The Biden administration wants Medicare Part D plans to apply any price concessions they get from drug makers to the point-of-sale and require Medicare Advantage plans to be more transparent in how they spend money on supplemental benefits. The Centers for Medicare & Medicaid Services (CMS) recently released a proposed rule that outlined major regulatory changes for MA and Part D starting in 2023. The rule covers a swath of major areas that include new changes for dual-eligible special needs beneficiaries and updates to calculations of star ratings, which can affect quality bonuses delivered to plans.
“Today’s proposed actions follow our guiding principles by improving health equity and enhancing access to prescription medications,” said CMS Administrator Chiquita Brooks-LaSure in a statement.
Rule Specifics
Under current law, “negotiated prices” must include all network pharmacy price concessions, with the exclusion of contingent pharmacy price concessions that cannot “reasonably be determined” at the point of sale. As proposed in the rule, the term “negotiated prices,” as it relates to prescription drugs under Part D, would be redefined to eliminate this exception. CMS is also proposing to define the term “price concession” to include all forms of discounts, direct or indirect subsidies, or rebates that work to reduce the costs incurred under Part D plans by Part D sponsors. In order to implement these provisions, both Part D sponsors and their pharmacy benefit managers (PBMs) would be required to transmit — via their claims processing systems that interface with contracted pharmacies — revised drug pricing tables that reflect the lowest possible reimbursement at the point of sale. If finalized, these changes would be effective January 1, 2023.
CMS is proposing several changes to the MA and Part D plans in an effort to increase oversight. To address transparency concerning the use of Medicare Trust Fund dollars, CMS is proposing to reinstate the Medical Loss Ratio (MLR) reporting requirements — in effect for CY 2014 through 2017 — that required MA organizations and Part D sponsors to report the underlying cost and revenue information needed to calculate and verify the MLR percentage and remittance amount. Additionally, the proposed rule would require that MA organizations report spending amounts on supplemental benefits not available under original Medicare.
The proposed rule also authorizes CMS to calculate 2023 Part C Star Ratings for the three Healthcare Effectiveness Data and Information Set measures based on the Health Outcomes Survey. The agency claims that, without this technical change, it would be unable to calculate 2023 Star Ratings for these measures as all MA contracts qualify for the “extreme and uncontrollable circumstances” adjustment for COVID-19. Further, CMS is proposing to allow certain states with integrated care programs to require that MA organizations establish a contract that only includes one or more D-SNPs. In doing so, CMS explains that this would allow Star Ratings for that contract to reflect the D-SNPs’ local performance.
Additionally, CMS is proposing MA plan applicants demonstrate that the plan has sufficient provider infrastructure to care for beneficiaries via new network adequacy standards. Under current regulations, CMS requires that an applicant attest to its provider network adequacy, but CMS will not deny an application based on network adequacy. Additionally, CMS is proposing a 10 percent application credit towards meeting the network adequacy rules to aid in operationalizing this potential requirement.
CMS is also trying to address out-of-pocket (OOP) caps. Currently, MA plans are required to establish a maximum OOP cap while allowing plans dual eligible special needs plans (D-SNPs) to exclude beneficiaries’ Medicaid OOP contributions from the maximum OOP. CMS notes that this practice disadvantages D-SNPs in MA plans. In an effort to create parity for MA providers servicing D-SNPs, CMS is proposing to alter this requirement by specifying that the maximum OOP limit include all cost-sharing in its calculations, including Medicaid OOP costs.
Furthermore, CMS is proposing to require additional bases for denying a new contract or service area expansion of an existing contract based on past performance. Currently, an organization must solely meet the requirements in the application; however, the application requirements do not look at an organization’s past performance in existing contracts. This proposed rule would add: (1) Star Ratings — 2.5 or lower; (2) bankruptcy or bankruptcy filings; and (3) exceeding a CMS designated threshold for compliance actions as additional basis for the denial of a new application.