On 29th April 2022, CMS published a final rule for Medicare Advantage and part D for the year 2023. Through this rule, CMS is expanding access to affordable health care and improving health equity in Medicare Advantage (MA) and Part D through lower out-of-pocket prescription drug costs and improved consumer protections. We shared a summary of MA and Part D regulations related to beneficiary cost-sharing at the pharmacy counter; the organization's past performance; network adequacy; and the maximum out-of-pocket policy for dually eligible beneficiaries.
In recent years, more Part D plans have been entering into arrangements with pharmacies that may pay less money for dispensed drugs if pharmacies do not meet certain criteria. The negotiated price for a drug is the price reported to CMS at the point of sale, which is used to calculate beneficiary cost-sharing and generally adjudicate the Part D benefit. With the emergence of these payment arrangements, the negotiated price is frequently higher than the final payment to pharmacies. Higher negotiated prices lead to higher beneficiary cost-sharing and faster beneficiary advancement through the Part D benefit.
CMS is finalizing a policy that requires Part D plans to apply all price concessions they receive from network pharmacies to the negotiated price at the point of sale so that the beneficiary can also share in the savings. Specifically, CMS is redefining the negotiated price as the baseline, or lowest possible, payment to a pharmacy, effective January 1, 2024. CMS is applying the finalized policy across all phases of the Part D benefit. This policy reduces beneficiary out-of-pocket costs and improves price transparency and market competition in the Part D program.
MA plans are required to set a limit on beneficiary cost-sharing for Medicare Part A and B services after which the plan pays 100 percent of the service costs. Current guidance on the calculation of the maximum out-of-pocket (MOOP) amount allows MA plans the option to count only those amounts the individual enrollee is responsible for paying, but not counting any state cost-sharing payments or unpaid cost-sharing toward the MOOP limit, rather than all the cost-sharing amounts for services the plan has established in its plan benefit package. In practice, this option does not cap the amount a state could pay for a dually eligible MA enrollee’s Medicare cost-sharing and results in state Medicaid programs paying more in Medicare cost-sharing for dually eligible enrollees than if the plan calculated attainment of the MOOP limit based on cost-sharing amounts for services in its plan benefit package.
This final rule specifies that the MOOP limit in an MA plan (after which the plan pays 100 percent of MA costs) is calculated based on the accrual of all Medicare cost-sharing in the plan benefit, whether that Medicare cost-sharing is paid by the beneficiary, Medicaid, or other secondary insurance, or remains unpaid (including when the cost-sharing is not paid because of state limits on the amounts paid for Medicare cost-sharing and dually eligible individuals’ exemption from Medicare cost-sharing). We project that the change will save state Medicaid agencies $2 billion over ten years while increasing the payment to providers serving dually eligible beneficiaries by $8 billion over ten years.
To hold plans to a higher standard, CMS is finalizing additional bases for denying an MA and Part D organization’s application for a new contract or a service area expansion of an existing contract based on an organization’s past performance. The current regulations permit CMS to deny applications from organizations under sanction or failing CMS’ net worth requirements during the performance period. The final rule adds Star Ratings (2.5 or lower), bankruptcy or bankruptcy filings, and exceeding a CMS designated threshold for compliance actions as bases for CMS denying a new application or a service area expansion application.
To strengthen its application standards and oversight, CMS is requiring that MA applicants demonstrate they have a sufficient network of contracted providers to care for beneficiaries before CMS will approve an application for a new or expanded MA contract. We believe that requiring applicants to demonstrate compliance with network adequacy standards as part of the application process will strengthen our oversight of an organization’s ability to provide an adequate network of providers to deliver care to MA enrollees. This change will also provide MA organizations with information regarding their network adequacy ahead of bid submissions, mitigating current issues with late changes to the bid that may impact bid integrity.
Due to the changes in the timing of the network adequacy reviews and potential difficulties MA organizations may face with building a full network almost one year in advance of the contract year, we also will allow applicants a 10-percentage point credit toward the percentage of beneficiaries residing within published time and distance standards. Additionally, based on comments received, we are finalizing a change to allow applicants to use Letters of Intent (Lois) in lieu of a signed provider contract, at the time of application and for the duration of the application review to meet network adequacy standards. Once the coverage year starts (January 1), organizations must be in full compliance; the 10-percentage point credit and permission to use LOIs will no longer apply, and signed provider and facility contracts must be in place for the network.
We shared a summary of the CY 2023 Medicare Advantage and Part D final rule for reference purposes. For detailed policy updates, you can refer to the following CMS link. MedicalBillersandCoders (MBC) is a leading medical billing company providing complete revenue cycle services. We can assist you in Medicare billing for receiving accurate reimbursements. To know more about our Medicare billing services, contact us at email@example.com/ 888-357-3226
Reference: Contract Year 2023 Policy and Technical Changes to the Medicare Advantage and Medicare Prescription Drug Benefit Programs