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New Rules for Medicare Part C and Part D Plans
 

On April 15, 2010, the Centers for Medicare & Medicaid Services (CMS) issued final regulations to provide policy and technical changes to the Medicare Parts C and D programs.[1]  The regulations address some issues of concern raised by Medicare beneficiary advocates and some provisions of the new health care reform legislation.  They also codify into regulation some existing CMS guidance. Unfortunately, CMS chose not to act on other recommendations made by advocates.

 

While the final regulations become effective on June 7, 2010, most provisions will not go into effect until January 1, 2011, because plans operate under calendar-year contracts with CMS. A separate memo sent by CMS to health plans on April 30, 2010 clarifies that provisions governing preparations for contract year 2011 are effective on June 7.  These provisions concern contract qualification; non-renewal for low enrollment; quality improvement program requirements; and plan bids, including the "meaningful difference" requirement discussed below.

 

This Alert identifies and summarizes many of the changes made by the final rules that directly affect Medicare beneficiaries.

 

Provisions Pertaining to Part C and Part D Plans

  • Marketing Materials:  CMS has narrowed the definition of marketing materials to exclude a new category of materials called "current enrollee communications materials." Excluded materials are not subject to CMS review.  These materials are targeted to current enrollees (e.g., information about a shortage of formulary drugs); are customized or limited to a subset of enrollees or apply to a specific situation (e.g. an enrollee is receiving a refund) and do not include information about the plan's benefit structure. 
  • Standardized Materials:  When directed to do so, plans must use standardized formats and language in model materials.  CMS indicates that it will explore additional standardization for 2012 and beyond.
  • Involuntary Disenrollment for Failure to Pay Premiums:  Part C and Part D plans must provide a two-month grace period before someone can be involuntarily disenrolled for failure to pay premiums.  The grace period begins only after the individual is notified that payment is due.  It runs from the later of the first day of the month for which the premium is unpaid or the first day of the month after the date on which payment is requested.
  • Maximum Allowable Cost Sharing Amounts:  CMS is authorized to establish cost-sharing thresholds for individual services. For Part D plans, tiered cost-sharing above the amount set annually by CMS will be considered to be discriminatory. For all Part C plans, including special needs plans (SNPs), cost-sharing for Part A and B services specified by CMS cannot exceed levels annually determined to be discriminatory.
    • Section 3202 of the Patient Protection and Affordable Care Act of 2010 (PPACA)[2] precludes plans from charging cost sharing for chemotherapy administration services, renal dialysis services, and skilled nursing facility (SNF) care that exceeds cost sharing for those services under Parts A and B, effective January 1, 2011.[3]  CMS is interpreting this provision, however, to allow plans to charge co-payments for the first 20 days of a SNF stay, even though no cost-sharing is assessed in traditional Medicare, as long as the overall cost-sharing does not exceed traditional Medicare levels for a 100-day SNF stay.[4]
    • In response to comments about Part D specialty cost-sharing tiers, CMS stated that any revision to the specialty tier policy would be done in a future rulemaking.
  • Nonrenewal Beneficiary Notification Requirements:  Part C and Part D plans that are not renewing their contracts with CMS must send enrollees a CMS-approved notice at least 90 days in advance of the effective date of the nonrenewal.  The notice was previously required to be sent 60 days in advance.  Plans will no longer have to provide notice to the general public in a general newspaper.  Plans must advise their enrollees of all of the options available to them, including PDPs for enrollees in MA plans.  Despite objections from advocacy groups, CMS is requiring plans to make calls to affected enrollees to ensure that they know who to contact to learn about enrollment options.  Advocates raised concerns that such calls could result in steering of affected beneficiaries to other plans offered by the sponsor, even if those plans were not the best option for them.
  • Disclosure Requirements:  CMS may require a plan sponsor to disclose to its enrollees and potential enrollees information concerning compliance deficiencies.  CMS will apply the new disclosure requirement when it believes that beneficiaries must be made aware of deficiencies.
  • Meaningful Differences in Bid Submissions and Bid Review:  CMS will promote plan offerings that have meaningful differences by only approving plan bids if the plan benefit package or plan cost structures are substantially different from those of other plans offered by the same sponsor.  In making the determination, CMS will look at plan characteristics such as premiums, cost-sharing, formulary structure, or benefits offered. The preamble to the regulations provides some examples of what CMS will look for in evaluating plan benefit packages.  CMS indicates that it will only consider differences in Medicare benefits, and not differences in Medicaid benefits, when evaluating D-SNPs offered by the same sponsor. CMS also has issued additional guidance to plans that describe how meaningful difference will be determined.  
  • Non-Renewal of Low-Enrollment Plans:  If a Part C or Part D plan has an insufficient number of enrollees to establish that it is a viable, independent plan option, CMS is authorized not to renew its contract.  CMS will provide implementation guidance concerning threshold amounts to be considered a low-enrollment plan.  CMS will also consider the length of time the plan has had low enrollment, the type of plan, and the benefits offered.  CMS rejected a request to exempt SNPs or other plan types from the minimum enrollment threshold; plans will be judged on their individual circumstances. 

Provisions Concerning Part C and Part D Appeals Processes

  • Representatives:  CMS is removing the term "authorized" before "representative" throughout the Part C regulations.  The rule also clarifies that a representative may request a grievance on behalf of the enrollee.

  • Organization Determinations Under Part C: Plan enrollees may make an oral request for an organization determination other than a request for payment.  CMS removed language from the existing regulation that requires an enrollee to disagree with the plan's discontinuance or reduction of a service for the plan's decision to be considered an organization determination. 

  • Standard Timeframe and Notice Requirements for Coverage Determinations under Part D:  Plan sponsors must accept standard coverage determination requests, other than requests for payment, both orally and in writing.  Plans must establish and maintain a method of documenting all oral requests. Plan sponsors must notify enrollees of a partially or fully favorable decision requiring payment within 14 days and must also make payment within that time frame.  CMS encourages plan sponsors to issue unfavorable payment determinations sooner than 14 days. Plans have the option to provide initial notice of a coverage determination orally as long as they send written notice within 3 calendar days.  The notice must include the conditions of the approval in a readable and understandable manner.

  • Timeframes and Notice Requirements for Expedited Coverage Determinations under Part D:  Plan sponsors must send written notice of fully favorable expedited coverage decisions.  They have the option of providing notice orally so long as they send written notice within 3 calendar days.  The written notice must provide the conditions of approval in a readable and understandable manner.  Plan sponsors must use the standardized CMS approved form for adverse expedited coverage determinations

  • Redeterminations under Part D:  Plans may make favorable and unfavorable expedited redetermination decisions orally if written notice is mailed to the enrollee within 3 calendar days of the oral notice.  The notice of favorable decision must explain the conditions of the approval in a readable form. 

Provisions Specific to Part C Plans

  • Network Adequacy:  HMOs, PPOs, SNPs, and private fee-for-service plans (PFFS) must meet provider network standards based on the prevailing pattern of community health care delivery.  The factors to be considered include:

    • Number and geographical distribution of available providers in the plan service area;

    • Number and geographical distribution of available providers contracting with both commercial and other Medicare Advantage plans;

    • Whether the service area is urban, rural, or a combination;

    • Whether the network meets Medicare time and distance standards for access to providers, including specialists; and

    • Other factors determined relevant by CMS. CMS did not adopt a recommendation by advocates to consider Medicaid provider network standards as part of the assessment of network adequacy.

  • Maximum Allowable Out-of-Pocket Amount for Part A and Part B Services: Starting in 2011, all local Medicare Advantage plans must have a maximum out-of-pocket (MOOP) liability amount for all Part A and Part B services to be set yearly by CMS.  For local PPOs, the mandatory MOOP amount applies only to in-network services; a higher catastrophic maximum applies to both in- and out-of-network liability.[5] Plans may use a lower voluntary MOOP in exchange for greater flexibility in cost-sharing thresholds.  For 2011, the mandatory MOOP for HMOs, for PFFS, and for local PPO in-network care is $6,700; the voluntary MOOP is $3,400. The voluntary catastrophic amount for local and regional PPOs is $5,100.  The mandatory catastrophic amount for local PPOs is $10,000; regional PPOs set their own.[6]

  • Prohibition on Prior Notification and Similar Requirements by PPO, PFFS, and MSA Plans:  PPO plans (for out-of-network services), PFFS plans, and MSA plans are prohibited from imposing prior notification requirements. Plans have used these prior notification requirements to assess higher cost-sharing when an enrollee or provider fails to notify the plan in advance of a service being furnished.  Also, only HMOs will be allowed to offer a point of service (POS) options.  CMS states that both the prior notification requirement and PPO-POS option are confusing to beneficiaries.

Provisions Specific to Part D plans

  • Deemed Low-Income Subsidy (LIS) Status:  An individual who is deemed eligible for LIS between January 1 and June 30 is LIS-eligible for the rest of that year.  An individual who is deemed eligible between July 1 and December 31 is deemed eligible for the remainder of the calendar year and the next calendar year. 

  • Enrollment of Subsidy Eligible Individuals:  The rules codify into regulation existing enrollment and reassignment procedures.  They clarify that the procedures for LIS individuals are similar to the procedures used for enrollment and reassignment of dual-eligible individuals; that the definition of a full-benefit dual eligible includes someone who has not yet enrolled in a Part D plan; that the rules for declining enrollment and disenrollment because someone is enrolled in a retiree plan also apply to LIS-eligible individuals; and that all LIS-eligible individuals are entitled to the same special enrollment period as duals.  Additionally, the rules address the effective date of enrollment.  For full-benefit duals who are on Medicaid first and then become eligible for Medicare, the effective date is the date the individual first becomes eligible for Part D. For full-benefit duals who are on Medicare first and then become eligible for Medicaid, the effective date of enrollment is the first day of the month the individual becomes a dual. For individuals who are not full benefit duals but who are LIS-eligible, the effective date of enrollment is to be no later than the first day of the second month after CMS determines that they are eligible for automatic enrollment.

  • Transition Process:  The rules codify existing guidance that requires all part D plans to have a transition policy for new enrollees.  The transition policy is available to new enrollees after the annual enrollment period; newly eligible Medicare enrollees moving from other coverage; individuals who switch plans during the year; current enrollees remaining in the plan who are affected by contract year formulary changes.  The transition policy applies to non-formulary drugs, which CMS defines as both drugs that are not on the formulary and drugs that are subject to prior authorization or step therapy.  Plans are required to ensure that enrollees receive a one-time temporary supply of a nonformulary drug requested during the first 90 days of coverage.  Enrollees who are living in the community are entitled to multiple fills up to a total 30-day supply.  For those living in a long-term care facility, the temporary supply may be up to 93 days in 31-day increments.  Sponsors must send a transition notice to affected enrollees within 3 business days of adjudication of the temporary fill and make reasonable efforts to notify prescribers that the drug cannot be refilled.

  • Reimbursement for Retroactive Claims Adjudication:  Plans must make retroactive claim adjustments, including those involving change in LIS status, as part of their coordination of benefits efforts. Sponsors must account for payments by SPAPs and other payers. Adjustments, including those involving retroactive adjustments to cost-sharing for LIS-eligible individuals and any resulting refunds, must be made within 45 days.  The rules also impose a three-year time limit on coordination of benefits.

  • Prohibition of Midyear Mass Enrollment Changes by SPAPS:  A state pharmaceutical assistance program (SPAP) may not make midyear mass drug plan enrollment changes for their enrollees. CMS rejected concerns by advocates that midyear changes might be necessary if plans are not adequately serving SPAP members.  CMS stated that SPAPs can make changes on an individual basis for their members who are not being well-served by a drug plan; they should report to CMS regulatory or statutory violations. 

  • Protected Classes of Drugs:  Because of revisions made by PPACA, CMS is not implementing proposed regulations concerning identification of protected classes and categories of drugs. For 2011 and until such time as CMS establishes criteria for determining "classes of clinical concern" the current six classes are protected. They are anticonvulsants, antidepressants, antineoplastics, antipsychotics, antiretrovirals, and immunosuppressants.  CMS will undertake notice and comment rulemaking to establish the criteria for identifying classes and categories of clinical concern. 

  • Medication Therapy Management (MTM) Program Requirements: The rules codify CMS guidance regarding medication therapy management programs.  Plan sponsors must enroll beneficiaries in their MTM programs using an opt-out enrollment method.  Beneficiaries are to be targeted for enrollment at least quarterly.  The regulations set a minimum level of MTM services that includes interventions for beneficiaries and prescribers, annual comprehensive medical reviews, and quarterly targeted medication reviews.  The rule adopts a dollar threshold of $3,000 in incurred annual costs for covered drugs, to be indexed annually.

  • Formulary Requirements - Development and Revision by a Pharmacy and Therapeutic (P & T) Committee: P & T committees must review and approve all clinical prior authorization criteria, step therapy protocols, and quantity limit restrictions applied to a Part D covered drug.  CMS acknowledges that such utilization management rules affect access as much as exclusion of a drug from the formulary.

Conclusion

 

The new Parts C and D rules make many changes to the workings of the Medicare Advantage and prescription drug programs.  Some of the changes address issues raised by beneficiary advocates for many years.  While the new rules are very detailed, the delay in their implementation will accord advocates the opportunity to familiarize themselves with the new requirements and protections. Advocates should be alert when reviewing Part C and Part D plans during the annual coordinated enrollment period to ensure that plan offerings and plan materials to beneficiaries comply with the new requirements.

 

For further information contact attorney Vicki Gottlich (vgottlich @ medicareadvocacy.org) in the Center for Medicare Advocacy's Washington, DC office at (202) 293-5760.

 

[1] 75 Federal Register Parts 19677 (April 15 2010), amending 42 C.F.R. Parts 422 and 423.

[2] Publ. L. 111-148 (March 23, 2010)

[3] See, Alert, Changes To Medicare Advantage Plans And Prescription Drug Plans Under Health Care Reform, April 8, 2010, http://140.174.89.214/InfoByTopic/Reform/10_04.08.MAandPDChanges.htm.

[4] For additional information on recommended cost-sharing limits, see: CMS Memo to Plans,  Benefits Policy and Operations Guidance (April 16, 2010) posted at: www.medicareadvocacy.org\InfoByTopic\Reform\041610CMSMOOPmemo.pdf

[5]  Regional PPO plans are required by statute to establish their own maximum out-of-pocket amount for in-network cost-sharing and a catastrophic amount for in-network and out-of-network cost-sharing. 42 U.S.C. 1395w–27a (b)(2).

[6] CMS Memo to Plans, Benefits Policy and Operations Guidance (April 16, 2010).

 
 


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