CMS Proposes Changes to Medicare Advantage and
Part D Prescription Drug Coverage – Part II
The following is Part II of a two-part series on CMS’ proposed changes to the Medicare Advantage and Part D prescription drug programs. Part I was published on October 11, 2011.
The Centers for Medicare and Medicaid Services (“CMS”) has proposed changes to the Medicare Advantage program and to the Medicare prescription drug benefit program (Part D), which were published in the Federal Register on October 11, 2011.
The following highlights some of the major provisions of the proposed rulemaking regarding changes to the Medicare Advantage and Part D programs, as well as proposed changes to beneficiaries’ access to such programs.
Strengthening Beneficiary Protections:
Good Cause Reinstatement Into a Cost Plan:
- Under current regulations, as amended in April 2011, beneficiaries are allowed to disenroll from Medicare Advantage (“MA”) and Part D plans if they are unable to pay the premiums. Such beneficiaries may also request to be reinstated into the plans provided they establish good cause for being involuntarily disenrolled and pay all arrearages.
- CMS is proposing to amend the regulations pertaining to cost enrollees to likewise permit such enrollees who are disenrolled for failure to pay premiums or other cost-sharing amounts to request reinstatement of enrollment for good cause shown.
- CMS proposes to provide similar reinstatement requirements for cost enrollees as for MA and Part D plan enrollees. Specifically, they must request reinstatement, good cause for disenrollment must be determined, and beneficiaries must pay all premium or cost sharing arrearages, including amounts that would have been due during the period of disenrollment.
- According to CMS, examples of good cause would include, but are not limited to: (1) an unexpected, prolonged hospitalization; (2) Federal government or plan representative error; or (3) exceptional circumstances beyond the beneficiary’s control, such as the loss of a home. CMS is proposing that good cause would not include a change in the beneficiary’s circumstances after disenrollment which allowed him or her to pay the premiums, if this was the only basis for requesting reinstatement.
Filing Part D Appeals with the Independent Review Entity:
- CMS is proposing to revise the regulations regarding beneficiary appeals process for Part D appeals by allowing physicians and other prescribers to request Independent Review Entity (“IRE”) reconsiderations on enrollees’ behalf.
- CMS states that such a revision would decrease the number of IRE requests dismissed for lack of a valid appointment of representation (“AOR”) form, because the IRE would not have to request an AOR form from prescribers who assist Part D enrollees exercise their own appeal rights. As a result, CMS predicts that beneficiaries’ access to the appeals process will be enhanced, and IRE would be able to make prompt decisions on whether requested drugs should be covered under Part D.
Excluding Poor Performers:
CMS is proposing three proposals designed to identify and terminate poor performing health care prepayment plans (“HCPPs”) based on whether their administration meets specified financial, reporting, and access requirements.
- CMS Termination of HCPPs:
Current regulations permit CMS to terminate contracts with HCPPs if an HCPP: (a) fails to meet the requirements for participation and reimbursement as an HCPP; (b) is not in substantial compliance with provisions of the Discount Program Agreement (“Agreement”) or applicable statutory or regulatory requirements; or (c) has a change in ownership. CMS is now proposing to codify specific elements for the second basis on which CMS may terminate such contracts. These elements would include: (i) the failure to provide adequate access to providers and documentation of such access as required in an HCPP’s agreement with CMS; (ii) failure to provide CMS with data and maintain financial records and statistics regarding costs payable by CMS; and (iii) failure to report costs to CMS.
2. Plan Performance Ratings as a Basis for Termination or Non-renewal of a Contracts:
CMS currently rates MA organizations (“MAOs”) and Part D sponsors on a 5-star scale, for which they receive a score for each performance measure, as well as a summary score for MA and Part D and an overall rating. A rating of three or more stars indicates average or better performance, and current regulations provide that an organization must have administrative and management arrangements that are satisfactory to CMS in order to qualify as an MAO or Part D sponsor. CMS proposes to clarify that organizations must continue to maintain satisfactory administrative and management arrangements once they are under contract with CMS.
In order to quantify this requirement, CMS is proposing that MAOs and Part D sponsors maintain a summary plan rating of at least 3 stars each year. Conversely, CMS proposes that a failure to attain a 3-star summary rating for three consecutive years would be a basis for terminating its contract with the MAO and/or Part D sponsor. The 3-star summary rating would apply separately for MAOs and Part D sponsors so that an organization that performs well in one program cannot mask the poor performance of the other program.
CMS proposes to use contract year 2013 Plan Ratings, which are expected to be issued in September 2012, as the first set of ratings in calculating an organization’s three consecutive plan rating years.
3. Denial of Applications with a Past Contract Termination or CMS Initiated Non-renewal:
The current regulations do not a provide time frame after which an MAO or Part D sponsor whose contract has been terminated or not renewed may re-enter the program, although regulations do provide that voluntarily terminated MAOs or Part D sponsors must wait two years before being able to re-enter the program.
CMS believes that the period for re-entry into the program for involuntarily terminated or non-renewed MAO or Part D sponsor contractors should be longer than the period for voluntarily terminated MAOs or Part D sponsors. Accordingly, CMS proposes to modify the regulations to require that the former MAOs or Part D sponsors must wait at least 38 months before they can re-enter the program. The 38 months account for a 3-year waiting period, plus two months during which applications are being prepared for submission to CMS.
In order to prevent organizations from gaming the system, CMS is also proposing to amend the regulations to allow CMS to deny an application where the applicant’s covered persons were the same as the covered persons of an involuntarily terminated or non-renewed contract. For this purpose, covered persons would mean: (a) “[a]ll owners of terminated organizations who are natural persons, other than shareholders who have an ownership interest of less than 5 percent”; (b) “[a]n owner in whole or part interest in any mortgage, deed of trust, note or other obligation secured (in whole or in part) by the organization, or any of the property or assets thereof, which whole or part interest is equal to or exceeds 5 percent of the total property, and assets of the organization”; or (c) “[a] member of the board of directors or board of trustees of the entity, if the organization is organized as a corporation.” 76 Fed. Reg. 63018, 63046 (Oct. 11, 2011).
Improving Program Efficiencies:
New Benefit Flexibility for Fully-Integrated Dual Eligible Special Needs Plans:
- The Affordable Care Act created a subset of dual eligible (i.e. beneficiaries eligible for both Medicare and Medicaid) special needs plans (“D-SNPs”) called fully-integrated dual eligible special needs plans (“FIDE SNPs”). Regulations finalized in April 2011 defined FIDE SNPs as D-SNPs that: (1) provide access to Medicare and Medicaid benefits under one managed care plan; (2) coordinate the provision of health and long-term care services covered under Medicare and Medicaid; (3) have “valid capitated contract[s] with the State for specified primary, acute, and long-term care benefits”; and (4) “comply with CMS and State policy regarding marketing, appeals, quality assurance, and enrollment communication procedures.” Id. at 63047.
- CMS is proposing to give additional flexibility to FIDE SNPs that are currently operational, operated in the prior contract year, and are of high-quality (as defined by CMS in its 2013 calendar year call letter). The additional flexibility would allow such FIDE SNPs, beginning in contract year 2013, to provide supplemental benefits not currently provided by MA plans where CMS determines that providing such benefits would better integrate care for dual eligible beneficiaries.
- Examples of supplemental benefits would include: (1) personal care services in the home; (2) non-skilled nursing services at home; (3) custodial care; and (4) in-home food delivery for certain beneficiaries.
Application of Hospital-Acquired Conditions and Present on Admission Indicator to MAOs:
- Currently, hospitals reimbursed under the inpatient prospective payment system are not reimbursed higher payment for discharges when one of the beneficiary’s conditions was acquired during his or her hospitalization; these conditions are referred to as “hospital-acquired conditions” (“HACs”). In addition, such hospitals must report on its claims for Medicare beneficiaries which diagnoses were present on admission (“POA”).
- CMS is proposing to require that, beginning with calendar year 2013, MAOs include in their contracts with hospitals that “payment will not be made to hospitals for serious preventable events and hospital-acquired conditions in accordance with section 1886(d)(4)(D) of the [Medicare] Act and all applicable Medicare policies.” Id. at 63050.
Establishment and Application of Daily Cost-Sharing Rate:
- CMS proposes to establish a daily cost-sharing rate that would allow beneficiaries to fill partial (i.e. less than a 30-day supply) prescriptions on a pro-rated cost-sharing basis which would correspond to the actual number of days’ supply prescribed and dispensed. This would allow beneficiaries for example to fill trial prescriptions, or to synchronize the refilling of new prescriptions with their existing prescriptions without having to pay the full cost-sharing of a 30-day supply. The proposed daily cost-sharing rate would be mandatory for Part D sponsors, but voluntary for beneficiaries and their prescribers.
- CMS therefore proposes to define “daily cost-sharing rate” as the established monthly “(1) Copayment under the enrollee’s Part D plan divided by 30 or 31 and rounded to the nearest lower dollar amount or to another amount but in no event to an amount which would require the enrollee to pay more for a month’s supply of the prescription than the enrollee would have paid if a month’s supply had been dispensed; or (2) Coinsurance rate under the enrollee’s Part D plan applied to the ingredient cost of the prescription for a month’s supply divided by 30 or 31.” Id. at 63085.
- CMS estimates that the potential savings to the Part D program would be $180 million in 2013 and more than $2.5 billion by 2018.
Clarifying Program Requirements:
Access to Part D Drugs Through Use of National Provider Identifiers:
- Currently, when a beneficiary fills a prescription under Part D, the Part D sponsor must submit an electronic summary record, referred to as a prescription drug event (“PDE”), to CMS. Part D sponsors must include on the PDE one of four prescriber identifiers: (1) the National Provider Identifier (“NPI”); (2) the Drug Enforcement Administration number; (3) the uniform provider identification number; or (4) the State license number.
- In a June 2010 report, the Office of Inspector General reported that 18.4 million PDEs contained 527,749 invalid identifiers, constituting a total payment of $1.2 billion. In light of this report, in April 2011, CMS instructed Part D sponsors that, although they were permitted to use any one of the above identifiers, they must retroactively ensure that the identifiers are valid; however, they cannot reject a claim solely on the basis of an invalid identifier. At the same time, CMS indicated that it was considering limiting, by regulation, acceptable prescriber identifiers to only the individual prescriber NPI.
- CMS is now proposing to amend its regulations to require, effective January 1, 2013, Part D sponsors to submit an active and valid NPI on all PDE records submitted to CMS. CMS is also proposing to codify its current policy that Part D sponsors may not reject a claim solely on the basis that it does not contain a valid NPI without prompt follow-up to ensure that the claim is resubmitted with a valid NPI. If the Part D sponsor subsequently determines that the prescriber does not have a valid NPI, and the claim is otherwise payable, the sponsor would be required to pay the claim, but it would not be able to submit the PDE to CMS. A Part D sponsor could, however, reject a claim from a foreign prescriber who does not have an NPI.
Comments to the proposed regulations are due no later than 5:00 pm, December 12, 2011.
