Unpacking the Medicare Final Rule: A Closer Look
To address the question of phasing out Medicare managed care, we turn to a significant piece of regulatory documentation: a final rule issued by the Centers for Medicare & Medicaid Services (CMS), an agency under the Department of Health and Human Services (HHS). This final rule, concerning 42 CFR Parts 417, 422, and 423, identified by [CMS-4190-F] and RIN 0938-AT97, focuses on revisions to regulations within Medicare Advantage (MA or Part C), Medicare Prescription Drug Benefit (Part D), and Medicare Cost Plan programs. It’s crucial to understand that this rule is not about phasing out managed care, but rather about implementing specific acts and enhancing existing programs.
AGENCY:
Centers for Medicare & Medicaid Services (CMS), Department of Health and Human Services (HHS).
ACTION:
Final rule.
SUMMARY:
This final rule will revise regulations for the Medicare Advantage (MA or Part C) program, Medicare Prescription Drug Benefit (Part D) program, and Medicare Cost Plan program to implement certain sections of the Bipartisan Budget Act of 2018 and the 21st Century Cures Act. In addition, it will enhance the Part C and D programs, codify several existing CMS policies, and implement other technical changes.
DATES:
Effective Date: These regulations are effective August 3, 2020.
Applicability Dates: Except for §§ 422.166(a)(2)(i), 423.186(a)(2)(i), and 422.514(d)(1) and (2), the provisions in this rule are applicable beginning January 1, 2021. The changes to §§ 422.166(a)(2)(i) and 423.186(a)(2)(i) are applicable beginning January 1, 2022. The provisions of § 422.514(d)(1), are applicable beginning January 1, 2022. The provisions of § 422.514(d)(2) are applicable beginning January 1, 2023.
FOR FURTHER INFORMATION CONTACT:
Theresa Wachter, (410) 786-1157, or Cali Diehl, (410) 786-4053—General Questions.
Kimberlee Levin, (410) 786-2549—Part C Issues.
Lucia Patrone, (410) 786-8621—Part D Issues.
Kristy Nishimoto, (206) 615-2367—Beneficiary Enrollment and Appeals Issues.
Stacy Davis, (410) 786-7813—Part C and D Payment Issues.
Melissa Seeley, (212) 616-2329—D-SNP Issues.
SUPPLEMENTARY INFORMATION:
CMS intends to address all of the remaining proposals from the February 2020 proposed rule in subsequent rulemaking. Therefore, CMS plans to make any provisions adopted in the subsequent, second final rule, although effective on or before January 1, 2021, applicable no earlier than January 1, 2022. Notwithstanding the foregoing, for proposals from the February 2020 proposed rule that would codify statutory requirements that are already in effect, CMS reminds readers and plan sponsors that the statutory provisions apply and will continue to be enforced. Similarly, for the proposals from the February 2020 proposed rule that would implement the statutory requirements in sections 2007 and 2008 of the Substance Use-Disorder Prevention that Promotes Opioid Recovery and Treatment (SUPPORT) for Patients and Communities Act (hereinafter referred to as the SUPPORT Act), CMS intends to implement these statutes consistent with their effective provisions.
Bipartisan Budget Act of 2018 and 21st Century Cures Act: Not a Phase-Out, but an Evolution
The core of this final rule is the implementation of sections from two key pieces of legislation: the Bipartisan Budget Act of 2018 (BBA of 2018) and the 21st Century Cures Act (Cures Act). These acts are not designed to dismantle or phase out Medicare managed care. Instead, they represent legislative efforts to refine and enhance these programs. The rule explicitly states its purpose is to “revise regulations” and “enhance the Part C and D programs,” indicating an ongoing commitment to Medicare Advantage and related managed care structures.
Executive Summary: Purpose and Provisions
The executive summary clearly outlines that the rule’s primary goal is to implement specific sections of the BBA of 2018 and the Cures Act related to Medicare Advantage (MA or Part C) and Prescription Drug Benefit (Part D) programs. These implementations are crucial for the contract year 2021 MA plan bids. The rule also aims to:
- Strengthen and improve Part C and D programs.
- Codify existing CMS policies.
- Implement technical changes.
1. Purpose
The primary purpose of this final rule is to implement certain sections of the following federal laws related to the Medicare Advantage (MA or Part C) and Prescription Drug Benefit (Part D) programs before the contract year 2021 MA plan bids (due by statute on the first Monday in June):
- The Bipartisan Budget Act of 2018 (hereinafter referred to as the BBA of 2018)
- The 21st Century Cures Act (hereinafter referred to as the Cures Act)
The rule also includes a number of changes to strengthen and improve the Part C and D programs, codifies in regulation several CMS interpretive policies previously adopted through the annual Call Letter and other guidance documents, and implements other technical changes. We took a measured approach to review each provision proposed and focused finalizing in this first final rule those most helpful for bidding, those that address the Coronavirus Disease (COVID-19) pandemic and public health emergency, as well as those topics on which issuing a final rule now would advance the MA program.
While we intend to address the remaining proposals from the February 18, 2020, proposed rule (85 FR 9002) not included in this final rule in subsequent rulemaking, we are focusing in this final rule on more immediate regulatory actions. CMS plans to make any provisions adopted in the subsequent, second final rule, although effective on or before January 1, 2021, applicable no earlier than January 1, 2022. Notwithstanding the foregoing, for proposals from the February 2020 proposed rule that would codify statutory requirements that are already in effect,[1] CMS reminds readers and plan sponsors that the statutory provisions apply and will continue to be enforced. Similarly, for the proposals from the February 2020 proposed rule that would implement the statutory requirements in sections 2007 and 2008 of the SUPPORT Act, CMS intends to implement the statute consistent with its effective provisions.
2. Summary of the Major Provisions
The rule outlines several major provisions, none of which suggest a phase-out of managed care. Instead, they indicate adjustments and enhancements. Key provisions include:
a. Medicare Advantage (MA) Plan Options for End-Stage Renal Disease (ESRD) Beneficiaries (§§ 422.50, 422.52, and 422.110)
The Cures Act amended sections of the Social Security Act to remove the prohibition on individuals with End-Stage Renal Disease (ESRD) from enrolling in MA plans. This expands access to managed care for a vulnerable population, directly contradicting the idea of phasing out such programs.
b. Medicare Fee-for-Service (FFS) Coverage of Costs for Kidney Acquisitions for Medicare Advantage (MA) Beneficiaries (§ 422.322)
This provision shifts the financial responsibility for kidney acquisitions for MA beneficiaries to the original Medicare Fee-for-Service (FFS) program. This is a financial and operational adjustment, not a reduction in the scope or availability of managed care.
c. Exclusion of Kidney Acquisition Costs From Medicare Advantage (MA) Benchmarks (§§ 422.258 and 422.306)
Consistent with the previous point, this provision adjusts the financial benchmarks for MA plans to exclude kidney acquisition costs, as these costs are now covered under FFS. This is a technical adjustment to payment models, not a program phase-out.
d. Medicare Advantage (MA) and Part D Prescription Drug Program Quality Rating System (§§ 422.162, 422.166, 423.182, and 423.186)
Changes to the Star Ratings system, including increased weight for patient experience and access measures, aim to improve the quality and accountability of MA and Part D programs. These are enhancements to managed care, not steps toward elimination.
e. Medical Loss Ratio (MLR) (§§ 422.2420, 422.2440, and 423.2440)
Amendments to the Medical Loss Ratio (MLR) regulations ensure that MA organizations are appropriately allocating funds towards patient care and quality improvement. This is about financial regulation and oversight, not program reduction.
f. Medicare Advantage (MA) and Cost Plan Network Adequacy (§§ 417.416 and 422.116)
Strengthening network adequacy rules, including considerations for telehealth and rural access, reinforces the commitment to accessible managed care networks.
g. Special Election Periods (SEPs) for Exceptional Conditions (§§ 422.62, 422.68, 423.38, and 423.40)
Codifying and expanding Special Election Periods (SEPs) provides beneficiaries with more flexibility and access to MA and Part D plans under various circumstances. This is about improving beneficiary access to managed care options.
3. Summary of Costs and Benefits
| Provision | Description | Impact |
|---|---|---|
| Medicare Advantage (MA) Plan Options for End-Stage Renal Disease (ESRD) Beneficiaries (§§ 422.50, 422.52, and 422.110) | CMS is codifying requirements under section 17006 of the Cures Act. Effective for the plan year beginning January 1, 2021, CMS is removing the prohibition on beneficiaries with ESRD enrolling in an MA plan | To estimate the impact, we used a pre-statute baseline. The analysis shows that removing the prohibition for ESRD beneficiaries to enroll in MA plans results in net costs to the Medicare Trust Funds ranging from $23 million in 2021 to $440 million in 2030. |
| Medicare Fee-for-Service (FFS) Coverage of Costs for Kidney Acquisitions for Medicare Advantage (MA) Beneficiaries (§ 422.322) | CMS is codifying requirements under section 17006 of the Cures Act. Effective for the plan year beginning January 1, 2021, CMS is finalizing that MA organizations will no longer be responsible for costs for organ acquisitions for kidney transplants for their beneficiaries. Instead, Medicare FFS will cover the kidney acquisition costs for MA beneficiaries, effective 2021 | To estimate the impact, we used a pre-statute baseline. This analysis shows that FFS coverage of kidney acquisition costs for MA beneficiaries results in net costs to the Medicare Trust Funds ranging from $212 million in 2021 to $981 million in 2030. |
| Exclusion of Kidney Acquisition Costs from Medicare Advantage (MA) Benchmarks (§§ 422.258 and 422.306) | CMS is codifying requirements under section 17006 of the Cures Act. Effective for the plan year beginning January 1, 2021, CMS is removing costs for organ acquisitions for kidney transplants from the calculation of MA benchmarks and annual capitation rates | To estimate the impact, we used a pre-statute baseline. This analysis shows that excluding kidney acquisition costs from MA benchmarks results in net savings estimated to range from $594 million in 2021 to $1,346 million in 2030. |
| Medicare Advantage (MA) and Part D Prescription Drug Program Quality Rating System (§§ 422.162, 422.166, 423.182, and 423.186) | CMS is finalizing an increase in the weight of patient experience/complaints and access measures. CMS is also finalizing the use of Tukey outlier deletion, which is a standard statistical methodology for removing outliers, to increase the stability and predictability of the star measure cut points. However, the application of Tukey outlier deletion will be delayed until the 2024 Star Ratings | Updating the patient experience/complaints and access measures weight creates a cost which is offset after the first year by using the Tukey outlier deletion. The net cost to the Medicare Trust Fund from the increased weight is $345.1 million in 2024; the net savings from both the increased weight and Tukey outlier deletion will grow over time reaching $999.4 million by 2030. The net reduction in spending to the Medicare Trust Fund through and including 2030 is $4.1 billion. |
| Medical Loss Ratio (MLR) (§§ 422.2420, 422.2440, and 423.2440) | CMS is finalizing our three proposed amendments to the Medicare MLR regulations. (1) We will allow MA organizations to include in the MLR numerator as “incurred claims” all amounts paid for covered services, including amounts paid to individuals or entities that do not meet the definition of “provider” at § 422.2. (2) We also are codifying our definitions of partial, full, and non-credibility and credibility factors that CMS published in the May 2013 Medicare MLR final rule (78 FR 31296) for MA and Part D MLRs. (3) We are finalizing our proposal to apply a deductible factor to the MLR calculation for MA MSA contracts receiving a credibility adjustment. The deductible factor, which functions as a multiplier on the credibility adjustment factor, is calibrated so that the probability that a contract will fail to meet the MLR requirement is the same for all contracts that receive a credibility adjustment, regardless of the deductible level | (1) Our change to the type of expenditures that can be included in “incurred claims” will have neutral dollar impact on the Medicare Trust Fund. These provisions will result in a transfer of funds from the Treasury, through the Medicare Trust Fund, to MA organizations. This transfer will take the form of a reduction in the remittance amounts withheld from MA capitated payments. The amount of this transfer is $35 to $55 million a year, resulting in plans obtaining $455 million over 10 years. (2) Codifying the definitions of partial, full, and non-credibility and the credibility factors is unlikely to have any impact on the Medicare Trust Fund. (3) The deductible factor to the MLR calculation for MA MSA contracts is estimated to result in a gradually increasing cost to the Medicare Trust Fund of $1 to $6 million per year, arising from the Trust Fund paying for benefits due to expected increased enrollment, and will result in a $40 million cost through, and including, 2030. |
| Medicare Advantage (MA) and Cost Plan Network Adequacy (§§ 417.416 and 422.116) | CMS is—(1) strengthening network adequacy rules for MA and cost plans and to make them more transparent to plans by codifying our existing network adequacy methodology and standards, with some modifications; (2) allowing MA plans to receive a 10-percentage point credit towards the percentage of beneficiaries residing within published time and distance standards when they contract with certain telehealth providers; (3) allowing MA organizations to receive a 10-percentage point credit towards the percentage of beneficiaries residing within published time and distance standards for affected provider and facility types in states that have CON laws, or other state imposed anti-competitive restrictions, that limit the number of providers or facilities in a county or state where CMS has not already customized the standards for that area; and (4) reducing the required percentage of beneficiaries residing within maximum time and distance standards in certain county types (Micro, Rural, and CEAC) | Changes to network standards are unlikely to have any impact on the Medicare Trust Fund. |
| Special Election Periods (SEPs) for Exceptional Conditions (§§ 422.62, 422.68, 423.38, and 423.40) | CMS is codifying a number of SEPs adopted and implemented through subregulatory guidance as exceptional circumstances SEPs. CMS is also establishing two new SEPs for exceptional circumstances: The SEP for Individuals Enrolled in a Plan Placed in Receivership and the SEP for Individuals Enrolled in a Plan that has been identified by CMS as a Consistent Poor Performer | This provision codifies existing practice since MA organizations and Part D plan sponsors are currently assessing applicants’ eligibility for election periods as part of existing enrollment processes. Consequently, the provision will not have added impact. |
Conclusion: Medicare Managed Care is Evolving, Not Dissolving
In conclusion, based on the detailed analysis of the CMS final rule, it is evident that no act is phasing out Medicare managed care programs. The Bipartisan Budget Act of 2018 and the 21st Century Cures Act, as implemented by this rule, are geared towards refining, regulating, and enhancing Medicare Advantage and Part D programs. These acts aim to improve the quality, accessibility, and financial sustainability of managed care within Medicare, not to dismantle it. For experts in fields like auto repair, understanding the detailed regulations can be complex, but the overarching message is clear: Medicare managed care is here to stay and is continuously being improved through legislative and regulatory actions.
For further information and to delve deeper into the specifics of these regulations and their impact on healthcare policy, continued engagement with resources like obdcarscantool.store is essential. Staying informed about these changes is crucial for stakeholders across the healthcare spectrum.
