Key Proposals from the CY 2026 Medicare Benefit and Half D Proposed Rule

On November 26, 2024, the Facilities for Medicare & Medicaid Companies (“CMS”) launched the contract yr 2026 proposed rule for the Medicare Benefit (“MA”) program, Medicare Prescription Drug Profit Program (“Half D”), Medicare Price Plan Program, and Applications of All-Inclusive Take care of the Aged (the “Proposed Rule”). Possible one of many final vital Medicare reform initiatives of the Biden administration, the Proposed Rule incorporates lots of the Administration’s broader coverage priorities, specializing in fairness, transparency, and modernization in healthcare supply and oversight.

We’ve summarized a few of the key adjustments within the Proposed Rule. Feedback are due January 27, 2025.

Increasing Half D Protection: Anti-Weight problems Medicine and Coated Insulin Product

In response to the growing prevalence of weight problems and different issues, CMS proposes a “reinterpretation” of the Half D protection exclusion for weight reduction medication to cowl anti-obesity drugs (“AOMs”) when used for the therapy of weight problems. Beneath present Medicare coverage, AOMs are solely lined when used to deal with one other medically accepted situation, equivalent to kind 2 diabetes or cardiovascular threat. Nevertheless, citing the altering medical consensus in direction of recognizing weight problems as a illness, CMS now proposes to reinterpret the statutory Medicare protection exclusion of “[a]gents when used for . . . weight reduction” at part 1927(d)(2)(A) of the Social Safety Act, such that the exclusion wouldn’t apply to medication when used for weight reduction or power weight administration for the therapy of weight problems.

CMS doesn’t suggest any definition of weight problems for the aim of figuring out eligibility for Half D protection of AOMs and “would allow Half D sponsors to outline weight problems for the needs of their prior authorization (PA) standards so long as the Half D sponsor’s PA standards usually are not extra restrictive than the FDA labeling for the actual AOM.” Against this, CMS doesn’t suggest to allow Half D protection of AOMs used to deal with chubby people, which the Proposed Rule distinguishes on the premise that chubby “shouldn’t be acknowledged as a illness.”

CMS states that the adjustments align with present insurance policies that let Half D protection for medication usually excluded, when used to deal with particular illnesses. The reinterpretation would apply to each Medicare and Medicaid. In consequence, AOMs couldn’t be excluded from Medicaid protection and can be thought of lined outpatient medication when used to deal with weight problems.

CMS estimates that the proposal would improve federal prices by $24.8 billion as a result of expanded Half D protection and $14.8 billion as a result of expanded Medicaid protection.

CMS additionally proposes a comparatively modest enlargement of the definition of a “lined insulin product” beneath Half D. If finalized, the proposed change would come with Half D protection for drug merchandise which might be a mixture of multiple kind of insulin or each insulin and non-insulin medication.

Medicare Prescription Fee Plan

CMS proposed to codify prior company steering implementing part 11202 of the Inflation Discount Act of 2022 (“IRA”), which establishes the Medicare Prescription Fee Plan and requires every Medicare Prescription Drug Plan (“PDP”) sponsor and Medicare Benefit prescription drug (“MA-PD”) plan to offer enrollees with the choice to pay cost-sharing beneath the plan in capped month-to-month quantities. The proposals, which might be relevant for 2026 and subsequent years, intention to ease the monetary burden for these with excessive cost-sharing early within the yr.

As background, to be able to implement the Medicare Prescription Fee Plan for CY 2025, CMS beforehand launched associated two-part ultimate steering on operational necessities and Half D enrollee training, outreach, and communications, respectively, which CMS proposed to codify with out modification. As well as, CMS proposes to change current necessities for a way Half D sponsors deal with changes for Half D claims, the timing necessities for the grace interval and preliminary discover of failure to pay, and proposes new necessities associated to the next:

• Necessities for year-over-year participation for current individuals within the Medicare Prescription Fee Plan, together with an automated renewal course of that extends Half D enrollee participation via the following calendar yr, except they select to decide out, and addition of a renewal discover to the required notices associated to election into this system;
• Necessities for the efficient date of voluntary terminations from this system;
• A number of new Half D required supplies and content material, to incorporate mannequin and standardized supplies for the Medicare Prescription Fee Plan, and to change the listing of required content material for Half D sponsor web sites to require Medicare Prescription Fee Plan data; and
• Waiving necessities associated to the Medicare Prescription Fee Plan for the Restricted Earnings Newly Eligible Transition (“LI NET”) program.

• CMS additionally solicits touch upon whether or not to require Half D sponsors to course of election requests made through telephone or internet in real-time from 2026 onwards. CMS is looking for feedback on this proposal for functions of future rulemaking.

Formulary Inclusion and Placement of Generics and Biosimilars

CMS notes that issues have been raised that Half D sponsors and their pharmacy profit managers (“PBMs”) could also be participating in practices that favor costly brand-name medication and reference organic merchandise over extra inexpensive choices, equivalent to generics and biosimilars, resulting in larger out-of-pocket prescription drug prices for Medicare beneficiaries. In response, CMS reminds Half D sponsors of the statutory requirement[1] that they implement cost-effective drug utilization administration applications that embrace incentives to make use of generics and biosimilars when medically acceptable. Within the Proposed Rule, CMS clarifies that plan formularies should guarantee beneficiaries have broad entry to generics, biosimilars, and different lower-cost medication to be able to adjust to the statutory requirement. This clarification expands on the CY2025 ultimate rule, which launched adjustments to allow extra flexibility for enrollees in the fee and accessibility of drug merchandise beneath their Half D plan.

Though CMS has been monitoring beneficiary entry to generics and biosimilars, CMS now plans to incorporate an extra step within the formulary assessment course of to test that Half D sponsors present broad entry to generics, biosimilars, and different decrease value medication. Particularly, CMS will holistically assessment whether or not a plan’s formulary and utilization administration practices are value efficient, cheap and acceptable, and inclusive of incentives to cut back prices. This would come with an analysis of whether or not the formulary consists of decrease value medication and whether or not such medication are on a decrease formulary tier. As well as, CMS would assessment whether or not a formulary incorporates fewer utilization controls on model medication and reference merchandise than on decrease value alternate options. CMS would use its authority beneath part 1860D—11(d)(2) to barter the phrases and circumstances of Half D sponsors’ bids if a plan’s proposed formulary doesn’t seem to offer broad entry to decrease value medication. Additional, CMS intends to observe and analyze plan sponsors’ inclusion of decrease value medication.

Selling Transparency for Pharmacies and Defending Beneficiaries from Disruptions

CMS proposes the next two new provisions aimed toward enhancing providers for Half D beneficiaries and guaranteeing stability in pharmacy networks by selling transparency in pharmacy community contracts:

• Mandating that Half D plans, (or first tier, downstream, or associated entities, equivalent to PBMs) should inform contracted pharmacies of the Half D plans they’re in-network with earlier than October 1 of the yr previous to the plan yr and upon request thereafter. The requirement goals to make sure that pharmacies can present correct data through the Annual Enrollment Interval, which begins on October 15. 
• Requiring Half D sponsors (or their FDRs) to permit pharmacies the precise to terminate their community contracts with out trigger, following the identical discover interval that Half D sponsors have for terminating contracts with out trigger. This provision would solely apply if the community pharmacy contract allowed terminations with out trigger by the sponsor. In assist of the proposal, CMS notes that it has acquired growing numbers of complaints from pharmacies about their Half D community contracts, expressing dissatisfaction with reimbursement phrases and the shortcoming to exit the contract with out intensive discover. CMS additionally notes anecdotal experiences that pharmacies unable to formally terminate their community contracts are “merely refusing to fill prescriptions for Half D beneficiaries lined by the plans utilizing these networks.”
• CMS proposes to undertake each proposals pursuant to its authority at part 1857(e) of the Social Safety Act, made relevant to Half D via part 1860D-12(b)(3)(D) of the Act, which authorizes the Secretary to undertake contract phrases and circumstances as vital and acceptable, as long as these phrases usually are not inconsistent with the Half D statute. Notably, CMS didn’t tackle the permissibility of the proposal in mild of the statutory “noninterference clause”, which, amongst different necessities, prohibits CMS from interfering with the negotiations between drug producers and pharmacies and PDP sponsors.[2] 

Half D Medicine Remedy Administration (MTM) Program Eligibility Standards

Beneath current laws, Half D sponsors are required to have a Medicine Remedy Administration (“MTM”) program aimed toward guaranteeing that focused beneficiaries appropriately use lined Half D medication to optimize therapeutic outcomes and decrease the danger of opposed occasions. The MTM program can be to focus on enrollees with a number of power illnesses, who take a number of Half D drugs, and people prone to exceed an annual value threshold for lined Half D medication. Efficient January 1, 2025, CMS established improved concentrating on standards for this system to make sure constant and equitable entry to MTM providers. Half D sponsors should embrace 10 core power illnesses, together with Alzheimer’s illness, of their concentrating on standards for figuring out beneficiaries with a number of power illnesses. Following strategies from the Contract 12 months 2024 MA and Half D rule, which elevated eligibility for the MTM program, CMS now proposes increasing the regulatory listing of core power illnesses used to determine Half D enrollees who’ve a number of power illnesses for functions of figuring out eligibility for MTM enrollment to incorporate different causes of dementia along with Alzheimer’s.

Strengthening Prior Authorization and Utilization Overview Guardrails

CMS proposes vital reforms to the prior authorization course of, requiring plans to undertake digital methods for streamlining requests, preserve approvals at some point of therapy, and make sure that medical choices are made primarily based on evidence-based tips. Particularly, to deal with inappropriate prior authorization and utilization administration practices that hinder entry to care, CMS proposes the next modifications to current laws:

• Outline “inside protection standards” and make clear that MA plans might solely apply such standards when Medicare protection insurance policies are inadequate. Any such standards have to be:
  • Publicly accessible and clear;
  • Primarily based on present proof and broadly accepted tips from acknowledged skilled medical societies or consensus-based organizations; and
  • In keeping with Medicare’s regulatory necessities.
• Require that after a previous authorization is accredited, it stays legitimate for the complete course of therapy, stopping the necessity for repeated approvals and guaranteeing continuity of care.
• Mandate that plans present particular causes for protection denials, together with the precise Medicare or plan protection rule or guideline used within the willpower, and an in depth rationalization of how the factors had been utilized.
• Reaffirm beneficiaries’ rights to enchantment denied providers and require that plans inform enrollees of their enchantment rights.
• Deal with retroactive protection denials, significantly for rural hospitals and important entry services, by guaranteeing that utilization administration practices don’t disrupt funds or entry to care.

Moreover, CMS plans to gather detailed data from preliminary protection choices and plan-level appeals to raised perceive utilization administration practices.

Synthetic Intelligence Guardrails

Synthetic Intelligence (“AI”) is more and more deployed in well being care, from decision-making instruments to administrative processes. Recognizing each the potential and dangers of AI in MA and Half D, CMS launched important guardrails for MA plans to reinforce algorithmic transparency, monitor and mitigate potential biases, and preserve human oversight, guaranteeing that clinicians retain authority over medical judgments impacting affected person care. The important thing guardrails are:

• AI and automatic methods have to be utilized in a way that preserves equitable entry to Medicare Benefit providers.
• Using AI should adhere to current Medicare laws that prohibit discrimination and promote equal entry to MA providers.
• MA plans are required to reveal their use of AI instruments, guaranteeing beneficiaries and suppliers are knowledgeable about how AI influences protection and care choices.

Enhanced Supplier Directories for Improved Accessibility

The Proposed Rule goals to enhance supplier directories by mandating real-time updates and integrating the supplier listing data into Medicare Plan Finder. Presently, supplier directories have to be accessible on MA plans’ web sites. The Proposed Rule builds on current CMS laws requiring plans to replace directories month-to-month, which have confronted criticism for inconsistent enforcement and restricted impression. By emphasizing real-time accuracy and accountability, CMS seeks to deal with one of the frequent complaints from MA beneficiaries: the problem of figuring out whether or not a supplier is in-network and accepting new sufferers. As a part of CMS’s plan to reinforce transparency and accessibility for beneficiaries, CMS proposes to require MA plans to:

• Combine their supplier listing data straight into the Medicare Plan Finder instrument;
• Be certain that their supplier listing information is correct, full, and up to date a minimum of each 30 days;
• Present listing data in a standardized format to facilitate simpler comparisons throughout plans, together with supplier title, contact particulars, specialty, community standing, and telehealth availability;
• Be certain that the built-in supplier listing is accessible to all beneficiaries, together with these with disabilities and those that are non-English audio system; and
• Promptly notify beneficiaries promptly when there are any adjustments to community suppliers, together with if a supplier leaves the community or is not accepting new sufferers.

Behavioral Well being Parity

Behavioral well being reform stays one of many Biden administration’s central equity-driven initiatives. The Proposed Rule strengthens behavioral well being protections by requiring plans to fulfill extra rigorous community adequacy requirements, implement balanced cost-sharing, and supply cultural competency coaching for suppliers. Beneath the Proposed Rule, MA plans’ value sharing for behavioral well being should not be higher than the fee sharing for Conventional Medicare. CMS proposes a 20% coinsurance or equal copayment restrict for sure psychological well being providers and outpatient substance abuse providers. The fee sharing for inpatient psychiatric providers can be capped at 100% of the fee-for-service price. CMS additional proposes zero value sharing for opioid therapy.

Bolstering Client Safety – Agent and Dealer Oversight

CMS’s proposed oversight of brokers and brokers addresses rising issues about high-pressure gross sales techniques and misinformation in MA and Half D plan advertising. The Proposed Rule tightens oversight of brokers and brokers, requiring enhanced coaching, higher transparency in compensation disclosures, and stricter plan monitoring of promoting practices. Notably, CMS proposes to increase the definition of “commercial” to embody digital platforms, together with web sites, social media, and electronic mail campaigns, guaranteeing that every one promotional supplies are topic to regulatory oversight.

Moreover, CMS has crafted a listing of subjects that brokers and brokers should focus on with beneficiaries through the plan choice course of. The Proposed Rule builds on these subjects to incorporate Low-Earnings Subsidy and details about state applications like Medicare Financial savings Applications eligibility. For beneficiaries who’re enrolling into an MA plan when first eligible for Medicare, or those that are dropping a Medigap plan to enroll into an MA plan for the primary time, the agent or dealer should inform beneficiaries of their 12-month trial proper interval. These provisions intention to curb misleading practices and guarantee beneficiaries have entry to correct data when deciding on plans.

Administration of Supplemental Advantages

MA rebate {dollars} proceed to symbolize a good portion of MA spending, with estimates that MA rebate {dollars} used for supplemental advantages and premium buy-downs will complete over $79 billion in 2026 and quantity to roughly $500 billion over a 5-year interval beginning in 2026. Present legislation and regulation permit MA plans to supply supplemental advantages to enrollees, topic to CMS bid approval and laws that govern how supplemental advantages could also be provided. The Proposed Rule consists of numerous proposals supposed to extend transparency and make clear regulatory necessities for correct administration of MA plan supplemental profit choices.

• Administration of Supplemental Advantages Protection By means of Debit Playing cards

Within the Proposed Rule, CMS observes that MA plans seem to often use debit playing cards to manage a number of necessary supplemental advantages, together with reductions in value sharing for dental and imaginative and prescient providers and/or cost for OTC gadgets, fitness-related advantages, meals and produce, transportation, and utilities assist. CMS proposes new necessities on the use debit playing cards to manage plan-covered advantages, together with new guardrails to make sure that beneficiaries are absolutely conscious of lined supplemental advantages and easy methods to entry these advantages:

• CMS proposes to require MA plans to have processes for delivering all MA plan lined supplemental advantages to enrollees that guarantee compliance with new and current regulatory requirements, together with acceptable entry to suppliers and suppliers. For MA coordinated care plans, this consists of offering supplemental advantages at in-network value sharing when an in-network supplier or profit is unavailable or insufficient to fulfill an enrollee’s medical wants. And for PPOs, supplemental advantages have to be supplied via out-of-network suppliers at in-network value sharing.
• When administering a compulsory supplemental profit via plan debit playing cards, CMS proposes that an MA plan should present debit playing cards which might be electronically linked to plan lined advantages via a real-time identification mechanism to confirm eligibility of plan lined advantages on the level of sale. The debit card should additionally embrace some type of mechanism that ensures the enrollee might solely use the cardboard to buy the lined merchandise or service.
• CMS proposes to revise current laws to obviously restrict when a plan might provide decreased value sharing as a compulsory supplemental profit via the usage of reimbursement, via a debit card or different means, to both handbook reimbursement or to a debit card ruled by the proposed new requirement for real-time verification mechanism, to stop the usage of unrestricted playing cards or different obscure mechanisms that can not be solely linked to lined advantages and restricted to the plan yr necessities. Present laws permit use of reimbursement via a debit card “or different means.” CMS requests touch upon what “different means” may be unintentionally faraway from the scope of the rule if finalized.
• CMS proposes to require MA plans to have another course of that enables for reimbursement of eligible bills for plan lined providers, to be able to make sure that the enrollee has entry to the profit if there’s a technical or non-technical (user-related) concern with the debit card. CMS proposes to require MA plans to offer directions for debit card use and buyer assist providers.
• CMS proposes a brand new regulation to ban MA plans from advertising a greenback worth of a supplemental profit or the strategy by which it’s administered. The proposal is meant to stop sure regarding ads that CMS has turn into conscious of, which “solely point out debit playing cards, or advertising phrases equivalent to ‘Medicare flex playing cards,’ with an alluring worth connected to them, probably giving false impressions that the cardboard itself is the profit, that it may be used to buy something and can be utilized anyplace, and that a person can obtain it robotically by enrolling within the marketed MA plan.”
• CMS encourages, however doesn’t require, MA plans “to companion with community-based suppliers or different native, smaller companies when providing supplemental advantages, significantly concerning meals and produce advantages which may be provided to chronically sick enrollees beneath SSBCI laws.” On the similar time, CMS acknowledges that in some areas there could also be a restricted variety of community-based suppliers, together with small companies.

• Particular Supplemental Advantages For The Chronically Ailing

The Balanced Funds Act of 2018 launched new authorities regarding supplemental advantages which may be provided to chronically sick enrollees in MA plans, generally known as Particular Supplemental Advantages For The Chronically Ailing (“SSBCI”). Within the Proposed Rule, CMS notes that the variety of MA plans that provide SSBCI—and the quantity and scope of SSBCI provided by a person plan—has considerably elevated during the last 5 years. Within the Proposed Rule, CMS proposes numerous adjustments supposed to make clear the 2 separate determinations that MA plans should make to fulfill the statutory and regulatory necessities for SSBCI advantages:

1. Eligibility: Whether or not the enrollee is eligible for SSBCI by satisfying the three-part statutory definition of “chronically sick enrollee,” outlined as an MA plan enrollee who meets the entire following:
   • Has a number of comorbid and medically advanced power circumstances that’s life threatening or considerably limits the general well being or perform of the enrollee;
   • Has a excessive threat of hospitalization or different opposed well being outcomes; and
   • Requires intensive care coordination.
2. Allowable SSBCI Profit: Whether or not the SSBCI has an affordable expectation of bettering or sustaining the well being or total perform of the enrollee.[3]

[Under existing regulations, SSBCI are not required to be primarily health related but must have a reasonable expectation of improving or maintaining the health or overall function of the enrollee, as established by the MA plan based on a bibliography of relevant acceptable evidence. In the Proposed Rule, CMS proposes to codify at § 422.102(f)(1)(iii) a non-exhaustive list of non-primarily health related items or services that do not meet the standard of having a reasonable expectation of improving or maintaining the health or overall function of the enrollee. CMS’ proposed list of services that cannot be offered as SSBCI includes the following, on which the Agency solicits comment:

• Procedures that are solely cosmetic in nature and do not extend upon Traditional Medicare coverage — Examples include cosmetic surgery such as facelifts or cosmetic treatment for facial lines, atrophy of collagen and fat, and bone loss due to aging. CMS notes that some plans have proposed in their bids to offer cosmetic services for aesthetic purposes only, such as botulinum toxin (Botox) injections for lines and wrinkles. CMS disapproved these proposals during bid review but notes that some cosmetic procedures may be acceptable to be offered as an SSBCI benefit if used to treat medical conditions that affect health or overall function and would not be considered purely cosmetic in nature (such as Botox injections to treat overactive bladder and other medical conditions).
• Alcohol, tobacco, and cannabis products — CMS reiterates that tobacco and alcohol are expressly prohibited under a 2019 HPMS memo, as neither is considered food or nutritional, and states that medical marijuana and its derivatives, such as cannabis oil, are prohibited as illegal substances under Federal law.
• Funeral planning and expenses — While MA plans may provide services to assist in the establishment of decision-making authority for healthcare needs (e.g., power of attorney for health services) and may provide education, such as financial literacy classes, technology education, and language classes, funeral services are provided after the death of the beneficiary and, as such, cannot be tied to improving or maintaining that individual’s health or overall function.
• Life insurance — Similarly, life insurance cannot be tied to improving or maintaining that individual’s health or overall function and would not be permissible as SSBCI.
• Hospital indemnity insurance — Regulations governing SSBCI require that an MA plan must incur a non-zero, direct non-administrative cost for offering an SSBCI that is not primarily health related. According to CMS, paying for separate, third-party insurance for the enrollee does not incur a direct cost on behalf of the enrollee but simply shifts payment for medical costs to another payer.
• Broad membership-type programs inclusive of multiple unrelated services and discounts — CMS states that it has received and declined proposals from MA plans to offer broad membership programs, inclusive of multiple unrelated services discounts (such as Amazon Prime, Costco, and others), as SSBCI. According to CMS, a generic membership is not permissible as SSBCI because it is not limited to items or services that have a reasonable expectation of improving or maintaining the health or overall function of the enrollee. CMS notes, however, that an MA plan might contract with such retailers to offer covered benefits in some other capacity (for example, benefits administered via a restricted debit card), so long as there is a mechanism to ensure enrollees receive only covered benefits.
• Cash and monetary rebates — These are prohibited by 1851(h)(4)(A) of the Social Security Act.
• Gambling items (e.g., online casino games, lottery tickets), firearms and ammunition — Not intended to improve the enrollee’s health.

CMS also proposes several amendments to clarify MA plans’ obligations related to determining SSBCI eligibility, including requirements to increase transparency with respect to eligibility criteria and scope of benefits:

• CMS clarifies that MA plans must properly evaluate all three components of the statutory definition of “chronically ill enrollee.” CMS proposes technical changes to amend the regulatory definitions to align with statutory requirements and previously issued guidance. In addition, CMS proposes to codify a new provision prohibiting MA plans from using the presence of a chronic illness as the sole basis for determining eligibility for SSBCI.
• CMS proposes new regulations requiring an MA plan to demonstrate that an enrollee has satisfied all three criteria through the use of an objective process (such as a health risk assessment, a claims review, or other similar means).
  • CMS states that the proposal is intended to address variability, inconsistency and subjective eligibility determinations observed by CMS through its routine monitoring, noting examples such as MA plans allowing an enrollee to self-attest to SSBCI eligibility without additional criteria and verification from the MA plan, or determining what SSBCI to cover and pay for without consultation with a doctor or other medical professional to determine the clinical appropriateness of the items and services offered under the SSBCI benefit.
  • CMS states that the proposal would continue to allow plans flexibility in the methods they use to determine that enrollees have met all three criteria.
• CMS proposes to require MA plans to publish on their public-facing website the objective criteria developed and used by the MA plan to determine whether an enrollee is eligible to receive any, and which particular, SSBCI benefits the plan offers.
  • Currently, CMS may review SSBCI eligibility criteria by requesting it from plans on a case-by-case basis. In the Proposed Rule, CMS expresses concern that the lack of transparency under current regulations, leaves enrollees “to speculate whether a particular benefit, which may be attractive to an enrollee and spur them to enroll in a plan, is even available to them.”
  • CMS acknowledges that there is currently not a consistent manner by which plans publicly report this information or submit the information directly to CMS but believes the proposals will increase compliance and patient awareness as compared with making the information available only upon request.

Improving Experiences for Dually Eligible Enrollees

Building on past efforts to enhance integration and care coordination, as well as accessibility for dual-eligible individuals, CMS proposes new requirements for certain dual-eligible Special Needs Plans (“D-SNPs”), to further streamline and organize care delivery. Specifically, CMS plans to:

•  Require integrated member ID cards for both Medicare and Medicaid plans. The proposal is limited to Applicable Integrated Plans (“AIPs”).;
• Require plans to conduct a single, integrated Health Risk Assessment (“HRA”) for both Medicare and Medicaid, replacing the separate HRAs currently utilized for each. CMS also proposes to adopt specific standards to implement the requirement that all MA SNPs conduct an initial assessment and an annual reassessment of the individual’s physical, psychosocial, and functional needs.
• Codify timeframes for all SNPs to conduct HRAs and develop Individualized Care Plans (“ICPs”), emphasizing active participation by enrollees or their representatives in the ICP development process. Specifically, CMS proposes to require that SNPs conduct the initial HRA within 30 days of the effective date of enrollment. CMS also proposes new requirements for all SNPs related to outreach to enrollees regarding completion of the HRA. CMS proposes that the SNP make at least three non-automated phone call attempts. If the enrollee has not responded, the SNP must send a follow-up letter. The SNP must document attempts to contact the enrollee, and if applicable, the enrollee’s choice not to participate.
• Require that SNPs update ICPs as warranted when there are changes in an enrollee’s health status or they have a healthcare transition.

Promoting Community-Based Services and Enhancing Transparency of In-Home Service Contractors

CMS has identified concerns about the exclusion of certain benefit providers from MA organizations’ provider directories. These concerns relate to safety and a lack of transparency regarding supplemental benefit service providers’ access to enrollees’ homes and sensitive personal information. Additionally, CMS is focused on ensuring that individuals are aware of which providers are deeply rooted within the communities they serve. As such, CMS proposes to:

• Codify definitions of community-based organizations (“CBOs”), in-home or at-home supplemental benefit providers, and direct furnishing entities. CMS proposes to define these terms as follows:
  • Direct furnishing entity — Any individual or entity that delivers or furnishes covered benefits to the enrollee, including Medicare Part A and B covered benefits, as well as all types of supplemental benefits. CMS proposes that the definition of direct furnishing entities may include first tier, downstream, or related entities (FDRs) from whom enrollees may expect to receive directly furnished services. CMS solicits comment on: (1) whether this definition is sufficient to encompass individuals or entities who may reasonably provide covered supplemental benefits to the enrollee and should therefore be included in the provider directory; or (2) whether the definition should be further refined to include a more tailored subset of individuals or entities.
  • CBOs — Public or private not-for-profit entities that provide specific services to the community or targeted populations in the community to address the health and social needs of those populations. CMS proposes to define this term consistent with the discussion of CBOs in the 2023 physician fee schedule proposed rule.
  • In-home/at-home supplemental benefit provider — Any direct furnishing entity in which the entity or an employee is given the enrollee’s physical address to provide in-person supplemental benefits or SSBCI items to that enrollee. CMS also proposes that this definition state that an in-home/at-home supplemental benefit provider may include direct furnishing entities who offer in-office as well as home supplemental benefits.
• Require plans to identify, within the provider directory, which providers and direct furnishing entities meet the proposed definition of a CBO;
• Require plans to identify in-home/at-home supplemental benefit service providers, including hybrid providers (both in-home or at-home, and in-office services), either through a subset list within the provider directory or through a separate list comprising in-home or at-home supplemental benefit providers and direct furnishing entities. The list must be easily accessible on the plan’s public facing website; and
• Clarify existing policy by stating that all direct furnishing entities must be included in the provider directory.

MA and Part D Medical Loss Ratio (MLR) Reporting

CMS proposes several changes to the MA and Part D MLR regulations that are intended to improve the meaningfulness and comparability of the MLR across plan contracts, as well as align the MA and Part D MLR regulations with the regulations in the commercial and Medicaid MLR programs. These proposals include:

• Requiring provider incentive and bonus arrangements are tied to clinical or quality improvement standards in order to be included in the MA MLR numerator;
• Requiring administrative costs to be excluded from quality-improving activities in the MA and Part D MLR numerators;
• Codifying the current practice by which MA and Part D MLR reports include a description of how expenses are allocated across lines of business; and
• Exclude Medicare Prescription Payment Plan unsettled balances from the MLR. 

Risk Adjustment Data

In addition to technical changes to the regulatory definitions relevant to risk adjustment data validation, CMS proposes to codify existing practice of requiring mandatory submission of risk adjustment data by PACE organizations and Section 1876 Cost plans, consistent with the risk adjustment data requirements applicable to MA plans.

Notably, the Proposed Rule does not provide any further guidance regarding CMS’ revised risk adjustment data validation (“RADV”) audit methodology, which allows CMS to audit a sample of an MA plan’s diagnoses reported for risk adjustment purposes (from 2018 and later) and then use the audit findings to calculate an extrapolated improper payment amount for the MA plan’s contract. On November 14, 2024, CMS issued the audit methods and instructions for the program year 2018 RADV audits, which provide little insight into the 60 MA contracts that have been selected for audit. CMS expects to begin issuing audit findings mid-year in 2026.

Please contact a member of the Sheppard Mullin Healthcare Team if you have any questions regarding the Proposed Rule. Also register for our complimentary webinar on the Proposed Rule.

FOOTNOTES

[1] See 1860D-4(c)(1)(A) of the Social Safety Act.

[2] 42 U.S.C. 1395w-111(i)(1).

[3] Per § 422.102(f)(1)(i)(B), CMS might publish a non-exhaustive listing of circumstances which might be medically advanced power circumstances which might be life-threatening or considerably restrict the general well being or perform of a person. This listing of power circumstances is similar because the listing for which MA organizations might provide power situation particular wants plans (C-SNPs), which could be discovered within the definition of “extreme or disabling power situation” inside § 422.2.