CMS on Friday released a final rule for Medicare Advantage (MA) and Part D plans for 2023—a move that strengthens oversight of these plans and adds new consumer protections.

Infographic: What seniors want when shopping for Medicare Advantage supplemental benefits

CMS to strengthen oversight of MA, Part D plans

Under the final rule, plans applying for MA approval will need to demonstrate they have a sufficient provider network before CMS will approve a new or expanded network.

However, to mitigate potential difficulties MA organizations may face with building a full network, CMS will allow applicants a 10-percentage point credit toward the percentage of beneficiaries residing in certain time and distance standards. In addition, organizations will be able to provide letters of intent in place of signed provider contracts during the application period.

CMS outlined additional reasons a new contract or contract expansion would be denied based on past performance. These reasons include low star ratings (below 2.5 stars), filing for bankruptcy, or exceeding a designated threshold of compliance actions.

The agency is also reinstating medical loss ratio requirements, which were originally implemented from 2014 to 2017. Under these requirements, MA and Part D plans will have to report the underlying cost and revenue data used to calculate their ratios. MA plans will be required to report their spending on supplemental benefits.

To increase consumer protections, CMS plans to increase oversight of third-party marketing organizations and require MA plans to work with these groups to ensure they follow applicable policies. In addition, plans will need to include multi-language inserts in certain program materials.

CMS also revised MA coverage obligations during disasters and emergencies. Under the final rule, MA plans will need to comply with special requirements to ensure beneficiaries have uninterrupted access to care during a declaration of a disaster or emergency, including a public health emergency, as well as when access to care is disrupted in a service area.

Additional changes to MA D-SNP plans

The final rule also includes new policies for MA dual-eligible special needs plans (D-SNPs).

To better assess the quality of D-SNPs, states with integrated care programs will be able to require MA insurers to create contracts solely for D-SNPs. This would allow start ratings to evaluate D-SNPs' performance and help identify any disparities between D-SNPs and other MA plans.

D-SNPs will be required to create advisory enrollee committees to provide guidance on a variety of issues, including how to improve health equity for underserved populations. D-SNPs will also have to adjust their annual health risk assessments to include specific standardized questions on social determinants of health, including food security, housing, and access to transportation.

Regarding MA plans' maximum out-of-pocket costs, CMS will require these limits to be based on all Medicare cost sharing in the benefit, regardless of whether the cost is paid by the beneficiary, Medicaid, or goes unpaid. According to CMS, this change will potentially save state Medicaid agencies $2 billion over a decade, while also increasing payments to providers who serve dual-eligible beneficiaries by $8 billion over the same period.

Over the next few years, CMS plans to transition states away from Medicare-Medicaid plans and towards integrated D-SNPs. States will be allowed to continue their Medicare-Medicaid plans through 2025, but will need to submit a transition plan by Oct. 1, 2022 if they want to move to integrated D-SNPs. For states that don't want to transition, CMS will help conclude their programs by the end of 2023.

Changes to PBMs

The final rule also requires pharmacy benefit managers (PBMs) to stop clawing back fees from pharmacies. Instead, all price concessions received from network pharmacies will be applied to drug costs at the point of sale, which CMS says will reduce beneficiaries' out-of-pocket costs and enhance market competition.

In an update to its original proposal, this policy will now apply to all phases of the Medicare Part D benefit, including coverage gaps.

According to Modern Healthcare, PBMs and insurers have argued that the policy contradicts Medicare law, which may potentially open it up to legal action in the future.

The Part D price concessions policy will go into effect Jan. 1, 2024, while all other policies in the final rule will go into effect June 28, 2022. (AHA News, 5/2; CMS fact sheet, 4/29; Goldman, Modern Healthcare, 4/29)