Health plans may soon be facing more transparency and accountability for their practices in Medicare Advantage and Part D, if the Biden administration finalizes a proposed rule released Thursday.
The regulation would overhaul a number of ways MA and Part D plans operate and disclose information, including in the areas of plan applications, provider network adequacy requirements, medical loss ratio reporting and marketing.
If finalized, it would also lean on pharmacy price concessions to try to lower out-of-pocket costs for prescription drugs in Part D, and revise regulations for Medicare special needs plans for dual-eligibles related to health risk assessments and beneficiary input into their own coverage.
CMS says updating the MA and Part D programs will improve price transparency and market competition while improving beneficiaries' experiences, especially among those who are dually eligible for both Medicare and Medicaid.
And in a fact sheet on the changes, which would kick in next year, CMS said it expects the "relatively modest costs" associated with the proposed rule to not significantly change MA plans' bids, supplemental benefits or beneficiary premiums.
MA trade group the Better Medicare Alliance said Thursday it was still reviewing the rule, but appreciated CMS' "thoughtful work" on the proposal in light of MA's growing popularity.
Higher standards for MA plans
A growing number of Medicare beneficiaries are electing to receive services through MA and Part D. More than 27 million beneficiaries are enrolled in MA plans — including those that offer Part D prescription drug coverage — while about 24 million are enrolled in standalone Part D plans, according to government data.
CMS is looking to hold the plans to a higher standard as their rolls swell, targeting their networks, past performance, marketing practices and spending.
The new proposed rule would require applicants for new or expanded MA plans to show they have a sufficient network of contracted providers to care for beneficiaries. The change would also give MA plans more information on their network adequacy ahead of bid submissions.
CMS noted meeting this requirement may be difficult for some plans, in that it requires them to build a full network about a year in advance of the contract year. As a result, to ease the burden on plans, CMS is proposing phasing in this requirement by allowing a 10-percentage point credit toward the percentage of beneficiaries living within published time and distance standards for new or expanding service area applicants, to help their network qualify.
Once the coverage year starts on Jan. 1, the 10-percentage point credit would no longer apply, and plans would have to meet full compliance.
The rule would also limit MA plans' ability to expand or enter into new contracts if they have a history of poor performance.
Currently, regulations allow CMS to deny applications from companies under sanction, or those failing CMS' net worth requirements during the performance period.
The proposed rule would add new bases for CMS denying applications, including star ratings of 2.5 or lower, bankruptcy or bankruptcy filings and exceeding the threshold for compliance actions.
The Biden administration is also looking to hold plans more accountable for how their Medicare revenue is spent, as the program continues to face financial stress.
That includes requiring plans to provide more transparency on how much they spend on supplemental benefits not available through traditional Medicare, which include dental, vision, hearing, transportation and meals.
CMS is also proposing that MA and Part D plans be required to report more information on how they calculate their medical loss ratios, which is the percent of plan revenue spent on patient care and quality improvement activities.
Currently, plans must meet an MLR of at least 85% of premium dollars going toward medical claims. If they fail to meet that threshold, they have to pay a remittance to CMS.
The proposed reporting requirements, which were actually in place from 2014 to 2017, would require MA and Part D plans to report the underlying cost and revenue information they use to calculate and verify their MLR and amount of the remittance, if any.
CMS is also looking to improve the accuracy of information about Medicare coverage by strengthening oversight of third-party marketing organizations that work, either directly or indirectly, on behalf of MA plans and Part D sponsors.
Such companies have come under fire for using deceptive marketing tactics to enroll beneficiaries in specific plans. According to CMS, the number of beneficiary complaints about third-party marketing tactics more than doubled from 2020 to 2021.
Because of this, regulators are proposing defining third-party marketing organizations, in a bid to minimize any confusion over plans' responsibility for marketers' activities. If the proposed rule is finalized, organizations would also have to publish a disclaimer saying they don't offer every plan availability in the area.
CMS is also proposing codifying enrollee ID card standards and requiring plan website instructions on how to appoint a representative, and website posting of enrollment instructions and forms. Additionally, all MA and Part D plans would have to provide information about the availability of free language and translation services in all required communications with beneficiaries.
CMS also wants to revise and clarify timeframes and standards associated with disasters and emergencies.
Currently, regulations have special requirements for MA plans during these events, including requiring plans to cover services provided by non-contracted providers and to waive gatekeeper referral requirements
The agency is proposing requiring MA plans to comply with the special requirements when a disaster or emergency is declared — including a public health emergency — and when healthcare access is disrupted.
Improving input and cost-sharing for dual-eligibles
Some MA enrollees are also enrolled in Medicaid, with a growing number enrolling in managed care plans through Medicare, Medicaid or both. Roughly 3.7 million dually eligible beneficiaries getting coverage through dual-eligible special needs plans, or D-SNPs, CMS said.
CMS is proposing requiring MA organizations with a D-SNP to establish, maintain and consult with one or more enrollee advisory committee to make sure the experiences of those dually eligible individuals are considered in plan decision-making.
The agency also wants to simplify materials describing how to access Medicare and Medicaid services and streamline the grievance and appeals process in certain D-SNPs, extending the protection of continuation of benefits pending appeal. The goal is to help dually eligible beneficiaries with low health literacy to navigate a more complex system of coverage than non-dual eligibles, CMS said.
CMS also wants to change the current MA cost-sharing rules, in a bid to create more equitable payments to providers serving dual-eligibles and improve dual-eligibles' access to providers. The agency wants to specify that the maximum out-of-pocket limits for an MA plan should be calculated based on the total of all Medicare cost-sharing in that plan's benefits, whether it's paid by the beneficiary, Medicaid, another payer or remains unpaid.
Regulators project the change would save state Medicaid agencies $2 billion over a decade, while increasing payments to providers serving dually eligible patients by $8 billion in the same timeframe.
The rule would also require all MA special needs plans to solicit information about beneficiaries' barriers to accessing care through standardized questions in health risk assessments on instability in housing, food and transportation. Such social factors are important contributors to overall health, and the Biden administration has made weaving them into regulations a key component of its health agenda.
Part D price concessions to be applied at point-of-sale
More Part D plans and pharmacies are entering into price concession agreements, where plans pay less money to pharmacies for dispensed drugs if the pharmacies fail to meet certain metrics. However, there's little public visibility on the price concessions, and any lower prices aren't being passed down to beneficiaries, CMS said.
As a result, in 2018, the government asked for public comment on a policy that would require Part D plans to apply all price concessions received from network pharmacies at the point of sale, which should in turn reduce beneficiary cost-sharing.
After digesting the comments, CMS is now proposing this policy. The agency said it would reduce beneficiaries' Medicare Part D out-of-pocket costs while bettering market competition and price transparency in Part D.
The policy, which would also redefine the negotiated price as the lowest admissible payment to a pharmacy, will take affect in 2023, if finalized.
CMS is also looking for feedback on the challenges with building behavioral health provider networks within MA plans, and how the changes proposed Thursday might impact network adequacy.
Comments on the proposed rule are due by March 7.