prescriber ($48,829/150 prescribers). PBMs) at a cost of $9,006,192 (93,600 × average of 5 minutes (0.083 hour) at $96.22/hour) for 2019. There would be $39.22/hour for an insurance claim and The proposed notice preparation and policy processing clerk to prepare and distribution requirements and burden no burden associated with 2020 and distribute the notices. We estimate that will be submitted to OMB for approval 2021. an average of approximately 800 under control number 0938–0964 prescribers would be on the preclusion (CMS–10141).

TABLE 18—ESTIMATED BURDEN OF PART D—NOTICE PREPARATION AND DISTRIBUTION [In hours]

3-year 2019 2020 2021 average

Provisional Supply—Programming ...... 93,600 0 0 31,200 Provisional Supply—Template Creation ...... 636 0 0 212 Provisional Supply—Letter Preparation ...... 6,640 1,245 1,245 3,043

Total ...... 100,876 1,245 1,245 34,455

TABLE 19—ESTIMATED BURDEN OF PART D—NOTICE PREPARATION AND DISTRIBUTION [In $]

3-year 2019 2020 2021 average

Provisional Supply—Programming ...... $9,006,192 $0 $0 $3,002,064 Provisional Supply—Template Creation ...... 43,935 0 0 14,645 Provisional Supply—Notice Preparation ...... 260,421 48,829 48,829 119,360

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

(2) Savings (OMB 0938–1135). We estimate that it (0.08 hours × $202.08). Multiplying this We believe that savings would accrue would take 0.5 hours for a prescriber to figure by 420,000 applications results in for the prescriber community from our complete a CMS–855O application. This a total savings of $12,734,400. We proposed elimination of the requirement is based on the following assumptions: believe that these savings would accrue • that prescribers enroll in Medicare in A medical secretary would take in 2019. 0.42 hours to prepare the application. order to prescribe Part D drugs. (3) Net Costs and Savings As previously explained in this • A physician would take 0.08 hours proposed rule, approximately 420,000 to review and sign the application. We believe that a result of our prescribers have yet to enroll in This would result in a per application proposed elimination of the Part D Medicare via the CMS–855O application cost of $30.32 ((0.42 hours × $33.70) +

VerDate Sep<11>2014 20:14 Nov 27, 2017 Jkt 244001 PO 00000 Frm 00140 Fmt 4701 Sfmt 4702 E:\FR\FM\28NOP2.SGM 28NOP2 sradovich on DSK3GMQ082PROD with PROPOSALS2 Federal Register / Vol. 82, No. 227 / Tuesday, November 28, 2017 / Proposed Rules 56475

enrollment requirement, the following net savings for prescribers would ensue:

TABLE 20—NET COSTS/SAVINGS [In $]

3-year 2019 2020 2021 average

Costs ...... $9,310,548 $48,829 $48,829 $3,136,069 Savings ...... 12,734,400 0 0 4,244,800 Net * ...... 3,423,852 (48,829) (48,829) 1,108,731 * Net costs denoted in parentheses.

b. Preclusion List Requirements for complete the CMS–855I (OMB No. completed by Part A providers and Part C 0938–0685), which is completed by certain Part B certified suppliers. As previously explained in this physicians and non-physician Therefore, we believe that savings proposed rule, approximately 120,000 practitioners; 24,000 would complete would accrue for providers and MA providers and suppliers have yet to the CMS–855B (OMB control number suppliers from our proposed enroll in Medicare via the CMS–855 0938–0685), which is completed by elimination of our MA/Part C application. Of these providers and certain Part B organizational suppliers; enrollment. Table 21 estimates the suppliers, and based on internal CMS and 6,000 would complete the CMS– burden hours associated with the statistics, we estimate that 90,000 would 855A (OMB No. 0938–0685), which is completion of each form.

TABLE 21—CMS–855 APPLICATION BURDEN

Number of Hours for an respondents Hours for Hours for a authorized Submission type no longer completion by physician to official to Total hours for required office review and review completion to enroll personnel sign and sign

CMS–855I ...... 90,000 2.5 0.5 n/a 3 CMS–855B ...... 24,000 4 n/a 1 5 CMS–855A ...... 6,000 5 n/a 1 6

In projecting the savings involved, we the cost of each application processed any additional burden from this assume a medical and health services by a medical secretary and signed off by particular proposal, for this activity is manager would serve as the provider’s a medical and health services manager consistent with existing policy. or supplier’s ‘‘authorized official’’ and as being $273.66 (($33.70 × 5 hours) + 13. ICRs Regarding the Part D Tiering ($105.16 × 1 hour)), we estimate a total would sign the CMS–855A or CMS– Exceptions ((§§ 423.560 and § 423.578(a) savings of $6,567,840 (24,000 855B application on the provider’s or and (c)) supplier’s behalf. applications × $273.66). Therefore, we project the following Given the foregoing, we estimate that In section II.A.9. of this rule, we are total hour and cost burdens: providers and suppliers would proposing various changes to • CMS–855I: We estimate a total experience a total reduction in hour § 423.578(a) and (c) related to the reduction in hour burden of 270,000 burden of 426,000 hours (270,000 + requirements for tiering exceptions hours (90,000 applicants × 3 hours). 120,000 + 36,000) and a total cost criteria that Part D plan sponsors are With the cost of each application savings of $32,102,980 ($9,667,660 + required to establish. These changes processed by a medical secretary and $5,759,040 + $16,676,100). We expect include establishing a revised physician as being $185.29 (($33.70 × these reductions and savings to accrue framework for treatment of tiering 2.5 hours) + ($202.08 × 0.5 hours)), we in 2019 and not in 2020 or 2021. exception requests based on whether the estimate a savings of $16,676,100 Nonetheless, over the OMB 3-year requested drug is a brand name or (90,000 applications × $185.29). approval period of 2019–2021, we generic drug or biological product, and • CMS–855B: We estimate a total expect an annual reduction in hour where the same type of drug alternatives reduction in hour burden of 120,000 burden of 142,000 hours and an annual are located on the plan’s formulary. The hours (24,000 applicants × 5 hours). savings of $10,700,933 ($32,102,800/3) proposed changes also include With the cost of each application under OMB Control No. 0938–0685. clarification of appropriate cost-sharing processed by a medical secretary and We also propose to revise § 422.310 to assigned to approved tiering exception signed off by a medical and health add a new paragraph (d)(5) to require requests when preferred alternative services manager as being $239.96 that, for data described in paragraph drugs are on multiple lower-cost tiers. (($33.70 × 4 hours) + ($105.16 × 1 (d)(1) as data equivalent to Medicare At the coverage determination level, if hour)), we estimate a total savings of fee-for-service data (which is also a plan issues a decision that is partially $5,759,040 (24,000 applications × known as MA encounter data), MA or fully adverse to the enrollee, it is $105.16). organizations must submit a National already required to send written notice • CMS–855A: We estimate a total Provider Identifier in a Billing Provider of that decision. The existing reduction in hour burden of 36,000 field on each MA encounter data record, requirement to send written notice of an hours (6,000 applicants × 6 hours). With per CMS guidance. We do not expect adverse coverage determination would

VerDate Sep<11>2014 20:14 Nov 27, 2017 Jkt 244001 PO 00000 Frm 00141 Fmt 4701 Sfmt 4702 E:\FR\FM\28NOP2.SGM 28NOP2 sradovich on DSK3GMQ082PROD with PROPOSALS2 56476 Federal Register / Vol. 82, No. 227 / Tuesday, November 28, 2017 / Proposed Rules

not change under the proposed changes number of notices (2)) total if a beneficiary is eligible for another related to tiering exceptions. We do not corresponding to such edits/limitations. election period (for example, AEP, OEP, expect the proposed changes to We estimate it would take an average of or other SEP), this SEP limitation would significantly impact the overall volume 5 minutes (0.083 hours) at $39.22/hour not prohibit the individual from making or the approval rate of tiering exceptions for an insurance claim and policy an election. This proposed provision, by requests, which represent a consistently processing clerk to prepare each notice. creating a limitation for dually- and low percentage of total request volume. We estimate an annual burden of 307 other LIS-eligible at-risk beneficiaries While the requirement to send a hours (3,693 notices × 0.083 hour) at a after the initial notification, would written denial notice is subject to the cost of $12,040.54 (307 hour × $39.22/ decrease sponsor burden in processing PRA, the requirement and burden are hour). disenrollment and enrollment requests currently approved by OMB under Part D plan sponsors are required to for dual- and LIS-eligible beneficiaries control number 0938–0976 (CMS– upload these new notice templates into who wish to change plans. 10146). Since this rule would not their internal claims systems. We We estimate that 1,846 beneficiaries impose any new or revised estimate that 219 Part D plan sponsors would meet the criteria proposed to be requirements/burden, we are not (31 PDP parent organizations and 188 identified as an at-risk beneficiary and making any changes to that control MA–PD parent organizations, based on have a limitation implemented. About number. plan year 2017 plan participation) 76 percent of the 1,846 beneficiaries are would be subject to this requirement. estimated to be LIS. Approximately 10 14. ICRs Regarding the Implementation We estimate that it will take on average percent of LIS-eligible enrollees use the of the Comprehensive Addiction and 5 hours at $81.90/hour for a computer duals’ SEP to make changes annually. Recovery Act of 2016 (CARA) programmer to upload all of the notices Thus we estimate, at most, 140 changes Provisions (§ 423.153(f)) into their claims systems (note, this is per year (1,846 beneficiaries × 0.76 × As discussed in section of this rule, an estimate to upload all of the 0.1) will no longer take place because of proposed § 423.153(f) would implement documents in total; not per document). the proposed duals’ SEP limitation. provisions of section 704 of CARA, This would result in a total burden of There are currently 219 Part D sponsors. which allows Part D plan sponsors to 1,095 hours (5 hours × 219 sponsors) at This amounts to an average of 0.6 establish a drug management program a cost of $89,680.50 (1,095 hour × changes per sponsor per year (140 that includes ‘‘lock-in’’ as a tool to $81.90/hour). changes/219 sponsors). In 2016, there manage an at-risk beneficiary’s access to In aggregate, the burden to upload and were more than 3.5888 Part D plan coverage of frequently abused drugs. prepare these additional notices is 1,402 switches, and as such, a difference of Part D plan sponsors would be required hours (307 hours + 1,095 hours) at a cost 0.6 enrollments or disenrollments per to notify at-risk beneficiaries about their of $101,721 ($12,040 + $89,681). sponsor will not impact the plan’s drug management program. Part Proposed revisions to § 423.38(c)(4) administrative processing infrastructure D plan sponsors are already expected to would limit the SEP for dual- or other or human resources needed to process send a notice to some beneficiaries LIS-eligible individuals who are enrollments and disenrollments. when the sponsor decides to implement identified as a potential at-risk Therefore, there is no change in burden a beneficiary-specific POS claim edit for beneficiary subject to the requirements for sponsors to implement this opioids (OMB under control number of a drug management program, as component of the provision. 0938–0964 (CMS–10141)). However, the outlined in § 423.153(f). As already We are proposing that reviews of at- OMB control number 0938–0964 only codified in § 423.38(c)(4), this proposed risk determinations made under the accounts for the notices that are SEP limitation would be extended to processes at § 423.153(f) be adjudicated currently sent to beneficiaries who have ‘‘other subsidy-eligible individuals’’ so under the existing Part D benefit appeals a POS edit put in place to monitor that both full and partial subsidy process and timeframes set forth in part opioid access (which would count as individuals are treated uniformly. Once 423 Subparts M and U. Consistent with the initial notice described in the an individual is identified as a potential existing rules for redeterminations, an preamble and defined in § 423.153(f)(4)) at-risk beneficiary, that individual will enrollee who wishes to dispute an at- and would not capture the second not be permitted to use this election risk determination would have 60 days notice that at-risk beneficiaries would period to make a change in enrollment. from the date of the notice of the receive confirming their determination Contingent with a Part D sponsor determination to make such request, as such or the alternate second notice opting to implement a drug management must affirmatively request IRE review of that potentially at-risk beneficiaries program, Part D sponsors will identify, an adverse plan level appeal decision would receive to inform them that they and submit to CMS, an individual’s made under a plan sponsor’s drug were not determined to be at risk. ‘‘potential’’ at-risk status and, if management program, and would have Since 2013, there have been 4,617 applicable, confirmed at-risk status. The rights to an expedited redetermination. POS edits submitted into MARx by plan Part D sponsor will include notification Revisions to regulations in part 423 sponsors for 3,961 unique beneficiaries of the limitation of the duals’ SEP in the Subparts M (§§ 423.558, 423.560, as a result of the drug utilization review required notice to the beneficiary that 423.562, 423.564, 423.580, 423.582, policy. Given that there has not been a he or she has been identified as a 423.584, 423.590, 423.602, 423.636, and steady increase or decrease in edits, we potential at-risk beneficiary. 423.638) and U (§§ 423.1970, 423.2018, have used the average, 923 edits Therefore, the burden associated with 423.2020, 423.2022, 423.2032, 423.2036, annually, to assess burden under this the notification of the inability to use 423.2038, 423.2046, 423.2056, 423.2062, rule. If we assume that the number of the duals’ SEP is covered under the 423.2122 and 423.2126) are being edits or access to coverage limitations previous statement of burden. proposed to account for reviews of at- will double due to the addition of Furthermore, we are proposing to risk determinations. The filing of an pharmacy and prescriber ‘‘lock-in’’ to codify that an at-risk beneficiary will appeal is an information collection OMS, to approximately 1,846 such have an election opportunity if their requirement that is associated with an limitations, we estimate 3,693 initial, dual- or LIS-eligible status changes, that administrative action pertaining to and second notices (number of is, if they gain, lose or have a change in specific individuals or entities (5 CFR limitations (1,846) multiplied by the the level of the subsidy assistance. Also, 1320.4(a)(2) and (c)). Consequently, the

VerDate Sep<11>2014 20:14 Nov 27, 2017 Jkt 244001 PO 00000 Frm 00142 Fmt 4701 Sfmt 4702 E:\FR\FM\28NOP2.SGM 28NOP2 sradovich on DSK3GMQ082PROD with PROPOSALS2 Federal Register / Vol. 82, No. 227 / Tuesday, November 28, 2017 / Proposed Rules 56477

burden for preparing and filing the appeals is included in the regulatory The aforementioned requirements and appeal is exempt from the requirements impact analysis. burden, excluding beneficiary appeals, and collection burden estimates of the In aggregate, these components of this will be submitted to OMB for approval PRA; however, the burden estimate for provision would result in an annual net under control number 0938–0964 cost of $101,012. (CMS–10141).

TABLE 22—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

TABLE 23—ESTIMATED BURDEN FOR THE CARA PROVISIONS (In $)

2019 2020 2021 3-Year average

Preparation and Upload Notices ...... $101,012 $0 $0 $33,670.7 SEP Limitation ...... 0 0 0 0 Appeals ...... N/A N/A N/A N/A

Total ...... 101,012 0 0 33,670.7

C. Summary of Proposed Information Collection Requirements and Burden

TABLE 24—PROPOSED 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) (hours)

422.60, 422.62, 422.68, 423.38, 0938–0753 468 558,000 5 min...... 46,500 $69.08 $3,212,220 and 423.40 eligibility determination. 422.60, 422.62, 422.68, 423.38, 0938–0753 468 558,000 1 min...... 9,300 69.08 642,444 and 423.40 notification. 422.60, 422.62, 422.68, 423.38, 0938–0753 468 558,000 1 min...... 9,300 69.08 642,444 and 423.40 report to CMS. 422.60, 422.62, 422.68, 423.38, 0938–0753 468 558,000 5 min...... 46,500 34.66 1,606,110 and 423.40 record keeping. 422.152 QIP ...... 0938–1023 468 (750) (15 min) (188) 67.54 (12,664) 422.2260 and 423.2260 mar- 0938–1051 805 (67,061) (30 min)(26,959) 69.08 (1,862,397) keting materials. 422.2460 and 423.2460 MLR re- 0938–1232 587 (587) (11 hr).... (6,457) 140.14 (904,884) porting. 423.120(c)(6) create model no- 0938–0964 212 212 3 hr...... 636 69.08 43,935 tices. 423.120(c)(6) 2019 prepare and 0938–0964 212 80,000 0.083 hr6,640 39.22 260,421 distribute the notices. 423.120(c)(6) 2020 and 2021 0938–0964 212 15,000 0.083 hr1,245 39.22 48,829 prepare and distribute the notices. 423.153(f) notice preparation ...... 0938–0964 219 3,693 0.083 hr 307 39.22 12,041 423.153(f) notice upload ...... 0938–0964 219 3,693 5 hr ...... 1,095 81.90 89,681 423.153(f) contract: Part D plan 0938–0964 31 31 10 hr...... 310 134.50 41,695 sponsors. 423.153(f) contract: MA–PDs ...... 0938–0964 188 188 20 hr ...... 3,760 134.50 505,720

Subtotal: Private Sector Bur- ...... 805 2,266,419 varies ..... 91,989 varies 4,325,595 den.

422.62, 423.38, and 423.40 com- 0938–0753 18,600,000 558,000 30 min.... 279,000 7.25 2,022,750 plete enrollment.

VerDate Sep<11>2014 20:14 Nov 27, 2017 Jkt 244001 PO 00000 Frm 00143 Fmt 4701 Sfmt 4702 E:\FR\FM\28NOP2.SGM 28NOP2 sradovich on DSK3GMQ082PROD with PROPOSALS2 56478 Federal Register / Vol. 82, No. 227 / Tuesday, November 28, 2017 / Proposed Rules

TABLE 24—PROPOSED ANNUAL RECORDKEEPING AND REPORTING REQUIREMENTS—Continued

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) (hours)

Subtotal: Burden on ...... 18,600,000 558,000 30 min .... 279,000 7.25 2,022,750 Beneficaries.

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 ...... 18,600,805 (29,201,581) varies..... 370,989 varies (48,320,037) * OMB control numbers and corresponding CMS ID numbers: 0938–0753 (CMS–R–267), 0938–1023 (CMS–10209), 0938–1051 (CMS–10260), 0938–1232 (CMS–10476), and 0938–0964 (CMS–10141).

D. Submission of PRA-Related number of provisions that will help the entities that will have costs Comments address the opioid epidemic and associated with the new requirements We have submitted a copy of this mitigate the impact of increasing drug finalized in this rule. At the time the proposed rule to OMB for its review of prices in the Part D program. analysis for the MA program was conducted, the market for health the rule’s information collection and B. Overall Impact insurance was and remains, dominated recordkeeping requirements. These We examined the impact of this final requirements are not effective until they by a handful of firms with substantial rule as required by Executive Order market share. have been approved by the OMB. 12866 on Regulatory Planning and To obtain copies of the supporting However, we estimate that the costs of Review (September 30, 1993), Executive statement and any related forms for the this rule on ‘‘small’’ health plans do not Order 13563 on Improving Regulation proposed collections previously approach the amounts necessary to be a and Regulatory Review (January 18, discussed, please visit CMS’ Web site at ‘‘significant economic impact’’ on firms 2011), the Regulatory Flexibility Act Web site address at https:// with revenues of tens of millions of (RFA) (September 19, 1980, Pub. L. 96– dollars. Therefore, this rule would not www.cms.gov/Regulations- 354), Section 1102(b) of the Social have a significant economic impact on andGuidance/Legislation/Paperwork Security Act, Section 202 of the a substantial number of small entities. ReductionActof1995/PRAListing.html, Unfunded Mandates Reform Act of 1995 In addition, section 1102(b) of the Act or call the Reports Clearance Office at (March 22, 1995; Pub. L. 104–4), requires us to prepare a regulatory 410–786–1326. Executive Order 13132 on Federalism analysis for any rule or regulation We invite public comments on these (August 4, 1999), the Congressional proposed under Title XVIII, Title XIX, potential information collection Review Act (5 U.S.C. 804(2)), and or Part B of the Act that may have requirements. If you wish to comment, Executive Order 13771 on Reducing significant impact on the operations of please submit your comments Regulation and Controlling Regulatory a substantial number of small rural electronically as specified in the Costs (January 30, 2017). hospitals. We are not preparing an ADDRESSES section of this proposed rule The Regulatory Flexibility Analysis analysis for section 1102(b) of the Act and identify the rule (CMS–4182–P) and (RFA), as amended, requires agencies to because the Secretary certifies that this where applicable the ICR’s CFR citation, analyze options for regulatory relief of rule will not have a significant impact CMS ID number, and OMB control small businesses, if a rule has a on the operations of a substantial number. significant impact on a substantial number of small rural hospitals. See the DATES and ADDRESSES sections number of small entities. For purposes Section 202 of the Unfunded of this proposed rule for further of the RFA, small entities include small Mandates Reform Act of 1995 (UMRA) information. businesses, nonprofit organizations, and also requires that agencies assess V. Regulatory Impact Analysis small governmental jurisdictions. anticipated costs and benefits before The health insurance industry was issuing any rule whose mandates A. Statement of Need examined in depth in the RIA prepared require spending in any 1 year of $100 This proposed rule approaches to for the proposed rule on establishment million in 1995 dollars, updated improve the quality, accessibility and of the MA program (69 FR 46866, annually for inflation. In 2017, that affordability of the Medicare Part C and August 3, 2004). It was determined, in threshold is approximately $148 Part D programs and to improve the that analysis, that there were few, if any, million. This proposed rule is not CMS customer experience. While ‘‘insurance firms,’’ including HMOs that anticipated to have an effect on State, satisfaction with these programs remain fell below the size thresholds for local, or tribal governments, in the high, these proposals are responsive to ‘‘small’’ business established by the aggregate, or on the private sector of input we received from stakeholders Small Business Administration (SBA). $148 million or more. while administering the program, as We assume that the ‘‘insurance firms’’ Executive Order 13132 establishes well as through a Request for are synonymous with health plans that certain requirements that an agency Information process earlier this year. conduct standard transactions with must meet when it promulgates a Additionally, this regulation includes a other covered entities and are, therefore, proposed rule (and subsequent final

VerDate Sep<11>2014 20:14 Nov 27, 2017 Jkt 244001 PO 00000 Frm 00144 Fmt 4701 Sfmt 4702 E:\FR\FM\28NOP2.SGM 28NOP2 sradovich on DSK3GMQ082PROD with PROPOSALS2 Federal Register / Vol. 82, No. 227 / Tuesday, November 28, 2017 / Proposed Rules 56479

rule) that imposes substantial direct In accordance with the provisions of For background, the current Part D requirement costs on state and local Executive Order 12866, this rule was Opioid Overutilization policy and governments, preempts state law, or reviewed by the Office of Management Overutilization Monitoring System otherwise has federalism implications. and Budget. (OMS) has been successful at reducing Since this rule does not impose any C. Anticipated Effects high risk opioid overutilization. Under substantial costs on state or local this policy, plans retrospectively governments, the requirements of 1. CARA Provisions identify beneficiaries at high risk of an Executive Order 13132 are not Proposed § 423.153(f) would adverse event due to opioids and use of applicable. implement provisions of section 704 of multiple prescribers and pharmacies. If regulations impose administrative CARA, which allows Part D plan CMS created the OMS to monitor plans’ costs on MA Plans and Part D Sponsors, sponsors to establish a drug effectiveness in complying with the such as the time needed to read and management program that includes policy. The OMS criteria incorporate the interpret this proposed rule, we should ‘‘lock-in’’ as a tool to manage an at-risk CDC Guideline for Prescribing Opioids estimate the cost associated with beneficiary’s access to coverage of for Chronic Pain (March 2016) (CDC regulatory review. There are currently frequently abused drugs. Guideline) to identify beneficiaries who Under CARA, potentially at-risk 468 MA plans and Part D Sponsors. are possibly overutilizing opioids and beneficiaries are to be identified under We assume each plan will have one guidelines developed by CMS with are at high risk but the CDC Guideline designated staff member who will read stakeholder input. Also, the Secretary is not a prescribing limit. CDC identifies the entire rule. must ensure that the population of at- 50 Morphine Milligram (MME) as a Using the wage information from the risk beneficiaries can be effectively threshold for increased risk of opioid BLS for medical and health service managed by Part D plans. CMS overdose, and to generally avoid managers (Code 11–9111), we estimate considered a variety of options as to increasing the daily dosage to 90 MME. that the cost of reviewing this rule is how to define the clinical guidelines. Plans are expected to perform case $105.16 per hour, including overhead We provide the estimated population of management for each beneficiary and fringe benefits (https://www.bls.gov/ potential at-risk beneficiaries under identified in OMS and respond using _ oes/2016/may/naics4 621100.htm). different guidelines that take into standardized responses. If viewed as Assuming an average reading speed, we account that the beneficiaries may be helpful by a prescriber, plans may estimate that it would take overutilizing opioids, coupled with use implement a beneficiary-specific claim approximately 15.6 hours for each of multiple prescribers and/or edit at the point-of-sale to prevent person to review this proposed rule. For pharmacies to obtain them, based on coverage of opioids outside of the each MA plan that reviews the rule, the retrospective review, which makes the amount deemed medically necessary by estimated cost is therefore, $1,640 (15.6 population appropriate to consider for hours × $105.16). Therefore, we estimate ‘‘lock-in’’ and a description of the the prescriber. Plans may also that the total cost of reviewing this various options. We note that the implement an edit in the absence of regulation is $767,520 ($1,640 × 468 measurement year for the estimates was prescriber response to case reviewers). 2015. management.

TABLE 25—GUIDELINES TO IDENTIFY AT-RISK BENEFICIARIES

Option Average MME Number of opioid prescribers and Estimated number opioid dispensing pharmacies of potentially at-risk Part D beneficiaries

1 ...... >=90 ...... 4+ 4+ 33,053 >=90 ...... 6+ 1+ 2 ...... >=90 ...... 4+ 4+ 52,998 >=90 ...... 5+ 1+ 3 ...... >=90 ...... 3+ 3+ 103,832 >=90 ...... 5+ 1+ 4 ...... >=90 ...... 3+ 3+ 152,652 >=90 ...... 4+ 1+ 5 ...... >=90 ...... 3+ 3+ 319,133 >=90 ...... 3+ 1+

Average MME Number of opioid prescribers or opioid Estimated number dispensing pharmacies of potentially at-risk Part D beneficiaries

6 ...... >=50 ...... 5+ 5+ 153,880 Any MME level ...... 7+ 7+

Under Option 1, CMS would propose abused drugs as all and only opioids for would have to engage in case to integrate the CARA lock-in provisions the treatment of pain. The guidelines to management of the opioid use of all with our current Part D Opioid identify at-risk beneficiaries would be enrollees who meet these criteria, which Overutilization Policy/Overutilization the current Part D OMS criteria finalized would be reported through OMS and Monitoring System (OMS). We will for 2018 after stakeholder input. Plans plans must provide a response for each propose to initially define frequently that adopt a drug management program case. The estimated number of potential

VerDate Sep<11>2014 20:14 Nov 27, 2017 Jkt 244001 PO 00000 Frm 00145 Fmt 4701 Sfmt 4702 E:\FR\FM\28NOP2.SGM 28NOP2 sradovich on DSK3GMQ082PROD with PROPOSALS2 56480 Federal Register / Vol. 82, No. 227 / Tuesday, November 28, 2017 / Proposed Rules

at-risk beneficiaries in 2019 using average number of scripts per year on that it will take on average 5 hours at Option 1 is 33,053. Option 1 would frequently abused drugs for those at-risk $81.90/hour for a computer programmer allow plans to use pharmacy/prescriber beneficiaries is about 48 and the average to upload the notices into their claims lock in as an additional tool to address cost per script is about $106 in 2016. systems. This would result in a total the opioid overutilization of identified Our data show that those beneficiaries burden of 1,095 hours (5 hours × 219 at-risk beneficiaries. who would meet the proposed criteria sponsors) at a cost of $89,680.50 (1,095 Option 2, 3, 4, and 5 are operationally for identification as an at-risk hour × $81.90/hr). In aggregate, the the same as Option 1, including 90 beneficiary and have a limitation placed burden to prepare and upload these MME, but would identify approximately on their access to opioids, have 4 additional notices was estimated as 52,998 to 319,133 beneficiaries in 2019 opioids scripts per month on average. 1,402 hours (307 hours + 1,095 hours) due to different clinical guidelines OACT anticipates between 10 and 30 at a cost of $101,721 ($12,040 + $89,681) related to the number of opioid percent reduction in prescriptions for in 2019 in section III. of this proposed prescribers and opioid dispensing frequently abused drugs would be rule. pharmacies. These options would result possible through drug management Part D plan sponsors may also in up to 10 times the program size programs and picked the average, 20 renegotiate the contracts with network compared to Option 1. percent. Therefore, we believe there pharmacies and network prescribers in Finally, under Option 6, the could be a 20 percent reduction in the the case of MA–PDs. For Part D plan guidelines to identify potentially at-risk prescriptions for frequently abused sponsors that contract with pharmacies beneficiaries would not be fully drugs for those 12,870 beneficiaries, only, we estimate it would take 10 hours integrated into our current OMS criteria. resulting in a projected savings of about at $134.50/hour for lawyers to conduct This option would identify beneficiaries $13 million to Medicare in 2019. the PDP contract negotiations with whose opioid use is at the 50 MME level Part D plan sponsors would also be network pharmacies. Considering 31 instead of 90, and the estimated number required to send at-risk beneficiaries sponsors we estimate a total burden of of potentially at-risk beneficiaries in multiple notices to notify them of about 310 hours at a cost of $41,695 (310 hour 2019 is 153,880. Of these, their plan’s drug management program. × $134.50/hour). For MA–PDs who also approximately 29,000 would meet these Part D plan sponsors are already contract with prescribers, we estimate criteria and the current OMS criteria. expected to send a notice to some that the annual burden for negotiating a We seek comment on proposed Option beneficiaries when the Part D plan contract with network providers who 1 or if any of the alternative options may sponsors decide to implement a can prescribe controlled substances to be currently viewed as manageable for beneficiary-specific POS claim edit for be 3,760 hours (188 MA–PDs × 20 hours Part D sponsors to implement. opioids. Therefore, we anticipate per sponsor) at a cost of $505,720 (3,760 In addition, while these criteria limited additional burden for Part D hour × $134.50/hour). The total would identify far more potentially at- plan sponsors to send certain at-risk estimated burden associated with the risk beneficiaries, we may have to beneficiaries an additional notice to contract negotiations from both PDP and implement these options in a way that indicate their lock-in status. MA–PD sources in 2019 was estimated plans that adopt a drug management Since 2013, there have been 4,617 as 4,070 hours (310 hours + 3,760 hours) program would not have to review the POS edits submitted into MARx by plan at a cost of $547,415 ($41,695 + opioid use of all enrollees who meet sponsors for 3,961 unique beneficiaries $505,720). these criteria. This would mean a as a result of the drug utilization review We estimate that, in order to change in the structure of the successful policy. That results in approximately implement pharmacy or prescriber lock- OMS or a separate administrative 923 edits annually. If we assume that in, Part D plan sponsors would have to structure for prescription drug the number of edits or access to program edits into their pharmacy management programs. coverage limitations will double due to claims systems so that once they restrict As noted in section II. of this rule, we the addition of pharmacy and prescriber an at-risk beneficiaries’ access to have chosen to propose Option 1. This ‘‘lock-in’’ to OMS, to approximately coverage for frequently abused drugs approach is a cautious approach for the 1,846 such limitations, we estimate through applying pharmacy or initial implementation year of the CARA 3,692 initial and second notices prescriber lock-in, claims at a non- ‘‘lock-in’’ provisions. We believe these (number of limitations (1,846) selected pharmacies or associated with provisions will result in the following multiplied by the number of notices (2)) prescriptions for frequently abused savings to the program. total corresponding to such edits/ drugs from non-selected prescribers We estimate that the CARA provisions limitations. For purposes of this would be rejected. We believe that most would result in a net savings of $10 estimate, we assume that all Part D plan sponsors with Medicaid or million (the estimated savings of $13 beneficiaries who receive initial notices private lines of business will have million less the total estimated costs of will be placed on an access limitation. existing lock-in programs in those lines $2,836,651 = $10,163,349, rounded to We estimate it would take an average of of business to pull efficiencies from. We the nearest million) in 2019. The 5 minutes (0.083 hours) at $39.22/hour estimate it would take a total number of following are details on each of these for an insurance claim and policy 26,280 labor hours across all 219 Part D savings. processing clerk to prepare each notice. plan sponsors (31 PDP parent We assume, based on past experience The burden of 307 hours (3,692 notices organizations and 188 MA–PD parent with OMS, that about 61 percent of at- × 0.083 hour) at a cost of $12,040.54 organizations) at a wage of $81.90 an risk beneficiaries may reduce (307 hour × $39.22/hr) in 2019 was hour for computer programmers to prescriptions for frequently abused estimated in section III of this rule. program these edits into their existing drugs and will no longer meet the Part D plan sponsors are required to systems. Thus, the total cost to program clinical criteria. This means that upload these new notice templates into these edits is 26,280 hours × $81.90 = prescriber and pharmacy lock-in would their internal claims systems. We $2,152,332. impact the remaining 39 percent of at- estimate that 219 Part D plan sponsors The right of an enrollee to appeal an risk beneficiaries or 39 percent × 33,000 (31 PDP parent organizations and 188 at-risk determination will also have an at-risk beneficiaries = 12,870 at-risk MA–PD parent organizations) will be associated cost. As explained, we beneficiaries. We estimate that the subject to this requirement. We estimate estimate a total hourly burden of 178

VerDate Sep<11>2014 20:14 Nov 27, 2017 Jkt 244001 PO 00000 Frm 00146 Fmt 4701 Sfmt 4702 E:\FR\FM\28NOP2.SGM 28NOP2 sradovich on DSK3GMQ082PROD with PROPOSALS2 Federal Register / Vol. 82, No. 227 / Tuesday, November 28, 2017 / Proposed Rules 56481

hours at an annual estimated cost of sponsoring organizations and their hospital staff as a starting point and $35,183 in 2019. As previously FDRs. We estimate that the burden OECD’s total figure of 20 million discussed, we estimate that 1,846 reduction will be roughly 1 hour for working in the health and social service beneficiaries would meet the criteria for each FDR employee who would be fields, we estimate the burden reduction being identified as an at-risk required to complete the CMS training is likely 6 to 8 million hours each year. beneficiary. Based on validated program on an annual basis, under the current Again, we have no way to determine data for 2015, 24 percent of all adverse regulation at §§ 422.503(b)(4)(vi)(C) and exactly how many FDRs there are or coverage determinations were appealed 423.504(b)(4)(vi)(C). We do not know exactly how many staff would be to level 1. Given the nature of drug how many employees were required to expected to take the training under the management programs, the extensive take the CMS training, nor do we know current regulation, but we hope this level of case management conducted by the exact numbers of FDRs that were example demonstrates the reduction in plans prior to making the at-risk subject to the requirement. Sponsoring burden this proposal would mean for determination, and the opportunity for organizations have discretion in not the industry. We request comment that an at-risk beneficiary to submit only which of their contracted would allow for more complete preferences to the plan prior to lock-in organizations meet the definition of an monetization of cost savings in the implementation, we believe it is FDR, but also discretion in which analysis of the final rule. reasonable to assume that this rate of employees of that FDR are subject to the Although sponsors must still monitor appeal will be reduced by at least 50 training. But we know from public FDRs and implement corrective actions percent for at-risk determinations made comments that PBMs, hospitals, when mistakes are found, we believe under a drug management program. pharmacies, labs, physician practice that they are currently already doing this. Therefore no additional burden Therefore, this estimate is based on an groups and even some billing offices complementing the reduction in burden assumption that about 12 percent of the were routinely subjected to the training. is anticipated from this proposal to beneficiaries estimated to be subject to Unfortunately, the Medicare Learning eliminate the CMS training. an at-risk determination (1,846) will Network (MLN) Matters® Web site is not appeal the determination. Hence, we able to track the number of people that 3. Meaningful Differences in Medicare estimate that there will be 222 level 1 took CMS’ training, so we cannot use Advantage Bid Submissions and Bid appeals (1,846 × 12 percent). We that as a data source. CMS has reviewed Review (§§ 422.254 and 422.256) estimate it takes 48 minutes (0.8 hours) the Organization for Economic Co- to process a level 1 appeal. There is a For CY 2018 bids, 2,743 non-D–SNP operation and Development’s (OECD) statutory requirement that a physician non-employer plans (that is, HMO, 2015 statistics which show a total of with appropriate expertise make the HMO–POS, Local PPO, PFFS, and 20,076,000 people employed in the determination for an appeal of an RPPO) used in house and/or consulting health and social services fields in the adverse initial determination based on actuaries to address the meaningful United States, although certainly not all medical necessity. Thus, we estimate an difference requirement based on CY of them were subject to CMS’ training hourly burden of 178 hours (222 appeals 2018 bid information. The most recent × requirement (See http://stats.oecd.org/ Bureau of Labor Statistics report states 0.8) at a cost of $197.66 per hour for _ physicians to perform these appeals. index.aspx?DataSetCode=HEALTH that actuaries made an average of $54.87 Thus the total cost in 2019 is estimated STAT). Hospitals are one sector of the an hour in 2016, and we estimate that as $35,183 = 178 hours × $197.66. health industry that has been 2 hours per plan are required to fully In aggregate, this provision would particularly vocal about the burden the address the meaningful difference result in a net savings of $13 million ¥ current training requirement has placed requirement. The estimated hours are ($101,721 + $547,415 + $2,152,332 + on them and their staff. If we use based on assumptions developed in $35,183) = $13 million ¥ $2,836,651 = hospitals as an example to estimate consultation with our Office of the $10,163,349 (or $10,000,000 if rounded potential burden reduction, the OECD Actuary. We additionally allow 100 to nearest million) in 2019. Web site states that there are 5,627 percent for benefits and overhead costs hospitals in the United States, of actuaries, resulting in an hourly wage 2. Reducing the Burden of the employing 6,210,602 people. That is an of $54.87 × 2 = $109.74. Therefore, we Compliance Program Training average of 1,103 people per hospital. estimate a savings of 2 hours per plan Requirements (§§ 422.503 and 423.504) There are approximately 4,800 hospitals × 2,743 plans = 5,486 hours reduction in The proposed provision would amend registered with Original Medicare. If we hourly burden with a savings in cost of the regulation so that first-tier, assume that each one of those hospitals 5,486 hours × $109.74 = $602,033.64, downstream and related entities (FDR) holds at least one contract with a M A rounded down to $0.6 million to be no longer are required to take the CMS health plan and all of their employees saved annually under this proposal. compliance training, which lasts 1 hour, were subjected to the training (4,800 × The number of plan bids received by and so that MA organizations and Part 1,103 × 1 hour) that is 5,294,400 hours CMS may increase because of a variety D sponsors no longer have a of burden that would be eliminated by of factors, such as payments, bidding requirement to ensure that FDRs have this proposal. If we add pharmacists, and service area strategies, serving compliance training. However, it is still pharmacy technicians, billing offices, unique populations, and in response to the sponsoring organization’s physician practice groups, we would other program constraints or responsibility to manage relationships expect further burden reduction. OECD flexibilities. However, CMS expects that with its FDRs and ensure compliance has data for a few more sectors of the eliminating the meaningful difference with all applicable laws, rules and industry, including 295,620 requirement will improve the plan regulations. Furthermore, we would pharmacists, 3,626,060 nurses and options available for beneficiaries, but continue to hold sponsoring 820,251 physicians in the United States. do not believe the number of similar organizations accountable for the Many of the physicians and nurses are plan options offered by the same MA failures of its FDRs to comply with likely represented in the 6 million organization in each county will Medicare program requirements. employed by hospitals. Unfortunately necessarily increase significantly or We believe that by deleting this we don’t have data sources for all create more confusion in beneficiary provision we will reduce burden for sectors of the industry. However, using decision-making related specifically to

VerDate Sep<11>2014 20:14 Nov 27, 2017 Jkt 244001 PO 00000 Frm 00147 Fmt 4701 Sfmt 4702 E:\FR\FM\28NOP2.SGM 28NOP2 sradovich on DSK3GMQ082PROD with PROPOSALS2 56482 Federal Register / Vol. 82, No. 227 / Tuesday, November 28, 2017 / Proposed Rules

the number of plan options. New their income, they are required to be capitated patients per practice per plan. flexibilities in benefit design and more covered by stop-loss insurance. We However, this information is not sophisticated approaches to consumer propose to replace the current insurance available. Therefore, we used the engagement and decision-making schedule in the regulation with updated median of the panel sizes listed in the should help beneficiaries, caregivers, stop-loss insurance requirements that chart at § 422.208(f)(2)(iii), which is and family members make informed would allow insurance with higher about 8,000. Since the per member per plan choices. deductibles. The new schedule would year (PMPY) stop-loss premiums are CMS does not believe this proposed result in a significant reduction to the greater for a smaller number of patients, change will have a significant impact on cost of obtaining stop-loss insurance. we lowered this 8,000 to 6,000 to reflect health care providers. The number of The higher deductibles are consistent the fact that the distribution of capitated plans offered by organizations in each with the increase in medical costs due patients is skewed to the left. We use county are not expected to increase to inflation. this rough estimate of 6,000 for its significantly as a result of this change To determine the cost of different estimates. and health care provider contracts with stop-loss insurance policies, we used For these 6,000 members, the current MA organizations typically include all claim distributions from original of the organization’s plans rather than regulation at § 422.208(f)(2)(iii) (the Medicare enrollees. Then, we assumed chart) shows the physician needs stop- having separate contracts for each plan. an average loading for administrative In addition, CMS does not expect a loss insurance for $37,000 in a and profit of 20 percent. Using these significant increase in time spent in bid combined attachment point assumptions, we estimate that plans and review as a direct result of eliminating (deductible). The $37,000 is obtained by physicians would save an average of meaningful difference nor increased using linear interpolation on the chart at $100 per globally capitated member per provider burden. § 422.208(f)(2)(iii), replacing panel sizes year in total costs. The derivation of this with midpoints of ranges and rounding 4. Physician Incentive Plans—Update $100 figure is as follows: to the nearest 1,000. To find the Stop-Loss Protection Requirements Under the current regulation at premium for a stop-loss insurance with (§ 422.208) § 422.208(f)(2)(iii), stop-loss insurance a deductible of $37,000, we use Table Some physician contracts with MA for the provider (at the MA 26, which reflects current insurance organizations provide that the MA organization’s expense) is needed only rates, that is, what would be charged organization pay the physician a if the number of members in the today. By using linear interpolations on capitated amount to assume financial physician’s group at global risk under the columns with $30,000 and $40,000 responsibility for services (for example, the MA plan is less than 25,000. The and rounding to the nearest $1,000, we hospital costs) that they do not average number of members in the see that the PMPY premium for personally render. CMS refers to under 25,000 group estimated under the insurance with $37,000 combined capitations to physicians that include current regulation is 6,000 members. attachment points is $2,000 PMPY. This services the physicians do not render as Ideally, to obtain an average, we should $2,000 premium reflects the baseline ‘‘global capitation.’’ When physicians weight the panel sizes in the chart at charge today for a combined deductible are globally capitated to the extent that § 422.208(f)(2)(iii) by the number of of $37,000. they can lose more than 25 percent of physician practices and the number of BILLING CODE 4120–01–P

VerDate Sep<11>2014 20:14 Nov 27, 2017 Jkt 244001 PO 00000 Frm 00148 Fmt 4701 Sfmt 4702 E:\FR\FM\28NOP2.SGM 28NOP2 sradovich on DSK3GMQ082PROD with PROPOSALS2 Federal Register / Vol. 82, No. 227 / Tuesday, November 28, 2017 / Proposed Rules 56483 NPEs INCLUDING BEFORE POINTS ATTACHMENT COMBINED 26: TABLE

BILLING CODE 4120–01–C

VerDate Sep<11>2014 20:14 Nov 27, 2017 Jkt 244001 PO 00000 Frm 00149 Fmt 4701 Sfmt 4702 E:\FR\FM\28NOP2.SGM 28NOP2 sradovich on DSK3GMQ082PROD with PROPOSALS2 EP28NO17.015 56484 Federal Register / Vol. 82, No. 227 / Tuesday, November 28, 2017 / Proposed Rules

Next, we compute the premium under The figures for 2019 were updated for • To issue written notification of the the proposed rule. We still assume an 2020 to 2023 using enrollment and enrollment a minimum of 60 days in average of 6,000 capitated members. inflation factors found in the CMS advance. However, the proposed rule allows trustees report, accessible at: https:// Our proposal represents the partial higher deductibles corresponding to www.cms.gov/reportstrustfunds. codification of existing policy on medical inflation. By using linear seamless conversion enrollment that has 5. Changes to the Agent/Broker interpolation on the columns headed been specified in subregulatory Requirements (§§ 422.2272(e) and with 50,000 and 60,000 combined guidance for contract years 2006 and 423.2272(e)) attachment points and rounding. We see subsequent years, but with additional that a deductible (combined attachment We propose to delete the limitation parameters and limits. Among the new point) of $57,000 corresponds to 6,000 placed on MA organizations and Part D limits proposed for seamless conversion capitated members and a premium of sponsors as to how they can respond to default enrollments are allowing such $1,500 PMPY. an agent/broker who has become enrollments only from the The savings in premium between unlicensed. We propose to delete a organization’s Medicaid managed care using § 422.208(f)(iii) to calculate requirement that the MA plan or Part D plan into an integrated D–SNP and deductibles (combined attachment plan terminate an unlicensed agent or requiring facilitation from applicable point) and using Table A to calculate broker and contact beneficiaries to state (in the form of a contract term and deductibles is $2000 ¥ $1500 = $500 notify them if they had been enrolled by provision of data). This will result in the PMPY. We assume that the average the unlicensed agent or broker. We discontinuation of the use of the loading for profit and administrative already require MA organizations and seamless conversion enrollment costs is roughly 20 percent. So our Part D sponsors to use only licensed mechanism by some of the approved PMPY savings is 20 percent × 500 = agents/brokers. We have established the MA organizations. However, as this $100 PMPY. The remaining $500 ¥ requirement to have a licensed agent or enrollment mechanism is voluntary and $100 = $400 in savings is on net broker in a 2008 final rule (73 FR not required for participation in the MA benefits. That reduction does not 54219). That burden assessment is not program, we do not believe the produce any savings since the plans and changing due to the proposal to remove proposed changes would have any physicians are simply trading claims for paragraph (e) from these sections. The impact to the Medicare Trust Funds. We premiums. impact analysis for the specific invite comments on the potential impact In 2007, we estimated that 7 percent provision at paragraph (e) of of the proposed changes on MA of enrollees were receiving services §§ 422.2272 and 423.2272 was organizations, Medicaid managed care under capitated arrangements. Although established in rule-making in April 2011 plans and beneficiaries. we do not have more current data, based (76 FR 21534). As for the impact of 7. Restoration of the MA Open on CMS observation of managed care review and compliance activities that Enrollment Period (§§ 422.60, 422.62, industry trends, we believe that the remain to plans after removing the 422.68, 423.38 & 423.40) percentage is now higher, and we narrow scope of compliance actions assume that 11 percent of enrollees are available to MA organizations and Part We expect that increasing the amount now paid under global capitation. There D sponsors, we do not believe this of time that MA-enrolled individuals are are currently 18.6 million MA change would have a significant given to switch plans will result in beneficiaries. We estimate that about increase in burden or financial impact. slightly more beneficiaries selecting 18.6 million × 11 percent = 2,046,000 Removing this requirement allows state plans that receive Quality-Bonus MA members are paid under some Department of Insurance (DOI) Payments (QBP). This assessment degree of global capitation. Thus, the requirements to take precedence in this reflects our observation that total aggregate projected annual savings situation. While some MA organizations beneficiaries tend to choose plans with under this proposal is roughly $100 and Part D sponsors may choose to higher quality ratings when given the PMPY × 2,046,000 million beneficiaries make operational changes to ensure opportunity. The projected costs to the paid under global capitation = $204.6 compliance, these changes are not based Government by extending the open million. on this rule, but are required to meet enrollment period for the first 3 months The $204.6 million savings is existing requirements. of the calendar year are $9 million for removed from the plan bid, but not the CY 2019, $10 million in 2020, $10 CMS benchmark. If the benchmark 6. Coordination of Enrollment and million in 2021, $11 million in 2022, exceeds the bid, Medicare pays the MA Disenrollment Through MA and $12 million in 2023. organization the bid (capitation rate and Organizations and Effective Dates of In order to estimate the additional risk adjustment) plus a percentage of the Coverage and Change of Coverage costs for the projection window 2019– difference between the benchmark and We propose to revise our regulations 2023, we first made an assumption that the bid, called the rebate. The rebate is at § 422.66 to permit default enrollment approximately 24,600 MA-enrolled based on quality ratings and allows of Medicaid managed care plan individuals will switch health plans Medicare to share in the savings to the members into an MA special needs plan from one without a QBP to one with a plans; our experience with rebates for dual eligible beneficiaries. Upon a QBP during the extended open shows that the average rebate is on the Medicaid managed care plan member enrollment period. The 24,600 enrollee order of 2/3. We assumed that of the becoming eligible for Medicare, assumption was determined by using a $204.6 million in annual savings, qualification for enrollment into the MA combination of published research and Medicare would save 35 percent × special needs plan for dual eligibles is by observing historical enrollment $204.6 million = $71,610,000, and the contingent on the following: information. Published research1 shows remaining 65 percent × $204.6 million • State support for the default that 10 percent of MA enrollees = $132,990,000 would be paid to the enrollment process, and voluntarily switch MA plans and that plans. The plan portion of the savings • The organization’s ability to MA enrollees who voluntarily switch we project for this proposal would fund identify such individuals at least 90 plans change to plans with slightly extra benefits or possibly reduce cost days in advance of their Medicare higher star ratings than their original sharing for plan members. eligibility; and plan, with a modest improvement of

VerDate Sep<11>2014 20:14 Nov 27, 2017 Jkt 244001 PO 00000 Frm 00150 Fmt 4701 Sfmt 4702 E:\FR\FM\28NOP2.SGM 28NOP2 sradovich on DSK3GMQ082PROD with PROPOSALS2 Federal Register / Vol. 82, No. 227 / Tuesday, November 28, 2017 / Proposed Rules 56485

0.11 stars, on average. The Office of the the CMS Trustee’s Report available at enrollees × $637.20 (Bonus payment) × Actuary confirmed these findings by https://www.cms.gov/reportstrustfunds/. 66 percent (rebate percentage) × 86 analyzing CMS enrollment data and We find that 24,600 (20,512,000 × 10 percent (Reduction in Part B premium), provided further detail. We estimate percent × 15 percent × 40 percent × 20 rounding to $9 million. that of the 10 percent of MA plan percent) people are expected to enroll in Then, we applied trends from the enrollees who switch plans, 15 percent the proposed open enrollment period. Trustees Report to the 2019 estimate in move to a higher rated plan. Of those The $9 million in additional costs for order to project the costs for years 2020 who go to a higher rated plan, we 2019 was calculated by multiplying the to 2023. The data from the Medicare estimate 40 percent move from a non- 24,600 impacted enrollment by the Payments to Private Health Plans, by QBP plan to a QBP plan. We also expected 2019 bonus amount ($637.20). Trust Fund (Table IV.C.2. of the 2017 estimate that one-fifth of these enrollees The Office of the Actuary experiences Medicare Trustees Report) was used as would take advantage of the new open an average rebate percentage of 66 the basis for the trends. The trend enrollment period. percent and an 86 percent backing out estimates are presented in the Table 27 We apply these assumptions to the of the projected Part B premium. Hence, that demonstrates the calculations and estimated MA enrollment for 2019, the net savings to the trust funds is displays the cost estimates for each year 20,512,000, which can be obtained from estimated as $9 million = 24,600 2019–2023.

TABLE 27—CALCULATION OF NET COSTS TO THE MEDICARE TRUST FUNDS FOR THE EXTENDED OPEN ENROLLMENT PERIOD

2019 Net costs Base Trend Trend Trend Trend (rounded to Year year factor factor factor factor 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

8. Lengthening Adjudication year and the Part D IRE’s workload will will take 5 minutes (0.083 hours) to Timeframes for Part D Payment be reduced by the same number of complete this notice. We used an Redeterminations and IRE cases. We estimate that it takes Part D adjusted hourly wage of $34.66 based on Reconsiderations plan sponsors an average of 15 minutes the Bureau of Labor Statistics May 2016 We believe the proposed changes will (0.25 hours) to assemble and forward a Web site for occupation code 43–9199, result in a reduction of burden to Part case file to the IRE, for an estimated ‘‘All other office and administrative × D plan sponsors since they will have savings of 375 hours (1500 cases 0.25 support workers,’’ which gives a mean additional time to adjudicate requests hours). Using an adjusted hourly wage hourly salary of $17.33, which when for payment. We also expect a reduction of $34.66 based on the Bureau of Labor multiplied by a factor of two to include in burden for the independent review Statistics May 2016 Web site for overhead, and fringe benefits, resulting entity (IRE) since the additional time for occupation code 43–9199, ‘‘All other in $34.66 an hour. Thus, the reduction Part D plan sponsors to process these office and administrative support in administrative time spent would be × requests will result in fewer untimely workers,’’ (based on a mean hourly 0.083 hours 47,108 cases = 3,926 payment redeterminations that must be salary of $17.33, which when multiplied hours with a consequent savings of × auto-forwarded to the IRE. Based on by a factor of two to include overhead, 3,926 hours $34.66 per hour = recent program data, about 2,000 and fringe benefits, resulting in $34.66 $136,064. retrospective payment redetermination an hour) the total estimated savings to We do not believe the proposed × cases are auto-forwarded to the Part D plans is $12,998 (375 hours $34.66). change will adversely impact health IRE each plan year. If the proposed 14- Since the proposed changes involve plan enrollees. The notice we are day timeframe for payment requests for payment where the enrollee proposing to eliminate is duplicative redeterminations is implemented, we has already received the drug, we do not and enrollees will be notified by the IRE estimate that about 75 percent of the believe the proposed changes will that their case was received by the IRE payment redetermination cases that are impose undue burden on enrollees. for review. currently auto-forwarded to the Part D 9. Elimination of Medicare Advantage 10. Revisions to §§ 422 and 423 Subpart IRE due to the plan not being able to Plan Notice for Cases Sent to the IRE V, Communication/Marketing Materials meet the adjudication timeframe will and Activities not be auto-forwarded under the 14 day The proposed changes at § 422.590(f) timeframe; the longer timeframe will would result in a slight reduction of CMS is proposing to narrow the afford Part D plan sponsors an burden to Part C plans by no longer definition of ‘‘marketing materials’’ additional 7 days to process a payment requiring a Notice of Appeal Status for under §§ 422.2260 and 423.2260 to only request, including obtaining necessary each case file forwarded to the IRE. The include materials and activities that aim supporting documentation, and to notify estimated savings of this proposed to influence enrollment decisions. CMS the enrollee of its decision. As a result, change is based on reduced plan believes the proposed definitions overall plan sponsor burden will be administration costs. Using the number appropriately safeguard potential and reduced by not having to auto-forward of partially and fully adverse cases, we current MA/PDP enrollees from about 1,500 payment redetermination estimate Part C plans forwarded 47,108 inappropriate steering of beneficiary cases to the Part D IRE in a given plan cases to the IRE in 2015. We estimate it choice, while not including materials

VerDate Sep<11>2014 20:14 Nov 27, 2017 Jkt 244001 PO 00000 Frm 00151 Fmt 4701 Sfmt 4702 E:\FR\FM\28NOP2.SGM 28NOP2 sradovich on DSK3GMQ082PROD with PROPOSALS2 56486 Federal Register / Vol. 82, No. 227 / Tuesday, November 28, 2017 / Proposed Rules

that pose little risk to current or do not receive a Quality Bonus Payment contract to a QBP contract would be potential enrollees and are not (QBP) to higher rated contracts that do 200,000 starting in 2019 and increasing traditionally considered ‘‘marketing.’’ receive a QBP as part of contract by 3 percent per year throughout the The proposed change would add text to consolidations. The proposal is to projection period. The 200,000 starting §§ 422.2260 and 423.2260 and provide a codify the methodology of the assigned figure was chosen by observing the narrower definition than is currently Star Ratings and to add requirements decreasing trend in the historical data as provided for ‘‘marketing materials.’’ addressing when contracts have well as placing the greatest weight on Consequently, this definition decreases consolidated. The methodology and the most recent data point. The 3 the number of marketing materials that measures being proposed here are percent growth rate is approximately the must be reviewed by CMS before use. generally from recent practice and projected growth in the MA eligible Additionally, the proposal would more policies finalized under the section population during the 2019–2023 specifically outline the materials that 1853(b) of the Act Rate Announcement. period. are and are not considered marketing With regard to consolidations, the Star Similarly, we calculated the net per materials. Ratings assigned would be based on the member per month (PMPM) dollar We believe the net effects of the enrollment weighted average of the impact of the QBP for those enrollees in proposed changes would reduce the measure scores of the surviving and burden to MA organizations and Part D contracts that consolidated to be $44.73 consumed contract(s) so that the ratings in 2018. Again, the PMPM impact was Sponsors by reducing the number of reflect the performance of all contracts materials required to be submitted to projected for the 2019–2023 period (surviving and consumed) involved in using the projected annual trend of 5 CMS for review. the consolidation. We believe that the In section IV.F. of this proposed rule, percent per year which is similar to the proposal would dissuade many plans projected growth rate for MA we estimated the reduced burden to from consolidating contracts since it industry at $1.3 million. There is also a expenditures and can be found in the would be possible for some plans to lose 2017 Trustees Report. We also made an reduced burden to the federal QBPs under certain scenarios. If less government since CMS staff are no assumption that even under the contracts consolidate to higher Star proposed Star Rating methodology longer obligated to review these Ratings, less QBPs would be paid to materials. Although all marketing changes, there would still be 50 percent plans and this would result in Trust of the projected impacted enrollees that materials are submitted for potential Fund savings. review by the MA plans to CMS, not all would consolidate or individually move materials are reviewed, since some MA In order to estimate the savings from a non-QBP contract to a QBP plans, because of a history of amounts for the projection window contract when advantageous to the compliance, have a ‘‘file and use’’ status 2019–2023, we first observed the health plan (lessening the overall which exempts their materials from number of enrollees that have been savings impact). Combining the routine reviews. We estimate that only impacted by contract consolidations for assumptions previously described, as 10 percent of submitted marketing the prior 3 contract years (2016 through well as accounting for the average rebate materials are reviewed by CMS staff. 2018) using a combination of bid and percentage of 66 percent and backing Consequently, the savings to the federal CMS enrollment/crosswalk data. The out the projected Part B premium, the government is 10 percent × 1.3 million number of enrollees observed are those net savings to the trust funds were = 0.13 million. that have moved from a non-QBP calculated to be $32 million for 2019, contract to a QBP contract and were $35 million in 2020, $37 million in 11. Part C & D Star Ratings found to be approximately 830,000 in 2021, $40 million in 2022, and $44 There has been a recent trend in the 2016, 530,000 in 2017, and 160,000 in million in 2023. The calculations for the number of enrollees that have moved 2018. We assumed that the number of five annual estimates are presented in from lower Star Ratings contracts that enrollees moving from a non-QBP Table 28.

TABLE 28—CALCULATIONS OF NET SAVINGS PER YEAR FOR STAR RATINGS

Backing Enrollment PMPM cost Number Percent not Average out of Year (3% annual (5% annual months consolidating rebate Part B Net Savings trend) 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

12. Any Willing Pharmacy Standard manufacturers contend limited competition and transparency will Terms and Conditions and Better Define dispensing networks with accreditation generate savings. Pharmacy Types requirements generate cost savings and Because this provision clarifies a. Anticipated Effects add value. Specialty pharmacies existing any willing pharmacy contend the added value avoids In considering the cost implications of requirements, consistent with OACT additional costs. Independent this proposal, we received varied estimates, we do not anticipate perspectives from stakeholders. Part D community pharmacies, and additional government or beneficiary plan sponsors, PBMs, and beneficiaries contend broader cost impacts from this provision.

VerDate Sep<11>2014 20:14 Nov 27, 2017 Jkt 244001 PO 00000 Frm 00152 Fmt 4701 Sfmt 4702 E:\FR\FM\28NOP2.SGM 28NOP2 sradovich on DSK3GMQ082PROD with PROPOSALS2 Federal Register / Vol. 82, No. 227 / Tuesday, November 28, 2017 / Proposed Rules 56487

TABLE 29—ESTIMATED AGGREGATE COSTS AND SAVINGS TO THE HEALTH CARE SECTOR BY PROVISION FOR CALENDAR YEARS 2019 THROUGH 2023

Calendar year Regulation ($ in millions) Total CYs Provision section(s) 2019–2023 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 meaningful difference threshold is met notices to affected Part D prescribers Proposed clarification of Any Willing between two PDP EA offerings. Based and beneficiaries; and (3) the savings Pharmacy rules, and clarification of the on the preliminary CY 2018 landscape, that would accrue from individuals and definition of retail pharmacy would if all PDP organizations that submitted entities no longer being required to account for recent changes in the an EA benefit design had also submitted enroll in or opt-out of Medicare to pharmacy practice landscape and the maximum of two EA plans, the prescribe Part D drugs or furnish Part C ensure that existing statutorily-required result would be approximately 275 EA services and items. Specifically, we Any Willing Pharmacy provisions are to EA plan pairings that would have project a total net savings, as described extended to innovative pharmacy required actuary time spent in in detail in the collection of information business and care delivery models. evaluation of the meaningful difference portion of this rule, over the first 3 years Rural areas are predominantly served requirement. We further estimate that it of this rule of $35,526,652 ($3,423,852 by independent community pharmacies. would take an actuary 2 hours to write for Part D + $32,102,800 for Part C), or The National Community Pharmacist’s a meaningful difference requirement. a 3-year annual average of $11,842,217). Association (NCPA) estimates that Based on the Bureau of Labor Statistics Costs associated with an alternative ‘‘independent pharmacies represent 52 (BLS) latest wage estimates, https:// approach are found in the Alternatives percent of all rural retail pharmacies www.bls.gov/oes/current/ Considered portion of this section. We and there are over 1800 independent oes152011.htm, the mean hourly wage would be responsible for the community pharmacies operating as the for actuaries, occupation code 15–2011 development and monitoring of the only retail pharmacy within their rural is $54.87 which when multiplied by 2 preclusion list using its own resources. communities 63 64.’’ Additionally, these to allow 100 percent for overhead and This would be funded as part of our fringe benefits is $109.74 an hour. Thus screening activities. We do not pharmacies are increasingly interested × to diversify their business models to our total estimated burden is 275 EAs anticipate a change in the number of 2 Hours per EA = 550 hours at a cost individuals or entities billing for dispense specialty drugs. Consequently, × we believe this proposal may support of 550 $109.74 = $60357. While there service, for we would only be denying small businesses in rural areas and may is potential savings for PDP plan payment to those parties that meet the help maintain beneficiary access to sponsors under this proposal, these conditions of the preclusion list. Costs specialty drugs from community savings could be offset for organizations associated with an alternative approach pharmacies. who make the business decision to are found in the Alternatives prepare and submit additional bids if Considered section of this rule. 13. Eliminating the Requirement to this proposal is finalized. If the EA to We welcome public comment on Provide PDP Enhanced Alternative (EA) EA threshold was the sole barrier to a these estimates, for stakeholder to EA Plan Offerings With Meaningful PDP sponsor offering a second EA plan, feedback could assist us in developing Differences (§ 423.265) (that is, the sponsor currently only more concrete projections. offers one enhanced plan), based on the The proposed revision of 423.265 15. Removal of Quality Improvement CY2018 PDP landscape, we could eliminates the requirement for two Project for Medicare Advantage anticipate a modest increase of enhanced benefit plans offered by a PDP Organizations (§ 422.152) organization in a service area to be approximately 125 additional enhanced ‘‘substantially different’’. If finalized plans (15 percent increase). Although This provision would result in a total this will result in increased plan we believe it unlikely that all PDP savings of $19,305 to the federal flexibilities and a potential increase in sponsors would opt to add an additional government. The driver of the savings is beneficiary plan choice. We expect this plan. the removal of burden for federal provision to reduce plan burden and employees to review Quality 14. Preclusion List Requirements for Improvement Project (QIP) attestations. could provide a very modest savings to Prescribers in Part D and Individuals plans sponsors of approximately MA organizations are required to and Entities in MA, Cost Plans and annually attest that they have an $60,000. The savings represent an PACE estimate of the time not spent by ongoing QIP in progress and the Central certifying actuaries to ensure that a The costs and savings, as reflected in Office reviews these attestation the total net savings, associated with our submissions. To estimate amounts, we 63 National Community Pharmacist’s Association preclusion list proposals would be those considered how many QIP attestations letter to CMS Administrator, Seema Verma, June 7, identified in the collection of are performed annually. 2017. Available at http://www.ncpa.co/pdf/ncpa- information section of this rule: We estimate that— medicaid-recommend-cms-june-2017.pdf). Specifically, (1) the system costs • Central Office staff will require one 64 National Community Pharmacist’s Association comment letter to CMS–4159–P, March 2014. associated with the Part D preclusion person reviewing for 0.25 hours to Available at //www.ncpa.co/pdf/NCPA-Comments- list; (2) costs associated with the review a single QIP attestation. The to-CMS-Proposed-Rule-2015FINAL-3.7.14.pdf. preparation and sending of written Central Office staff typically have higher

VerDate Sep<11>2014 20:14 Nov 27, 2017 Jkt 244001 PO 00000 Frm 00153 Fmt 4701 Sfmt 4702 E:\FR\FM\28NOP2.SGM 28NOP2 sradovich on DSK3GMQ082PROD with PROPOSALS2 56488 Federal Register / Vol. 82, No. 227 / Tuesday, November 28, 2017 / Proposed Rules

GS levels. We assume a GS grade 13, proposed rule, the proposed changes to historically Part D sponsors have been step 5, with a mean wage of $51.48, the MLR reporting requirement will able to anticipate the generic launches which with an allowance of 100 percent save MA organizations and Part D well and migrate the brand scripts to for overhead and fringe benefits sponsors $904,884 a year. Thus, the generics smoothly once the generic becomes $102.96. This is based on the total annual savings of this proposal are drugs become available. The proposal 2017 publicly available wages found on $1,446,417: $490,000 to the government could provide some administrative the Office of Personnel Management and $904,884 to MA organizations and relief for Part D sponsors, although the Web site at https://www.opm.gov/ Part D sponsors. savings won’t be very significant. policy-data-oversight/pay-leave/ We do not anticipate that our In addition regardless of any first year salaries-wages/2017/general-schedule/. proposal to modify the regulations at effect, we do not believe there could be • We calculate the savings to the §§ 422.2430 and 423.2430 to specify that any significant effect for subsequent federal government by multiplying the Medication Therapy Management years. Our proposed changes would number of anticipated QIP attestation (MTM) programs that comply with permit immediate specified generic submissions (750) times the number of § 423.153(d) are quality improvement substitutions throughout the plan year CMS staff it takes to complete a activities (QIA) will significantly reduce or a 30 rather than a 60 day notice review— (1) times the adjusted wage for stakeholder burden. As explained in period for certain substitutions. Part D that staff ($102.96) (750 × 1 × $102.96 section II.C.1.b.(2). of this proposed sponsors submit for review each year an × 0.25 hour), which equals $19,305. rule, we stated in the May 23, 2013 final entirely new formulary and presumably Thus, the total savings of this rule (78 FR 31294) that MTM activities the timing of substitutions would provision are $31,968, of which qualify as QIA, provided they meet the overlap across plan years a minimal $12,663.75 are savings to the industry, requirements set forth in §§ 422.2430 amount of times. as indicated in section III. of this and 423.2430. We expect that most if proposed rule, and $19,305 are savings not all MTM programs that comply with 18. Treatment of Follow-On Biological to the federal government. § 423.153(d) would already satisfy the Products as Generics for Non-LIS QIA requirements set forth in current Catastrophic and LIS Cost Sharing 16. Reducing the Burden of the Medical §§ 422.2430 and 423.2430. Therefore, Loss Ratio Reporting Requirements a. Savings we do not anticipate that the proposal Our proposal to significantly reduce to explicitly include MTM programs in Proposed codification of follow-on the amount of MLR data submitted to QIA will have a significant impact on biological products as generics for the CMS would eliminate the need for CMS burden. purposes of LIS cost sharing and non- to continue to pay a contractor, LIS catastrophic cost sharing will approximately $390,000 a year for the 17. Expedited Substitutions of Certain reduce marketplace confusion about following: Generics and Other Midyear Formulary what level of cost-sharing Part D • To perform initial analyses, or desk Changes (§§ 423.100, 423.120, and enrollees should be charged for follow- reviews, of the detailed MLR reports 423.128) on biological products. By establishing submitted by MA organizations. The proposed provisions would cost sharing at the lower level, this • Part D sponsors in order to identify specifically permit Part D sponsors that provision would also improve Part D omissions and suspected inaccuracies meet our requirements to remove brand enrollee incentives to use follow-on and to communicate their findings to name drugs (or change their cost-sharing biological products instead of reference MA organizations and Part D sponsors status) when replacing them with (or biological products. As discussed in order to resolve potential compliance adding) newly approved generics previously, this would reduce costs to issues. without providing advance notice or Part D enrollees and generate savings for In addition, because we would be submitting formulary change requests. the Part D program. receiving only the minimum amount of We would also permit Part D sponsors In addition, we believe that reducing data from MAOs and Part D sponsors, to make such changes at any time of the confusion in the marketplace we expect that we would reduce the year rather than waiting for them to take surrounding this issue will improve amount we pay to contractors for effect 2 months after the start of the plan beneficiary protections while improving software development, data year. A related proposal would except enrollee incentives to choose follow-on management, and technical support from our transition policy applicable biological products over reference related to MLR reporting. We currently generic substitutions and additions with biological products. (This proposed pays a contractor $300,000 each year for cost-sharing changes. Lastly, we are provision to classify follow-on these services. Although we expect that proposing to decrease the days of biological products as generic drugs are MAOs and Part D sponsors would enrollee notice and refill required in for the purposes of cost sharing for non- continue to use the HPMS or a similar cases in which (aside from generic LIS cost sharing in the catastrophic system to submit and attest to their substitutions and drugs deemed unsafe portion of the benefit and LIS enrollees simplified MLR submissions, we would or removed from the market) drug in any phase of the benefit.) Improved no longer need to maintain and update removal or changes in cost-sharing will incentives to choose lower cost MLR reporting software with validation affect enrollees. alternatives will reduce costs to Part D features, to receive certain data extract The FDA has noted that generics are enrollees and the Part D program. OACT files, or to provide support for desk typically sold at substantial discounts estimates this proposal will provide a review functionality. We estimate, by from the branded price. (‘‘Generic modest savings of $10 million in 2019, eliminating these services, we would Drugs: Questions and Answers,’’ see with savings increasing by reduce our payments to contractors by FDA Web site, https://www.fda.gov/ approximately $1 million each year approximately $100,000 a year. drugs/resourcesforyou/consumers/ through 2028. In total, we estimate that the proposed questionsanswers/ucm100100.htm, OACT anticipates some natural shift changes to the MLR reporting accessed June 22, 2017.) However, we from reference biological products to requirements will save the government do not believe that significant savings follow-on biological products, but $490,000 a year. As noted in the will necessarily result from these follow-on biological products’ price Collection of Information section of this proposed provisions, because differential and market share are lower

VerDate Sep<11>2014 20:14 Nov 27, 2017 Jkt 244001 PO 00000 Frm 00154 Fmt 4701 Sfmt 4702 E:\FR\FM\28NOP2.SGM 28NOP2 sradovich on DSK3GMQ082PROD with PROPOSALS2 Federal Register / Vol. 82, No. 227 / Tuesday, November 28, 2017 / Proposed Rules 56489

than that observed for small molecule with OACT’s anticipation and OACT OACT estimates this proposal will generic drugs. Currently, Zarxio® data expects other follow-on biological result in a minor shift of an additional provide the only meaningful products to follow the similar pattern. 5 percent of prescriptions to follow-on comparison available to date, as very Based on 2017 year-to-date data on the biological products by LIS enrollees limited data exist on the other six per script price difference between under this proposal. Consequently, ® ® approved (as of September 14, 2017) Neupogen and Zarxio , OACT savings are not estimated to be follow-on biological products. The estimated follow-on biological products significant at this time. market dynamic between Neupogen® to be 16 percent less expensive than and Zarxio® has behaved consistent their reference biological product.

TABLE 30—ESTIMATED AGGREGATE COSTS AND SAVINGS TO THE HEALTH CARE SECTOR BY 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

Treatment of Follow-On Biological Products as Generics for 423.4 ...... 10 11 12 13 14 60 LIS Cost Sharing and Non-LIS Catastrophic Cost Sharing.

b. Benefits of Treatment of Follow-On patients that we now believe they do not 2. Any Willing Pharmacy Standard Biological Products as Generics for Non- need to effectuate the transition. Terms and Conditions and Better Define LIS Catastrophic and LIS Cost Sharing We believe this provision will Pharmacy Types Proposed codification of follow-on produce cost-savings to the Medicare The critical policy decision was how biological products as generics for the Part D program because it requires fewer to strike the right balance to clarify purposes of LIS cost sharing and non- drugs to be dispensed under transition, confusion in the marketplace, afford LIS catastrophic cost sharing will particularly in the LTC setting. Part D plan sponsor flexibility, and reduce marketplace confusion about However, we are unable to estimate the incorporate recent innovations in what level of cost-sharing Part D cost-savings, because it largely depends pharmacy business and care delivery enrollees should be charged for follow- upon which and how many drugs are models without prematurely and on biological products. By establishing dispensed as transition drugs to Part D inappropriately interfering with highly cost sharing at the lower level, this volatile market forces. beneficiaries in the LTC setting in the provision would also improve Part D 3. Preclusion List enrollee incentives to use follow-on future. Also, we are unable to determine biological products instead of reference which PDEs involve transition supplies We considered a preclusion list that biological products. As discussed in LTC in order to provide an estimate would embody preventive provisions previously, this would reducing costs to of future savings based on past that would place on the preclusion list Part D enrollees and generate savings for experience with transition supplies in not just those providers and suppliers the Part D program. LTC in the Part D program. who are prescribing Part D drugs or who are providing services to Medicare G. Alternatives Considered 19. Changes to the Days’ Supply beneficiaries who are receiving their Required by the Part D Transition 1. Follow-On Biological Products as Medicare benefit from a MA plan. The Process Generics for Non-LIS Catastrophic and savings and cost estimates associated We do not believe our proposal in this LIS Cost Sharing with that alternative are based on the section would impose any new burden following. Prescription drug event (PDE) on any stakeholder. Since Part D The critical policy decision was how and encounter data identifies providers sponsors and their PBMs already have broadly or narrowly to classify follow- who furnish Part C services and items prescription drug pharmacy claims on biological products as generics. and prescribe Part D drugs to Medicare systems programmed to provide Overly broad classification might easily beneficiaries. Given the frequency with transition to plan enrollees in the overstep the distinctions between which MA organizations and Part D outpatient setting, they would only have generic drugs and follow-on biologics in sponsors typically submit data to CMS, to make a technical change to these statute and those drawn by the United we estimate a delay of approximately 1 systems that consists of changing the States Food and Drug Administration month in obtaining this data. Delays in required number of days’ supply if it is (FDA), leading to confusion in the the availability of this data and the not already 30 days. In addition, Part D marketplace, and potentially screening and evaluation of the sponsors and their PBMs would have to jeopardizing Part D enrollee safety. providers and prescribers will result in cease treating these enrollees in the LTC Inappropriate utilization of biological delays in the identification and setting separately from enrollees in the products and increased need for inclusion of providers or prescribers on outpatient setting for purposes of additional medical services, in turn, the preclusion list, which would occur transition. We also do not believe this after the service, item or drug was increase costs to the Part D program. A proposal would impose any new burden provided to the Medicare beneficiary. narrow classification can appropriately on LTC facilities and the pharmacies We estimate that it will cost the Trust that serve them. If finalized, we believe resolve marketplace confusion while Fund approximately $44.7 million if we this regulation would eliminate the also improving Part D enrollee do not proactively screen providers and additional time that LTC facilities and incentives to choose lower cost prescribers and delay screening until pharmacies have to transition Part D alternatives. after the PDE and encounter data is

VerDate Sep<11>2014 20:14 Nov 27, 2017 Jkt 244001 PO 00000 Frm 00155 Fmt 4701 Sfmt 4702 E:\FR\FM\28NOP2.SGM 28NOP2 sradovich on DSK3GMQ082PROD with PROPOSALS2 56490 Federal Register / Vol. 82, No. 227 / Tuesday, November 28, 2017 / Proposed Rules

available. We estimate an additional 1.4 1-month delay in the availability of the $3,324 estimate is based on Medicare million providers or prescribers would PDE and encounter data, three months fee-for-service revocation data and may not be screened if we only rely on PDE for screening and an additional 3 be higher or lower depending on and encounter data. The current months to evaluate the offenses, we whether the provider is an individual or Medicare provider population consists anticipate approximately a 7-month organization and their provider type. of approximately 2 million providers delay in the provider or prescriber’s and historically we has revoked 0.4 inclusion on the preclusion list H. Accounting Statement percent of its existing Medicare enrolled following the service, item or drug being As required by OMB Circular A–4 providers., However this percentage provided to the beneficiary, if we do not (available at https://obamawhitehouse. could be higher or lower for the perform proactive screening. The 7- _ _ population of prescribers solely enrolled month timeframe is dependent on archives.gov/omb/circulars a004 a-4/), for prescribing. There are approximately whether the PDE and encounter data is in Table 31 we have prepared an 480,000 part C and D unenrolled timely. Using a cost avoidance of $3,324 accounting statement showing the providers and prescribers, 120,000 of per month average per provider and savings and transfers associated with which are billing Part C. Using the applying it to the estimated 1,920 new the provisions of this final rule for CYs percentage of historical revocations, we revocations, a delay in screening would 2019 through 2023. Table 31 is based on estimate approximately 1,920 new cost the Trust Fund approximately Table 32 which lists savings, costs, and revocations. Based on the approximate $44.7 million (3,324 × 7 × 1,920). The transfers by provision.

TABLE 31—ACCOUNTING STATEMENT: CLASSIFICATIONS OF ESTIMATED SAVINGS, COSTS, AND TRANSFERS FROM CALENDAR YEARS 2019 TO 2023 [$ in millions]

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

Net Annualized Monetized Savings ...... 82.34 82.02 CYs 2019–2023 .... Federal government, MA organizations and Part D Sponsors. Annualized Monetized Savings ...... 87.26 86.79 CYs 2019–2023 .... Federal government, MA organizations and Part D Sponsors. Annualized Monetized Cost ...... ¥4.92 ¥4.77 CYs 2019–2023 .... Federal government, MA organizations and Part D Sponsors. Net Annualized Monetized Savings ...... 13.80 13.82 CYs 2019–2023 .... Trust Fund. Annualized Monetized Savings ...... 13.80 13.82 CYs 2019–2023 .... Trust Fund. Annualized Monetized Cost ...... 0.00 0.00 CYs 2019–2023 .... Trust Fund. Net Annualized Monetized Savings ...... 68.54 68.20 CYs 2019–2023 .... Industry. Annualized Monetized Savings ...... 73.46 72.98 CYs 2019–2023 .... Industry. Annualized Monetized Cost ...... ¥4.92 ¥4.77 CYs 2019–2023.... Industry. Transfers ...... 155.90 154.95 CYs 2019–2023 .... Federal Government, MA plans and Part D Sponsors. Note: Monetized figures in 2018 dollars. Positive numbers indicate aggregate annual savings at the giving percentage. Transfers are a separate line item. Savings and cost have been broken out separately for industry, the trust fund and aggregate. For example, the industry provisions with positive amounts had a level monetized amount of 72.32 at the 3 percent level but a cost of 11.87 at the 3 percent level resulting in an aggregate of 72.32 ¥11.87 = 60.45. Minor (cent) errors are due to rounding.

The following Table 32 summarizes provision and formed a basis for the savings, costs, and transfers by accounting table. BILLING CODE 4120–01–P

VerDate Sep<11>2014 20:14 Nov 27, 2017 Jkt 244001 PO 00000 Frm 00156 Fmt 4701 Sfmt 4702 E:\FR\FM\28NOP2.SGM 28NOP2 sradovich on DSK3GMQ082PROD with PROPOSALS2 Federal Register / Vol. 82, No. 227 / Tuesday, November 28, 2017 / Proposed Rules 56491 0 0 0 14 44 -18.1 2R1.7 321.6 2023 Transfers 0 14 0.5 14.6 14.6 0.13 2023 Fund Trust negative 0 0 -3 67 1.3 0.1 0.9 0.6 -2.8 67.1 69.9 while 2023 Industry 0 0 0 savings 13 40 -17 295 -17.1 295.0 259.1 2022 indicate Transfers 0 13 0.5 13.6 13.6 0.13 2022 numbers Fund Trust 0 0 1.3 0.1 0.9 0.6 -2.8 -2.8 66.7 63.9 6U Positive 2022 Industry PROVISION dollars. 0 0 0 12 37 of -16.1 -16.1 271.8 23K9 271.8 BY 2021 Transfers millions 0 13 0.5 0.13 13.63 13.63 2021 Fund Trust indicate 0 0 1.3 0.1 0.9 0.6 -2.8 -2.8 63.6 60.8 60.7 TRANSFERS 2021 Numbers Industry 0. as 0 0 0 11 35 AND -16.1 -16.1 250.5 220.6 250.5 2020 scored Transfers are 0 13 0.5 COSTS, table 0.13 13.63 13.63 2020 Fund Trust the in 0 0 1.3 not 0.1 0.6 0.9 -2.8 -2.8 60.5 57.7 57.6 2020 Industry SAVINGS, Provisions 0 0 0 10 32 -15.1 -15.1 32: 204.6 231.5 231.5 2019 Transfers provision. 0 by 13 0.5 13.6 13.6 0.13 TABLE 2019 Fund Trust savings 1.3 0.1 0.9 0.6 and -2.8 -9.3 44.8 90.3 54.7 -12.1 102.4 2019 cost Industry C) D) summarizes cost. (Part (Pt tables indicate This Difference Difference Biologics (PIP) Preclusion Preclusion on ,oss Note: numbers Transfers Ratings I C/D C/D costs savings Star Stop Follow Part Disclosure Part MLR Marketing Meaningful Meaningful Tot Tot Totals Total OEP CARA

BILLING CODE 4120–01–C

VerDate Sep<11>2014 20:14 Nov 27, 2017 Jkt 244001 PO 00000 Frm 00157 Fmt 4701 Sfmt 4702 E:\FR\FM\28NOP2.SGM 28NOP2 sradovich on DSK3GMQ082PROD with PROPOSALS2 EP28NO17.016 56492 Federal Register / Vol. 82, No. 227 / Tuesday, November 28, 2017 / Proposed Rules

I. Conclusion Reporting and recordkeeping § 417.430 Application procedures. requirements. This proposed rule has a net savings (a) * * * of between $80 to $100 million for each 42 CFR Part 423 (1) The application form must comply of the next 5 years. The savings are Administrative practice and with CMS instructions regarding equivalent to a level amount of about procedure, Emergency medical services, content and format and be approved by $80 million per year for both 7 percent Health facilities, Health maintenance CMS as described in § 422.2262 of this and 3 percent interest rates. These organizations (HMO), Health chapter. The application must be aggregate savings are to industry ($68.20 professionals, Medicare, Penalties, completed by an HMO or CMP eligible million at the 3 percent level = $72.98 Incorporation by Reference, Privacy, (or soon to become eligible) individual million savings—$4.77 million cost), and Reporting and recordkeeping and include authorization for disclosure and the Federal government and the requirements. between HHS and its designees and the Trust Fund ($13.82 million at the 3 HMO or CMP. percent level which reflects savings to 42 CFR Part 460 * * * * * the trust fund without any cost). Aged, Health care, Health records, Transfers between the Federal Medicaid, Medicare, and Reporting and ■ 5. Section 417.472 is amended by Government and Industry are between recordkeeping requirements adding paragraph (k) to read as follows: $230 and $320 million and are § 417.472 Basic contract requirements. equivalent to a monetized level amount 42 CFR Part 498 of about $270 million per year at the 3- Administrative practice and * * * * * percent and 7-percent levels. Both procedure, Health facilities, Health (k) All cost contracts under section industry and the Federal government professions, Medicare, and Reporting 1876 of the Act must agree to be rated save from program efficiencies and and recordkeeping requirements. under the quality rating system reduced work. For the reasons set forth in the specified at subpart D of part 422, and preamble, the Centers for Medicare & J. Reducing Regulation and Controlling for cost plans that provide the Part D Medicaid Services proposes to amend Regulatory Costs prescription benefit, under the quality 42 CFR chapter IV as set forth below: rating system specified at part 423 This rule, if finalized as proposed, is subpart D, of this chapter. Cost contacts expected to be an E.O. 13771 regulatory PART 405—FEDERAL HEALTH are not required to submit data on or be action. Details on the estimated costs INSURANCE FOR THE AGED AND rated on specific measures determined and cost savings can be found in the DISABLED by CMS to be inapplicable to their preceding analysis. contract or for which data are not ■ 1. The authority citation for part 405 available, including hospital IV. Response to Comments continues to read as follows: readmission and call center measures. Authority: Secs. 205(a), 1102, 1861, Because of the large number of public ■ 6. Section 417.478 is amended by comments we normally receive on 1862(a), 1869, 1871, 1874, 1881, and 1886(k) of the Social Security Act (42 U.S.C. 405(a), revising paragraph (e) to read as follows: Federal Register documents, we are not 1302, 1395x, 1395y(a), 1395ff, 1395hh, able to acknowledge or respond to them 1395kk, 1395rr and 1395ww(k)), and sec. 353 § 417.478 Requirements of other laws and individually. We will consider all of the Public Health Service Act (42 U.S.C. regulations. comments we receive by the date and 263a). * * * * * time specified in the DATES section of ■ 2. Section § 405.924 is amended by (e)(1) The prohibitions, procedures this preamble, and, when we proceed adding paragraph (a)(5) to read as and requirements relating to payment to with a subsequent document, we will follows: individuals and entities on the respond to the comments in the preclusion list, defined in § 422.2 of this preamble to that document. § 405.924 Actions that are initial determinations. chapter, apply to HMOs and CMPs that List of Subjects contract with CMS under section 1876 (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. MEDICAL PLANS, AND HEALTH CARE ■ 7. Section 417.484 is amended by Administrative practice and PREPAYMENT PLANS procedure, Grant programs-health, revising paragraph (b)(3) to read as Health care, Health insurance, Health ■ 3. The authority citation for part 417 follows: maintenance organizations (HMO), Loan continues to read as follows: § 417.484 Requirement applicable to programs-health, Medicare, Reporting Authority: Secs. 1102 and 1871 of the related entities. and recordkeeping requirements. Social Security Act (42 U.S.C. 1302 and * * * * * 1395hh), secs. 1301, 1306, and 1310 of the 42 CFR Part 422 Public Health Service Act (42 U.S.C. 300e, (b) * * * Administrative practice and 300e–5, and 300e–9), and 31 U.S.C. 9701. (3) That payments must not be made procedure, Health facilities, Health ■ 4. Section 417.430 is amended by to individuals and entities included on maintenance organizations (HMO), revising paragraph (a)(1) to read as the preclusion list, defined in § 422.2 of Medicare, Penalties, Privacy, and follows: this chapter.

VerDate Sep<11>2014 20:14 Nov 27, 2017 Jkt 244001 PO 00000 Frm 00158 Fmt 4701 Sfmt 4702 E:\FR\FM\28NOP2.SGM 28NOP2 sradovich on DSK3GMQ082PROD with PROPOSALS2 Federal Register / Vol. 82, No. 227 / Tuesday, November 28, 2017 / Proposed Rules 56493

PART 422—MEDICARE ADVANTAGE § 422.54 Continuation of enrollment for MA (ii) Have substantially similar PROGRAM local plans. provider and facility networks and * * * * * Medicare- and Medicaid-covered ■ 8. The authority citation for part 422 (c) * * * benefits as the plan (or plans) from continues to read as follows: (1) * * * which the beneficiaries are passively Authority: Secs. 1102 and 1871 of the (i) Obtain CMS’s approval of the enrolled. Social Security Act (42 U.S.C. 1302 and continuation area, the communication (iii) Have an overall quality rating of 1395hh). materials that describe the option, and at least 3 stars under the rating system ■ 9. Section 422.2 is amended by adding the MA organization’s assurances of described in § 422.160 through the definition of ‘‘Preclusion list’’ in access to services. § 422.166 for the year prior to the plan alphabetical order to read as follows: * * * * * year passive enrollments take effect or is (d) * * * a low enrollment contract or new MA § 422.2 Definitions. (4) * * * plan as defined in § 422.252. * * * * * (ii) Organizations that require (iv) Not have any prohibition on new Preclusion list means a CMS- enrollees to give advance notice of enrollment imposed by CMS. compiled list of individuals and entities intent to use the continuation of (v) Have limits on premiums and cost- that— enrollment option, must stipulate the sharing appropriate to full-benefit dual (1) Meet all of the following notification process in the eligible beneficiaries. requirements: communication materials. (vi) Have the operational capacity to passively enroll beneficiaries and agree (i) The individual or entity is * * * * * to receive the enrollments. currently revoked from Medicare under ■ 11. Section 422.60 is amended— (3) Passive enrollment procedures. § 424.535. ■ a. In paragraph (a)(2) by removing the Individuals will be considered to have (ii) The individual or entity is reference ‘‘§ 422.62(a)(3), (a)(4), and elected the plan selected by CMS unless currently under a reenrollment bar (a)(5) if’’ and adding in its place the they— under § 424.535(c). reference ‘‘§ 422.62(a)(3) and (4) if’’; and (i) Decline the plan selected by CMS, ■ (iii) CMS determines that the b. Revising paragraph (g). in a form and manner determined by underlying conduct that led to the The revision reads as follows: CMS, or revocation is detrimental to the best (ii) Request enrollment in another interests of the Medicare program. In § 422.60 Election process. * * * * * plan. making this determination under this (4) Beneficiary notification. The MA (g) Passive enrollment by CMS—(1) paragraph, CMS considers the following organization that receives the passive Circumstances in which CMS may factors: enrollment must provide to the enrollee implement passive enrollment. CMS (A) The seriousness of the conduct a notice that describes the costs and may implement passive enrollment underlying the individual’s or entity’s benefits of the plan and the process for procedures in any of the following revocation. accessing care under the plan and situations: (B) The degree to which the clearly explains the beneficiary’s ability (i) Immediate terminations as individual’s or entity’s conduct could to decline the enrollment or choose provided in § 422.510(b)(2)(i)(B). affect the integrity of the Medicare another plan. Such notice must be (ii) CMS determines that remaining program. provided to all potential passively enrolled in a plan poses potential harm (C) Any other evidence that CMS enrolled enrollees prior to the to the members. deems relevant to its determination; or enrollment effective date (or as soon as (iii) CMS determines, after consulting (2) Meet both of the following possible after the effective date if prior with the State Medicaid agency that requirements: notice is not practical), in a form and contracts with the dual eligible special (i) The individual or entity has manner determined by CMS. needs plan described in paragraph engaged in behavior for which CMS (5) Special election period. (g)(2)(i) of this section, and that meets could have revoked the individual or Individuals not otherwise eligible for a the requirements of paragraph (g)(2) of entity to the extent applicable had they special election period at the time of this section, that the passive enrollment been enrolled in Medicare. passive enrollment will be provided will promote integrated care and with a special election period, in (ii) CMS determines that the continuity of care for a full-benefit dual accordance with § 422.62(b)(4). underlying conduct that would have led eligible beneficiary (as defined in ■ 12. Section § 422.62 is amended by— to the revocation is detrimental to the § 423.772 of this chapter and entitled to ■ a. Revising paragraphs (a)(3) through best interests of the Medicare program. Medicare Part A and enrolled in Part B (5); In making this determination under this under title XVIII) who is currently paragraph, CMS considers the following ■ b. Removing paragraphs (a)(6) and (7); enrolled in an integrated dual eligible and factors: special needs plan. (A) The seriousness of the conduct ■ c. Revising paragraph (b)(3)(ii). (2) MA plans that may receive passive The revisions read as follows: involved. enrollments. CMS may implement (B) The degree to which the passive enrollment described in § 422.62 Election of coverage under an MA individual’s or entity’s conduct could paragraph (g)(1)(iii) only into MA–PD plan. affect the integrity of the Medicare plans that meet all the following (a) * * * program; and requirements: (3) Open enrollment period for (C) Any other evidence that CMS (i) Operate as a fully integrated dual individuals enrolled in MA—(i) For deems relevant to its determination. eligible special needs plan as defined in 2019 and subsequent years. Except as * * * * * § 422.2, or a specialized MA plan for provided in paragraphs (a)(3)(ii) and (iii) ■ 10. Section 422.54 is amended by special needs individuals that meets a and (a)(4) of this section, an individual revising paragraphs (c)(1)(i) and high standard of integration, as who is enrolled in an MA plan may (d)(4)(ii) to read as follows: described in § 422.102(e). make an election once during the first

VerDate Sep<11>2014 20:14 Nov 27, 2017 Jkt 244001 PO 00000 Frm 00159 Fmt 4701 Sfmt 4702 E:\FR\FM\28NOP2.SGM 28NOP2 sradovich on DSK3GMQ082PROD with PROPOSALS2 56494 Federal Register / Vol. 82, No. 227 / Tuesday, November 28, 2017 / Proposed Rules

3 months of the year to enroll in another § 422.66 Coordination of enrollment and (iv) Notice requirement for default MA plan or disenroll to obtain Original disenrollment through MA organizations. enrollments. The MA organization must Medicare. An individual who chooses to * * * * * provide notification that describes the exercise this election may also make a (c) Election by default: Initial costs and benefits of the MA plan and coordinating election to enroll in or coverage election period—(1) Basic rule. the process for accessing care under the disenroll from Part D, as specified in Subject to paragraph (c)(2) of this plan and clearly explains the § 423.38(e). section, an individual who fails to make individual’s ability to decline the (ii) Newly eligible MA individual. For an election during the initial coverage enrollment, up to and including the day 2019 and subsequent years, a newly MA election period is deemed to have prior to the enrollment effective date, eligible individual who is enrolled in a elected original Medicare. and either enroll in Original Medicare MA plan may change his or her election (2) Default enrollment into MA or choose another plan. Such once during the period that begins the special needs plan—(i) Conditions for notification must be provided to all month the individual is entitled to both default enrollment. During an individuals who qualify for default Part A and Part B and ends on the last individual’s initial coverage election enrollment under paragraph (c)(2) of day of the third month of the period, an individual may be deemed to this section no fewer than 60 calendar entitlement. An individual who chooses have elected a MA special needs plan days prior to the enrollment effective to exercise this election may also make for individuals entitled to medical date described in paragraph (c)(2)(iii) of a coordinating election to enroll in or assistance under a State plan under this section. disenroll from Part D, as specified in Title XIX offered by the organization (d) * * * § 423.38(e). provided all the following conditions (1) Basic rule. An MA plan offered by (iii) Single election limitation. The are met: limitation to one election or change in (A) At the time of the deemed an MA organization must accept any paragraphs (a)(3)(i) and (ii) of this election, the individual remains individual (regardless of whether the section does not apply to elections or enrolled in an affiliated Medicaid individual has end-stage renal disease) changes made during the annual managed care plan. For purposes of this who requests enrollment during his or coordinated election period specified in section, an affiliated Medicaid managed her Initial Coverage Election Period and paragraph (a)(2) of this section, or care plan is one that is offered by the is enrolled in a health plan offered by during a special election period MA organization that offers the MA the MA organization during the month specified in paragraph (b) of this special needs plan for individuals immediately preceding the MA plan section. entitled to medical assistance under enrollment effective date, and who (4) Open enrollment period for Title XIX or is offered by an entity that meets the eligibility requirements at institutionalized individuals. After shares a parent organization with such § 422.50. 2005, an individual who is eligible to MA organization; * * * * * elect an MA plan and who is (B) The state has approved the use of (5) Election. An individual who institutionalized, as defined in § 422.2, the default enrollment process in the requests seamless continuation of is not limited (except as provided for in contract described in § 422.107 and coverage as described in paragraph paragraph (d) of this section for MA provides the information that is (d)(1) of this section may complete a MSA plans) in the number of elections necessary for the MA organization to simplified election, in a form and or changes he or she may make. Subject identify individuals who are in their manner approved by CMS that meets to the MA plan being open to enrollees initial coverage election period; the requirements in § 422.60(c)(1). as provided under § 422.60(a)(2), an MA (C) The MA organization offering the * * * * * eligible institutionalized individual may MA special needs plan has issued the ■ 14. Section 422.68 is amended by at any time elect an MA plan or change notice described in paragraph (c)(2)(iv) revising paragraphs (a), (c), and (f) to his or her election from an MA plan to of this section to the individual; read as follows: Original Medicare, to a different MA (D) Prior to the effective date plan, or from original Medicare to an described in paragraph (c)(2)(iii) of this § 422.68 Effective dates of coverage and MA plan. section, the individual does not decline change of coverage. (5) Annual 45-day period for the default enrollment and does not * * * * * disenrollment from MA plans to elect to receive coverage other than (a) Initial coverage election period. An Original Medicare. Through 2018, at any through the MA organization; and election made during an initial coverage time from January 1 through February (E) CMS has approved the MA election period as described in 14, an individual who is enrolled in an organization to use default enrollment § 422.62(a)(1) is effective as follows: MA plan may elect Original Medicare under paragraph (c)(2)(ii) of this section. (1) If made prior to the month of (ii) CMS approval of default once during this 45-day period. An entitlement to both Part A and Part B, enrollment. An MA organization must individual who chooses to exercise this it is effective as of the first day of the obtain approval from CMS before election may also make a coordinating month of entitlement to both Part A and implementing any default enrollment as election to enroll in a PDP as specified Part B. in § 423.38(d) of this chapter. described in this section. CMS may (b) * * * suspend or rescind approval when CMS (2) If made during or after the month (3) * * * determines the MA organization is not of entitlement to both Part A and Part (ii) The organization (or its agent, in compliance with the requirements of B, it is effective the first day of the representative, or plan provider) this section. calendar month following the month in materially misrepresented the plan’s (iii) Effective date of default which the election is made. provisions in communication materials enrollment. Default enrollment in the * * * * * as outlined in subpart V of this part. MA special needs plan for individuals (c) Open enrollment periods. For an * * * * * entitled to medical assistance under a election, or change in election, made ■ 13. Section 422.66 is amended by State plan under Title XIX is effective during an open enrollment period, as revising paragraphs (c) and (d)(1) and the month in which the individual is described in § 422.62(a)(3) through (5), (5) to read as follows: first entitled to both Part A and Part B. coverage is effective as of the first day

VerDate Sep<11>2014 20:14 Nov 27, 2017 Jkt 244001 PO 00000 Frm 00160 Fmt 4701 Sfmt 4702 E:\FR\FM\28NOP2.SGM 28NOP2 sradovich on DSK3GMQ082PROD with PROPOSALS2 Federal Register / Vol. 82, No. 227 / Tuesday, November 28, 2017 / Proposed Rules 56495

of the first calendar month following the pocket limits and also use MA individually, or offer a combination of month in which the election is made. encounter data to inform patient groups and individual services. * * * * * utilization scenarios used to help * * * * * (f) Annual 45-day period for identify MA plan cost sharing standards ■ 18. Section 422.111 is amended by disenrollment from MA plans to and thresholds that are not revising paragraphs (a) introductory Original Medicare. Through 2018, an discriminatory. text, (a)(3), and (h)(2)(ii) to read as election made from January 1 through * * * * * follows: ■ February 14 to disenroll from an MA 16. Section 422.101 is amended by § 422.111 Disclosure requirements. plan to Original Medicare, as described revising paragraphs (d)(2) and (3) to (a) Detailed description. An MA in § 422.62(a)(5), is effective the first day read as follows: of the first month following the month organization must disclose the information specified in paragraph (b) of in which the election is made. § 422.101 Requirements relating to basic benefits. this section in the manner specified by ■ 15. Section 422.100 is amended— CMS— ■ a. In paragraph (f)(2), by removing the * * * * * phrase ‘‘to services. and’’ and adding in (d) * * * * * * * * its place the phrase ‘‘to services.’’; and (2) Catastrophic limit. MA regional (3) At the time of enrollment and at ■ b. By revising paragraphs (f)(4), (f)(5) plans are required to establish a least annually thereafter, by the first day introductory text, (f)(5)(ii), and (f)(6). catastrophic limit on beneficiary out-of- of the annual coordinated election The revisions read as follows: pocket expenditures for in-network period. benefits under the Medicare Fee-for- * * * * * § 422.100 General requirements. Service program (Part A and Part B (h) * * * * * * * * benefits) that is no greater than the (2) * * * (f) * * * annual limit set by CMS using Medicare (ii) Copies of its evidence of coverage, (4) Except as provided in paragraph Fee-for-Service data to establish summary of benefits, and information (f)(5) of this section, MA local plans (as appropriate out-of-pocket limits. CMS (names, addresses, phone numbers, and defined in § 422.2) must have an out-of sets the annual limit to strike a balance specialty) on the network of contracted pocket maximum for Medicare Parts A between limiting maximum beneficiary providers. Posting does not relieve the and B services that is no greater than the out of pocket costs and potential MA organization of its responsibility annual limit set by CMS using Medicare changes in premium, benefits, and cost under paragraph (a) of this section to Fee-for-Service data. CMS sets the sharing, with the goal of ensuring provide hard copies to enrollees upon annual limit to strike a balance between beneficiary access to affordable and request. limiting maximum beneficiary out of sustainable benefit packages. * * * * * pocket costs and potential changes in (3) Total catastrophic limit. MA § 422.152 [Amended] premium, benefits, and cost sharing, regional plans are required to establish ■ 19. Section 422.152 is amended by with the goal of ensuring beneficiary a total catastrophic limit on beneficiary removing and reserving paragraphs access to affordable and sustainable out-of-pocket expenditures for in- (a)(3) and (d). benefit packages. network and out-of-network benefits ■ 20. Sections 422.160, 422.162, (5) With respect to a local PPO plan, under the Medicare Fee-for-Service 422.164 and 422.166 are added to the limit specified under paragraph program (Part A and Part B benefits). Subpart D to read as follows: (f)(4) of this section applies only to use (i) This total out-of-pocket of network providers. Such local PPO catastrophic limit, which would apply Subpart D–Quality Improvement plans must include a total catastrophic to both in-network and out-of-network limit annually determined by CMS benefits under Medicare Fee-for-Service, * * * * * using Medicare Fee-for-Service and to may be higher than the in-network Sec. 422.160 Basis and scope of the Medicare establish appropriate beneficiary out-of- catastrophic limit in paragraph (d)(2) of Advantage Quality Rating System. pocket expenditures for both in-network this section, but may not increase the 422.162 Medicare Advantage Quality Rating and out-of-network Parts A and B limit described in paragraph (d)(2) of System. services that is— this section and may be no greater than 422.164 Adding, updating, and removing * * * * * the annual limit set by CMS using measures. (ii) Not greater than the annual limit Medicare Fee-for-Service data. 422.166 Calculation of Star Ratings. set by CMS using Medicare Fee-for- (ii) CMS sets the annual limit to strike § 422.160 Basis and scope of the Medicare Service data to establish appropriate a balance between limiting maximum Advantage Quality Rating System. beneficiary out-of-pocket expenditures. beneficiary out of pocket costs and (a) Basis. This subpart is based on CMS will set the annual limit to strike potential changes in premium, benefits, sections 1851(d), 1852(e), 1853(o) and a balance between limiting maximum and cost sharing, with the goal of 1854(b)(3)(iii), (v), and (vi) of the Act beneficiary out of pocket costs and ensuring beneficiary access to affordable and the general authority under section potential changes in premium, benefits, and sustainable benefit packages. 1856(b) of the Act requiring the and cost sharing, with the goal of * * * * * establishment of standards consistent ensuring beneficiary access to affordable ■ 17. Section 422.102 is amended by with and to carry out Part C. and sustainable benefit packages. revising paragraph (d) to read as (b) Purpose. Ratings calculated and (6) Cost sharing for Medicare Part A follows: assigned under this subpart will be used and B services specified by CMS does by CMS for the following purposes: not exceed levels annually determined § 422.102 Supplemental benefits. (1) To provide comparative by CMS to be discriminatory for such * * * * * information on plan quality and services. CMS may use Medicare Fee- (d) Supplemental benefits packaging. performance to beneficiaries for their for-Service data to evaluate the MA organizations may offer enrollees a use in making knowledgeable possibility of discrimination and to group of services as one optional enrollment and coverage decisions in establish non-discriminatory out-of- supplemental benefit, offer services the Medicare program.

VerDate Sep<11>2014 20:14 Nov 27, 2017 Jkt 244001 PO 00000 Frm 00161 Fmt 4701 Sfmt 4702 E:\FR\FM\28NOP2.SGM 28NOP2 sradovich on DSK3GMQ082PROD with PROPOSALS2 56496 Federal Register / Vol. 82, No. 227 / Tuesday, November 28, 2017 / Proposed Rules

(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 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 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. The regulations in Technically, the variance in measure public reporting, and improving health. this subpart will be applicable scores is separated into within-cluster All managed care organizations with beginning with the 2019 measurement and between-cluster sum of squares MA contracts must participate. period and the associated 2021 Star components. The clusters reflect the Low income subsidy (LIS) means the Ratings that are released prior to the groupings of numeric value scores that subsidy that a beneficiary receives to annual coordinated election period for minimize the variance of scores within help pay for prescription drug coverage the 2021 contract year and used to the clusters. The Star Ratings levels are (see § 423.34 of this chapter for assign QBP ratings for the 2022 payment assigned to the clusters that minimize definition of a low-income subsidy year. the within-cluster sum of squares. The eligible individual). cut points for star assignments are Measurement period means the § 422.162 Medicare Advantage Quality derived from the range of measure Rating System. period for which data are collected for scores per cluster, and the star levels (a) Definitions. In this subpart the a measure or the performance period associated with each cluster are that a measures covers. following terms have the meanings: determined by ordering the means of the CAHPS refers to a comprehensive and Measure score means the numeric clusters. value of the measure or an assigned evolving family of surveys that ask Consolidation means when an MA consumers and patients to evaluate the ‘missing data’ message. organization that has at least two Measure star means the measure’s interpersonal aspects of health care. contracts for health and/or drug services CAHPS surveys probe those aspects of numeric value is converted to a Star of the same plan type under the same Rating. It is displayed to the nearest care for which consumers and patients parent organization in a year combines are the best or only source of whole star, using a 1–5 star scale. multiple contracts into a single contract Overall rating means a global rating information, as well as those that for the start of the subsequent contract consumers and patients have identified that summarizes the quality and year. performance for the types of services as being important. CAHPS initially Consumed contract means a contract stood for the Consumer Assessment of offered across all unique Part C and Part that will no longer exist after a contract D measures. Health Plans Study, but as the products year’s end as a result of a consolidation. Part C summary rating means a global have evolved beyond health plans the Display page means the CMS Web site rating that summarizes the health plan acronym now stands for Consumer on which certain measures and scores quality and performance on Part C Assessment of Healthcare Providers and are publicly available for informational measures. Systems. purposes; the measures that are Case-mix adjustment means an presented on the display page are not Part D summary rating means a global adjustment to the measure score made used in assigning Part C and D Star rating that summarizes prescription prior to the score being converted into Ratings. drug plan quality and performance on a Star Rating to take into account certain Domain rating means the rating that Part D measures. enrollee characteristics that are not groups measures together by dimensions Plan benefit package (PBP) means a under the control of the plan. For of care. set of benefits for a defined MA or PDP example age, education, chronic Dual-eligible (DE) means a beneficiary service area. The PBP is submitted by medical conditions, and functional who is enrolled in both Medicare and Part D plan sponsors and MA health status that may be related to the Medicaid. organizations to CMS for benefit enrollee’s survey responses. HEDIS is the Healthcare Effectiveness analysis, bidding, marketing, and Categorical Adjustment Index (CAI) Data and Information Set which is a beneficiary communication purposes. means the factor that is added to or widely used set of performance Reliability means a measure of the subtracted from an overall or summary measures in the managed care industry, fraction of the variation among the Star Rating (or both) to adjust for the developed and maintained by the observed measure values that is due to average within-contract (or within-plan National Committee for Quality real differences in quality (‘‘signal’’) as applicable) disparity in performance Assurance (NCQA). HEDIS data include rather than random variation (‘‘noise’’); associated with the percentages of clinical measures assessing the it is reflected on a scale from 0 (all beneficiaries who are dually eligible for effectiveness of care, access/availability differences in plan performance Medicare and enrolled in Medicaid, measures, and service use measures. measure scores are due to measurement beneficiaries who receive a Low Income Highest rating means the overall error) to 1 (the difference in plan Subsidy, or have disability status in that rating for MA–PDs, the Part C summary performance scores is attributable to real contract (or plan as applicable). rating for MA-only contracts, and the differences in performance). Clustering refers to a variety of Part D summary rating for PDPs. Reward factor means a rating-specific techniques used to partition data into Highly-rated contract means a factor added to the contract’s summary distinct groups such that the contract that has 4 or more stars for its or overall ratings (or both) if a contract observations within a group are as highest rating when calculated without has both high and stable relative similar as possible to each other, and as the improvement measures and with all performance.

VerDate Sep<11>2014 20:14 Nov 27, 2017 Jkt 244001 PO 00000 Frm 00162 Fmt 4701 Sfmt 4702 E:\FR\FM\28NOP2.SGM 28NOP2 sradovich on DSK3GMQ082PROD with PROPOSALS2 Federal Register / Vol. 82, No. 227 / Tuesday, November 28, 2017 / Proposed Rules 56497

Statistical significance assesses how the consolidation based on the compliance with MA requirements and likely differences observed in enrollment-weighted mean of the data submitted by plans. performance are due to random chance measure scores of the surviving and (2) MA organizations are required to alone under the assumption that plans consumed contract(s) as provided in collect, analyze, and report data that are actually performing the same. paragraph (b)(3)(iv) of this section. permit measurement of health outcomes Surviving contract means the contact Paragraph (b)(3)(iii) of this section is and other indices of quality. MA that will still exist under a applied to subsequent years that are not organizations must provide unbiased, consolidation, and all of the addressed in paragraph (b)(3)(ii) of this accurate, and complete quality data beneficiaries enrolled in the consumed section for assigning the QBP rating. described in paragraph (c)(1) of this contract(s) are moved to the surviving (ii) For the first year after a section to CMS on a timely basis as contracts. consolidation, CMS will determine the requested by CMS. Traditional rounding rules mean that QBP status of a contract using the the last digit in a value will be rounded. enrollment-weighted means (using § 422.164 Adding, updating, and removing If rounding to a whole number, look at traditional rounding rules) of what measures. the digit in the first decimal place. If the would have been the QBP Ratings of the (a) General. CMS adds, updates, and digit in the first decimal place is 0, 1, surviving and consumed contracts based removes measures used to calculate the 2, 3, or 4, then the value should be on the contract enrollment in November Star Ratings as provided in this section. rounded down by deleting the digit in of the year the preliminary QBP ratings CMS lists the measures used for a the first decimal place. If the digit in the were released in the Health Plan particular Star Rating each year in the first decimal place is 5 or greater, then Management System (HPMS). Technical Notes or similar guidance the value should be rounded up by 1 (iii) In subsequent years following the document with publication of the Star and the digit in the first decimal place first year after the consolidation, CMS Ratings. deleted. will determine QBP status based on the (b) Review of data quality. CMS (b) Contract ratings—(1) General. consolidated entity’s Star Ratings reviews the quality of the data on which CMS calculates an overall Star Rating, displayed on Medicare Plan Finder. performance, scoring and rating of a Part C summary rating, and Part D (iv) The Star Ratings posted on measure is based before using the data summary rating for each MA–PD Medicare Plan Finder for contracts that to score and rate performance or in contract, and a Part C summary rating consolidate are as follows: calculating a Star Rating. This includes for each MA-only contract using the 5- (A) For the first year after review of variation in scores among MA star rating system described in this consolidation, CMS will use enrollment- organizations and Part D plan sponsors, subpart. Measures are assigned stars at weighted measure scores using the July and the accuracy, reliability, and the contract level and weighted in enrollment of the measurement period validity of measures and performance accordance with § 422.166(a). Domain of the consumed and surviving contracts data before making a final determination ratings are the unweighted mean of the for all measures, except the survey- about inclusion of measures in each individual measure ratings under the based and call center measures. The year’s Star Ratings. topic area in accordance with survey-based measures would use (c) Adding measures. (1) CMS will § 422.166(b). Summary ratings are the enrollment of the surviving and continue to review measures that are in weighted mean of the individual consumed contracts at the time the alignment with the private sector, such measure ratings for Part C or Part D in sample is pulled for the rating year. The as measures developed by NCQA and accordance with § 422.166(c). Overall call center measures would use average the Pharmacy Quality Alliance (PQA), Star Ratings are calculated by using the enrollment during the study period. or endorsed by the National Quality weighted mean of the individual (B) For the second year after Forum for adoption and use in the Part measure ratings in accordance with consolidation, CMS will use the C and Part D Quality Ratings System. § 422.166(d) with both the reward factor enrollment-weighted measure scores CMS may develop its own measures as and CAI applied as applicable, as using the July enrollment of the well when appropriate to measure and described in § 422.166(f). measurement year of the consumed and reflect performance specific to the (2) Plan benefit packages. All plan surviving contracts for all measures Medicare program. benefit packages (PBPs) offered under except those from the following data (2) In advance of the measurement an MA contract have the same overall sources: HEDIS, CAHPS, and HOS. period, CMS will announce potential and/or summary Star Ratings as the HEDIS and HOS measure data will be new measures and solicit feedback contract under which the PBP is offered scored as reported. CMS will ensure that through the process described for by the MA organization. Data from all the CAHPS survey sample will include changes in and adoption of payment the PBPs offered under a contract are enrollees in the sample frame from both and risk adjustment policies in section used to calculate the measure and the surviving and consumed contracts. 1853(b) of the Act and then domain ratings for the contract except (c) Data sources. (1) CMS bases Part subsequently will propose and finalize for Special Needs Plan (SNP)-specific C Star Ratings on the type of data new measures through rulemaking. measures collected at the PBP level. A specified in section 1852(e) of the Act (3) New measures added to the Part C contract level score is calculated using and on CMS administrative data. Part C Star Ratings program will be on the an enrollment-weighted mean of the Star Ratings measures reflect structure, display page on www.cms.gov for a PBP scores and enrollment reported as process, and outcome indices of quality. minimum of 2 years prior to becoming part of the measure specification in each This includes information of the a Star Ratings measure. PBP. following types: Clinical data, (4) A measure will remain on the (3) Contract consolidations. (i) In the beneficiary experiences, changes in display page for longer than 2 years if case of contract consolidations physical and mental health, benefit CMS finds reliability or validity issues involving two or more contracts for administration information and CMS with the measure specification. health or drug services of the same plan administrative data. Data underlying (d) Updating measures—(1) Non- type under the same parent Star Ratings measures may include substantive updates. For measures that organization, CMS assigns Star Ratings survey data, data separately collected are already used for Star Ratings, CMS for the first and second years following and used in oversight of MA plans’ will update measures so long as the

VerDate Sep<11>2014 20:14 Nov 27, 2017 Jkt 244001 PO 00000 Frm 00163 Fmt 4701 Sfmt 4702 E:\FR\FM\28NOP2.SGM 28NOP2 sradovich on DSK3GMQ082PROD with PROPOSALS2 56498 Federal Register / Vol. 82, No. 227 / Tuesday, November 28, 2017 / Proposed Rules

changes in a measure are not described for changes in and adoption (4) Calculation of the improvement substantive. CMS will announce non- of payment and risk adjustment policies score. The improvement measure will substantive updates to measures that in section 1853(b) of the Act in advance be calculated as follows: occur (or are announced by the measure of the measurement period. (i) The improvement change score steward) during or in advance of the (f) Improvement measure. CMS will (the difference in the measure scores in measurement period through the calculate improvement measure scores the two year period) will be determined process described for changes in and based on a comparison of the measure for each measure that has been adoption of payment and risk scores for the current year to the designated an improvement measure adjustment policies in section 1853(b) of immediately preceding year as provided and for which a contract has a numeric the Act. Non-substantive measure in this paragraph; the improvement score for each of the 2 years examined. specification updates include those measure score would be calculated for (ii) Each contract’s improvement that— Parts C and D separately by taking a change score per measure will be (i) Narrow the denominator or weighted sum of net improvement categorized as a significant change or population covered by the measure; divided by the weighted sum of the not a significant change by employing a (ii) Do not meaningfully impact the number of eligible measures. two-tailed t-test with a level of numerator or denominator of the significance of 0.05. (1) Identifying eligible measures. (iii) The net improvement per measure; Annually, the subset of measures to be (iii) Update the clinical codes with no measure category (outcome, access, included in the Part C and Part D change in the target population or the patient experience, process) would be improvement measures will be intent of the measure; calculated by finding the difference (iv) Provide additional clarifications: announced through the process between the weighted number of (A) Adding additional tests that described for changes in and adoption significantly improved measures and would meet the numerator of payment and risk adjustment policies significantly declined measures, using requirements; in section 1853(b) of the Act. CMS the measure weights associated with (B) Clarifying documentation identifies measures to be used in the each measure category. requirements; improvement measures if the measures (iv) The improvement measure score (C) Adding additional instructions to meet all of the following: will then be determined by calculating identify services or procedures; or (i) CMS will include only measures the weighted sum of the net (v) Add alternative data sources. available for the current and previous improvement per measure category (2) Substantive updates. For measures year in the improvement measures and divided by the weighted sum of the that are already used for Star Ratings, in that have numeric value scores in both number of eligible measures. the case of measure specification the current and prior year. (v) The improvement measure score updates that are substantive updates not (ii) CMS will exclude any measure for will be converted to a measure-level subject to paragraph (d)(1) of this which there was a substantive Star Rating using hierarchical clustering section, CMS will propose and finalize specification change from the previous algorithms. these measures through rulemaking year. (vi) The Part D improvement measure similar to the process for adding new (iii) CMS will exclude any measures scores for MA–PDs and PDPs will be measures. CMS will initially solicit that are already focused on determined using cluster algorithms in feedback on whether to make improvement in MA organization accordance with §§ 422.166(a)(2)(ii) substantive measure updates through performance from year to year. through (iv) and 423.186(a)(2)(ii) the process described for changes in and through (iv) of this chapter. The Part D (iv) The Part C improvement measure adoption of payment and risk improvement measure thresholds for will include only Part C measure scores; adjustment policies in section 1853(b) of MA–PDs and PDPs would be reported the Part D improvement measure will the Act. Once the update has been made separately. include only Part D measure scores. to the measure specification by the (g) Data integrity. (1) CMS will reduce measure steward, CMS may continue (2) Determining eligible contracts. a contract’s measure rating when CMS collection of performance data for the CMS will calculate an improvement determines that a contract’s measure legacy measure and include it in Star score only for contracts that have data are inaccurate, incomplete, or Ratings until the updated measure has numeric measure scores for both years biased; such determinations may be been on display for 2 years. CMS will in at least half of the measures based on a number of reasons, including place the updated measure on the identified for use applying the standards mishandling of data, inappropriate display page for at least 2 years prior to in paragraphs (f)(1)(i) through (iv) of this processing, or implementation of using the updated measure to calculate section. incorrect practices that have an impact and assign Star Ratings as specified in (3) Special rules for calculation of the on the accuracy, impartiality, or paragraph (c) of this section. improvement score. For any measure completeness of the data used for one or (e) Removing measures. (1) CMS will used for the improvement measure for more specific measure(s). remove a measure from the Star Ratings which a contract received 5 stars in each (i) CMS will reduce HEDIS measures program as follows: of the years examined, but for which the to 1 star when audited data are (i) When the clinical guidelines measure score demonstrates a submitted to NCQA with a designation associated with the specifications of the statistically significant decline based on of ‘‘biased rate’’ or BR based on an measure change such that the the results of the significance testing (at auditor’s review of the data or a specifications are no longer believed to a level of significance of 0.05) on the designation of ‘‘nonreport’’ or NR. align with positive health outcomes; or change score, the measure will be (ii) CMS will reduce measures based (ii) A measure shows low statistical categorized as having no significant on data that an MA organization must reliability. change and included in the count of submit to CMS under § 422.516 to 1 star (2) CMS will announce in advance of measures used to determine eligibility when a contract did not score at least 95 the measurement period the removal of for the measure (that is, for the percent on data validation for the a measure based upon its application of denominator of the improvement applicable reporting section or was not this paragraph through the process measure score). compliant with CMS data validation

VerDate Sep<11>2014 20:14 Nov 27, 2017 Jkt 244001 PO 00000 Frm 00164 Fmt 4701 Sfmt 4702 E:\FR\FM\28NOP2.SGM 28NOP2 sradovich on DSK3GMQ082PROD with PROPOSALS2 Federal Register / Vol. 82, No. 227 / Tuesday, November 28, 2017 / Proposed Rules 56499

standards for data directly used to forwarded to the IRE and the total (iii) The clustering algorithm for the calculate the associated measure. number of untimely cases. improvement measure scores is done in (iii) For the appeals measures, CMS (J) The projected number of cases not two steps to determine the cut points for will use statistical criteria to estimate forwarded to the IRE in a 3-month the measure-level Star Ratings. the percentage of missing data for each period is calculated by multiplying the Clustering is conducted separately for contract using data from multiple number of cases found not to be improvement measure scores greater sources such as a timeliness monitoring forwarded to the IRE based on the TMP than or equal to zero and those with study or audit information to scale the or audit data by a constant determined improvement measure scores less than star reductions to determine whether by the data collection or data sample zero. the data at the independent review time period. The value of the constant (A) Improvement scores of zero or entity (IRE) are complete. The criteria will be 1.0 for contracts that submitted greater would be assigned at least 3 stars would allow CMS to use scaled 3 months of data; 1.5 for contracts that for the improvement Star Rating. reductions for the Star Ratings for the submitted 2 months of data; and 3.0 for (B) Improvement scores less than zero applicable appeals measures to account contracts that submitted 1 month of would be assigned either 1 or 2 stars for for the degree to which the IRE data are data. the improvement Star Rating. missing. (K) Contracts would be subject to a (3) Relative distribution and (A) The data submitted for the possible reduction due to lack of IRE significance testing for CAHPS Timeliness Monitoring Project (TMP) or data completeness if both of the measures. The method combines audit that aligns with the Star Ratings following conditions are met: evaluating the relative percentile year measurement period will be used (1) The calculated error rate is 20 distribution with significance testing to determine the scaled reduction. percent or more. and accounts for the reliability of scores (B) The determination of the Part C (2) The projected number of cases not produced from survey data; no measure appeals measure IRE data reduction is forwarded to the IRE is at least 10 in a Star Rating is produced if the reliability done independently of the Part D 3-month period. of a CAHPS measure is less than 0.60. appeals measure IRE data reduction. (L) A confidence interval estimate for Low reliability scores are defined as (C) The reductions range from a one- the true error rate for the contract is those with at least 11 respondents and star reduction to a four-star reduction; calculated using a Score Interval reliability greater than or equal to 0.60 the most severe reduction for the degree (Wilson Score Interval) at a confidence but less than 0.75 and also in the lowest of missing IRE data would be a four-star level of 95 percent and an associated z 12 percent of contracts ordered by reduction. of 1.959964 for a contract that is subject reliability. The following rules apply: (D) The thresholds used for to a possible reduction. (i) A contract is assigned 1 star if both determining the reduction and the (M) A contract’s lower bound is of the following criteria in paragraphs associated appeals measure reduction compared to the thresholds of the scaled (a)(3)(i)(A) and (B) of this section are are as follows: reductions to determine the IRE data met and the criterion in paragraph (1) 20 percent, 1 star reduction. completeness reduction. (a)(3)(i)(C) or (D) of this section is met: (2) 40 percent, 2 star reduction. (N) The reduction is identified by the (A) Its average CAHPS measure score (3) 60 percent, 3 star reduction. highest threshold that a contract’s lower is lower than the 15th percentile; and (4) 80 percent, 4 star reduction. bound exceeds. (B) Its average CAHPS measure score (E) If a contract receives a reduction (2) CMS will reduce a measure rating is statistically significantly lower than due to missing Part C IRE data, the to 1 star for additional concerns that the national average CAHPS measure reduction is applied to both of the data inaccuracy, incompleteness, or bias score; contract’s Part C appeals measures. have an impact on measure scores and (C) The reliability is not low; or (F) If a contract receives a reduction are not specified in paragraphs (g)(1)(i) (D) Its average CAHPS measure score due to missing Part D IRE data, the through (iii) of this section, including a is more than one standard error below reduction is applied to both of the contract’s failure to adhere to HEDIS, the 15th percentile. contract’s Part D appeals measures. HOS, or CAHPS reporting requirements. (ii) A contract is assigned 2 stars if it (G) The scaled reduction is applied does not meet the 1 star criteria and after the calculation for the appeals § 422.166 Calculation of Star Ratings. meets at least one of the following measure-level Star Ratings. If the (a) Measure Star Ratings—(1) Cut criteria: application of the scaled reduction points. CMS will determine cut points (A) Its average CAHPS measure score results in a measure-level star rating less for the assignment of a Star Rating for is lower than the 30th percentile and the than 1 star, the contract will be assigned each numeric measure score by measure does not have low reliability; 1 star for the appeals measure. applying either a clustering or a relative or (H) The Part C Calculated Error is distribution and significance testing (B) Criterion (b) its average CAHPS determined using the quotient of methodology. For the Part D measures, measure score is lower than the 15th number of cases not forwarded to the CMS will determine MA–PD and PDP percentile and the measure has low IRE and the total number of cases that cut points separately. reliability; or should have been forwarded to the IRE. (2) Clustering algorithm for all (C) Its average CAHPS measure score (The number of cases that should have measures except CAHPS measures. (i) is statistically significantly lower than been forwarded to the IRE is the sum of The method minimizes differences the national average CAHPS measure the number of cases in the IRE during within star categories and maximizes score and below the 60th percentile. the data collection or data sample differences across star categories using (iii) A contract is assigned 3 stars if it period and the number of cases not the hierarchical clustering method. meets at least one of the following forwarded to the IRE during the same (ii) In cases where multiple clusters criteria: period.) have the same measure score value (A) Its average CAHPS measure score (I) The Part D Calculated Error is range, those clusters would be is at or above the 30th percentile and determined by the quotient of the combined, leading to fewer than 5 lower than the 60th percentile, and it is number of untimely cases not auto- clusters. not statistically significantly different

VerDate Sep<11>2014 20:14 Nov 27, 2017 Jkt 244001 PO 00000 Frm 00165 Fmt 4701 Sfmt 4702 E:\FR\FM\28NOP2.SGM 28NOP2 sradovich on DSK3GMQ082PROD with PROPOSALS2 56500 Federal Register / Vol. 82, No. 227 / Tuesday, November 28, 2017 / Proposed Rules

from the national average CAHPS Service. The 4 domains for the Part D to 5 (best rating) in half-increments measure score; or Star Ratings are: Drug Plan Customer using traditional rounding rules. (B)(1) Its average CAHPS measure Service; Member Complaints and (v) Low enrollment contracts (as score is at or above the 15th percentile Changes in the Drug Plan’s Performance; defined in § 422.252) and new MA plans and lower than the 30th percentile; Member Experience with the Drug Plan; (as defined in § 422.252) do not receive (2) The reliability is low; and and Drug Safety and Accuracy of Drug an overall and/or summary rating. They (3) The score is not statistically Pricing. are treated as qualifying plans for the significantly lower than the national (2) CMS calculates the domain ratings purposes of QBPs as described in average CAHPS measure score. as the unweighted mean of the Star § 422.258(d)(7) and as announced (C)(1) Its average CAHPS measure Ratings of the included measures. through the process described for score is at or above the 60th percentile (i) A contract must have scores for at changes in and adoption of payment and lower than the 80th percentile; least 50 percent of the measures and risk adjustment policies in section (2) The reliability is low; and required to be reported for that contract 1853 (b) of the Act. (3) The score is not statistically type for that domain to have a domain (e) Measure weights—(1) General significantly higher than the national rating calculated. rules. Subject to paragraphs (e)(2) and average CAHPS measure score. (ii) The domain ratings are on a 1- to (3) of this section, CMS will assign (iv) A contract is assigned 4 stars if it 5- star scale ranging from 1 (worst weights to measures based on their does not meet the 5-star criteria and rating) to 5 (best rating) in whole star categorization as follows. meets at least one of the following increments using traditional rounding (i) Improvement measures receive the criteria: rules. highest weight of 5. (A) Its average CAHPS measure score (c) Part C summary ratings. (1) CMS (ii) Outcome and Intermediate is at or above the 60th percentile and will calculate the Part C summary outcome measures receive a weight of 3. the measure does not have low ratings using the weighted mean of the (iii) Patient experience and complaint reliability. measure-level Star Ratings for Part C, measures receive a weight of 1.5. (B) Its average CAHPS measure score (iv) Access measures receive a weight weighted in accordance with paragraph is at or above the 80th percentile and of 1.5. (e) of this section with an adjustment to the measure has low reliability. (v) Process measures receive a weight (C) Its average CAHPS measure score reward consistently high performance of 1. is statistically significantly higher than and the application of the CAI under (2) Rules for new measures. New the national average CAHPS measure paragraph (f) of this section. measures to the Star Ratings program score and above the 30th percentile. (2)(i) A contract must have scores for will receive a weight of 1 for their first (v) A contract is assigned five stars if at least 50 percent of the measures year in the Star Ratings program. In both of the following criteria in required to be reported for the contract subsequent years, the measure will be paragraphs (a)(3)(v)(A) and (B) of this type to have the summary rating assigned the weight associated with its section are met and the criterion in calculated. category. paragraph (a)(3)(v)(C) or (D) of this (ii) The Part C improvement measure (3) Special rule for Puerto Rico. section is met: is not included in the count of the Contracts that have service areas that are (A) Its average CAHPS measure score minimum number of rated measures. wholly located in Puerto Rico will is at or above the 80th percentile. (3) The summary ratings are on a 1- receive a weight of zero for the Part D (B) Its average CAHPS measure score to 5-star scale ranging from 1 (worst adherence measures for the summary is statistically significantly higher than rating) to 5 (best rating) in half-star and overall rating calculations and will the national average CAHPS measure increments using traditional rounding have a weight of 3 for the adherence score. rules. measures for the improvement measure (C) The reliability is not low. (d) Overall MA–PD rating. (1) The calculations. (D) Its average CAHPS measure score overall rating for a MA–PD contract will (f) Completing the Part C summary is more than one standard error above be calculated using a weighted mean of and overall rating calculations. CMS the 80th percentile. the Part C and Part D measure-level Star will adjust the summary and overall (4) Measure scores are converted to a Ratings, weighted in accordance with rating calculations to take into account 5-star scale ranging from 1 (worst rating) paragraph (e) of this section and with an the reward factor (if applicable) and the to 5 (best rating), with whole star adjustment to reward consistently high categorical adjustment index (CAI) as increments for the cut points. performance and the application of the provided in this paragraph. (b) Domain Star Ratings. (1)(i) CMS CAI, under paragraph (f) of this section. (1) Reward factor. This rating-specific groups measures by domains solely for (2)(i) An MA–PD must have both Part factor is added to the both the summary purposes of public reporting the data on C and Part D summary ratings and and overall ratings of contracts that Medicare Plan Finder. They are not scores for at least 50 percent of the qualify for the reward factor based on used in the calculation of the summary measures required to be reported for the both high and stable relative or overall ratings. Domains are used to contract type to have the overall rating performance for the rating level. group measures by dimensions of care calculated. (i) The contract’s performance will be that together represent a unique and (ii) The Part C and D improvement assessed using its weighted mean and important aspect of quality and measures are not included in the count its ranking relative to all rated contracts performance. of measures needed for the overall in the rating level (overall for MA–PDs; (ii) The 5 domains for the MA Star rating. Part C summary for MA–PDs and MA- Ratings are: Staying Healthy: (iii) Any measures that share the same only; and Part D summary for MA–PDs Screenings, Tests and Vaccines; data and are included in both the Part and PDPs) for the same Star Ratings Managing Chronic (Long Term) C and Part D summary ratings will be year. The contract’s stability of Conditions; Member Experience with included only once in the calculation performance will be assessed using the Health Plan; Member Complaints and for the overall rating. weighted variance and its ranking Changes in the Health Plan’s (iv) The overall rating is on a 1- to 5- relative to all rated contracts in the Performance; and Health Plan Customer star scale ranging from 1 (worst rating) rating type (overall for MA–PDs; Part C

VerDate Sep<11>2014 20:14 Nov 27, 2017 Jkt 244001 PO 00000 Frm 00166 Fmt 4701 Sfmt 4702 E:\FR\FM\28NOP2.SGM 28NOP2 sradovich on DSK3GMQ082PROD with PROPOSALS2 Federal Register / Vol. 82, No. 227 / Tuesday, November 28, 2017 / Proposed Rules 56501

summary for MA–PDs and MA-only; mean difference in the adjusted and inclusion in the calculations of the CAI and Part D summary for MA–PDs and unadjusted ratings (overall, Part C, Part values will be selected based on the PDPs). The weighted mean and D for MA–PDs, Part D for PDPs) of the analysis of the dispersion of the LIS/DE weighted variance are compared contracts that lie within each final within-contract differences using all separately for MA–PD and standalone adjustment category for each rating type. reportable numeric scores for contracts Part D contracts. The measure weights (i) The CAI is added to or subtracted receiving a rating in the previous rating are specified in § 422.166(e). Since from the contract’s overall and summary year. CMS calculates the results of each highly-rated contracts may have the ratings and is applied after the reward contract’s estimated difference between improvement measure(s) excluded in factor adjustment (if applicable). the LIS/DE and non-LIS/DE the determination of their final highest (A) The adjustment factor is performance rates per contract using rating, each contract’s weighted monotonic (that is, as the proportion of logistic mixed effects models that variance and weighted mean are LIS/DE and disabled increases in a includes LIS/DE as a predictor, random calculated both with and without the contract, the adjustment factor increases effects for contract and an interaction improvement measures. For an MA– in at least one of the dimensions) and term of contract. For each contract, the PD’s Part C and D summary ratings, its varies by a contract’s categorization into proportion of beneficiaries receiving the ranking is relative to all other contracts’ a final adjustment category that is measured clinical process or outcome weighted variance and weighted mean determined by a contract’s proportion of for LIS/DE and non-LIS/DE beneficiaries for the rating type (Part C summary, Part LIS/DE and disabled beneficiaries. would be estimated separately. The D summary) with the improvement (B) To determine a contract’s final following decision criteria is used to measure. adjustment category, contract determine the measures for adjustment: (ii) Relative performance of the enrollment is determined using (A) A median absolute difference weighted variance (or weighted variance enrollment data for the month of between LIS/DE and non-LIS/DE ranking) will be categorized as being December for the measurement period beneficiaries for all contracts analyzed high (at or above 70th percentile), of the Star Ratings year. The count of is 5 percentage points or more. medium (between the 30th and 69th beneficiaries for a contract is restricted (B) The LIS/DE subgroup performed percentile) or low (below the 30th to beneficiaries that are alive for part or better or worse than the non-LIS/DE percentile). Relative performance of the all of the month of December of the subgroup in all contracts. weighted mean (or weighted mean applicable measurement year. A (C) The Part D measures for MA–PDs ranking) will be categorized as being beneficiary is categorized as LIS/DE if and PDPs will be analyzed high (at or above the 85th percentile), the beneficiary was designated as full or independently, but the Part D measures relatively high (between the 65th and partially dually eligible or receiving a selected for adjustment will include 84th percentiles), or other (below the LIS at any time during the applicable measures that meet the selection criteria 65th percentile). measurement period. Disability status is for either delivery system. (iii) The combination of the relative determined using the variable original (iv) The adjusted measures score for variance and relative mean is used to reason for entitlement (OREC) for the selected measures are determined determine the value of the reward factor Medicare using the information from the using the results from regression models to be added to the contract’s summary Social Security Administration and of beneficiary-level measure scores that and overall ratings as follows: Railroad Retirement Board record adjust for the average within-contract (A) A contract with low variance and systems. difference in measure scores for MA or a high mean will have a reward factor (C) MA–PD contracts may have up to PDP contracts. equal to 0.4. three rating-specific CAI adjustments: (A) A logistic regression model with (B) A contract with medium variance One for the overall Star Rating and one contract fixed effects and beneficiary- and a high mean will have a reward for each of the summary ratings (Part C level indicators of LIS/DE and disability factor equal to 0.3. and Part D). status is used for the adjustment. (C) A contract with low variance and (D) An MA-only contract may be (B) The adjusted measure scores are a relatively high mean will have a adjusted only once for the CAI for the converted to a measure-level Star Rating reward factor equal to 0.2. Part C summary rating. using the measure thresholds for the (D) A contract with medium variance (E) The CAI values are rounded and Star Ratings year that corresponds to the and a relatively high mean will have a displayed with 6 decimal places. reward factor equal to 0.1. (ii) In determining the CAI values, a measurement period of the data (E) A contract with all other measure will be excluded as a candidate employed for the CAI determination. combinations of variance and relative for inclusion for adjustment if the (v) The rating-specific CAI values will mean will have a reward factor equal to measure meets any of the following: be determined using the mean 0.0. (A) The measure is already case-mix differences between the adjusted and (iv) The reward factor is determined adjusted for socioeconomic status. unadjusted Star Ratings (overall, Part C and applied before application of the (B) The focus of the measurement is summary, Part D summary for MA–PDs CAI adjustment under paragraph (f)(2) not a beneficiary-level issue but rather and Part D summary for PDPs) in each of this section; the reward factor is a plan or provider-level issue. final adjustment category. based on unadjusted scores. (C) The measure is scheduled to be (A) For the annual development of the (2) Categorical Adjustment Index. retired or revised. CAI, the distribution of the percentages CMS applies the categorical adjustment (D) The measure is applicable only to for LIS/DE and disabled using the index (CAI) as provided in this SNPs. enrollment data that parallels the paragraph to adjust for the average (iii) CMS will announce the measures previous Star Ratings year’s data would within-contract disparity in identified for inclusion in the be examined to determine the number of performance associated with the calculations of the CAI under this equal-sized initial groups for each percentages of beneficiaries who receive paragraph through the process described attribute (LIS/DE and disabled). a low income subsidy or are dual for changes in and adoption of payment (B) The initial categories are created eligible (LIS/DE) or have disability and risk adjustment policies in section using all groups formed by the initial status. The factor is calculated as the 1853(b) of the Act. The measures for LIS/DE and disabled groups.

VerDate Sep<11>2014 20:14 Nov 27, 2017 Jkt 244001 PO 00000 Frm 00167 Fmt 4701 Sfmt 4702 E:\FR\FM\28NOP2.SGM 28NOP2 sradovich on DSK3GMQ082PROD with PROPOSALS2 56502 Federal Register / Vol. 82, No. 227 / Tuesday, November 28, 2017 / Proposed Rules

(C) The mean difference between the include the improvement measures in a health and prescription drug plans with adjusted and unadjusted summary or contract’s final highest rating, CMS the low performing icon; beneficiaries overall ratings per initial category applies the following rules: will be directed to contact the plan would be calculated and examined. The (i) Contracts with 2 or fewer stars for directly to enroll in the low-performing initial categories would then be their highest rating when calculated plan. collapsed to form the final adjustment without improvement and with all (2) Plan preview of the Star Ratings. categories. The collapsing of the initial applicable adjustments (CAI and the CMS will have plan preview periods categories to form the final adjustment reward factor) will not have their rating before each Star Ratings release during categories would be done to enforce calculated with the improvement which MA organizations can preview monotonicity in at least one dimension measure(s). their Star Ratings data in HPMS prior to (LIS/DE or disabled). (ii) If the highest rating for each display on the Medicare Plan Finder. (D) The mean difference within each contract-type is 4 stars or more without ■ 21. Section 422.204 is amended by final adjustment category by rating-type the use of the improvement measure(s) removing paragraph (b)(5) and adding (Part C, Part D for MA–PD, Part D for and with all applicable adjustments paragraph (c). PDPs or overall) would be the CAI (CAI and the reward factor), a The addition reads as follows: values for the next Star Ratings year. comparison of the highest rating with (vi) CMS develops the model for the and without the improvement § 422.204 Provider selection and modified contract-level LIS/DE measure(s) is done. The higher rating is credentialing. percentage for Puerto Rico using the used for the rating. * * * * * following sources of information: (iii) If the highest rating is between 2 (c) An MA organization must follow (A) The most recent data available at stars and 4 stars with all applicable a documented process that ensures the time of the development of the adjustments (CAI and the reward factor), compliance with the preclusion list model of both 1-year American the rating will be calculated with the provisions in § 422.222. Community Survey (ACS) estimates for improvement measure(s). ■ 22. Amend § 422.206 by revising the percentage of people living below (2) The Part C summary rating for paragraph (b)(2)(i) to read as follows: the Federal Poverty Level (FPL) and the MA–PDs will include the Part C ACS 5-year estimates for the percentage improvement measure and the Part D § 422.206 Interference with health care summary rating for MA–PDs will professionals’ advice to enrollees of people living below 150 percent of prohibited. the FPL. The data to develop the model include the Part D improvement will be limited to the 10 states, drawn measure. (b) * * * from the 50 states plus the District of (h) Posting and display of ratings. For (2) * * * Columbia with the highest proportion of all ratings at the measure, domain, (i) To CMS, with its application for a people living below the FPL, as summary and overall level, posting and Medicare contract, within 10 days of identified by the 1-year ACS estimates. display of the ratings is based on there submitting its bid proposal or, for policy (B) The Medicare enrollment data being sufficient data to calculate and changes, in accordance with all from the same measurement period as assign ratings. If a contract does not applicable requirements under subpart the Star Ratings’ year. The Medicare have sufficient data to calculate a rating, V of this part. enrollment data would be aggregated the posting and display would be the * * * * * from MA contracts that had at least 90 flag ‘‘Not enough data available.’’ If the ■ 23. Section 422.208 is amended by percent of their enrolled beneficiaries measurement period is prior to one year revising paragraph (f)(2)(iii) and adding with mailing addresses in the 10 highest past the contract’s effective date, the paragraphs (f)(2)(iv) through (vii) and poverty states. posting and display would be the flag (f)(3) to read as follows: (vii) A linear regression model is ‘‘Plan too new to be measured’’. developed to estimate the percentage of (1) Medicare Plan Finder Performance § 422.208 Physician incentive plans: requirements and limitations. LIS/DE for a contacts that solely serve icons. Icons are displayed on Medicare the population of beneficiaries in Puerto Plan Finder to note performance as * * * * * Rico. provided in this paragraph (h): (f) * * * (A) The maximum value for the (i) High-performing icon. The high (2) *** modified LIS/DE indicator value per performing icon is assigned to an MA- (iii)(A) Stop-loss protection must contract would be capped at 100 only contract for achieving a 5-star Part cover 90 percent of costs above the percent. C summary rating and an MA–PD deductible or an actuarial equivalent (B) All estimated modified LIS/DE contract for a 5-star overall rating. amount of the costs of referral services values for Puerto Rico would be (ii) Low-performing icon. (A) A that exceed the per-patient deductible rounded to 6 decimal places when contract receives a low performing icon limit. The single combined deductible, expressed as a percentage. as a result of its performance on the Part for policies that pay 90 percent of costs (C) The model’s coefficient and C or Part D summary ratings. The low above the deductible or an actuarial intercept are updated annually and performing icon is calculated by equivalent amount, for stop-loss published in the Technical Notes. evaluating the Part C and Part D insurance for the various panel sizes for (g) Applying the improvement summary ratings for the current year contract years beginning on or after measure scores. (1) CMS runs the and the past 2 years. If the contract had January 1, 2019 is determined using the calculations twice for each highest level any combination of Part C or Part D table published by CMS that is rating for each contract-type (overall summary ratings of 2.5 or lower in all developed using the methodology in rating for MA–PD contracts and Part C 3 years of data, it is marked with a low paragraph (f)(2)(iv) of this section. For summary rating for MA-only contracts), performing icon. A contract must have panel sizes not shown in the table, use with all applicable adjustments (CAI a rating in either Part C or Part D for all linear interpolation between the table and the reward factor), once including 3 years to be considered for this icon. values. the improvement measure(s) and once (B) CMS may disable the Medicare (B) To apply this table, a physician or without including the improvement Plan Finder online enrollment function physician group may use linear measure(s). In deciding whether to (in Medicare Plan Finder) for Medicare interpolation to compute the deductible

VerDate Sep<11>2014 20:14 Nov 27, 2017 Jkt 244001 PO 00000 Frm 00168 Fmt 4701 Sfmt 4702 E:\FR\FM\28NOP2.SGM 28NOP2 sradovich on DSK3GMQ082PROD with PROPOSALS2 Federal Register / Vol. 82, No. 227 / Tuesday, November 28, 2017 / Proposed Rules 56503

for the globally capitated patients paragraphs (f)(2)(vi) and (vii) of this that are rendered by the physician or (DGCP) as well as the deductible for section. For deductible amounts not physician group. globally capitated patients plus NPEs shown in the table use linear (B) The lowest deductible shown in (DGCPNPE). The deductible for the interpolation between the table values. the tables described in paragraphs stop-loss insurance required to be The tables and methodology in (f)(2)(iii) and (v) of this section would provided for the physician or physician paragraph (f)(2)(iv) of this section only generally not be available for sale from group is then based on the lesser of address capitation arrangements in the an insurance company. The number of DGCP+100,000 and DGCPNPE. PIP and that other stop-loss insurance risk patients and the net premiums are (iv) The table referenced in paragraph needs to be used for non-capitated shown for the case where the MA plan (f)(2)(iii) of this section will be created, arrangements. If it is not a global might directly insure a contracted updated, and published by CMS in capitation arrangement or a different physician or physician group with guidance (such as an attachment to the stop/loss arrangement, these tables do protection at these lower deductibles. Rate Announcement issued under not apply. (3) Special insurance. If there is a section 1853(b) of the Act), as necessary, (B) The maximum deductibles for different type of stop-loss policy using the following methodology: each category of services (institutional obtained by the physician group, it must (A) The table and the methodology in and professional claims) are identified be actuarially equivalent to the coverage this paragraph (f)(2)(iv) only address by using the net benefit premium (NBP) shown in the tables described in capitation arrangements in the PIP and for the patient panel size from the table paragraphs (f)(2)(iii) and (v) of this that other stop-loss insurance needs to described in paragraph (f)(2)(iii) of this section. Actuarially equivalent be used for non-capitated arrangements. section. If the NBP is identified using deductibles are acceptable if the (B) If it is not a global capitation interpolation from the values in the insurance is actuarially certified by an arrangement or is a different stop/loss table described in paragraph (f)(2)(iii) of attesting actuary who fulfills all of the arrangement, the tables developed using this section, interpolation is also used following requirements. (i) Develops the deductibles to be this methodology do not apply. The from the NBP values in the table actuarially equivalent to those coverages table is calculated using the following described in paragraph (f)(2)(v)(A) of methodology and assumptions: in the tables. this section that are closest to the NBP (ii) Makes the computations in (1) CMS used the population of all identified by using the table described Fee For Service (FFS) Part A and Part B accordance with generally accepted in paragraph (f)(2)(iii) of this section. actuarial principles and practices. claims for the most available recent year TAs with combined stop-loss insurance, and assumed a multi-specialty practice (iii) Is certified as meeting the panel size may include non-risk requirements in paragraphs (f)(3)(i) and since all physician claims were allowed. patients. As with combined stop-loss (2) CMS’s estimate of medical group (ii) of this section by actuaries who meet insurance, the deductible for separate the qualification standards established income was derived from CMS claims insurance that must be provided for the files, which include payments for all by the American Academy of Actuaries physician or physician group is the and follow the practice standards Part A and Part B services. lesser of DGCP+100,000 and DGCPNPE. (3) The central limit theorem was established by the Actuarial Standards (vi) The table described in (f)(2)(v) of used to obtain the distribution of claim Board. this section is calculated using a means for a multi-specialty group of any * * * * * methodology similar to the calculation given panel size. ■ 24. Section 422.222 is revised to read (4) The distribution was used to of the table described in paragraph as follows: obtain, with 98 percent confidence, the (f)(2)(iii) of this section. § 422.222 Preclusion list. point at which a multi-specialty group (A) The population of all Part A and of a given panel size would, through Part B claims was obtained. (a)(1) An MA organization must not referral services, lose more than 25 (B) The source for our estimate of make payment for a health care item or percent of the net income derived from medical group income and institutional service furnished by an individual or services that the physicians personally income is derived from CMS claims files entity that is included on the preclusion rendered. which includes payments for all Part A list, defined in § 422.2. (i) This point is set as the deductible and Part B services. (2) CMS sends written notice to the individual or entity via letter of their in the table described in paragraph (C) The central limit theorem is used inclusion on the preclusion list. The (f)(2)(iii) of this section. to obtain the distribution of claim (ii) The ‘net benefit premium’ (NBP) means and deductibles are obtained at notice must contain the reason for the column in that table is not used for the 98 percent confidence level. inclusion and inform the individual or computation of combined insurance but (vii) In determining the number of entity of their appeal rights. An is used to determine the separate global risk patients for the types of individual or entity may appeal their deductibles for physician/professional services covered under Parts A and B of inclusion on the preclusion list, defined in § 422.2, in accordance with part 498 services and institutional services. Medicare, commercial and Medicaid (iii) The NBP is computed by dividing patients who are at global risk and in of this chapter. (b) An MA organization that does not the total amount of stop loss claims (90 the same stop-loss risk pool may be comply with paragraph (a) of this percent of claims above the deductible) included. section may be subject to sanctions for that panel size by the panel size. (A) The number of non-risk patient (v)(A) Insurance using separate equivalents (NPEs) is equal to the under § 422.750 and termination under deductibles for professional and projected annual aggregate payments to § 422.510. ■ 25. Section 422.224 is revised to read institutional claims is permissible for the physician or physician group for as follows: contract years beginning on or after non-global risk patients, divided by an January 1, 2019 so long as the separate estimate of the average capitation per § 422.224 Payment to individuals and deductibles for institutional services member per year (PMPY) for all non- entities excluded by the OIG or included on and professional services are consistent global risk patients, whether or not they the preclusion list. with the table published by CMS using are capitated. Both numerator and (a) An MA organization may not pay, the methodology and assumptions in denominator are for physician services directly or indirectly, on any basis, for

VerDate Sep<11>2014 20:14 Nov 27, 2017 Jkt 244001 PO 00000 Frm 00169 Fmt 4701 Sfmt 4702 E:\FR\FM\28NOP2.SGM 28NOP2 sradovich on DSK3GMQ082PROD with PROPOSALS2 56504 Federal Register / Vol. 82, No. 227 / Tuesday, November 28, 2017 / Proposed Rules

items or services (other than emergency enrollment contracts and new MA plans (2) Such training and education must or urgently needed services as defined are defined in § 422.252.) occur at a minimum annually and must in § 422.113 of this chapter) furnished to * * * * * be made a part of the orientation for a a Medicare enrollee by any individual ■ 30. Section 422.310 by adding new employee and new appointment to or entity that is excluded by the Office paragraph (d)(5) to read as follows: a chief executive, manager, or governing of the Inspector General (OIG) or is body member. § 422.310 Risk adjustment data. included on the preclusion list, defined * * * * * in § 422.2. * * * * * ■ 34. Section 422.504 is amended by— (b) If an MA organization receives a (d) * * * ■ a. Revising paragraphs (a) (5) For data described in paragraph request for payment by, or on behalf of, introductory text and (a)(6). an individual or entity that is excluded (d)(1) of this section as data equivalent ■ b. Removing paragraph (a)(16). by the OIG or an individual or entity to Medicare fee-for-service data, which ■ c. Redesignating paragraphs (a)(17) that is included on the preclusion list, is also known as MA encounter data, and (18) as paragraphs (a)(16) and (17), defined in § 422.2, the MA organization MA organizations must submit a NPI in respectively; and must notify the enrollee and the a billing provider field on each MA ■ d. Revising newly redesignated excluded individual or entity or the encounter data record, per CMS paragraph (a)(17). individual or entity included on the guidance. ■ e. Revising paragraph (i)(2)(v). preclusion list in writing, as directed by * * * * * The revisions read as follows: contract or other direction provided by ■ 31. Section 422.501 is amended by CMS, that payments will not be made. revising paragraphs (c)(1)(iv) and (2) to § 422.504 Contract provisions. Payment may not be made to, or on read as follows: * * * * * behalf of, an individual or entity that is (a) Agreement to comply with § 422.501 Application requirements. excluded by the OIG or is included on regulations and instructions. The MA the preclusion list. * * * * * organization agrees to comply with all (c) * * * the applicable requirements and § 422.254 [Amended] (1) * * * conditions set forth in this part and in ■ (iv) Documentation that payment for 26. Section 422.254 is amended by general instructions. Compliance with health care services or items is not being removing paragraph (a)(4) and the terms of this paragraph is material and will not be made to individuals and redesignating paragraph (a)(5) as to the performance of the MA contract. entities included on the preclusion list, paragraph (a)(4). The MA organization agrees— defined in § 422.2. § 422.256 [Amended] (2) The authorized individual must * * * * * ■ 27. Section 422.256 is amended by thoroughly describe how the entity and (6) To comply with all applicable removing paragraph (b)(4). MA plan meet, or will meet, all the provider and supplier requirements in requirements described in this part, subpart E of this part, including § 422.258 [Amended] including providing documentation that provider certification requirements, ■ 28. Section 422.258 is amended in payment for health care services or anti-discrimination requirements, paragraph (d)(7) introductory text by items is not being and will not be made provider participation and consultation removing the phrase ‘‘section 1852(e) of to individuals and entities included on requirements, the prohibition on the Act)’’ and adding in its place the the preclusion list, defined in § 422.2. interference with provider advice, limits phrase ‘‘section 1852(e) of the Act) * * * * * on provider indemnification, rules specified in subpart 166 of this part governing payments to providers, limits 422’’. § 422.502 [Amended] on physician incentive plans, and the ■ 29. Section 422.260 is amended by ■ 32. Section 422.502 is amended in preclusion list requirements in revising paragraph (a) and revising the paragraphs (b)(1) and (2) by removing §§ 422.222 and 422.224. definition of ‘‘Quality bonus payment the phrase ‘‘14 months’’ and adding in * * * * * (QBP) determination methodology’’ in its place ‘‘12 months’’ each time it (17) To maintain a Part C summary paragraph (b) to read as follows: appears. plan rating score of at least 3 stars under ■ § 422.260 Appeals of quality bonus 33. Section 422.503 is amended— the 5-star rating system specified in part ■ payment determinations. a. In paragraph (b)(4)(ii), by removing 422 subpart D. A Part C summary plan (a) Scope. The provisions of this the phrase ‘‘financial and marketing rating is calculated as provided in section pertain to the administrative activities’’ and adding in its place § 422.166. review process to appeal quality bonus ‘‘financial and communication * * * * * payment status determinations based on activities’’; and (i) * * * ■ b. Revising paragraph (b)(4)(vi)(C). (2) * * * section 1853(o) of the Act. Such The revision reads as follows: determinations are made based on the (v) They will ensure that payments overall rating for MA–PDs and Part C § 422.503 General provisions. are not made to individuals and entities summary rating for MA-only contracts * * * * * included on the preclusion list, defined for the contract assigned under subpart (b) * * * in § 422.2. D of this part (4) * * * * * * * * (b) * * * (vi) * * * Quality bonus payment (QBP) (C)(1) Each MA organization must § 422.506 [Amended] determination methodology means the establish and implement effective ■ 35. Section 422.506 is amended by— quality ratings system specified in training and education for its ■ a. Removing paragraph (a)(3); subpart 166 of this part 422 for compliance officer and organization ■ b. Redesignating paragraphs (a)(4) and assigning quality ratings to provide employees, the MA organization’s chief (5) as paragraphs (a)(3) and (4); and comparative information about MA executive and other senior ■ c. Removing and reserving paragraph plans and evaluating whether MA administrators, managers and governing (b). organizations qualify for a QBP. (Low body members.

VerDate Sep<11>2014 20:14 Nov 27, 2017 Jkt 244001 PO 00000 Frm 00170 Fmt 4701 Sfmt 4702 E:\FR\FM\28NOP2.SGM 28NOP2 sradovich on DSK3GMQ082PROD with PROPOSALS2 Federal Register / Vol. 82, No. 227 / Tuesday, November 28, 2017 / Proposed Rules 56505

■ 36. Section 422.508 is amended by minimum enrollment requirement for subpart V of this part or applicable adding paragraph (a)(3) to read as the first 3 years of the contract. To implementing guidance. follows: receive a waiver, a contract applicant * * * * * must demonstrate to CMS’s satisfaction (13) Fails to comply with §§ 422.222 § 422.508 Modification or termination of that it is capable of administering and contract by mutual consent. and 422.224, that requires the MA managing an MA contract and is able to organization not to make payment to (a) * * * manage the level of risk required under excluded individuals and entities, nor (3) If the organization submits a the contract during the first 3 years of to individuals and entities on the request to end the term of its contract the contract. Factors that CMS takes into preclusion list, defined in § 422.2. after the deadline provided in consideration in making this evaluation (b) Suspension of enrollment and § 422.506(a)(2)(i), the contract may be include the extent to which— communications. If CMS makes a terminated by mutual consent in (1)(i) The contract applicant determination that could lead to a accordance with paragraphs (a) through management and providers have contract termination under § 422.510(a), (d) of this section. CMS may mutually previous experience in managing and CMS may impose the intermediate consent to the contract termination if providing health care services under a sanctions at § 422.750(a)(1) and (3). the contract termination does not risk-based payment arrangement to at * * * * * negatively affect the administration of least as many individuals as the the Medicare program. applicable minimum enrollment for the Subpart V—Medicare Advantage * * * * * entity as described in paragraph (a) of Communication Requirements ■ 37. Section 422.510 is amended by this section; or revising paragraphs (a)(4)(viii) and (xiii) (ii) The contract applicant has the ■ 43. The subpart heading for Subpart V and adding paragraphs (a)(4)(xiv) and financial ability to bear financial risk is revised to read as set forth above. (xv) and (b)(2)(v) to read as follows: under an MA contract. In determining ■ 44. Section 422.2260 is revised to read whether an organization is capable of as follows: § 422.510 Termination of contract by CMS. bearing risk, CMS considers factors such § 422.2260 Definitions. (a) * * * as the organization’s management (4) * * * experience as described in this For the purposes of this section— Communications means activities and (viii) Substantially fails to comply paragraph (b)(1) and stop-loss insurance use of materials to provide information with the requirements in subpart V of that is adequate and acceptable to CMS; this part. to current and prospective enrollees. and Communication materials means all (2) The contract applicant is able to * * * * * information provided to current and (xiii) Fails to meet the preclusion list establish a marketing and enrollment prospective enrollees. Marketing requirements in accordance with process that allows it to meet the materials are a subset of communication § 422.222 and 422.224. applicable enrollment requirement material. (xiv) The MA organization has specified in paragraph (a) of this section Marketing means the use of materials committed any of the acts in before completion of the third contract or activities that meet the following: § 422.752(a) that support the imposition year. (1) By the MA organization or of intermediate sanctions or civil money * * * * * downstream entities. penalties under Subpart O of this part. (2) Intended to draw a beneficiary’s § 422.590 [Amended] (xv) Following the issuance of a attention to a MA plan or plans. notice to the MA organization no later ■ 39. Section 422.590 is amended by (3) Influence a beneficiary’s decision- than August 1, CMS must terminate, removing paragraph (f) and making process when making a MA effective December 31 of the same year, redesignating paragraphs (g) and (h) as plan selection or influence a an individual MA plan if that plan does paragraphs (f) and (g), respectively. beneficiary’s decision to stay enrolled in not have a sufficient number of § 422.664 [Amended] a plan (that is, retention-based enrollees to establish that it is a viable ■ 40. Section 422.664 is amended in marketing). independent plan option. Marketing materials include, but are paragraph (b)(1) by removing the phrase (b) * * * not limited to the following: ‘‘July 15’’ and adding in its place (2) * * * (1) Materials such as brochures; (v) In the event that CMS issues a ‘‘September 1’’. ■ 41. Section 422.750 is amended by posters; advertisements in media such termination notice to an MA as newspapers, magazines, television, organization on or before August 1 with revising paragraph (a)(3) to read as follows: radio, billboards, or the Internet; and an effective date of the following social media content. December 31, the MA organization must § 422.750 Types of intermediate sanctions (2) Marketing representative materials issue notification to its Medicare and civil money penalties. such as scripts or outlines for enrollees at least 90 days before to the (a) * * * telemarketing or other presentations. effective date of the termination. (3) Suspension of communication (3) Presentation materials such as * * * * * activities to Medicare beneficiaries by slides and charts. ■ 38. Section 422.514 is amended by an MA organization, as defined by CMS. Marketing materials exclude materials revising paragraph (b) to read as follows: * * * * * that— ■ 42. Section 422.752 is amended by (1) Do not include information about § 422.514 Minimum enrollment the plan’s benefit structure or cost requirements. revising paragraphs (a)(11) and (13) and (b) to read as follows: sharing; * * * * * (2) Do not include information about (b) Minimum enrollment waiver. For a § 422.752 Basis for imposing intermediate measuring or ranking standards (for contract applicant that does not meet sanctions and civil money penalties. example, star ratings); the applicable requirement of paragraph (a) * * * (3) Mention benefits or cost sharing, (a) of this section at application for an (11) Fails to comply with but do not meet the definition of MA contract, CMS may waive the communication restrictions described in marketing in this section; or

VerDate Sep<11>2014 20:14 Nov 27, 2017 Jkt 244001 PO 00000 Frm 00171 Fmt 4701 Sfmt 4702 E:\FR\FM\28NOP2.SGM 28NOP2 sradovich on DSK3GMQ082PROD with PROPOSALS2 56506 Federal Register / Vol. 82, No. 227 / Tuesday, November 28, 2017 / Proposed Rules

(4) Unless otherwise specified by (3) Claim the MA organization is or misrepresents the MA organization, CMS because of their use or purpose, recommended or endorsed by CMS or its marketing representatives, or CMS. are required under § 422.111. Medicare or that CMS or Medicare (7) Conduct sales presentations or ■ 45. Section 422.2262 is amended by recommends that the beneficiary enroll distribute and accept MA plan revising paragraph (d) to read as in the MA plan. It may explain that the enrollment forms in provider offices or follows: organization is approved for other areas where health care is participation in Medicare. delivered to individuals, except in the § 422.2262 Review and distribution of (4) Employ MA plan names that case where such activities are marketing materials. suggest that a plan is not available to all conducted in common areas in health * * * * * Medicare beneficiaries. This prohibition care settings. (d) Enrollee communication materials. must not apply to MA plan names in (8) Conduct sales presentations or Enrollee communication materials may effect on July 31, 2000. distribute and accept plan applications be reviewed by CMS, which may upon (5) Display the names and/or logos of at educational events. review determine that such materials co-branded network providers on the (9) Display the names and/or logos of must be modified, or may no longer be organization’s member identification provider co-branding partners on used. card, unless the provider names, and/or marketing materials, unless the ■ 46. Section 422.2264 is revised to read logos are related to the member materials clearly indicate that other as follows: selection of specific provider providers are available in the network. organizations (for example, physicians, § 422.2264 Guidelines for CMS review. (10) Knowingly target or send hospitals). marketing materials to any MA enrollee In reviewing marketing material or (6) Use a plan name that does not during the Open Enrollment Period. election forms under § 422.2262, CMS include the plan type. The plan type (11) Engage in any other marketing determines that the materials— should be included at the end of the activity prohibited by CMS in its (a) Provide, in a format (and, where plan name. marketing guidance. appropriate, print size), and using (7) For markets with a significant non- (12) Engage in any discriminatory standard terminology that may be English speaking population, provide activity such as attempting to recruit specified by CMS, the following materials, as defined by CMS, unless in Medicare beneficiaries from higher information to Medicare beneficiaries the language of these individuals. income areas without making interested in enrolling: Specifically, MA organizations must comparable efforts to enroll Medicare (1) Adequate written description of translate materials into any non-English beneficiaries from lower income areas. rules (including any limitations on the language that is the primary language of (13) Solicit door-to-door for Medicare providers from whom services can be at least 5 percent of the individuals in beneficiaries or through other obtained), procedures, basic benefits a plan benefit package (PBP) service unsolicited means of direct contact, and services, and fees and other charges. area. including calling a beneficiary without (2) Adequate written description of (b) In marketing, MA organizations the beneficiary initiating the contact. any supplemental benefits and services. may not do any of the following: (14) Use providers or provider groups (b) Notify the general public of its (1) Provide cash or other monetary to distribute printed information enrollment period in an appropriate rebates as an inducement for enrollment comparing the benefits of different manner, through appropriate media, or otherwise. health plans unless the providers, throughout its service area and if (2) Offer gifts to potential enrollees, provider groups, or pharmacies accept applicable, continuation areas. unless the gifts are of nominal (as and display materials from all health (c) Include in written materials notice defined in the CMS Marketing plans with which the providers, that the MA organization is authorized Guidelines) value, are offered to all provider groups, or pharmacies contract. by law to refuse to renew its contract potential enrollees without regard to The use of publicly available with CMS, that CMS also may refuse to whether or not the beneficiary enrolls, comparison information is permitted if renew the contract, and that termination and are not in the form of cash or other approved by CMS in accordance with or non-renewal may result in monetary rebates. the Medicare marketing guidance. termination of the beneficiary’s (3) Market non-health care related (15) Provide meals to potential enrollment in the plan. products to prospective enrollees during enrollees, which is prohibited, (d) Ensure that materials are not any MA or Part D sales activity or regardless of value. presentation. This is considered cross- materially inaccurate or misleading or * * * * * otherwise make material selling and is prohibited. misrepresentations. (4) Market any health care related § 422.2272 [Amended] ■ 47. Section 422.2268 is amended by: product during a marketing ■ 48. Section § 422.2272 is amended by ■ a. Removing the introductory text; and appointment beyond the scope agreed removing paragraph (e). ■ b. Revising paragraphs (a) and (b). upon by the beneficiary, and The revisions read as follows: documented by the plan, prior to the § 422.2274 [Amended] appointment. ■ 49. Section 422.2274 is amended by— § 422.2268 Standards for MA organization (5) Market additional health related ■ a. Redesignating paragraph (b)(1)(iii) communications and marketing. lines of plan business not identified as paragraph (b)(1)(iv). (a) In conducting communication prior to an individual appointment ■ b. Redesignating paragraph (b)(2)(iii) activities, MA organizations may not do without a separate scope of appointment as paragraph (b)(1)(iii). any of the following: identifying the additional lines of ■ c. Removing paragraph (b)(2); and (1) Provide information that is business to be discussed. ■ d. Redesignating paragraph (b)(3) as inaccurate or misleading. (6) Distribute marketing materials for paragraph (b)(2). (2) Engage in activities that could which, before expiration of the 45-day mislead or confuse Medicare period, the MA organization receives § 422.2410 [Amended] beneficiaries, or misrepresent the MA from CMS written notice of disapproval ■ 50. Section 422.2410 is amended in organization. because it is inaccurate or misleading, paragraph (a) by removing the phrase

VerDate Sep<11>2014 20:14 Nov 27, 2017 Jkt 244001 PO 00000 Frm 00172 Fmt 4701 Sfmt 4702 E:\FR\FM\28NOP2.SGM 28NOP2 sradovich on DSK3GMQ082PROD with PROPOSALS2 Federal Register / Vol. 82, No. 227 / Tuesday, November 28, 2017 / Proposed Rules 56507

‘‘an MLR’’ and adding in its place the organization must submit to CMS, in a section 351(k) of the Public Health phrase ‘‘the information required under timeframe and manner specified by Service Act (42 U.S.C. 262(k)) is § 422.2460’’. CMS, the following information: approved. (1) Fully credible and partially § 422.2420 [Amended] * * * * * credible contracts. For each contract ■ 58. Amend § 423.32 by revising ■ 51. Section 422.2420 is amended— under this part that has fully credible or ■ paragraph (b) introductory text and a. By removing and reserving partially credible experience, as redesignating paragraphs (b)(i) and (ii) paragraph (b)(2)(ix); and determined in accordance with ■ as (b)(1) and (2). b. In paragraph (d)(2)(i), removing the § 422.2440(d), the MA organization The revision reads as follows: phrase ‘‘in § 422.2420(b) or (c)’’ and must report to CMS the MLR for the adding in its place the phrase ‘‘in contract and the amount of any § 423.32 Enrollment process. paragraph (b) or (c) of this section’’. remittance owed to CMS under * * * * * ■ 52. Section 422.2430 is amended by— § 422.2410. (b) Enrollment form or CMS-approved ■ a. Redesignating paragraph (a) (2) Non-credible contracts. For each enrollment mechanism. The enrollment introductory text and paragraphs (a)(1) contract under this part that has non- form or CMS-approved enrollment and (2) as paragraphs (a)(1), (2), and (3), credible experience, as determined in mechanism must comply with CMS respectively; accordance with § 422.2440(d), the MA instructions regarding content and ■ b. Adding a paragraph (a) subject organization must report to CMS that format and must have been approved by heading and revising newly the contract is non-credible. CMS as described in § 423.2262. redesignated paragraph (a)(1); (c) Total revenue included as part of * * * * * ■ c. Adding paragraph (a)(4); and the MLR calculation must be net of all ■ 59. Section 423.38 is amended by— ■ d. Removing and reserving paragraph projected reconciliations. ■ a. Revising paragraph paragraphs (c) (b)(8). (d) The MLR is reported once, and is introductory text, (c)(4), and (c)(8)(i)(C); The revision and addition read as not reopened as a result of any payment ■ b. Adding paragraph (c)(9); follows: reconciliation processes. ■ c. Revising paragraph (d); and § 422.2430 Activities that improve health ■ d. Adding paragraph (e). § 422.2480 [Amended] care quality. The revisions and additions read as ■ (a) Activity requirements. (1) 54. Section 422.2480 is amended— follows: ■ a. In the introductory text by Activities conducted by an MA § 423.38 Enrollment periods. organization to improve quality must removing the phrase ‘‘reviews of reports either— submitted’’ and adding in its place * * * * * (i) Fall into one of the categories in ‘‘review of data submitted’’. (c) Special enrollment periods. A Part ■ paragraph (a)(2) of this section and meet b. In paragraph (d) introductory text D eligible individual may enroll in a all of the requirements in paragraph by removing the phrase ‘‘Reports PDP or disenroll from a PDP and enroll (a)(3) of this section; or submitted ’’ and adding in its place the in another PDP or MA–PD plan (as (ii) Be listed in paragraph (a)(4). phrase ‘‘Data submitted’’. provided at § 422.62(b) of this chapter), as applicable, under any of the * * * * * § 422.2490 [Amended] following circumstances: (4)(i) For an MA contract that ■ 55. Section 422.2490 is amended in includes MA–PD plans (described in * * * * * paragraph (a) by removing the phrase (4) The individual is a full-subsidy § 422.2420(a)(2)), Medication Therapy ‘‘information contained in reports Management Programs meeting the eligible individual or other subsidy- submitted’’ and adding in its place the eligible individual as defined in requirements of § 423.153(d) of this phrase ‘‘information submitted’’. chapter. § 423.772, who has not been identified (ii) Fraud reduction activities, PART 423—MEDICARE PROGRAM; as a ‘‘potential at-risk beneficiary’’ or including fraud prevention, fraud MEDICARE PRESCRIPTION DRUG ‘‘at-risk beneficiary’’ as defined in detection, and fraud recovery. PROGRAM § 423.100 and— (i) Making an allowable onetime-per- * * * * * ■ 56. The authority citation for part 423 calendar-year election; or ■ 53. Section 422.2460 is revised to read continues to read as follows: (ii) Making an election after as follows: Authority: Secs. 1102, 1860D–1 through notification of a CMS or State-initiated § 422.2460 Reporting requirements. 1860D–42, and 1871 of the Social Security enrollment action or within 2 months of (a) For each contract year, from 2014 Act (42 U.S.C. 1302, 1395w–101 through that enrollment action’s effective date. through 2017, each MA organization 1395w–152, and 1395hh). * * * * * must submit to CMS, in a timeframe and ■ 57. Amend § 423.4 by revising the (8) * * * manner specified by CMS, a report that definition of ‘‘Generic drug’’ to read as (i) * * * includes but is not limited to the data follows: (C) The PDP (or its agent, needed by the MA organization to representative, or plan provider) calculate and verify the MLR and § 423.4 Definitions. materially misrepresented the plan’s remittance amount, if any, for each * * * * * provisions in communication materials contract, under this part, such as Generic drug means— as outlined in subpart V. incurred claims, total revenue, (1) A drug for which an application * * * * * expenditures on quality improving under section 505(j) of the Federal Food, (9) The individual is making an activities, non-claims costs, taxes, Drug, and Cosmetic Act (21 U.S.C. election within 2 months of a gain, loss, licensing and regulatory fees, and any 355(j)) is approved; and or change to Medicaid or LIS eligibility, remittance owed to CMS under (2) For purposes of cost sharing under or notification of such a change, § 422.2410. sections 1860D–2(b)(4) and 1860D– whichever is later. (b) For contract year 2018 and for 14(a)(1)(D) of the Act only, a biological (d) Enrollment period to coordinate each subsequent contract year, each MA product for which an application under with MA annual 45-day disenrollment

VerDate Sep<11>2014 20:14 Nov 27, 2017 Jkt 244001 PO 00000 Frm 00173 Fmt 4701 Sfmt 4702 E:\FR\FM\28NOP2.SGM 28NOP2 sradovich on DSK3GMQ082PROD with PROPOSALS2 56508 Federal Register / Vol. 82, No. 227 / Tuesday, November 28, 2017 / Proposed Rules

period. Through 2018, an individual removal or cost-sharing change affects delivers extended days’ supplies of enrolled in an MA plan who elects the Part D enrollee’s access to the drug covered Part D drugs via common Original Medicare from January 1 during the current plan year. carrier at mail-order cost sharing. through February 14, as described in * * * * * * * * * * § 422.62(a)(5), may also elect a PDP At-risk beneficiary means a Part D Potential at-risk beneficiary means a during this time. eligible individual— Part D eligible individual— (e) Enrollment period to coordinate (1) Who is— (1) Who is identified using clinical with MA open enrollment period. For (i) Identified using clinical guidelines guidelines (as defined in § 423.100); or 2019 and subsequent years, an (as defined in § 423.100); (2) With respect to whom a Part D individual who makes an election as (ii) Not an exempted beneficiary; and plan sponsor receives a notice upon the described in § 422.62(a)(3), may make (iii) Determined to be at-risk for beneficiary’s enrollment in such an election to enroll in or disenroll from misuse or abuse of such frequently sponsor’s plan that the beneficiary was Part D coverage. An individual who abused drugs under a Part D plan identified as a potential at-risk elects Original Medicare during the MA sponsor’s drug management program in beneficiary (as defined in paragraph (1) open enrollment period may elect to accordance with the requirements of of this definition) under the prescription enroll in a PDP during this time. § 423.153(f); or drug plan in which the beneficiary was (2) With respect to whom a Part D ■ 60. Section 423.40 is amended by most recently enrolled, such plan sponsor receives a notice upon the revising paragraph (d) and adding identification had not been terminated beneficiary’s enrollment in such paragraph (e) to read as follows: upon disenrollment, and the new plan sponsor’s plan that the beneficiary was has adopted the identification. § 423.40 Effective dates. identified as an at-risk beneficiary (as Preclusion list means a CMS compiled defined in the paragraph (1) of this * * * * * list of prescribers who— definition) under the prescription drug (d) PDP enrollment period to (1) Meet all of the following plan in which the beneficiary was most coordinate with the MA annual requirements: recently enrolled, such identification disenrollment period. Through 2018, an (i) The prescriber is currently revoked had not been terminated upon enrollment made from January 1 from the Medicare program under disenrollment, and the new plan has through February 14 by an individual § 424.535. adopted the identification. who has disenrolled from an MA plan (ii) The prescriber is currently under as described in § 422.62(a)(5) will be * * * * * a reenrollment bar under § 424.535(c). effective the first day of the month Clinical guidelines, for the purposes (iii) CMS determines that the following the month in which the of a drug management program under underlying conduct that led to the enrollment in the PDP is made. § 423.153(f), are criteria— revocation is detrimental to the best (1) To identify potential at-risk (e) PDP enrollment period to interests of the Medicare program. In beneficiaries who may be determined to coordinate with the MA annual making this determination under this be at-risk beneficiaries under such disenrollment period. For 2019 and paragraph, CMS considers the following programs; and subsequent years, an enrollment made factors: (2) That are developed in accordance by an individual who elects Original (A) The seriousness of the conduct with § 423.153(f)(16) and published in Medicare during the MA open underlying the prescriber’s revocation; guidance annually. enrollment period as described in (B) The degree to which the § 422.62(a)(3), will be effective the first * * * * * prescriber’s conduct could affect the day of the month following the month Exempted beneficiary means with integrity of the Part D program; and in which the election is made. respect to a drug management program, ■ (C) Any other evidence that CMS 61. Section § 423.100 is amended— an enrollee who— deems relevant to its determination; or. ■ a. By revising the definition of (1) Has elected to receive hospice (2) Meet both of the following ‘‘Affected enrollee’’; care; requirements: ■ b. By adding in alphabetical order (2) Is a resident of a long-term care (i) The prescriber has engaged in definitions for ‘‘At risk beneficiary’’, facility, of a facility described in section behavior for which CMS could have ‘‘Clinical guidelines’’, ‘‘Exempted 1905(d) of the Act, or of another facility revoked the prescriber to the extent beneficiary’’, ‘‘Frequently abused drug’’, for which frequently abused drugs are applicable if he or she had been and ‘‘Mail-Order pharmacy’’; dispensed for residents through a enrolled in Medicare. ■ c. By removing the definition of contract with a single pharmacy; or (ii) CMS determines that the ‘‘Other authorized prescriber’’; (3) Has a cancer diagnosis. underlying conduct that would have led ■ d. By adding in alphabetical order Frequently abused drug means a to the revocation is detrimental to the definitions for ‘‘Potential at-risk controlled substance under the Federal best interests of the Medicare program. beneficiary’’, ‘‘Preclusion List’’, and Controlled Substances Act that the In making this determination under this ‘‘Program size’’; and Secretary determines is frequently ■ e. By revising the definition of ‘‘Retail abused or diverted, taking into account paragraph, CMS considers the all of the pharmacy’’. all of the following factors: following factors: The revisions and additions read as (1) The drug’s schedule designation (A) The seriousness of the conduct follows: by the Drug Enforcement involved. Administration. (B) The degree to which the § 423.100 Definitions. (2) Government or professional prescriber’s conduct could affect the * * * * * guidelines that address that a drug is integrity of the Part D program. Affected enrollee means a Part D frequently abused or misused. (C) Any other evidence that CMS enrollee who is currently taking a (3) An analysis of Medicare or other deems relevant to its determination. covered Part D drug that is either being drug utilization or scientific data. * * * * * removed from a Part D plan’s formulary, * * * * * Program size means the estimated or whose preferred or tiered cost-sharing Mail-order pharmacy means a population of potential at-risk status is changing and such drug licensed pharmacy that dispenses and beneficiaries in drug management

VerDate Sep<11>2014 20:14 Nov 27, 2017 Jkt 244001 PO 00000 Frm 00174 Fmt 4701 Sfmt 4702 E:\FR\FM\28NOP2.SGM 28NOP2 sradovich on DSK3GMQ082PROD with PROPOSALS2 Federal Register / Vol. 82, No. 227 / Tuesday, November 28, 2017 / Proposed Rules 56509

programs (described in § 423.153(f)) paragraphs (b)(5)(iv) and (b)(6) of this provides advance general notice to CMS operated by Part D plan sponsors that section. and other specified entities. the Secretary determines can be * * * * * (E) The Part D sponsor provides effectively managed by such sponsors as (iii) Ensure the provision of a notice of any such formulary changes to part of the process to develop clinical temporary fill when an enrollee requests affected enrollees and CMS and other guidelines. a fill of a non-formulary drug during the specified entities consistent with the * * * * * time period specified in paragraph requirements of paragraphs (b)(5)(i) (as Retail pharmacy means any licensed (b)(3)(ii) of this section (including Part applicable) and (ii) of this section. This pharmacy that is open to dispense D drugs that are on a plan’s formulary would include direct notice to the prescription drugs to the walk-in but require prior authorization or step affected enrollees. general public from which Part D therapy under a plan’s utilization * * * * * enrollees could purchase a covered Part management rules) by providing a one- (c) * * * D drug at retail cost sharing without time, temporary supply of at least a (5)(i) A Part D plan sponsor must being required to receive medical month’s supply of medication, unless reject, or must require its pharmacy services from a provider or institution the prescription is written by a benefit manager (PBM) to reject, a affiliated with that pharmacy. prescriber for less than a month’s pharmacy claim for a Part D drug unless supply and requires the Part D sponsor * * * * * the claim contains the active and valid to allow multiple fills to provide up to ■ 62. Section 423.120 is amended by— National Provider Identifier (NPI) of the a total of a month’s supply of prescriber who prescribed the drug. ■ a. Redesignating paragraph (b)(3)(i) medication. introductory text and paragraphs (ii) The sponsor must communicate at * * * * * (b)(3)(i)(A) through (D) as paragraphs point-of sale whether or not a submitted (5) * * * NPI is active and valid in accordance (b)(3)(i)(A) introductory text and (iv) A Part D sponsor may (b)(3)(i)(A)(1) through (4); with this paragraph (c)(5)(ii). immediately remove a brand name drug (A) If the sponsor communicates that ■ b. Adding a new paragraph (as defined in § 423.4) from its Part D the NPI is not active and valid, the (b)(3)(i)(B); formulary or change the brand name sponsor must permit the pharmacy to— ■ c. Revising paragraph (b)(3)(iii); drug’s preferred or tiered cost-sharing (1) Confirm that the NPI is active and ■ d. In paragraph (b)(5)(i) introductory without meeting the deadlines and refill valid; or text, by removing the figure ‘‘60’’ and requirements of paragraph (b)(5)(i) of (2) Correct the NPI. adding in its place the figure ‘‘30’’ and this section provided that the Part D (B) If the pharmacy confirms that the by adding the phrase ‘‘(for purposes of sponsor does all of the following: NPI is active and valid or corrects the this paragraph (b)(5) these entities are (A) At the same time that it removes NPI, the sponsor must pay the claim if referred to as ‘‘CMS and other specified such brand name drug or changes its it is otherwise payable. entities’’) after the word ‘‘pharmacists’’; preferred or tiered cost-sharing, it adds (iii) A Part D sponsor must not later ■ e. In paragraph (b)(5)(i)(A), by a therapeutically equivalent (as defined recoup payment from a network removing the phrase ‘‘60 days’’ and in § 423.100) generic drug (as defined in pharmacy for a claim that does not § 423.4) to its formulary with the same adding in its place the phrase ‘‘2 contain an active and valid individual or lower cost-sharing and the same or months’’; prescriber NPI on the basis that it does ■ less restrictive utilization management f. In paragraph (b)(5)(i)(B), by not contain one, unless the sponsor— removing the figure ‘‘60’’ and adding in criteria. (B) The Part D sponsor previously (A) Has complied with paragraph (ii) its place the figure ‘‘30’’; of this section; ■ g. In paragraph (b)(5)(iii), by removing could not have included such therapeutically equivalent generic drug (B) Has verified that a submitted NPI the phrase ‘‘, CMS, State Pharmaceutical was not in fact active and valid; and Assistance Programs (as defined in on its formulary when it requested CMS formulary approval consistent with (C) The agreement between the parties § 423.454), entities providing other explicitly permits such recoupment. prescription drug coverage (as described § 423.120(b)(2) because such generic drug was not yet available on the (iv) With respect to requests for in § 423.464(f)(1)), authorized reimbursement submitted by Medicare prescribers, network pharmacies, and market. (C) Before making any permitted beneficiaries, a Part D sponsor may not pharmacists’’ and adding in its place the generic substitutions, the Part D sponsor make payment to a beneficiary phrase ‘‘and CMS and other specified provides general notice to all current dependent upon the sponsor’s entities’’; and prospective enrollees in its acquisition of an active and valid ■ h. Adding paragraph (b)(5)(iv); formulary and other applicable individual prescriber NPI, unless there ■ i. In paragraph (b)(6), by removing the beneficiary communication materials is an indication of fraud. If the sponsor phrase ‘‘under paragraphs (b)(5)(iii) of advising them that— is unable to retrospectively acquire an this section’’ and adding in its place the (1) Such changes may be made at any active and valid individual prescriber phrase ‘‘under paragraphs (b)(5)(iii) and time when a new generic is added in NPI, the sponsor may not seek recovery (iv) of this section’’; and place of a brand name drug, and there of any payment to the beneficiary solely ■ j. Revising paragraphs (c)(5) and (6). may be no advance direct notice to the on that basis. The additions and revisions read as affected enrollees; (6)(i) Except as provided in paragraph follows: (2) If such a substitution should (c)(6)(iv) of this section, a Part D occur, affected enrollees will receive sponsor must reject, or must require its § 423.120 Access to covered Part D drugs. direct notice including information on PBM to reject, a pharmacy claim for a * * * * * the specific drugs involved and steps Part D drug if the individual who (b) * * * they may take to request coverage prescribed the drug is included on the (3) * * * determinations and exceptions under preclusion list, defined in § 423.100. (B) Not apply in cases in which a Part §§ 423.566 and 423.578; and (ii) Except as provided in paragraph D sponsor substitutes a generic drug for (D) Before making any permitted (c)(6)(iv) of this section, a Part D a brand name drug as permitted under generic substitutions, the Part D sponsor sponsor must deny, or must require its

VerDate Sep<11>2014 20:14 Nov 27, 2017 Jkt 244001 PO 00000 Frm 00175 Fmt 4701 Sfmt 4702 E:\FR\FM\28NOP2.SGM 28NOP2 sradovich on DSK3GMQ082PROD with PROPOSALS2 56510 Federal Register / Vol. 82, No. 227 / Tuesday, November 28, 2017 / Proposed Rules

PBM to deny, a request for the preclusion list should it determine who meet the definition of an at-risk reimbursement from a Medicare that exceptional circumstances exist beneficiary and a potential at-risk beneficiary if the request pertains to a regarding beneficiary access to beneficiary in § 423.100 and responding Part D drug that was prescribed by an prescriptions. In making a to requests from other sponsors for individual who is identified by name in determination as to whether such information about at-risk beneficiaries the request and who is included on the circumstances exist, CMS takes into and potential at-risk beneficiaries who preclusion list, defined in § 423.100. account— recently disenrolled from the sponsor’s (iii) A Part D plan sponsor may not (A) The degree to which beneficiary prescription drug benefit plan. submit a prescription drug event (PDE) access to Part D drugs would be (2) Case management/clinical record to CMS unless it includes on the impaired; and contact/prescriber verification—(i) PDE record the active and valid (B) Any other evidence that CMS General rule. The sponsor’s clinical staff individual NPI of the prescriber of the deems relevant to its determination. must conduct case management for each drug, and the prescriber is not included * * * * * potential at-risk beneficiary for the on the preclusion list, defined in ■ 63. Section 423.128 is amended by purpose of engaging in clinical contact § 423.100, for the date of service. revising paragraph (d)(2)(iii) to reads as with the prescribers of frequently (iv)(A) A Part D sponsor or its PBM follows: abused drugs and verifying whether a must not reject a pharmacy claim for a potential at-risk beneficiary is an at-risk Part D drug under paragraph (c)(6)(i) of § 423.128 Dissemination of Part D plan beneficiary. Except as provided in information. this section or deny a request for paragraph (f)(2)(ii) of this section, the reimbursement under paragraph * * * * * sponsor must do all of the following: (c)(6)(ii) of this section unless the (d) * * * (A) Send written information to the sponsor has provided the provisional (2) * * * beneficiary’s prescribers that the (iii) Provides current and prospective coverage of the drug and written notice beneficiary meets the clinical guidelines Part D enrollees with notice that is to the beneficiary required by paragraph and is a potential at risk beneficiary. timely under § 423.120(b)(5) regarding (c)(6)(iv)(B) of this section. (B) Elicit information from the any removal or change in the preferred (B) Upon receipt of a pharmacy claim prescribers about any factors in the or tiered cost-sharing status of a Part D or beneficiary request for beneficiary’s treatment that are relevant drug on its Part D plan’s formulary. reimbursement for a Part D drug that a to a determination that the beneficiary Part D sponsor would otherwise be * * * * * is an at-risk beneficiary, including ■ required to reject or deny in accordance 64. Section 423.153 is amended by whether prescribed medications are with paragraph (c)(6)(i) or (ii) of this adding a sentence at the end of appropriate for the beneficiary’s medical section, a Part D sponsor or its PBM paragraph (a) and adding paragraph (f) conditions or the beneficiary is an must do the following: to read as follows: exempted beneficiary. (1) Provide the beneficiary with the § 423.153 Drug utilization management, (C) In cases where the prescribers following, subject to all other Part D have not responded to the inquiry rules and plan coverage requirements: quality assurance, and medication therapy management programs (MTMPs). described in paragraph (f)(2)(i)(B) of this (i) A provisional supply coverage section, make reasonable attempts to period during which the sponsor must (a) * * * communicate telephonically with the cover all drugs dispensed to the A Part D plan sponsor may establish prescribers within a reasonable period beneficiary in accordance with a drug management program for at-risk after sending the written information. prescriptions written by the individual beneficiaries enrolled in their (ii) Exception for identification by on the preclusion list. The provisional prescription drug benefit plans to prior plan. If a beneficiary was supply period begins on the date-of- address overutilization of frequently identified as a potential at-risk or an at- service the first drug is dispensed in abused drugs, as described in paragraph risk beneficiary by his or her most accordance with a prescription written (f) of this section. recent prior plan and such identification by the individual on the preclusion list. * * * * * (ii) Written notice within 3 business (f) Drug management programs. A has not been terminated in accordance days after adjudication of the first claim drug management program must meet with paragraph (f)(14) of this section, or request for the drug in a form and all the following requirements: the sponsor meets the requirements in manner specified by CMS. (1) Written policies and procedures. A paragraph (f)(2)(i) of this section, so long (2) Ensure that reasonable efforts are sponsor must document its drug as the sponsor obtains case management made to notify the prescriber of a management program in written policies information from the previous sponsor beneficiary who was sent a notice under and procedures that are approved by the and such information is clinically paragraph (c)(6)(iv)(B)(1)(ii) of this applicable P&T committee and reviewed adequate and up to date. section. and updated as appropriate. These (3) Limitation on access to coverage (v)(A) CMS sends written notice to the policies and procedures must address for frequently abused drugs. Subject to prescriber via letter of his or her all aspects of the sponsor’s drug the requirements of paragraph (f)(4) of inclusion on the preclusion list. The management program, including but not this section, a Part D plan sponsor may notice must contain the reason for the limited to the following: do all of the following: inclusion on the preclusion list and (i) The appropriate credentials of the (i) Implement a point-of-sale claim inform the prescriber of his or her personnel conducting case management edit for frequently abused drugs that is appeal rights. required under paragraph (f)(2) of this specific to an at-risk beneficiary. (B) A prescriber may appeal his or her section. (ii) In accordance with paragraphs inclusion on the preclusion list under (ii) The necessary and appropriate (f)(10) and (11) of this section, limit an this section in accordance with 42 CFR contents of files for case management at-risk beneficiary’s access to coverage part 498. required under paragraph (f)(2) of this for frequently abused drugs to those that (vi) CMS has the discretion not to section. are— include a particular individual on (or if (iii) Monitoring reports and (A) Prescribed for the beneficiary by warranted, remove the individual from) notifications about incoming enrollees one or more prescribers;

VerDate Sep<11>2014 20:14 Nov 27, 2017 Jkt 244001 PO 00000 Frm 00176 Fmt 4701 Sfmt 4702 E:\FR\FM\28NOP2.SGM 28NOP2 sradovich on DSK3GMQ082PROD with PROPOSALS2 Federal Register / Vol. 82, No. 227 / Tuesday, November 28, 2017 / Proposed Rules 56511

(B) Dispensed to the beneficiary by coverage for frequently abused drugs to (i) An explanation of the sponsor’s one or more network pharmacies; or those that are prescribed for the drug management program, the specific (C) Specified in both paragraphs beneficiary by one or more prescribers limitation the sponsor intends to place (f)(3)(ii)(A) and (C) of this section. under paragraph (f)(3)(ii)(A) of this on the beneficiary’s access to coverage (iii)(A) If the sponsor implements an section unless— for frequently abused drugs under the edit as specified in paragraph (f)(3)(i) of (A) At least 6 months has passed from program. this section, the sponsor must not cover the date the beneficiary was first (ii) The timeframe for the sponsor’s frequently abused drugs for the identified as a potential at-risk decision beneficiary in excess of the edit, unless beneficiary from the date of the (iii) If applicable, any limitation on the edit is terminated or revised based applicable CMS identification report; the availability of the special enrollment on a subsequent determination, and period described in § 423.38. including a successful appeal. (B) The beneficiary meets the clinical (6) Clear instructions that explain (B) If the sponsor limits the at-risk guidelines and was reported by the most how the beneficiary can contact the beneficiary’s access to coverage as recent CMS identification report. sponsor, including how the beneficiary specified in paragraph (f)(3)(ii) of this (5) Initial notice to a beneficiary. (i) A may submit information to the sponsor section, the sponsor must cover Part D sponsor that intends to limit the in response to the request described in frequently abused drugs for the access of a potential at-risk beneficiary paragraph (f)(5)(ii)(C)(4) of this section. beneficiary only when they are obtained to coverage for frequently abused drugs (7) Contact information for other from the selected pharmacy(ies) or under paragraph (f)(3) of this section organizations that can provide the prescriber(s) or both, as applicable— must provide an initial written notice to beneficiary with assistance regarding (1) In accordance with all other the beneficiary. the sponsor’s drug management coverage requirements of the (ii) The notice must do all of the program. beneficiary’s prescription drug benefit following: (8) Other content that CMS plan, unless the limit is terminated or (A) Use language approved by the determines is necessary for the revised based on a subsequent Secretary. beneficiary to understand the determination, including a successful (B) Be in a readable and information required in this notice. appeal; and understandable form. (iii) The Part D plan sponsor must (2) Except as necessary to provide (C) Provide all of the following make reasonable efforts to provide the reasonable access in accordance with information: beneficiary’s prescriber(s) of frequently paragraph (f)(12) of this section. (1) An explanation that the abused drugs with a copy of the notice (4) Requirements for limiting access to beneficiary’s current or immediately required under paragraph (f)(5)(i) of this coverage for frequently abused drugs. (i) prior Part D plan sponsor has identified section. A sponsor may not limit the access of the beneficiary as a potential at-risk (6) Second notice. (i) Upon making a an at-risk beneficiary to coverage for beneficiary. determination that a beneficiary is an at- frequently abused drugs under (2) A description, of all State and risk beneficiary and to limit the paragraph (f)(3) of this section, unless Federal public health resources that are beneficiary’s access to coverage for the sponsor has done all of the designed to address prescription drug frequently abused drugs under following: abuse to which the beneficiary has paragraph (f)(3) of this section, a Part D (A) Conducted case management as access, including mental health and sponsor must provide a second written required by paragraph (f)(2) of this other counseling services and notice to the beneficiary. section and updated it, if necessary. information on how to access such (ii) The second notice must do all of (B) Obtained the agreement of the services, including any such services the following: prescribers of frequently abused drugs covered by the plan under its Medicare (A) Use language approved by the for the beneficiary that the specific benefits, supplemental benefits, or Secretary. limitation is appropriate. Medicaid benefits (if the plan integrates (B) Be in a readable and (C) Provided the notices to the coverage of Medicare and Medicaid understandable form. beneficiary in compliance with benefits). (C) Provide all of the following paragraphs (f)(5) and (6) of this section. (3) An explanation of the beneficiary’s information: (ii) If the sponsor has complied with right to a redetermination if the sponsor (1) An explanation that the the requirement of paragraph (f)(2)(i)(C) issues a determination that the beneficiary’s current or immediately of this section, and the prescribers were beneficiary is an at-risk beneficiary and prior Part D plan sponsor has identified not responsive after 3 attempts by the the standard and expedited the beneficiary as an at-risk beneficiary. sponsor to contact them by telephone redetermination processes described at (2) An explanation that the within 10 business days, then the § 423.580 et seq. beneficiary is subject to the sponsor has met the requirement of (4) A request that the beneficiary requirements of the sponsor’s drug paragraph (f)(4)(i)(B) of this section. submit to the sponsor within 30 days of management program, including— (iii) The sponsor has met the case the date of this initial notice any (i) The limitation the sponsor is management requirement in paragraph information that the beneficiary believes placing on the beneficiary’s access to (f)(2)(i) of this section if— is relevant to the sponsor’s coverage for frequently abused drugs (A) The beneficiary meets paragraph determination, including which and the effective and end date of the (2) of the definition of a potential at-risk prescribers and pharmacies the limitation; and beneficiary or an at-risk beneficiary; and beneficiary would prefer the sponsor to (ii) If applicable, any limitation on the (B) The sponsor has obtained the select if the sponsor implements a availability of the special enrollment applicable case management limitation under paragraph (f)(3)(ii) of period described in § 423.38. information from the sponsor of the this section. (3) The prescriber(s) or pharmacy(ies) beneficiary’s most recent plan and (5) An explanation of the meaning or both, if and as applicable, from which updated it as appropriate. and consequences of being identified as the beneficiary must obtain frequently (iv) A Part D sponsor must not limit an at-risk beneficiary, including the abused drugs in order for them to be an at-risk beneficiary’s access to following: covered by the sponsor.

VerDate Sep<11>2014 20:14 Nov 27, 2017 Jkt 244001 PO 00000 Frm 00177 Fmt 4701 Sfmt 4702 E:\FR\FM\28NOP2.SGM 28NOP2 sradovich on DSK3GMQ082PROD with PROPOSALS2 56512 Federal Register / Vol. 82, No. 227 / Tuesday, November 28, 2017 / Proposed Rules

(4) An explanation of the beneficiary’s (8) Timing of notices. (i) Subject to (B) If the second notice is not feasible right to a redetermination under paragraph (f)(8)(ii) of this section, a Part due to the timing of the beneficiary’s § 423.580 et seq., including— D sponsor must provide the second submission, in a subsequent written (i) A description of both the standard notice described in paragraph (f)(6) of notice, issued no later than 14 days after and expedited redetermination this section or the alternate second receipt of the submission. processes; and notice described in paragraph (f)(7) of (10) Exception to beneficiary (ii) The beneficiary’s right to, and this section, as applicable, on a date that preferences. (i) If the Part D sponsor conditions for, obtaining an expedited is not less than 30 days and not more determines that the selection or change redetermination. than the earlier of the date the sponsor of a prescriber or pharmacy under (5) An explanation that the makes the relevant determination or 90 paragraph (f)(9) of this section would beneficiary may submit to the sponsor, days after the date of the initial notice contribute to prescription drug abuse or if the beneficiary has not already done described in paragraph (f)(5) of this drug diversion by the at-risk beneficiary, so, the prescriber(s) and pharmacy(ies), section. the sponsor may change the selection as applicable, from which the (ii) Immediately upon the without regard to the beneficiary’s beneficiary would prefer to obtain beneficiary’s enrollment in the gaining preferences if there is strong evidence of frequently abused drugs. plan, the gaining plan sponsor may inappropriate action by the prescriber, (6) Clear instructions that explain immediately provide a second notice pharmacy, or beneficiary. how the beneficiary may contact the described in paragraph (f)(6) of this (ii) If the sponsor changes the sponsor, including how the beneficiary section to a beneficiary for whom the selection, the sponsor must provide the may submit information to the sponsor gaining sponsor received a notice that beneficiary with— in response to the request described in the beneficiary was identified as an at- (A) At least 30 days advance written paragraph (f)(6)(ii)(C)(5) of this section. risk beneficiary by his or her most notice of the change; and (B) A rationale for the change. (7) Other content that CMS recent prior plan, and such determines is necessary for the (11) Reasonable access. In making the identification had not been terminated selections under paragraph (f)(12) of this beneficiary to understand the in accordance with paragraph (f)(14) of information required in this notice. section, a Part D plan sponsor must this section, if the sponsor is ensure both of the following: (iii) The Part D plan sponsor must implementing either of the following: make reasonable efforts to provide the (i) That the beneficiary continues to (A) A beneficiary-specific point-of- have reasonable access to frequently beneficiary’s prescriber(s) of frequently sale claim edit as described in abused drugs with a copy of the notice abused drugs, taking into account— paragraph (f)(3)(i) of this section. (1) Geographic location; required by paragraph (f)(6)(i) of this (B) A limitation on access to coverage (2) Beneficiary preference; section. as described in paragraph (f)(3(ii) of this (3) The beneficiary’s predominant (7) Alternate second notice. (i) If, after section, if such limitation would require usage of a prescriber or pharmacy or providing an initial notice to a potential the beneficiary to obtain frequently both; at-risk beneficiary under paragraph (f)(4) abused drugs from the same location of (4) The impact on cost-sharing; and of this section, a Part D sponsor pharmacy and/or the same prescriber, as (5) Reasonable travel time. determines that the potential at-risk applicable, that was selected under the (ii) Reasonable access to frequently beneficiary is not an at-risk beneficiary, immediately prior plan under paragraph abused drugs in the case of— the sponsor must provide an alternate (f)(9) of this section. (A) Individuals with multiple second written notice to the beneficiary. (9) Beneficiary preferences. Except as residences; (ii) The alternate second notice must (B) Natural disasters and similar described in paragraph (f)(10) of this do all of the following: situations; and section, if a beneficiary submits (A) Use language approved by the (C) The provision of emergency preferences for prescribers or Secretary. services. (B) Be in a readable and pharmacies or both from which the (12) Selection of prescribers and understandable form. beneficiary prefers to obtain frequently pharmacies. (i) A Part D plan sponsor (C) Provide all of the following abused drugs, the sponsor must do the must select, as applicable— information: following: (A) One, or, if the sponsor reasonably (1) The sponsor has determined that (i) Review such preferences. determines it necessary to provide the the beneficiary is not an at-risk (ii) If the beneficiary is— beneficiary with reasonable access, beneficiary. (A) Enrolled in a stand-alone more than one, network prescriber who (2) The sponsor will not limit the prescription drug benefit plan and is authorized to prescribe frequently beneficiary’s access to coverage for specifies a prescriber(s) or network abused drugs for the beneficiary, unless frequently abused drugs. pharmacy(ies) or both, select or change the plan is a stand-alone PDP and the (3) If applicable, the SEP limitation no the selection of prescriber(s) or network selection involves a prescriber(s), in longer applies. pharmacy(ies) or both for the which case, the prescriber need not be (4) Clear instructions that explain beneficiary based on beneficiary’s a network prescriber; and how the beneficiary may contact the preference(s). (B) One, or, if the sponsor reasonably sponsor. (B) Enrolled in a Medicare Advantage determines it necessary to provide the (5) Other content that CMS prescription drug benefit plan and beneficiary with reasonable access, determines is necessary for the specifies a network prescriber(s) or more than one, network pharmacy that beneficiary to understand the network pharmacy(ies) or both, select or may dispense such drugs to such information required in this notice. change the selection of prescriber(s) or beneficiary. (ii) The Part D sponsor must make pharmacy(ies) or both for the (ii)(A) For purposes of this paragraph reasonable efforts to provide the beneficiary based on the beneficiary’s (f)(12) of this section, in the case of a beneficiary’s prescriber(s) of frequently preference(s). pharmacy that has multiple locations abused drugs with a copy of the notice (iii) The sponsor must inform the that share real-time electronic data, all required in accordance with paragraph beneficiary of the selection in— such locations of the pharmacy must (f)(7)(i) of this section. (A) The second notice; or collectively be treated as one pharmacy.

VerDate Sep<11>2014 20:14 Nov 27, 2017 Jkt 244001 PO 00000 Frm 00178 Fmt 4701 Sfmt 4702 E:\FR\FM\28NOP2.SGM 28NOP2 sradovich on DSK3GMQ082PROD with PROPOSALS2 Federal Register / Vol. 82, No. 227 / Tuesday, November 28, 2017 / Proposed Rules 56513

(B) For purposes of this paragraph identifying potential at-risk 2008 (incorporated by reference in (f)(12) of this section, in the case of a beneficiaries; paragraph (c)(1)(i) of this section), to group practice, all prescribers of the (C) Provide information to CMS provide for the communication of a group practice must be treated as one within 7 business days of the date of the prescription or prescription-related prescriber. initial notice or second notice that the information between prescribers and (13) Confirmation of selections(s). (i) sponsor provided to a beneficiary, or dispensers, for the following: Before selecting a prescriber or within 7 days of a termination date, as (A) Get message transaction. pharmacy under this paragraph, a Part applicable, about a beneficiary-specific (B) Status response transaction. D plan sponsor must notify the opioid claim edit or a limitation on (C) Error response transaction. prescriber or pharmacy, as applicable, access to coverage for frequently abused (D) New prescription transaction. that the beneficiary has been identified drugs. (E) Prescription change request for inclusion in the drug management (D) Transfer case management transaction. program for at-risk beneficiaries and information upon request of a gaining (F) Prescription change response that the prescriber or pharmacy or both sponsor as soon as possible but not later transaction. is (are) being selected as the than 2 weeks from the gaining sponsor’s (G) Refill/Resupply prescription beneficiary’s designated prescriber or request when— request transaction. pharmacy or both for frequently abused (1) An at-risk beneficiary or potential (H) Refill/Resupply prescription drugs. at-risk beneficiary disenrolls from the response transaction. (ii) The sponsor must receive sponsor’s plan and enrolls in another (I) Verification transaction. confirmation from the prescriber(s) or prescription drug plan offered by the (J) Password change transaction. pharmacy(ies) or both that the selection gaining sponsor; and (K) Cancel prescription request is accepted before conveying this (2) The edit or limitation that the transaction. information to the at-risk beneficiary, sponsor had implemented for the (L) Cancel prescription response unless the prescriber or pharmacy has beneficiary had not terminated before transaction. agreed in advance in its network disenrollment. (M) Fill status notification. (iv) The National Council for agreement with the sponsor to accept all (16) Clinical guidelines. Potential at- Prescription Programs SCRIPT standard, such selections and the agreement risk beneficiaries and at-risk Implementation Guide Version 2017071 specifies how the prescriber or beneficiaries are identified by CMS or approved July 28, 2017 (incorporated by pharmacy will be notified by the the Part D sponsor using clinical reference in paragraph (c)(1)(i) of this sponsor of its selection. guidelines that— section), to provide for the (14) Termination of identification as (i) Are developed with stakeholder communication of a prescription or an at-risk beneficiary. The identification consultation; related prescription-related information of an at-risk beneficiary as such must (ii) Are based on the acquisition of between prescribers and dispensers for terminate as of the earlier of the frequently abused drugs from multiple the following: following: prescribers, multiple pharmacies, the (A) Get message transaction. (i) The date the beneficiary level of frequently abused drugs used, or any combination of this factors; (B) Status response transaction. demonstrates through a subsequent (C) Error response transaction. determination, including but not limited (iii) Are derived from expert opinion and an analysis of Medicare data; and (D) New prescription transaction. to, a successful appeal, that the (E) Prescription change request beneficiary is no longer likely, in the (iv) Include a program size estimate. ■ transaction. absence of the limitations under this 65. Section 423.160 is amended by ■ (F) Prescription change response paragraph, to be an at-risk beneficiary. a. Revising paragraph (b)(1)(iv); ■ transaction. (ii) The end of a 12-calendar month b. Adding paragraph (b)(1)(v); ■ c. Revising paragraph (b)(2)(iii); (G) Refill/Resupply prescription period calculated from the effective date ■ request transaction. of the limitation, as specified in the d. Adding paragraph (b)(2)(iv); ■ e. Revising paragraph (b)(4); and (H) Refill/Resupply prescription notice provided under paragraph (f)(6) ■ f. Adding paragraph (c)(1)(vii). response transaction. of this section. The revisions and additions read as (I) Verification transaction. (15) Data disclosure. (i) CMS follows: (J) Password change transaction. identifies each potential at-risk (K) Cancel prescription request beneficiary to the sponsor of the § 423.160 Standards for electronic transaction. prescription drug plan in which the prescribing. (L) Cancel prescription response beneficiary is enrolled. * * * * * transaction. (ii) A Part D sponsor that operates a (b) * * * (M) Fill status notification. drug management program must (1) * * * (N) Prescription drug administration disclose any data and information to (iv) From March 1, 2015 until January message. CMS and other Part D sponsors that 1, 2019, the standards specified in (O) New prescription requests. CMS deems necessary to oversee Part D paragraphs (b)(2)(iii), (b)(3), (b)(4)(i), (P) New prescription response drug management programs at a time, (b)(5)(iii), and (b)(6). denials. and in a form and manner specified by (v) On or after January 1, 2019, the (Q) Prescription transfer message. CMS. The data and information standards specified in paragraphs (R) Prescription fill indicator change. disclosures must do all of the following: (b)(2)(iii) and (b)(3), (b)(4)(ii), (b)(5)(iii), (S) Prescription recertification. (A) Respond to CMS within 30 days and (b)(6) of this section. (T) REMS initiation request. of receiving a report about a potential at- (2) * * * (U) REMS initiation response. risk beneficiary from CMS. (iii) National Council for Prescription (V) REMS request. (B) Provide information to CMS about Drug Programs Prescriber/Pharmacist (W) REMS response. any potential at-risk beneficiary that a Interface SCRIPT Standard, * * * * * sponsor identifies within 30 days from Implementation Guide, Version 10, (4) Medication history. Medication the date of the most recent CMS report Release 6 (Version 10.6), November 12, history to provide for the

VerDate Sep<11>2014 20:14 Nov 27, 2017 Jkt 244001 PO 00000 Frm 00179 Fmt 4701 Sfmt 4702 E:\FR\FM\28NOP2.SGM 28NOP2 sradovich on DSK3GMQ082PROD with PROPOSALS2 56514 Federal Register / Vol. 82, No. 227 / Tuesday, November 28, 2017 / Proposed Rules

communication of Medicare Part D (3) To provide a means to evaluate Rating), such that scores in the same medication history information among and oversee overall and specific Star Rating level are as similar as Medicare Part D sponsors, prescribers compliance with certain regulatory and possible and scores in different Star and dispensers: contract requirements by Part D plans, Rating levels are as different as possible. (i) Until January 1, 2017, Either the where appropriate and possible to use Technically, the variance in measure National Council for Prescription Drug data of the type described in scores is separated into within-cluster Programs Prescriber/Pharmacist § 423.182(c). and between-cluster sum of squares Interface SCRIPT Standard, (c) Applicability. The regulations in components. The clusters reflect the Implementation Guide Version 8, this subpart will be applicable groupings of numeric value scores that Release 1 (Version 8.1), October 2005 beginning with the 2019 measurement minimize the variance of scores within (incorporate by reference in paragraph period and the associated 2021 Star the clusters. The Star Ratings levels are (c)(1)(v) of this section, or the National Ratings that are released prior to the assigned to the clusters that minimize Council for Prescription Drug Programs annual coordinated election period for the within-cluster sum of squares. The SCRIPT Standard, Implementation the 2021 contract year. cut points for star assignments are Guide Version 10.6, approved § 423.182 Part D Quality Rating System. derived from the range of measure November 12, 2008 (incorporated by scores per cluster, and the star levels (a) Definitions. In this subpart the reference in paragraph (c)(1)(vi) of this associated with each cluster are following terms have the meanings: section. CAHPS refers to a comprehensive and determined by ordering the means of the (ii) On or after January 1, 2019, the evolving family of surveys that ask clusters. Consolidation means when an MA National Council for Prescription Drug consumers and patients to evaluate the organization that has at least two Programs SCRIPT Standard, interpersonal aspects of health care. contracts for health and/or drug services Implementation Guide Version 2017071, CAHPS surveys probe those aspects of of the same plan type under the same approved July 28, 2017 (incorporated by care for which consumers and patients parent organization in a year combines reference in paragraph (c)(1)(vii) of this are the best or only source of multiple contracts into a single contract section). information, as well as those that for the start of the subsequent contract * * * * * consumers and patients have identified (c) * * * year. as being important. CAHPS initially Consumed contract means a contract (1) * * * stood for the Consumer Assessment of that will no longer exist after a contract (vii) National Council for Prescription Health Plans Study, but as the products year’s end as a result of a consolidation. Drug Programs SCRIPT Standard, have evolved beyond health plans the Display page means the CMS Web site Implementation Guide Version 2017071, acronym now stands for Consumer on which certain measures and scores approved July 28, 2017. Assessment of Healthcare Providers and are publicly available for informational * * * * * Systems. purposes; the measures that are ■ 66. Sections 423.180, 423.182, Case-mix adjustment means an presented on the display page are not 423.184 and 423.186 are added Subpart adjustment to the measure score made used in assigning Part C and D Star D to read as follows: prior to the score being converted into Ratings. a Star Rating to take into account certain Domain rating means the rating that Subpart D—Cost Control and Quality enrollee characteristics that are not groups measures together by dimensions Improvement Requirements under the control of the plan. For of care. example age, education, chronic * * * * * Dual-eligible (DE) means a beneficiary medical conditions, and functional who is enrolled in both Medicare and Sec. health status that may be related to the 423.180 Basis and scope of the Part D Medicaid. Quality Rating System. enrollee’s survey responses. Highest rating means the overall 423.182 Part D Quality Rating System. Categorical Adjustment Index (CAI) rating for MA–PDs, the Part C summary 423.184 Adding, updating, and removing means the factor that is added to or rating for MA-only contracts, and the measures. subtracted from an overall or summary Part D summary rating for PDPs. 423.186 Calculation of star ratings. Star Rating (or both) to adjust for the Highly-rated contract means a average within-contract (or within-plan contract that has 4 or more stars for its § 423.180 Basis and scope of the Part D as applicable) disparity in performance Quality Rating System. highest rating when calculated without associated with the percentages of the improvement measures and with all (a) Basis. This subpart is based on beneficiaries who are dually eligible for applicable adjustments (CAI and the sections 1851(d), 1852(e), 1853(o) and Medicare and enrolled in Medicaid, reward factor). 1854(b)(3)(iii), (v), and (vi) of the Act beneficiaries who receive a Low Income Low-income subsidy (LIS) means the and the general authority under section Subsidy, or have disability status in that subsidy that a beneficiary receives to 1856(b) of the Act requiring the contract (or plan as applicable). help pay for prescription drug coverage establishment of standards consistent Clustering refers to a variety of (see § 423.34 for definition of a low- with and to carry out Part D. techniques used to partition data into income subsidy eligible individual). (b) Purpose. Ratings calculated and distinct groups such that the Measurement period means the assigned under this subpart will be used observations within a group are as period for which data are collected for by CMS for the following purposes: similar as possible to each other, and as a measure or the performance period (1) To provide comparative dissimilar as possible to observations in that a measures covers. information on plan quality and any other group. Clustering of the Measure score means the numeric performance to beneficiaries for their measure-specific scores means that gaps value of the measure or an assigned use in making knowledgeable that exist within the distribution of the ‘missing data’ message. enrollment and coverage decisions in scores are identified to create groups Measure star means the measure’s the Medicare program. (clusters) that are then used to identify numeric value is converted to a Star (2) To provide quality ratings on a 5- the four cut points resulting in the Rating. It is displayed to the nearest star rating system. creation of five levels (one for each Star whole star, using a 1–5 star scale.

VerDate Sep<11>2014 20:14 Nov 27, 2017 Jkt 244001 PO 00000 Frm 00180 Fmt 4701 Sfmt 4702 E:\FR\FM\28NOP2.SGM 28NOP2 sradovich on DSK3GMQ082PROD with PROPOSALS2 Federal Register / Vol. 82, No. 227 / Tuesday, November 28, 2017 / Proposed Rules 56515

Overall rating means a global rating weighted in accordance with (c) Data sources. (1) Part D Star that summarizes the quality and § 423.186(a). Domain ratings are the Ratings measures reflect structure, performance for the types of services average of the individual measure process, and outcome indices of quality. offered across all unique Part C and Part ratings under the topic area in This includes information of the D measures. accordance with § 423.186(b). Summary following types: Beneficiary Part C summary rating means a global ratings are the weighted average of the experiences, benefit administration rating that summarizes the health plan individual measure ratings for Part C or information, clinical data, and CMS quality and performance on Part C Part D in accordance with § 423.186(c). administrative data. Data underlying measures. Overall Star Ratings are calculated by Star Ratings measures may include Part D summary rating means a global using the weighted average of the survey data, data separately collected rating that summarizes prescription individual measure ratings in and used in oversight of Part D plans’ drug plan quality and performance on accordance with § 423.186(d) with both compliance with contract requirements, Part D measures. the reward factor and CAI applied as data submitted by plans, and CMS Plan benefit package (PBP) means a applicable, as described in § 423.186(f). administrative data. set of benefits for a defined MA or PDP (2) Plan benefit packages. All plan (2) Part D sponsors are required to service area. The PBP is submitted by benefit packages (PBPs) offered under collect, analyze, and report data that Part D plan sponsors and MA an MA contract or PDP plan sponsor permit measurement of indices of organizations to CMS for benefit have the same overall and/or summary quality. Part D sponsors must provide analysis, bidding, marketing, and Star Ratings as the contract under which unbiased, accurate, and complete beneficiary communication purposes. the PBP is offered by the MA quality data described in paragraph Reliability means a measure of the organization or PDP plan sponsor. Data (c)(1) to CMS on a timely basis as fraction of the variation among the from all the PBPs offered under a requested by CMS. observed measure values that is due to contract are used to calculate the real differences in quality (‘‘signal’’) § 423.184 Adding, updating, and removing measure and domain ratings for the measures. rather than random variation (‘‘noise’’); contract. A contract level score is it is reflected on a scale from 0 (all (a) General. CMS adds, updates, and calculated using an enrollment- removes measures used to calculate the differences in plan performance weighted mean of the PBP scores and measure scores are due to measurement Star Ratings as provided in this section. enrollment reported as part of the CMS lists the measures used for a error) to 1 (the difference in plan measure specification in each PBP. performance scores is attributable to real particular Star Rating each year in the (3) Contract consolidations. (i) In the differences in performance). Technical Notes or similar guidance Reward factor means a rating-specific case of contract consolidations document with publication of the Star factor added to the contract’s summary involving two or more contracts for Ratings. or overall ratings (or both) if a contract health and/or drug services of the same (b) Review of data quality. CMS has both high and stable relative plan type under the same parent reviews the quality of the data on which performance. organization, CMS assigns Star Ratings performance, scoring and rating of a Statistical significance assesses how for the first and second years following measure is based before using the data likely differences observed in the consolidation based on the to score and rate performance or in performance are due to random chance enrollment-weighted mean of the calculating a Star Rating. This includes alone under the assumption that plans measure scores of the surviving and review of variation in scores among MA are actually performing the same. consumed contract(s) as provided in organizations and Part D plan sponsors, Surviving contract means the contact paragraph (b)(3)(ii) of this section. and the accuracy, reliability, and that will still exist under a (ii) The Star Ratings posted on validity of measures and performance consolidation, and all of the Medicare Plan Finder for contracts that data before making a final determination beneficiaries enrolled in the consumed consolidate are as follows: about inclusion of measures in each contract(s) are moved to the surviving (A) For the first year after year’s Star Ratings. contracts. consolidation, CMS will use enrollment- (c) Adding measures. (1) CMS will Traditional rounding rules mean that weighted measure scores using the July continue to review measures that are the last digit in a value will be rounded. enrollment of the measurement period nationally endorsed and in alignment If rounding to a whole number, look at of the consumed and surviving contracts with the private sector, such as the digit in the first decimal place. If the for all measures, except the survey- measures developed by National digit in the first decimal place is 0, 1, based and call center measures. The Committee for Quality Assurance and 2, 3 or 4, then the value should be survey-based measures would use the Pharmacy Quality Alliance or rounded down by deleting the digit in enrollment of the surviving and endorsed by the National Quality Forum the first decimal place. If the digit in the consumed contracts at the time the for adoption and use in the Part D first decimal place is 5 or greater, then sample is pulled for the rating year. The Quality Ratings System. CMS may the value should be rounded up by 1 call center measures would use average develop its own measures as well when and the digit in the first decimal place enrollment during the study period. appropriate to measure and reflect deleted. (B) For the second year after performance specific to the Medicare (b) Contract ratings—(1) General. consolidation, CMS will use the program. CMS calculates an overall Star Rating, enrollment-weighted measure scores (2) In advance of the measurement Part C summary rating, and Part D using the July enrollment of the period, CMS will announce potential summary rating for each MA–PD measurement year of the consumed and new measures and solicit feedback contract and a Part D summary rating for surviving contracts for all measures through the process described for each PDP contract using the 5-star rating except those from CAHPS. CMS will changes in and adoption of payment system described in this subpart. For ensure that the CAHPS survey sample and risk adjustment policies in section PDP contracts, the Part D summary will include enrollees in the sample 1853(b) of the Act and then rating is the highest rating. Measures are frame from both the surviving and subsequently will propose and finalize assigned stars at the contract level and consumed contracts. new measures through rulemaking.

VerDate Sep<11>2014 20:14 Nov 27, 2017 Jkt 244001 PO 00000 Frm 00181 Fmt 4701 Sfmt 4702 E:\FR\FM\28NOP2.SGM 28NOP2 sradovich on DSK3GMQ082PROD with PROPOSALS2 56516 Federal Register / Vol. 82, No. 227 / Tuesday, November 28, 2017 / Proposed Rules

(3) New measures added to the Part D (e) Removing measures. (1) CMS will change and included in the count of Star Ratings program will be on the remove a measure from the Star Ratings measures used to determine eligibility display page on www.cms.gov for a program as follows: for the measure (that is, for the minimum of 2 years prior to becoming (i) When the clinical guidelines denominator of the improvement a Star Ratings measure. associated with the specifications of the measure score). (4) A measure will remain on the measure change such that the (4) Calculation of the improvement display page for longer than 2 years if specifications are no longer believed to score. The improvement measure will CMS finds reliability or validity issues align with positive health outcomes, or be calculated as follows: with the measure specification. (ii) A measure shows low statistical (i) The improvement change score (d) Updating measures—(1) Non- reliability. (the difference in the measure scores in (2) CMS will announce in advance of substantive updates. For measures that the 2-year period) will be determined the measurement period the removal of are already used for Star Ratings, CMS for each measure that has been a measure based upon its application of will update measures so long as the designated an improvement measure this paragraph through the process changes in a measure are not and for which a contract has a numeric described for changes in and adoption substantive. CMS will announce non- score for each of the 2 years examined. of payment and risk adjustment policies substantive updates to measures that (ii) Each contract’s improvement in section 1853(b) of the Act in advance occur (or are announced by the measure change score per measure will be of the measurement period. steward) during or in advance of the categorized as a significant change or (f) Improvement measure. CMS will measurement period through the not a significant change by employing a calculate improvement measure scores process described for changes in and two-tailed t-test with a level of based on a comparison of the measure adoption of payment and risk significance of 0.05. scores for the current year to the adjustment policies in section 1853(b) of (iii) The net improvement per immediately preceding year as provided the Act. Non-substantive measure measure category (outcome, access, in this paragraph; the improvement specification updates include those patient experience, process) would be measure score would be calculated for that— calculated by finding the difference Parts C and D separately by taking a (i) Narrow the denominator or between the weighted number of weighted sum of net improvement significantly improved measures and population covered by the measure; divided by the weighted sum of the (ii) Do not meaningfully impact the significantly declined measures, using number of eligible measures. the measure weights associated with numerator or denominator of the (1) Identifying eligible measures. each measure category. measure; Annually, the subset of measures to be (iv) The improvement measure score (iii) Update the clinical codes with no included in the Part D improvement will then be determined by calculating change in the target population or the measure will be announced through the the weighted sum of the net intent of the measure; process described for changes in and improvement per measure category adoption of payment and risk (iv) Provide additional clarifications: divided by the weighted sum of the adjustment policies in section 1853(b) of (A) Adding additional qualifiers that number of eligible measures. the Act. CMS identifies measures to be would meet the numerator (v) The improvement measure score used in the improvement measure if the requirements; will be converted to a measure-level measures meet all the following: (B) Clarifying documentation Star Rating using hierarchical clustering requirements; (i) CMS will include only measures available for the current and previous algorithms. (C) Adding additional instructions; or year in the improvement measures and (vi) The Part D improvement measure (v) Add alternative data sources. that have numeric value scores in both scores for MA–PDs and PDPs will be (2) Substantive updates. For measures the current and prior year. determined using cluster algorithms in that are already used for Star Ratings, in (ii) CMS will exclude any measure for accordance with § 423.186(a)(2)(ii). The the case of measure specification which there was a substantive Part D improvement measure thresholds updates that are substantive updates not specification change, from the previous for MA–PDs and PDPs would be subject to paragraph (d)(1), CMS will year. reported separately. propose and finalize these measures (iii) The Part D improvement measure (g) Data integrity. (1) CMS will reduce through rulemaking similar to the will include only Part D measure scores. a contract’s measure rating when CMS process for adding new measures. CMS (2) Determining eligible contracts. determines that a contract’s measure will initially solicit feedback on CMS will calculate an improvement data are inaccurate, incomplete, or whether to make substantive measure score only for contracts that have biased; such determinations may be updates through the process described numeric measure scores for both years based on a number of reasons, including for changes in and adoption of payment in at least half of the measures mishandling of data, inappropriate and risk adjustment policies in section identified for use applying the standards processing, or implementation of 1853(b) of the Act. Once the update has in paragraphs (f)(1)(i) through (iii) of incorrect practices that have an impact been made to the measure specification this section. on the accuracy, impartiality, or by the measure steward, CMS may (3) Special rules for calculation of the completeness of the data used for one or continue collection of the performance improvement score. For any measure more specific measures. data for the legacy measure and include used for the improvement measure for (i) CMS will reduce measures based it in Star Ratings until the updated which a contract received 5 stars in each on Part D reporting requirements data to measure has been on display for 2 years. of the years examined, but for which the 1 star when a contract did not score at CMS will place the updated measure on measure score demonstrates a least 95 percent on data validation for the display page for at least 2 years prior statistically significant decline based on the applicable reporting section or was to using the updated measure to the results of the significance testing (at not compliant with CMS data validation calculate and assign Star Ratings as a level of significance of 0.05) on the standards/sub-standards for data specified in paragraph (c) of this change score, the measure will be directly used to calculate the associated section. categorized as having no significant measure.

VerDate Sep<11>2014 20:14 Nov 27, 2017 Jkt 244001 PO 00000 Frm 00182 Fmt 4701 Sfmt 4702 E:\FR\FM\28NOP2.SGM 28NOP2 sradovich on DSK3GMQ082PROD with PROPOSALS2 Federal Register / Vol. 82, No. 227 / Tuesday, November 28, 2017 / Proposed Rules 56517

(ii) For the appeals measures, CMS data completeness if both of the evaluating the relative percentile will use statistical criteria to estimate following conditions are met: distribution with significance testing the percentage of missing data for each (1) The calculated error rate is 20 and accounts for the reliability of scores contract using data from multiple percent or more; and produced from survey data; no measure sources such as a timeliness monitoring (2) The projected number of cases not Star Rating is produced if the reliability study or audit information to scale the forwarded to the IRE is at least 10 in a of a CAHPS measure is less than 0.60. star reductions to determine whether 3-month period. Low reliability scores are those with at the data at the independent review (K) A confidence interval estimate for least 11 respondents, reliability greater entity (IRE) are complete. the true error rate for the contract is than or equal to 0.60 but less than 0.75, (A) The criteria would allow CMS to calculated using a Score Interval and also in the lowest 12 percent of use scaled reductions for the Star (Wilson Score Interval) at a confidence contracts ordered by reliability. The Ratings for the applicable appeals level of 95 percent and an associated z following rules apply: measures to account for the degree to of 1.959964 for a contract that is subject (i) A contract is assigned 1 star if both which the IRE data are missing. to a possible reduction. of the following criteria in paragraphs (B) The data submitted for the (1) A contract’s lower bound is (a)(3)(i)(A) and (B) of this section are timeliness monitoring project (TMP) or compared to the thresholds of the scaled met and the criterion in paragraph audit that aligns with the Star Ratings reductions to determine the IRE data (a)(3)(i)(C) or (D) of this section is met: year measurement period will be used completeness reduction. (A) Its average CAHPS measure score to determine the scaled reduction. (2) The reduction is identified by the is lower than the 15th percentile; and (B) Its average CAHPS measure score (C) The determination of the Part C highest threshold that a contract’s lower is statistically significantly lower than appeals measure IRE data reduction is bound exceeds. the national average CAHPS measure done independently of the Part D (2) CMS will reduce a measure rating to 1 star for additional concerns that score. appeals measure IRE data reduction. (C) The reliability is not low. (D) The reductions range from a one- data inaccuracy, incompleteness, or bias have an impact on measure scores and (D) Its average CAHPS measure score star reduction to a four-star reduction; is more than one standard error below the most severe reduction for the degree are not specified in paragraphs (g)(1)(i) and (ii) of this section, including a the 15th percentile. of missing IRE data would be a four-star (ii) A contract is assigned two stars if reduction. contract’s failure to adhere to CAHPS reporting requirements. it does not meet the 1 star criteria and (E) The thresholds used for meets at least one of the following determining the reduction and the § 423.186 Calculation of Star Ratings. criteria: associated appeals measure reduction (a) Measure Star Ratings—(1) Cut (A) Its average CAHPS measure score are as follows: points. CMS will determine cut points is lower than the 30th percentile and the (1) 20 percent, 1 star reduction. for the assignment of a Star Rating for measure does not have low reliability. (2) 40 percent, 2 star reduction. each numeric measure score by (B) Its average CAHPS measure score (3) 60 percent, 3 star reduction. applying either a clustering or a relative is lower than the 15th percentile and the (4) 80 percent, 4 star reduction. distribution and significance testing measure has low reliability. (C) Its average CAHPS measure score (F) If a contract receives a reduction methodology. For the Part D measures, is statistically significantly lower than due to missing Part D IRE data, the we propose to determine MA–PD and the national average CAHPS measure reduction is applied to both of the PDP cut points separately. contract’s Part D appeals measures. (2) Clustering algorithm for all score and below the 60th percentile. (iii) A contract is assigned three stars (G) The scaled reduction is applied measures except CAHPS measures. (i) if it meets at least one of the following after the calculation for the appeals The method minimizes differences measure-level star ratings. If the criteria: within star categories and maximize (A) Its average CAHPS measure score application of the scaled reduction differences across star categories using results in a measure-level star rating less is at or above the 30th percentile and the hierarchical clustering method. lower than the 60th percentile, and it is than one-star, the contract will be (ii) In cases where multiple clusters not statistically significantly different assigned one-star for the appeals have the same measure score value from the national average CAHPS measure. range, those clusters would be measure score. (H) The Part D Calculated Error is combined, leading to fewer than 5 determined by the quotient of the (B)(1) Its average CAHPS measure clusters. score is at or above the 15th percentile number of untimely cases not auto- (iii) The clustering algorithm for the forwarded to the IRE and the total and lower than the 30th percentile; improvement measure scores is done in (2) The reliability is low; and number of untimely cases. two steps to determine the cut points for (3) The score is not statistically (I) The projected number of cases not the measure-level Star Ratings. significantly lower than the national forwarded to the IRE in a 3-month Clustering is conducted separately for average CAHPS measure score. period is calculated by multiplying the improvement measure scores greater (C)(1) Its average CAHPS measure number of cases found not to be than or equal to zero and those with score is at or above the 60th percentile forwarded to the IRE based on the TMP improvement measure scores less than and lower than the 80th percentile; or audit data by a constant determined zero. (2) The reliability is low; and by the data collection or data sample (A) Improvement scores of zero or (3) The score is not statistically time period. The value of the constant greater would be assigned at least 3 stars significantly higher than the national will be 1.0 for contracts that submitted for the improvement Star Rating. average CAHPS measure score. 3 months of data; 1.5 for contracts that (B) Improvement scores less than zero (iv) A contract is assigned 4 stars if it submitted 2 months of data; and 3.0 for would be assigned either 1 or 2 stars for does not meet the 5-star criteria and contracts that submitted 1 month of the improvement Star Rating. meets at least one of the following data. (3) Relative distribution and criteria: (J) Contracts would be subject to a significance testing for CAHPS (A) Its average CAHPS measure score possible reduction due to lack of IRE measures. The method combines is at or above the 60th percentile and

VerDate Sep<11>2014 20:14 Nov 27, 2017 Jkt 244001 PO 00000 Frm 00183 Fmt 4701 Sfmt 4702 E:\FR\FM\28NOP2.SGM 28NOP2 sradovich on DSK3GMQ082PROD with PROPOSALS2 56518 Federal Register / Vol. 82, No. 227 / Tuesday, November 28, 2017 / Proposed Rules

the measure does not have low (2)(i) A contract must have scores for have a weight of 3 for the adherence reliability. at least 50 percent of the measures measures for the improvement measure (B) Its average CAHPS measure score required to be reported for the contract calculations. is at or above the 80th percentile and type to have a summary rating (f) Completing the Part D summary the measure has low reliability. calculated. and overall rating calculations. CMS (C) Its average CAHPS measure score (ii) The Part D improvement measure will adjust the summary and overall is statistically significantly higher than is not included in the count of the rating calculations to take into account the national average CAHPS measure minimum number of rated measures. the reward factor (if applicable) and the score and above the 30th percentile. (3) The summary ratings are on a 1 to categorical adjustment index (CAI) as (v) A contract is assigned five stars if 5 star scale ranging from 1 (worst rating) provided in this paragraph. to 5 (best rating) in half-star increments both of the following criteria in (1) Reward factor. This rating-specific using traditional rounding rules. paragraphs (a)(3)(v)(A) and (B) of this factor is added to both the summary and section are met and the criterion in (d) Overall MA–PD rating. (1) The overall rating for a MA–PD contract will overall ratings of contracts that qualify paragraph (a)(3)(v)(C) or (D) of this for the reward factor based on both high section is met: be calculated using a weighted mean of the Part C and Part D measure-level Star and stable relative performance for the (A) Its average CAHPS measure score rating level. is at or above the 80th percentile. Ratings, weighted in accordance with (i) The contract’s performance will be (B) Its average CAHPS measure score paragraph (e) of this section and with an assessed using its weighted mean and is statistically significantly higher than adjustment to reward consistently high its ranking relative to all rated contracts the national average CAHPS measure performance described and the in the rating level (overall for MA–PDs score. application of the CAI, under paragraph and Part D summary for MA–PDs and (C) The reliability is not low. (f). PDPs) for the same Star Ratings year. (D) Its average CAHPS measure score (2)(i) An MA–PD must have both Part The contract’s stability of performance is more than one standard error above C and Part D summary ratings and will be assessed using the weighted the 80th percentile. scores for at least 50 percent of the measures required to be reported for the variance and its ranking relative to all (4) Measure scores are converted to a rated contracts in the rating type 5-star scale ranging from 1 (worst rating) contract type to have the overall rating calculated. (overall for MA–PDs and Part D to 5 (best rating), with whole star summary for MA–PDs and PDPs). The increments for the cut points. (ii) The Part C and D improvement measures are not included in the count weighted mean and weighted variance (b) Domain Star Ratings. (1)(i) CMS of measures needed for the overall are compared separately for MA–PD and groups measures by domains solely for rating. standalone Part D contracts (PDPs). The purposes of public reporting the data on (iii) Any measures that share the same measure weights are specified in Medicare Plan Finder. They are not data and are included in both the Part paragraph (e) of this section. Since used in the calculation of the summary C and Part D summary ratings will be highly-rated contracts may have the or overall ratings. Domains are used to included only once in the calculation improvement measure(s) excluded in group measures by dimensions of care for the overall rating. the determination of their final highest that together represent a unique and (iv) The overall rating is on a 1 to 5 rating, each contract’s weighted important aspect of quality and star scale ranging from 1 (worst rating) variance and weighted mean will be performance. to 5 (best rating) in half-increments calculated both with and without the (ii) The 4 domains for the Part D Star using traditional rounding rules. improvement measures. For an MA– Ratings are: Drug Plan Customer (e) Measure weights—(1) General PD’s Part C and D summary ratings, its Service; Member Complaints and rules. Subject to paragraphs (e)(2) and ranking is relative to all other contracts’ Changes in the Drug Plan’s Performance; (3) of this section, CMS will assign weighted variance and weighted mean Member Experience with the Drug Plan; weights to measures based on their for the rating type (Part C summary, Part and Drug Safety and Accuracy of Drug categorization as follows. D summary) with the improvement Pricing. (i) Improvement measures receive the measure. (2) CMS calculates the domain ratings highest weight of 5. (ii) Relative performance of the as the unweighted mean of the Star (ii) Outcome and Intermediate Ratings of the included measures. weighted variance (or weighted variance outcome measures receive a weight of 3. ranking) will be categorized as being (i) A contract must have scores for at (iii) Patient experience and complaint least 50 percent of the measures high (at or above 70th percentile), measures receive a weight of 1.5. medium (between the 30th and 69th required to be reported for that contract (iv) Access measures receive a weight type for that domain to have a domain percentile) or low (below the 30th of 1.5. percentile). Relative performance of the rating calculated. (v) Process measures receive a weight weighted mean (or weighted mean (ii) The domain ratings are on a 1 to of 1. ranking) will be categorized as being 5 star scale ranging from 1 (worst rating) (2) Rules for new measures. New high (at or above the 85th percentile), to 5 (best rating) in whole star measures to the Star Ratings program relatively high (between the 65th and increments using traditional rounding will receive a weight of 1 for their first 84th percentiles), or other (below the rules. year in the Star Ratings program. In 65th percentile). (c) Part D summary ratings. (1) CMS subsequent years, the measure will be will calculate the Part D summary assigned the weight associated with its (iii) The combination of the relative ratings using the weighted mean of the category. variance and relative mean is used to measure-level Star Ratings for Part D, (3) Special rule for Puerto Rico. determine the reward factor to be added weighted in accordance with paragraph Contracts that have service areas that are to the contract’s summary and overall (e) with an adjustment to reward wholly located in Puerto Rico will ratings as follows: consistently high performance described receive a weight of zero for the Part D (A) A contract with low variance and and the application of the CAI, under adherence measures for the summary a high mean will have a reward factor paragraph (f) of this section. and overall rating calculations and will equal to 0.4.

VerDate Sep<11>2014 20:14 Nov 27, 2017 Jkt 244001 PO 00000 Frm 00184 Fmt 4701 Sfmt 4702 E:\FR\FM\28NOP2.SGM 28NOP2 sradovich on DSK3GMQ082PROD with PROPOSALS2 Federal Register / Vol. 82, No. 227 / Tuesday, November 28, 2017 / Proposed Rules 56519

(B) A contract with medium variance one for the overall Star Rating and one (A) A logistic regression model with and a high mean will have a reward for each of the summary ratings (Part C contract fixed effects and beneficiary factor equal to 0.3. and Part D). level indicators of LIS/DE and disability (C) A contract with low variance and (D) A PDP contract may be adjusted status is used for the adjustment. a relatively high mean will have a only once for the CAI: For the Part D (B) The adjusted measure scores are reward factor equal to 0.2. summary rating. converted to a measure-level Star Rating (D) A contract with medium variance (E) The CAI values are rounded and using the measure thresholds for the and a relatively high mean will have a displayed with 6 decimal places. Star Ratings year that corresponds to the reward factor equal to 0.1. (ii) In determining the CAI values, a measurement period of the data (E) A contract with all other measure will be excluded as a candidate employed for the CAI determination. combinations of variance and relative for inclusion for adjustment if the (v) The rating-specific CAI values will mean will have a reward factor equal to measure meets any of the following: be determined using the mean 0.0. (A) The measure is already case-mix differences between the adjusted and (iv) The reward factor is determined adjusted for socioeconomic status. unadjusted Star Ratings (overall, Part D and applied before application of the (B) The focus of the measurement is summary for MA–PDs and Part D CAI adjustment under paragraph (f)(2) not a beneficiary-level issue but rather summary for PDPs) in each final of this section; the reward factor is a plan or provider-level issue. adjustment category. based on unadjusted scores. (A) For the annual development of the (2) Categorical adjustment index. (C) The measure is scheduled to be CAI, the distribution of the percentages CMS applies the categorical adjustment retired or revised. for LIS/DE and disabled (using the index (CAI) as provided in this (D) The measure is applicable only to enrollment data that parallels the paragraph to adjust for the average SNPs. previous Star Ratings year’s data) would within-contract disparity in (iii) CMS will announce the measures be examined to determine the number of performance associated with the identified for inclusion in the equal-sized initial groups for each percentages of beneficiaries who receive calculations of the CAI in accordance attribute (LIS/DE and disabled). a low income subsidy or are dual with this paragraph through the process eligible (LIS/DE)/or have disability described for changes in and adoption (B) The initial categories are created status. The factor is calculated as the of payment and risk adjustment policies using all groups formed by the initial mean difference in the adjusted and in section 1853(b) of the Act. The LIS/DE and disabled groups. unadjusted ratings (overall, Part D for measures for inclusion in the (C) The mean difference between the MA–PDs, Part D for PDPs) of the calculations of the CAI values will be adjusted and unadjusted summary or contracts that lie within each final selected based on the analysis of the overall ratings per initial category adjustment category for each rating type. dispersion of the LIS/DE within contract would be calculated and examined. The (i) The CAI is added to or subtracted differences using all reportable numeric initial categories would then be from the contract’s overall and summary scores for contracts receiving a rating in collapsed to form the final adjustment ratings and is applied after the reward the previous rating year. CMS calculates categories. The collapsing of the initial factor adjustment (if applicable). the results of each contract’s estimated categories to form the final adjustment (A) The adjustment factor is difference between the LIS/DE and non- categories would be done to enforce monotonic (that is, as the proportion of LIS/DE performance rates per contract monotonicity in at least one dimension LIS/DE and disabled increases in a using logistic mixed effects model that (LIS/DE or disabled). contract, the adjustment factor increases includes LIS/DE as a predictor, random (D) The mean difference within each in at least one of the dimensions) and effects for contract and an interaction final adjustment category by rating-type varies by a contract’s categorization into term of contract. For each contract, the (Part D for MA–PD, Part D for PDPs or a final adjustment category that is proportion of beneficiaries receiving the overall) would be the CAI values for the determined by a contract’s proportion of measured clinical process or outcome next Star Ratings year. LIS/DE and disabled beneficiaries. for LIS/DE and non-LIS/DE beneficiaries (vi) CMS develops the model for the (B) To determine a contract’s final would be estimated separately. The modified contract-level LIS/DE adjustment category, contract following decision criteria is used to percentage for Puerto Rico using the enrollment is determined using determine the measures for adjustment: following sources of information: enrollment data for the month of (A) A median absolute difference (A) The most recent data available at December for the measurement period between LIS/DE and non-LIS/DE the time of the development of the of the Star Ratings year. The count of beneficiaries for all contracts analyzed model of both 1-year American beneficiaries for a contract is restricted is 5 percentage points or more. Community Survey (ACS) estimates for to beneficiaries that are alive for part or (B) The LIS/DE subgroup performed the percentage of people living below all of the month of December of the better or worse than the non-LIS/DE the Federal Poverty Level (FPL) and the applicable measurement year. A subgroup in all contracts. ACS 5-year estimates for the percentage beneficiary is categorized as LIS/DE if (C) The Part D measures for MA–PDs of people living below 150 percent of the beneficiary was designated as full or and PDPs will be analyzed the FPL. The data to develop the model partially dually eligible or receiving a independently, but the Part D measures will be limited to the 10 states, drawn LIS at any time during the applicable selected for adjustment will include from the 50 states plus the District of measurement period. Disability status is measures that meet the selection criteria Columbia with the highest proportion of determined using the variable original for either delivery system. people living below the FPL, as reason for entitlement (OREC) for (iv) The adjusted measures scores for identified by the 1-year ACS estimates. Medicare using the information from the the selected measures are determined (B) The Medicare enrollment data Social Security Administration and using the results from regression models from the same measurement period as Railroad Retirement Board record of beneficiary level measure scores that the Star Rating’s year. The Medicare systems. adjust for the average within contract enrollment data would be aggregated (C) A MA–PD contract may be difference in measure scores for MA or from MA contracts that had at least 90 adjusted up to three times with the CAI: PDP contracts. percent of their enrolled beneficiaries

VerDate Sep<11>2014 20:14 Nov 27, 2017 Jkt 244001 PO 00000 Frm 00185 Fmt 4701 Sfmt 4702 E:\FR\FM\28NOP2.SGM 28NOP2 sradovich on DSK3GMQ082PROD with PROPOSALS2 56520 Federal Register / Vol. 82, No. 227 / Tuesday, November 28, 2017 / Proposed Rules

with mailing addresses in the 10 highest (i) Medicare Plan Finder performance § 423.503 [Amended] poverty states. icons. Icons are displayed on Medicare ■ 68. Section 423.503 is amended in (vii) A linear regression model is Plan Finder to note performance as paragraphs (b)(1) and (2) by removing developed to estimate the percentage of provided in this paragraph: the phrase ‘‘14 months’’ and adding in LIS/DE for a contacts that solely serve (1) High-performing icon. The high its place ‘‘12 months’’ each time it the population of beneficiaries in Puerto performing icon is assigned to a Part D appears. Rico. plan sponsor for achieving a 5-star Part ■ 69. Section 423.504 is amended by (A) The maximum value for the D summary rating and an MA–PD revising paragraphs (b)(4)(ii) and modified LIS/DE indicator value per contract for a 5-star overall rating. (b)(4)(vi)(C) to read as follows. contract would be capped at 100 percent. (2) Low-performing icon. (i) A contract § 423.504 General provisions. (B) All estimated modified LIS/DE receives a low performing icon as a * * * * * values for Puerto Rico would be result of its performance on the Part C (b) * * * rounded to 6 decimal places when or Part D summary ratings. The low (4) * * * expressed as a percentage. performing icon is calculated by (ii) Personnel and systems sufficient (C) The model’s coefficient and evaluating the Part C and Part D for the Part D plan sponsor to organize, intercept are updated annually and summary ratings for the current year implement, control, and evaluate published in the Technical Notes. and the past 2 years. If the contract had financial and communication activities, (g) Applying the improvement any combination of Part C or Part D the furnishing of prescription drug measure scores. (1) CMS runs the summary ratings of 2.5 or lower in all services, the quality assurance, medical calculations twice for each highest 3 years of data, it is marked with a low therapy management, and drug and or rating for each contract-type (overall performing icon. A contract must have utilization management programs, and rating for MA–PD contracts and Part D a rating in either Part C or Part D for all the administrative and management summary rating for PDPs), with all 3 years to be considered for this icon. aspects of the organization. applicable adjustments (CAI and the (ii) CMS may disable the Medicare * * * * * reward factor), once including the Plan Finder online enrollment function (vi) * * * improvement measure(s) and once (in Medicare Plan Finder) for Medicare (C)(1) Each Part D plan sponsor must without including the improvement health and prescription drug plans with establish and implement effective measure(s). In deciding whether to the low performing icon; beneficiaries training and education for its include the improvement measures in a will be directed to contact the plan compliance officer and organization contract’s highest rating, CMS applies directly to enroll in the low-performing employees, the Part D sponsor’s chief the following rules: plan. executive and other senior (i) Contracts with 2 or fewer stars for administrators, managers and governing (3) Plan preview of the Star Ratings. their highest rating when calculated body members. without improvement and with all CMS will have plan preview periods (2) Such training and education must applicable adjustments (CAI and the before each Star Ratings release during occur at a minimum annually and must reward factor) will not have their rating which Part D plan sponsors can preview be made a part of the orientation for a calculated with the improvement their Star Ratings data in HPMS prior to new employee, and new appointment to measure(s). display on the Medicare Plan Finder. a chief executive, manager, or governing (ii) If the highest rating for each ■ 67. Section 423.265 is amended by body member. contract-type is 4 stars or more without revising paragraph (b)(2) to read as * * * * * the use of the improvement measure(s) follows. ■ 70. Section 423.505 is amended— and with all applicable adjustments ■ § 423.265 Submission of bids and related a. By revising paragraph (b)(18); (CAI and the reward factor), a ■ information. b. In paragraph (b)(25), by removing comparison of the highest rating with the word ‘‘marketing’’ and adding in its and without the improvement * * * * * place the word ‘‘communication’’; and measure(s) is done. The higher rating is (b) * * * ■ c. By revising paragraph (b)(26). used for the rating. (2) Substantial differences between The revisions read as follows: (iii) If the highest rating is between 2 bids—(i) General rule. Except as § 423.505 Contract provisions. stars and 4 stars with all applicable provided in paragraph (b)(2)(ii) of this * * * * * adjustments (CAI and the reward factor), section, potential Part D sponsors’ bid (b) * * * the rating will be calculated with the submissions must reflect differences in improvement measure(s). (18) To agree to have a standard benefit packages or plan costs that CMS contract with reasonable and relevant (2) The Part D summary rating for determines to represent substantial MA–PDs will include the Part D terms and conditions of participation differences relative to a sponsor’s other whereby any willing pharmacy may improvement measure. bid submissions. In order to be (h) Posting and display of ratings. For access the standard contract and considered ‘‘substantially different,’’ all ratings at the measure, domain, participate as a network pharmacy each bid must be significantly different summary and overall level, posting and including all of the following: from the sponsor’s other bids with display of the ratings is based on there (i) Making standard contracts respect to beneficiary out-of-pocket being sufficient data to calculate and available upon request from interested costs or formulary structures. assign ratings. If a contract does not pharmacies no later than September 15 have sufficient data to calculate a rating, (ii) Exception. A potential Part D of each year for contracts effective the posting and display would be the sponsor’s enhanced bid submission January 1 of the following year. flag ‘‘Not enough data available.’’ If the does not have to reflect the substantial (ii) Providing a copy of a standard measurement period is prior to one year differences as required in paragraph contract to a requesting pharmacy past the contract’s effective date, the (b)(2)(i) of this section relative to any of within 2 business days after receiving posting and display would be the flag its other enhanced bid submissions. such a request from the pharmacy. ‘‘Plan too new to be measured’’. * * * * * * * * * *

VerDate Sep<11>2014 20:14 Nov 27, 2017 Jkt 244001 PO 00000 Frm 00186 Fmt 4701 Sfmt 4702 E:\FR\FM\28NOP2.SGM 28NOP2 sradovich on DSK3GMQ082PROD with PROPOSALS2 Federal Register / Vol. 82, No. 227 / Tuesday, November 28, 2017 / Proposed Rules 56521

(26) Maintain a Part D summary plan ■ 74. Section 423.558 is amended by Part D drugs and biological products rating score of at least 3 stars under the adding paragraph (a)(4) to read as that exceed a cost threshold established 5-star rating system specified in subpart follows: by the Secretary. 186 of this part 423. A Part D summary ■ 76. Section 423.562 is amended by § 423.558 Scope. plan rating is calculated as provided in revising paragraph (a)(1)(ii), adding § 423.186. (a) * * * paragraph (a)(1)(v), and revising * * * * * (4) Review of at-risk determinations paragraph (b)(4) to read as follows: made under a drug management § 423.507 [Amended] program in accordance with § 423.562 General provisions. ■ 71. Section 423.507 is amended by § 423.153(f). (a) * * * removing and reserving paragraph (b). * * * * * (1) * * * ■ 72. Section 423.508 is amended by ■ 75. Section 423.560 is amended by (ii) Use a single, uniform exceptions revising paragraph (a) to read as follows: revising the definitions of ‘‘Appeal’’, and appeals process which includes ‘‘Grievance’’, ‘‘Reconsideration’’, and procedures for accepting oral and § 423.508 Modification or termination of ‘‘Redetermination’’ and adding in written requests for coverage contract by mutual consent. alphabetical order a definition for determinations and redeterminations (a) General rule. A contract may be ‘‘Specialty tier’’ to read as follows: that are in accordance with modified or terminated at any time by § 423.128(b)(7) and (d)(1)(iv). § 423.560 Definitions. written mutual consent. If the PDP * * * * * sponsor submits a request to end the * * * * * Appeal means any of the procedures (v) If the Part D plan sponsor has term of its contract after the deadline established a drug management program provided in § 423.507(a)(2)(i), the that deal with the review of adverse coverage determinations made by the under § 423.153(f), appeal procedures contract may be terminated by mutual that meet the requirements of this consent in accordance with paragraphs Part D plan sponsor on the benefits under a Part D plan the enrollee believes subpart for issues that involve at-risk (b) through (f) of this section. CMS may determinations. mutually consent to the contract he or she is entitled to receive, termination if the contract termination including delay in providing or * * * * * does not negatively affect the approving the drug coverage (when a (b) * * * administration of the Medicare Part D delay would adversely affect the health (4) If dissatisfied with any part of a program. of the enrollee), or on any amounts the coverage determination or an at-risk * * * * * enrollee must pay for the drug coverage, determination under a drug as defined in § 423.566(b). Appeal also management program in accordance ■ 73. Section 423.509 is amended by includes the review of at-risk with § 423.153(f), all of the following revising paragraph (a)(4)(v)(A) and determinations made under a drug appeal rights: adding paragraphs (a)(4)(xiii) and (xiv) management program in accordance and (b)(2)(v) to read as follows: (i) The right to a redetermination of with § 423.153(f). These procedures the adverse coverage determination or § 423.509 Termination of contract by CMS. include redeterminations by the Part D at-risk determination by the Part D plan (a) * * * plan sponsor, reconsiderations by the sponsor, as specified in § 423.580. (4) * * * independent review entity, ALJ (ii) The right to request an expedited hearings, reviews by the Medicare (v) * * * redetermination, as provided under Appeals Council (Council), and judicial § 423.584. (A) Requirements in subpart V of this reviews. part. (iii) If, as a result of the * * * * * redetermination, a Part D plan sponsor * * * * * Grievance means any complaint or affirms, in whole or in part, its adverse (xiii) The Part D plan sponsor has dispute, other than one that involves a coverage determination or at-risk committed any of the acts in § 423.752 coverage determination or at-risk determination, the right to a that support the imposition of determination, expressing reconsideration or expedited intermediate sanctions or civil money dissatisfaction with any aspect of the reconsideration by an independent penalties under § 423.750. operations, activities, or behavior of a review entity (IRE) contracted by CMS, (xiv) Following the issuance of a Part D plan sponsor, regardless of as specified in § 423.600. notice to the sponsor no later than whether remedial action is requested. (iv) If the IRE affirms the plan’s August 1, CMS must terminate, effective * * * * * adverse coverage determination or at- December 31 of the same year, an Reconsideration means a review of an risk determination, in whole or in part, individual PDP if that plan does not adverse coverage determination or at- the right to an ALJ hearing if the amount have a sufficient number of enrollees to risk determination by an independent in controversy meets the requirements establish that it is a viable independent review entity (IRE), the evidence and in § 423.1970. plan option. findings upon which it was based, and (v) If the ALJ or attorney adjudicator (b) * * * any other evidence the enrollee submits affirms the IRE’s adverse coverage (2) * * * or the IRE obtains. determination or at-risk determination, (v) In the event that CMS issues a Redetermination means a review of an in whole or in part, the right to request termination notice to a Part D plan adverse coverage determination or at- Council review of the ALJ’s or attorney sponsor on or before August 1 with an risk determination by a Part D plan adjudicator’s decision, as specified in effective date of the following December sponsor, the evidence and findings § 423.1974. 31, the Part D plan sponsor must issue upon which it is based, and any other (vi) If the Council affirms the ALJ’s or notification to its Medicare enrollees at evidence the enrollee submits or the attorney adjudicator’s adverse coverage least 90 days prior to the effective date Part D plan sponsor obtains. determination or at-risk determination, of the termination. Specialty tier means a formulary cost- in whole or in part, the right to judicial * * * * * sharing tier dedicated to very high cost review of the decision if the amount in

VerDate Sep<11>2014 20:14 Nov 27, 2017 Jkt 244001 PO 00000 Frm 00187 Fmt 4701 Sfmt 4702 E:\FR\FM\28NOP2.SGM 28NOP2 sradovich on DSK3GMQ082PROD with PROPOSALS2 56522 Federal Register / Vol. 82, No. 227 / Tuesday, November 28, 2017 / Proposed Rules

controversy meets the requirements in the Part D plan sponsor may require the the lowest applicable tier, under the § 423.1976. physician or other prescriber to requirements in paragraph (a) of this * * * * * subsequently provide a written section. ■ 77. Section 423.564 is amended by supporting statement. The Part D plan * * * * * revising paragraph (b) to read as follows: sponsor may require the prescribing ■ 79. Section 423.580 is revised to read physician or other prescriber to provide as follows: § 423.564 Grievance procedures. additional supporting medical * * * * * documentation as part of the written § 423.580 Right to a redetermination. (b) Distinguished from appeals. follow-up. An enrollee who has received a Grievance procedures are separate and (6) Limitations on tiering exceptions: coverage determination (including one distinct from appeal procedures, which A Part D plan sponsor is permitted to that is reopened and revised as address coverage determinations as design its tiering exceptions procedures described in § 423.1978) or an at-risk defined in § 423.566(b) and at-risk such that an exception is not approvable determination under a drug determinations made under a drug in the following circumstances: management program in accordance management program in accordance (i) To cover a brand name drug, as with § 423.153(f) may request that it be with § 423.153(f). Upon receiving a defined in § 423.4, at a preferred cost- redetermined under the procedures complaint, a Part D plan sponsor must sharing level that applies only to described in § 423.582, which address promptly determine and inform the alternative drugs that are— requests for a standard redetermination. enrollee whether the complaint is (A) Generic drugs, for which an The prescribing physician or other subject to its grievance procedures or its application is approved under section prescriber (acting on behalf of an appeal procedures. 505(j) of the Federal Food, Drug, and enrollee), upon providing notice to the * * * * * Cosmetic Act; or enrollee, may request a standard ■ 78. Section 423.578 is amended by— (B) Authorized generic drugs as redetermination under the procedures ■ a. Revising paragraphs (a) defined in section 505(t)(3) of the described in § 423.582. An enrollee or introductory text, (a)(1) and (2), (a)(4) Federal Food, Drug, and Cosmetic Act. an enrollee’s prescribing physician or introductory text, and (a)(5) and (6); (ii) To cover a biological product other prescriber (acting on behalf of an ■ b. Removing paragraph (a)(7); and licensed under section 351 of the Public enrollee) may request an expedited ■ c. Revising paragraph (c)(3). Health Service Act at a preferred cost- redetermination as specified in The revisions read as follows: sharing level that does not contain any § 423.584. alternative drug(s) that are biological ■ 80. Section 423.582 is amended by § 423.578 Exceptions process. products. revising paragraphs (a) and (b) to read (a) Requests for exceptions to a plan’s (iii) If a Part D plan sponsor maintains as follows: tiered cost-sharing structure. Each Part a specialty tier, as defined in § 423.560, D plan sponsor that provides § 423.582 Request for a standard the sponsor may design its exception redetermination. prescription drug benefits for Part D process so that Part D drugs and (a) Method and place for filing a drugs and manages this benefit through biological products on the specialty tier request. An enrollee or an enrollee’s the use of a tiered formulary must are not eligible for a tiering exception. prescribing physician or other establish and maintain reasonable and * * * * * complete exceptions procedures subject prescriber (acting on behalf of the (c) * * * enrollee) must ask for a redetermination to CMS’ approval for this type of (3) When a tiering exceptions request coverage determination. The Part D plan by making a written request with the is approved. Whenever an exceptions Part D plan sponsor that made the sponsor grants an exception whenever it request made under paragraph (a) of this determines that the requested non- coverage determination or the at-risk section is approved— determination under a drug preferred drug for treatment of the (i) The Part D plan sponsor may not enrollee’s condition is medically management program in accordance require the enrollee to request approval with § 423.153(f). The Part D plan necessary, consistent with the for a refill, or a new prescription to physician’s or other prescriber’s sponsor may adopt a policy for continue using the Part D prescription accepting oral requests. statement under paragraph (a)(4) of this drug after the refills for the initial section. (b) Timeframe for filing a request. prescription are exhausted, as long as— Except as provided in paragraph (c) of (1) The tiering exceptions procedures (A) The enrollee’s prescribing must address situations where a this section, a request for a physician or other prescriber continues redetermination must be filed within 60 formulary’s tiering structure changes to prescribe the drug; during the year and an enrollee is using calendar days from the date of the (B) The drug continues to be notice of the coverage determination or a drug affected by the change. considered safe for treating the (2) Part D plan sponsors must the at-risk determination under a drug enrollee’s disease or medical condition; management program in accordance establish criteria that provide for a and tiering exception, consistent with with § 423.153(f). (C) The enrollment period has not * * * * * paragraphs (a)(3) through (6) of this expired. If an enrollee renews his or her section. ■ 81. Section 423.584 is amended by membership after the plan year, the plan revising paragraph (a) to read as follows: * * * * * may choose to continue coverage into (4) A prescribing physician or other the subsequent plan year. § 423.584 Expediting certain prescriber must provide an oral or (ii) The Part D plan sponsor must redeterminations. written supporting statement that the provide coverage for the approved (a) Who may request an expedited preferred drug(s) for the treatment of the prescription drug at the cost-sharing redetermination. An enrollee or an enrollee’s condition— level that applies to preferred enrollee’s prescribing physician or other * * * * * alternative drugs. If the plan’s formulary prescriber may request that a Part D (5) If the physician or other prescriber contains alternative drugs on multiple plan sponsor expedite a redetermination provides an oral supporting statement, tiers, cost-sharing must be assigned at that involves the issues specified in

VerDate Sep<11>2014 20:14 Nov 27, 2017 Jkt 244001 PO 00000 Frm 00188 Fmt 4701 Sfmt 4702 E:\FR\FM\28NOP2.SGM 28NOP2 sradovich on DSK3GMQ082PROD with PROPOSALS2 Federal Register / Vol. 82, No. 227 / Tuesday, November 28, 2017 / Proposed Rules 56523

§ 423.566(b) or an at-risk determination (i) For adverse drug coverage Part D plan sponsor is reversed in whole made under a drug management redeterminations, or redeterminations or in part by the independent review program in accordance with related to a drug management program entity, or at a higher level of appeal, the § 423.153(f). (This does not include in accordance with § 423.153(f), Part D plan sponsor must implement the requests for payment of drugs already describe both the standard and change to the at-risk determination furnished.) expedited reconsideration processes, within 72 hours from the date it receives * * * * * including the enrollee’s right to, and notice reversing the determination. The ■ 82. Section 423.590 is amended by conditions for, obtaining an expedited Part D plan sponsor must inform the revising paragraphs (a), (b)(1) and (2), reconsideration and the rest of the independent review entity that the Part the paragraph (f) subject heading, and appeals process; D plan sponsor has effectuated the paragraphs (f)(1) and (g)(3)(i) to read as * * * * * decision. follows: ■ 83. Section 423.602 is amended by ■ 85. Section 423.638 is revised to read revising paragraph (b)(2) to read as as follows: § 423.590 Timeframes and responsibility follows: for making redeterminations. § 423.638 How a Part D plan sponsor must (a) Standard redetermination— § 423.602 Notice of reconsideration effectuate expedited redeterminations or reconsiderations. request for covered drug benefits or determination by the independent review review of an at-risk determination. (1) If entity. (a) Reversals by the Part D plan the Part D plan sponsor makes a * * * * * sponsor— (1) Requests for benefits. If, on an redetermination that is completely (b) * * * expedited redetermination of a request favorable to the enrollee, the Part D plan (2) If the reconsideration for benefits, the Part D plan sponsor sponsor must notify the enrollee in determination is adverse (that is, does reverses its coverage determination, the writing of its redetermination (and not completely reverse the adverse Part D plan sponsor must authorize or effectuate it in accordance with coverage determination or provide the benefit under dispute as § 423.636(a)(1) or (3) as expeditiously as redetermination by the Part D plan expeditiously as the enrollee’s health the enrollee’s health condition requires, sponsor), inform the enrollee of his or condition requires, but no later than 72 but no later than 7 calendar days from her right to an ALJ hearing if the amount hours after the date the Part D plan the date it receives the request for a in controversy meets the threshold sponsor receives the request for standard redetermination. requirement under § 423.1970; (2) If the Part D plan sponsor makes * * * * * redetermination. (2) Review of an at-risk determination. a redetermination that affirms, in whole ■ 84. Section 423.636 is amended by If, on an expedited redetermination of or in part, its adverse coverage revising paragraph (a)(2) and adding an at-risk determination made under a determination or at-risk determination, paragraphs (a)(3) and (b)(3) to read as drug management program in it must notify the enrollee in writing of follows:. accordance with § 423.153(f), the Part D its redetermination as expeditiously as § 423.636 How a Part D plan sponsor must plan sponsor reverses its at-risk the enrollee’s health condition requires, effectuate standard redeterminations, determination, the Part D plan sponsor but no later than 7 calendar days from reconsiderations, or decisions. must implement the change to the at- the date it receives the request for a (a) * * * risk determination as expeditiously as standard redetermination. (2) Requests for payment. If, on the enrollee’s health condition requires, (b) * * * redetermination of a request for but no later than 72 hours after the date (1) If the Part D plan sponsor makes payment, the Part D plan sponsor the Part D plan sponsor receives the a redetermination that is completely reverses its coverage determination, the request for redetermination. favorable to the enrollee, the Part D plan Part D plan sponsor must authorize (b) Reversals other than by the Part D sponsor must issue its redetermination payment for the benefit within 14 plan sponsor— (and effectuate it in accordance with calendar days from the date it receives (1) Requests for benefits. If the § 423.636(a)(2)) no later than 14 the request for redetermination, and expedited determination or expedited calendar days from the date it receives make payment no later than 30 calendar redetermination for benefits by the Part the request for redetermination. days after the date the plan sponsor D plan sponsor is reversed in whole or (2) If the Part D plan sponsor affirms, receives the request for redetermination. in part by the independent review in whole or in part, its adverse coverage (3) Review of an at-risk determination. entity, or at a higher level of appeal, the determination, it must notify the If, on redetermination of an at-risk Part D plan sponsor must authorize or enrollee in writing of its determination made under a drug provide the benefit under dispute as redetermination no later than 14 management program in accordance expeditiously as the enrollee’s health calendar days from the date it receives with § 423.153(f), the Part D plan condition requires but no later than 24 the request for redetermination. sponsor reverses its at-risk hours from the date it receives notice * * * * * determination, the Part D plan sponsor reversing the determination. The Part D (f) Who must conduct the review of an must implement the change to the at- plan sponsor must inform the adverse coverage determination or at- risk determination as expeditiously as independent review entity that the Part risk determination. (1) A person or the enrollee’s health condition requires, D plan sponsor has effectuated the persons who were not involved in but no later than 7 calendar days from decision. making the coverage determination or the date it receives the request for (2) Review of an at-risk determination. an at-risk determination under a drug redetermination. If the expedited redetermination of an management program in accordance (b) * * * at-risk determination made under a drug with § 423.153(f) must conduct the (3) Review of an at-risk determination. management program in accordance redetermination. If, on appeal of an at-risk determination with § 423.153(f) by the Part D plan * * * * * made under a drug management sponsor is reversed in whole or in part (g) * * * program in accordance with by the independent review entity, or at (3) * * * § 423.153(f), the determination by the a higher level of appeal, the Part D plan

VerDate Sep<11>2014 20:14 Nov 27, 2017 Jkt 244001 PO 00000 Frm 00189 Fmt 4701 Sfmt 4702 E:\FR\FM\28NOP2.SGM 28NOP2 sradovich on DSK3GMQ082PROD with PROPOSALS2 56524 Federal Register / Vol. 82, No. 227 / Tuesday, November 28, 2017 / Proposed Rules

sponsor must implement the change to § 423.1970 Right to an ALJ hearing. place the phrase ‘‘the coverage the at-risk determination as * * * * * determination or at-risk determination, expeditiously as the enrollee’s health (b) Calculating the amount in redetermination,’’. condition requires but no later than 24 controversy in specific circumstances. § 423.2036 [Amended] hours from the date it receives notice (1) If the basis for the appeal is the ■ reversing the determination. The Part D refusal by the Part D plan sponsor to 95. Section 423.2036 is amended in plan sponsor must inform the provide drug benefits, CMS uses the paragraph (e) by removing the phrase ‘‘a independent review entity that the Part projected value of those benefits to coverage determination’’ and adding in D plan sponsor has effectuated the compute the amount remaining in its place the phrase ‘‘a coverage decision. controversy. The projected value of a determination or at-risk determination’’. Part D drug or drugs must include any § 423.652 [Amended] § 423.2038 [Amended] costs the enrollee could incur based on ■ ■ 86. Section 423.652 is amended 96. Section 423.2038 is amended in the number of refills prescribed for the paragraph (c) by removing the phrase paragraph (b)(1) by removing the phrase drug(s) in dispute during the plan year. ‘‘July 15’’ and adding in its place ‘‘may be made, and’’ and adding in its (2) If the basis for the appeal is an at- place the phrase ‘‘may be made, or an ‘‘September 1’’. risk determination made under a drug ■ 87. Section 423.750 is amended by enrollee’s at-risk determination should management program in accordance be reversed, and’’. revising paragraph (a)(3) to read as with § 423.153(f), CMS uses the follows: projected value of the drugs subject to § 423.2046 [Amended] § 423.750 Types of intermediate sanctions the drug management program to ■ 97. Section 423.2046 is amended in and civil money penalties. compute the amount remaining in paragraph (a)(1)(iii) by removing the controversy. The projected value of the (a) * * * phrase ‘‘the coverage determination.’’ drugs subject to the drug management and adding in its place the phrase ‘‘the (3) Suspension of communication program shall include the value of any coverage determination or at-risk activities to Medicare beneficiaries by a refills prescribed for the drug(s) in determination. Part D plan sponsor, as defined by CMS. dispute during the plan year. * * * * * * * * * * § 423.2056 [Amended] ■ 88. Section 423.752 is amended by ■ 98. Section 423.2056 is amended— revising paragraphs (a)(9) and (b) to read § 423.2018 [Amended] ■ a. In paragraph (a)(1) by removing the as follows: ■ 91. Section 423.2018 is amended— phrase ‘‘appealed coverage ■ a. In paragraph (a)(1), by removing the determination’’ and adding in its place § 423.752 Basis for imposing intermediate phrase ‘‘appealed coverage the phrase ‘‘appealed coverage sanctions and civil money penalties. determination was made’’ and adding in determination or at-risk determination’’, (a) * * * its place the phrase ‘‘appealed coverage and (9) Fails to comply with determination or at-risk determination ■ b. In paragraph (e) by removing the communication restrictions described in was made’’; and phrase ‘‘the coverage determination to subpart V or applicable implementing ■ b. In paragraph (a)(2), by removing the be considered in the appeal.’’ and guidance. phrase ‘‘after the coverage adding in its place ‘‘the coverage * * * * * determination to be considered’’ and determination or at-risk determination (b) Suspension of enrollment and adding in its place the phrase ‘‘after the to be considered in the appeal.’’ coverage determination or at-risk communications. If CMS makes a § 423.2062 [Amended] determination that could lead to a determination to be considered’’. ■ contract termination under § 423.509(a), 99. Section 423.2062 is amended in § 423.2020 [Amended] CMS may impose the intermediate paragraph (b) by removing the phrase sanctions at § 423.750(a)(1) and (3). ■ 92. Section 423.2020 is amended in ‘‘coverage determination being paragraph (c)(1) by removing the phrase considered and does not have * * * * * ‘‘the coverage determination, and’’ and precedential effect’’ and adding in its ■ 89. Section 423.756 is amended by adding in its place the phrase ‘‘the place the phrase ‘‘coverage revising paragraph (c)(3)(ii) introductory coverage determination or at-risk determination or at-risk determination text to read as follows: determination, and’’. being considered and does not have § 423.756 Procedures for imposing precedential effect’’. § 423.2022 [Amended] intermediate sanctions and civil money § 423.2122 [Amended] penalties. ■ 93. Section 423.2022 is amended by— ■ ■ 100. Section 423.2122 is amended— (c) * * * a. Removing the first appearance of paragraph the (b) subject heading and ■ a. In paragraph (a)(1) by removing the (3) * * * paragraph (b)(1) introductory text; and. phrase ‘‘the coverage determination.’’ (ii) In instances where intermediate ■ b. In paragraph (b)(1)(i) by removing and adding in its place the phrase ‘‘the sanctions have been imposed, CMS may the phrase ‘‘the coverage determination, coverage determination or at-risk require a Part D plan sponsor to market redetermination,’’ and adding in its determination’’; or to accept enrollments or both for a place the phrase ‘‘the coverage ■ b. In paragraph (a)(3) by removing the limited period of time in order to assist determination or at-risk determination, phrase ‘‘a coverage determination is CMS in making a determination as to redetermination,’’. made’’ and adding in its place ‘‘a whether the deficiencies that are the coverage determination or at-risk bases for the intermediate sanctions § 423.2032 [Amended] determination is made’’ and by have been corrected and are not likely ■ 94. Section 423.2032 is amended in removing the phrase ‘‘after the coverage to recur. paragraph (a) by removing the phrase determination considered’’ and adding * * * * * ‘‘the coverage determination, in its place ‘‘after the coverage ■ 90. Section 423.1970 is amended by redetermination,’’ and adding in its determination or at-risk determination revising paragraph (b) to read as follows: considered’’.

VerDate Sep<11>2014 20:14 Nov 27, 2017 Jkt 244001 PO 00000 Frm 00190 Fmt 4701 Sfmt 4702 E:\FR\FM\28NOP2.SGM 28NOP2 sradovich on DSK3GMQ082PROD with PROPOSALS2 Federal Register / Vol. 82, No. 227 / Tuesday, November 28, 2017 / Proposed Rules 56525

§ 423.2126 [Amended] (3) Unless otherwise specified by Medicare or that CMS or Medicare ■ 101. Section 423.2126 is amended in CMS because of their use or purpose, recommends that the beneficiary enroll paragraph (b) by removing the phrase are required under § 423.128. in the Part D plan. It may explain that ‘‘coverage determination to be ■ 104. Section 422.2262 is amended by the organization is approved for considered in the appeal.’’ and adding revising paragraph (d) to read as participation in Medicare. in its place the phrase ‘‘coverage follows: (4) Employ Part D plan names that determination or at-risk determination suggest that a plan is not available to all § 422.2262 Review and distribution of Medicare beneficiaries. to be considered in the appeal.’’ marketing materials. (5) Display the names and/or logos of Subpart V—Part D Communication * * * * * co-branded network providers or Requirements (d) Enrollee communication pharmacies on the sponsor’s member materials. Enrollee communication ■ 102. The subpart V heading is identification card, unless the names, materials may be reviewed by CMS, and/or logos are related to the member amended to read as set forth above. which may upon review determine that ■ 103. Section 423.2260 is amended selection of specific provider such materials must be modified, or organizations (for example, physicians, by— may no longer be used. ■ hospitals). a. Revising the section heading; ■ ■ 105. Section 423.2264 is revised to (6) Use a plan name that does not b. Adding in alphabetical order read as follows: definitions for ‘‘Communications’’, include the plan type. The plan type ‘‘Communications materials’’, and § 423.2264 Guidelines for CMS review. should be included at the end of the ‘‘Marketing’’; and In reviewing marketing material or plan name. ■ c. Revising the definition of election forms under § 423.2262 of this (7) For markets with a significant non- ‘‘Marketing materials’’. part, CMS determines that the English speaking population, provide The revisions and additions read as materials— materials, as defined by CMS, unless in follows: (a) Provide to Medicare beneficiaries the language of these individuals. Specifically, MA organizations must § 423.2260 Definitions. interested in enrolling, adequate written description of rules (including any translate materials into any non-English * * * * * language that is the primary language of Communications means activities and limitations on the providers from whom services can be obtained), procedures, at least 5 percent of the individuals in use of materials to provide information a plan benefit package (PBP) service to current and prospective enrollees. basic benefits and services, and fees and other charges in a format (and, where area. Communication materials means all (b) In marketing, Part D sponsors may information provided to current and appropriate, print size) and using standard terminology that may be not do any of the following: prospective enrollees. Marketing (1) Provide cash or other monetary materials are a subset of communication specified by CMS. (b) Notify the general public of its rebates as an inducement for enrollment materials. or otherwise. Marketing means the use of materials enrollment period in an appropriate manner, through appropriate media, (2) Offer gifts to potential enrollees, or activities that meet the following: unless the gifts are of nominal (as (1) By the Part D sponsor or throughout its service area. (c) Include in written materials notice defined in the CMS Marketing downstream entities. Guidelines) value, are offered to all (2) Intended to draw a beneficiary’s that the Part D sponsor is authorized by law to refuse to renew its contract with potential enrollees without regard to attention to a Part D plan or plans. whether or not the beneficiary enrolls, (3) Influence a beneficiary’s decision CMS, that CMS also may refuse to and are not in the form of cash or other making process when making a Part D renew the contract, and that termination monetary rebates. plan selection or influence a or non-renewal may result in (3) Market non-health care/non- beneficiary’s decision to stay enrolled in termination of the beneficiary’s prescription drug plan related products a plan (that is, retention-based enrollment in the Part D plan. In to prospective enrollees during any Part marketing). addition, the Part D plan may reduce its Marketing materials— service area and no longer be offered in D sales activity or presentation. This is (1) Include, but are not limited to the area where a beneficiary resides. considered cross-selling and is following: (d) Ensure that materials are not prohibited. (i) Materials such as brochures; materially inaccurate or misleading or (4) Market any health care related posters; advertisements in media such otherwise make material product during a marketing as newspapers, magazines, television, misrepresentations. appointment beyond the scope agreed radio, billboards, or the Internet; and ■ 106. Section 423.2268 is revised to upon by the beneficiary, and social media content. read as follows: documented by the plan, prior to the (ii) Marketing representative materials appointment. such as scripts or outlines for § 423.2268 Standards for Part D Sponsor (5) Market additional health related communications and marketing. telemarketing or other presentations. lines of plan business not identified (iii) Presentation materials such as (a) In conducting communication prior to an individual appointment slides and charts. activities, Part D sponsors may not do without a separate scope of appointment (2) Exclude the following materials: any of the following: identifying the additional lines of (i) Information about the plan’s (1) Provide information that is business to be discussed. benefit structure or cost sharing; inaccurate or misleading. (6) Distribute marketing materials for (ii) Information about measuring or (2) Engage in activities that could which, before expiration of the 45-day ranking standards (for example, star mislead or confuse Medicare period, the Part D sponsor receives from ratings); beneficiaries, or misrepresent the Part D CMS written notice of disapproval (iii) Mention benefits or cost sharing, sponsor. because it is inaccurate or misleading, but do not meet the definition of (3) Claim the Part D sponsor is or misrepresents the Part D sponsor, its marketing in this section; or recommended or endorsed by CMS or marketing representatives, or CMS.

VerDate Sep<11>2014 20:14 Nov 27, 2017 Jkt 244001 PO 00000 Frm 00191 Fmt 4701 Sfmt 4702 E:\FR\FM\28NOP2.SGM 28NOP2 sradovich on DSK3GMQ082PROD with PROPOSALS2 56526 Federal Register / Vol. 82, No. 227 / Tuesday, November 28, 2017 / Proposed Rules

(7) Conduct sales presentations or § 423.2410 [Amended] § 423.2460 Reporting requirements. distribute and accept Part D plan ■ 109. Section 423.2410 is amended in (a) For each contract year, from 2014 enrollment forms in provider offices or paragraph (a) by removing the phrase through 2017, each Part D sponsor must other areas where health care is ‘‘an MLR’’ and adding in its place the submit to CMS, in a timeframe and delivered to individuals, except in the phrase ‘‘the information required under manner specified by CMS, a report that case where such activities are § 423.2460’’. includes but is not limited to the data conducted in common areas in health needed by the Part D sponsor to § 423.2420 [Amended] care settings. calculate and verify the MLR and (8) Conduct sales presentations or ■ 110. Section 423.2420 is amended remittance amount, if any, for each distribute and accept plan applications by— contract, under this part, such as at educational events. ■ a. Removing and reserving paragraph incurred claims, total revenue, (9) Display the names and/or logos of (b)(2)(viii); expenditures on quality improving provider co-branding partners on ■ b. Revising paragraph (d)(2)(i); and activities, non-claims costs, taxes, marketing materials, unless the ■ c. Removing the first paragraph licensing and regulatory fees, and any materials clearly indicate that other designated as (d)(2)(ii). remittance owed to CMS under providers are available in the network. The revision reads as follows: § 423.2410. (10) Knowingly target or send § 423.2420 Calculation of medical loss (b) For contract year 2018 and for marketing materials to any Part D ratio. each subsequent contract year, each Part enrollee, whose prior year enrollment D sponsor must submit to CMS, in a was in an MA plan, during the Open * * * * * (d) * * * timeframe and manner specified by Enrollment Period. CMS, the following information: (11) Engage in any other marketing (2) (i) Allocation to each category must be (1) Fully credible and partially activity prohibited by CMS in its credible contracts. For each contract marketing guidance. based on a generally accepted accounting method that is expected to under this part that has fully credible or (12) Engage in any discriminatory partially credible experience, as activity such as attempting to recruit yield the most accurate results. Specific identification of an expense with an determined in accordance with Medicare beneficiaries from higher § 423.2440(d), the Part D sponsor must income areas without making activity that is represented by one of the categories in paragraph (b) or (c) of this report to CMS the MLR for the contract comparable efforts to enroll Medicare and the amount of any remittance owed beneficiaries from lower income areas. section will generally be the most accurate method. to CMS under § 423.2410. (13) Solicit door-to-door for Medicare (2) Non-credible contracts. For each * * * * * beneficiaries or through other contract under this part that has non- ■ 111. Section 423.2430 is amended unsolicited means of direct contact, credible experience, as determined in by— including calling a beneficiary without accordance with § 423.2440(d), the Part ■ a. Redesignating paragraphs (a) the beneficiary initiating the contact. D sponsor must report to CMS that the introductory text and paragraphs (a)(1) (14) Use providers or provider groups contract is non-credible. to distribute printed information and (2) as paragraphs (a)(1), (2), and (3), respectively; (c) Total revenue included as part of comparing the benefits of different the MLR calculation must be net of all health plans unless the providers, ■ b. Revising newly redesignated paragraph (a)(1); projected reconciliations. provider groups, or pharmacies accept (d) The MLR is reported once, and is and display materials from all health ■ c. Adding paragraph (a)(4); and ■ d. Removing and reserving paragraph not reopened as a result of any payment plans with which the providers, reconciliation processes. provider groups, or pharmacies contract. (b)(8). The use of publicly available The revisions and additions read as § 423.2480 [Amended] follows: comparison information is permitted if ■ 113. Section 423.2480 is amended— approved by CMS in accordance with § 423.2430 Activities that improve health ■ a. In the introductory text by the Medicare marketing guidance. care quality. removing the phrase ‘‘reviews of reports (15) Provide meals to potential (a) Activity requirements. (1) submitted’’ and adding in its place enrollees, which is prohibited, Activities conducted by a Part D ‘‘review of data submitted’’; and regardless of value. sponsor to improve quality must ■ b. In paragraph (d) introductory text § 423.2272 [Amended] either— by removing the phrase ‘‘Reports ■ 107. Section 423.2272 is amended by (i) Fall into one of the categories in submitted under’’ and adding in its removing paragraph (e). paragraph (a)(2) of this section and meet place the phrase ‘‘Data submitted all of the requirements in paragraph under’’. § 423.2274 [Amended] (a)(3) of this section; or § 423.2490 [Amended] ■ 108. Section 423.2274 is amended— (ii) Be listed in paragraph (a)(4) of this ■ ■ a. By redesignating paragraph section. 114. Section 423.2490 is amended in (b)(1)(iii) as paragraph (b)(1)(iv); * * * * * paragraph (a) by removing the phrase ■ b. By redesignating paragraph (4)(i) Medication Therapy ‘‘information contained in reports (b)(2)(iii) as paragraph (b)(1)(iii); Management Programs meeting the submitted’’ and adding in its place the ■ c. By removing paragraph (b)(2); requirements of § 423.153(d). phrase ‘‘information submitted’’. ■ (ii) Fraud reduction activities, d. By redesignating paragraph (b)(3) as PART 460—PROGRAMS OF ALL- including fraud prevention, fraud paragraph (b)(2); and INCLUSIVE CARE FOR THE ELDERLY ■ detection, and fraud recovery. e. In newly redesignated paragraph (PACE) (b)(2)(iii), by removing the phrase ‘‘from * * * * * an MA plan,’’ and adding the phrase ■ 112. Section 423.2460 is revised to ■ 115. The authority citation for part ‘‘from a Part D sponsor,’’ in its place. read as follows: 460 continues to read as follows:

VerDate Sep<11>2014 20:14 Nov 27, 2017 Jkt 244001 PO 00000 Frm 00192 Fmt 4701 Sfmt 4702 E:\FR\FM\28NOP2.SGM 28NOP2 sradovich on DSK3GMQ082PROD with PROPOSALS2 Federal Register / Vol. 82, No. 227 / Tuesday, November 28, 2017 / Proposed Rules 56527

Authority: Secs. 1102, 1871, 1894(f), and § 460.86 Payment to individuals and (b) * * * 1934(f) of the Social Security Act (42 U.S.C. entities excluded by the OIG or included on (20) An individual or entity is to be 1302, 1395, 1395eee(f), and 1396u–4(f)). the preclusion list. included on the preclusion list as (a) A PACE organization may not pay, ■ 116. Section 460.40 is amended by defined in § 422.2 or § 423.100 of this directly or indirectly, on any basis, for chapter. revising paragraph (j) to read as follows: items or services (other than emergency * * * * * § 460.40 Violations for which CMS may or urgently needed services as defined impose sanctions. in § 460.100) furnished to a Medicare ■ 124. Section 498.5 is amended by * * * * * enrollee by any individual or entity that adding paragraph (n) to read as follows: is excluded by the OIG or is included on § 498.5 Appeal rights. (j) Makes payment to any individual the preclusion list, defined in § 422.2 of or entity that is included on the this chapter. * * * * * preclusion list, defined in § 422.2 of this (b) If a PACE organization receives a (n) Appeal rights of individuals and chapter. request for payment by, or on behalf of, entities on preclusion list. (1) Any ■ 117. Section 460.50 is amended by an individual or entity that is excluded individual or entity that is dissatisfied revising paragraph (b)(1)(ii) to read as by the OIG or is included on the with an initial determination or revised follows: preclusion list, defined in § 422.2 of this initial determination that they are to be chapter, the PACE organization must included on the preclusion list (as § 460.50 Termination of PACE program notify the enrollee and the excluded defined in § 422.2 or § 423.100 of this agreement. individual or entity or the individual or chapter) may request a reconsideration * * * * * entity that is included on the preclusion in accordance with § 498.22(a). (b) * * * list in writing, as directed by contract or (2) If CMS or the individual or entity (1) * * * other direction provided by CMS, that under paragraph (n)(1) of this section is payments will not be made. Payment (ii) The PACE organization failed to dissatisfied with a reconsidered may not be made to, or on behalf of, an determination under paragraph (n)(1) of comply substantially with conditions individual or entity that is excluded by for a PACE program or PACE this section, or a revised reconsidered the OIG or is included on the preclusion determination under § 498.30, CMS or organization under this part, or with list. terms of its PACE program agreement, the individual or entity is entitled to a including making payment to an PART 498—APPEALS PROCEDURES hearing before an ALJ. individual or entity that is included on FOR DETERMINATIONS THAT AFFECT (3) If CMS or the individual or entity the preclusion list, defined in § 422.2 of PARTICIPATION IN THE MEDICARE under paragraph (n)(2) of this section is this chapter. PROGRAM AND FOR dissatisfied with a hearing decision as * * * * * DETERMINATIONS THAT AFFECT THE described in paragraph (n)(2) of this PARTICIPATION OF ICFs/IID AND section, CMS or the individual or entity § 460.68 [Amended] CERTAIN NFs IN THE MEDICAID may request Board review and the ■ 118. Section 460.68 is amended by PROGRAM individual or entity has a right to seek judicial review of the Board’s decision. removing paragraph (a)(4). ■ 122. The authority for part 498 Dated: October 27, 2017. § 460.70 [Amended] continues to read as follows: Seema Verma, ■ Authority: Secs. 1102, 1128I and 1871 of 119. Section 460.70 is amended by the Social Security Act (42 U.S.C. 1302, Administrator, Centers for Medicare & removing paragraph (b)(1)(iv). 1320a–7j, and 1395hh). Medicaid Services. Dated: October 30, 2017. § 460.71 [Amended] ■ 123. Section 498.3 is amended by adding paragraph (b)(20) to read as Eric D. Hargan, ■ 120. Section 460.71 is amended by follows: Acting Secretary, Department of Health and removing paragraph (b)(7). Human Services. ■ 121. Section 460.86 is revised to read § 498.3 Scope and applicability. [FR Doc. 2017–25068 Filed 11–16–17; 4:15 pm] as follows: * * * * * BILLING CODE 4120–01–P

VerDate Sep<11>2014 20:14 Nov 27, 2017 Jkt 244001 PO 00000 Frm 00193 Fmt 4701 Sfmt 9990 E:\FR\FM\28NOP2.SGM 28NOP2 sradovich on DSK3GMQ082PROD with PROPOSALS2