The Centers for Medicare and Medicaid Services (CMS) have been active this year proposing major new restrictions on Medicare Advantage (MA) plans. Many of the changes are in reaction to provider lobbying efforts on Capitol Hill as well as public outcry over misleading tactics by third-party entities who enroll individuals in the popular senior and disabled plans.
Let’s start out with the changes effective January 1, 2024, from the 2024 MA and Part D rule finalized earlier this year. It is important to note that CMS issued a memo that states that it will enforce the 2024 rule beginning January 1, 2024. Usually, such rules are enforced through the regular program audit process and it takes a number of years before regulatory changes are rolled into the audit protocols. That seemed fair as major changes take time for plans to implement. But in the October 24, 2023, memo issued through the Health Plan Management System (HPMS) process, CMS says that plans that receive routine program audit notices in 2024 will undergo a focused audit on the 2024 changes as well. It also noted that all other plans, even if an audit was just conducted in the last two years, could be subjected to focused audits on aspects of the 2024 rule.
The focused audits seem to be confined to just the utilization management portions of the 2024 rule changes, but plans should be ready to be in compliance with all aspects of the rule.
Here is an overview of the major 2024 changes:
- The rule spelled out that the medical necessity standard for MA is what is in place for the traditional Medicare fee-for-service (FFS) program.
- MA plans must use the National Coverage Determination (NCD) or Local Coverage Determination (LCD) for Medicare FFS to determine medical necessity in MA. MA plans can only use their own or external evidence-based criteria if the NCD or LCD is not fully established. It must be made public. MA plans can continue to use Part B Drug Step Therapy (which is often applied to expensive oncology and other medical drugs).
- Thus, prior authorization policies can only be used to confirm the presence of diagnoses or other medical conditions.
- Members are now required to have a minimum 90-day transition period for ongoing treatment when changing MA plans. The new plan cannot require prior authorization in that timeframe for an active course of treatment.
- Plans must have a utilization management committee and ensure annually that coverage criteria meet the NCD and LCD standards.
- Approvals now must be valid as long as medically reasonable, in accordance with coverage criteria and consistent with the treating provider’s recommendation.
- If a partial or full denial is expected, the service request must be reviewed by a physician or other appropriate healthcare professional with expertise in the field of medicine or healthcare that is appropriate for the services at issue, including knowledge of Medicare coverage criteria.
- The new rule makes clear that approval and denial letters, among other correspondence, must be in any non-English languages that are the primary language of at least 5 percent of the individuals in a plan benefit package (PDP) service area and/or in an accessible format (usually Large Font, Braille, or audio). The rule applies if the member or representative requests the materials in another language (if the 5% threshold is met) and/or accessible format OR the plan otherwise learns of the enrollee’s preferred language or need for an accessible format. It is important to note that the translated letter or format must be fulfilled within the case turnaround time (a likely impossibility for some case types when it comes to certain alternative formats).
The prior authorization and medical necessity changes are significant. MA plans have been able to take significant excess expense out of the system by deploying prior authorization to save on medical expense. This has translated into greater supplemental benefits for seniors and the disabled. Under the minimum medical loss ratio (MLR) rules, it does not translate into greater profits.
CMS is seemingly putting a stake through the heart of cost savings in MA. Despite the cries of providers, MA plans responsibly deployed prior authorization and had a great deal of oversight from CMS, including regular program audits and external review processes. All this is unfortunate as it undermines the ability to responsibly use evidence-based criteria to target overspending. The NCD and LCD criteria can best be described as coverage criteria, not whether a given service is truly medically necessary.
The program will suffer from this decision as plans will inevitably come to the conclusion over time that prior authorization no longer plays a strong or reasonable role in running an MA plan. That is unfortunate as PA does have an important role, especially judging from traditional Medicare FFS’ track record on cost and quality.
At the same time, though, it does present MA plans with the opportunity to focus on wellness, prevention, and care management. For too long the healthcare system was obsessed with utilization management as opposed to care management. A case can be made that savings here are many folds greater than with PA. While I think there is a role for both, plans will now pivot to care management and steering members and providers to the best site of care performed by quality-oriented providers. The necessity for clean and timely data and analytics will also become that much more important in health plan operations.
On to the 2025 proposed rule, which will be finalized after comments in 2024, here are the key changes:
Overhauling Agent Compensation
After major complaints about the actions of various third-party marketing organizations, CMS put in some more rigorous oversight requirements for MA plans as well as restrictions on certain television advertisements. Now, CMS is proposing to stop what it believes is steerage to certain plans based on extraordinary financial incentives rather than what is in the best interest of the member. It seeks to limit excessive broker and agent compensation and other bonus arrangements.
The rule would redefine “compensation” to set a clear, fixed amount that agents and brokers can be paid regardless of the plan the beneficiary enrolls in. The proposed national agent/broker fixed compensation would be $632, higher than the national cap of $601 currently. But it also eliminates variability in payments and bonus compensation, especially with third-party marketing organizations (TMOs). The new rule will have the effect of substantially reducing overall compensation in the system. Some say it could amount to a halving of existing compensation, but most of the excess compensation is retained by TMOs and a subset of agents. Congratulations to the Association of Community Health Plans (ACAP), which substantially impacted this change through recommendations to CMS.
Improving Access to Behavioral Health Care Providers
CMS is updating network adequacy standards in the area of behavioral health. Consistent with a series of laws and earlier regulations that expanded recognition and payment to various behavioral health therapists and counselors in Medicare, CMS is proposing to add a range of behavioral health providers under a new category called “Outpatient Behavioral Health” as a facility-specialty for which CMS sets Medicare Advantage plan network adequacy standards. An additional incentive would be offered the plan in calculating its network adequacy if telehealth options are offered in this category.
Mid-Year Enrollee Notification of Available Supplemental Benefits
While CMS supports the provision of supplemental benefits, especially in the area of social determinants and the chronically ill, it wants to ensure better oversight. In 2022, over 99% of Medicare Advantage plans offered at least one supplemental benefit and the median was 23 supplemental benefits added in an MA plan. It notes that enrollee utilization of many of these benefits is low. The proposed rule would require MA plans to engage in minimum outreach efforts so that enrollees are aware of the supplemental benefits available to them. It also proposed that a “Mid-Year Enrollee Notification of Unused Supplemental Benefits” be issued annually, personalized to each enrollee, that includes a list of any supplemental benefits not accessed during the first six months of the year.
With regard to chronically ill benefits (which are benefits provided to eligible chronically ill enrollees who have a reasonable expectation of improving or maintaining health or overall function), CMS proposes that MA plans demonstrate, by the time they submit bids, that such items and services meet the legal threshold of having a reasonable expectation of improving the health or overall function of chronically ill enrollees and are supported by evidence-based research. Additionally, CMS proposes to update marketing requirements to prevent misleading marketing related to these benefits that makes it appear that the benefits are available to everyone in the plan rather than a subset of enrollees.
Annual Health Equity Analysis of Utilization Management Policies and Procedures
MA wants to tackle the potential impact that prior authorization policies and procedures may have on underserved populations. The rule would require MA plans to analyze their utilization management (UM) policies and procedures from a health equity perspective (including those with special needs, disabilities, and low income). At least one member on the UM committee would need to have expertise in health equity and the UM committee would need to conduct an annual health equity analysis of prior authorization policies and procedures. These results would need to be made public on the plan’s website.
Enhance Enrollees’ Rights to Appeal a Medicare Advantage Plan’s Decision to Terminate Coverage for Non-Hospital Provider Services
The rule would expand the fast-track review by the Medicare Quality Improvement Organization (QIO) in MA to termination of services for skilled nursing facility, comprehensive outpatient rehabilitation facility, or home health agency. The rule would also eliminate the provision requiring forfeiture of an enrollee’s right to appeal a termination of services decision when they leave the facility. This would create parity with the FFS program.
Increase the Percentage of Dually Eligible Managed Care Enrollees Who Receive Integrated Medicare and Medicaid Services
The rule would eliminate the ability of dual eligibles and certain low-income subsidy members to have a special enrollment period (SEP) quarterly in favor of a more restrictive rule that allows year-round monthly enrollment only in integrated SNPs (as well as a switch to Medicare FFS and a standalone drug plan (PDP)). Other changes include limiting enrollment in certain D-SNPs to those individuals who are also enrolled in an affiliated Medicaid managed care organization (MCO) and limiting the number of D-SNP plan benefit packages an MA organization can offer in the same service area as an affiliated Medicaid MCO. This last stipulation also would apply to a parent organization or entity that shares a parent organization with the MA organization.
The rule also would limit out-of-network cost sharing for D-SNP preferred provider organizations (PPOs) for specific services beginning in 2026.
Risk Adjustment Data Validation (RADV) Appeals Processes
The RADV rule is being challenged by one or more plans in court. CMS is attempting to strengthen its legal position with regard to RADV by including clear guidelines in regulation, including the following:
- MA plans may request only a medical record review determination appeal or payment error calculation appeal for purposes of reconsideration, and not both at the same time.
- If a plan requests a medical record review determination appeal, it may only request a payment error calculation appeal after the completion of the medical record review determination administrative RADV appeal process.
- A revised audit report containing a recalculated payment error calculation will not be issued by the Secretary at each level of appeal but instead will be issued when a medical record review determination appeal or a payment error calculation appeal is final, as applicable.
- If the CMS Administrator does not decline to review or does not elect to review within 90 days of receipt of either the Medicare Advantage Plan organization’s or CMS’s timely request for review (whichever is later), the hearing officer’s decision becomes final.
Threshold for Identifying D-SNP Look-Alikes
CMS has been reining in so-called D-SNP look-alikes. Look-alikes are plans that have high levels of dual eligibles but are not otherwise D-SNP plans (which follow rigorous regulatory and clinical requirements). The rule would lower the D-SNP look-alike threshold from 80% to 70% in 2025 and to 60% in 2026. This proposal would have the effect of further controlling the continued proliferation of look-alike plans by making it harder to design such plans to be marketed next to D-SNP plans.
More Flexibility to More Quickly Substitute Lower Cost Biosimilar Biological Products
On a formulary, Part D plans would be able to make formulary substitutions of many biosimilar biological products for their reference products as “maintenance changes” that would not require prior approval by CMS. Members would be given a 30-day notice of the substitution. A wise move to lower drug costs overall as well as out-of-pocket costs for enrollees.
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— Marc S. Ryan