Introduction
On April 4, 2024, the Centers for Medicare & Medicaid Services (CMS) issued a final rule that revises the Medicare Advantage and Part D programs in significant ways (the Final Rule). The Final Rule stems from the CY 2025 Medicare Advantage and Part D proposed rules issued in November 2023 and CY 2024 Medicare Advantage and Part D proposed rules published on December 14, 2022. It continues the trend of regulatory enhancements to the Medicare Advantage and Part D programs and in practice creates additional administrative requirements for Medicare Advantage organizations (MAOs) and Part D plans. Below are summaries of some of the key provisions.
1. Changes to agent and broker compensation and TPMO requirements
In what may be the most impactful change to the industry as a whole, the Final Rule makes significant changes to the compensation payable to agents and brokers beginning in the upcoming Annual Enrollment Period. Historically, MAOs have been able to compensate agents and brokers for enrollment activities and administrative services. While compensation for enrollment activities was capped via regulation, payments for administrative services (which were very loosely defined) needed to align with fair market value. Agent and broker compensation, especially payments for administrative services, has been subject to scrutiny and criticism, as some believed MAOs were using payments for administrative services as a loophole to provide excessive compensation to agents and brokers to incentivize member enrollments.
The Final Rule eliminates separate administrative services payments and, instead, sets a fixed amount that MAOs may pay agents and brokers for enrollments, which may be adjusted in future years by CMS. To balance the elimination of administrative services payments, CMS is increasing the per-enrollment fee by $100 and allowing MAOs to compensate brokers for renewal enrollments at 50% of the new base enrollment fee.
Notably, this new requirement does not expressly apply to payments from MAOs to third party marketing organizations (TPMOs). In responding to comments, CMS stated “[t]his proposal, and all agent broker compensation rules at §422.2274(d) are limited to independent agents and brokers, and do not extend to TMPOs more generally. Therefore, this policy represents a limitation on payments in excess of those paid under “compensation” only for commissions paid for enrollments to independent agents and brokers. Though we are continuing to consider future rulemaking in this space, our current policy does not extend to placing limitations on payments from an MAO to a TPMO who is not an independent agent or broker for activities that are not undertaken as part of an enrollment by an independent agent or broker.”
At the same time, the rule contains restrictions on contract terms between MAOs and TPMOs to prevent TPMOs from directly or indirectly being incentivized to inhibit an agent or broker’s ability to objectively assess and recommend the plan that is best suited to a potential enrollee’s needs. This is a broad restriction and CMS provided numerous examples of prohibited contract terms, such as provisions offering volume-based bonuses for enrollment into certain plans.
This is likely to be a seismic change for agents and brokers, which are often compensated through commissions and administrative services payments. It also has the potential to level the playing field for smaller plans that offer competitive benefits and plan design but do not have the volume of larger plans. MAOs should update their relevant agreements are updated compliance starting October 1, 2024.
2. Changes to RADV audit appeal process
In the Final Rule, CMS sought to standardize, simplify, and address what it views as gaps and operational constraints in the Risk Adjustment Data Validation (RADV) audit appeals process at 42 C.F.R. § 422.311. The new requirements provide that MAOs must exhaust all three levels of appeal for medical record review determinations (reconsideration, hearing and CMS administrator review) before beginning the payment error calculation process – a change from the current process where both medical record reviews and payment error calculations can move through the appeals process concurrently. Because payment error calculation appeals are directly based on the outcomes of medical record review determinations, CMS believes this change will avoid the filing of unnecessary payment error calculation appeals and reduce the burden on CMS and MAOs.
An MAO whose medical record review determination appeal has been completed now has 60 days from the date of issuance of a revised RADV audit report to file a written request for a RADV payment error calculation appeal. Under the Final Rule, MAOs choosing only to file a payment error calculation appeal will be unable to file a medical record review determination appeal after the adjudication of the payment error calculation appeal.
Finally, the HHS Secretary will not issue a revised audit report containing a recalculated payment error calculation at each level of appeal, but instead will issue a revised audit report only when an appeal is final. The Final Rule states that a hearing officer’s decision becomes final if the CMS Administrator does not decline to review or does not elect to review within 90 days of receipt of the later of either the MAO’s or CMS’ timely request for review.
3. Changes to Stars reconsideration process
CMS updated provisions at 42 C.F.R. § 422.260 related to appeals of quality bonus payment (“QBP”) determinations. The Final Rule incorporates changes from the proposed rules released in November 2023 and also implements certain changes from proposed rulemaking from December 2022.
CMS clarified that MAOs’ requests for reconsideration are limited to those circumstances where a calculation error or use of incorrect data could impact an individual measure or the overall Star Rating, which could ultimately cause that measure or overall Star Rating to change. CMS also listed data sources that are deemed not reviewable either because they are already validated before Stars submissions or because they involve an impermissible challenge to the validity of an enrollee’s opinion of the plan. These non-reviewable data sources are: HEDIS, CAHPS, HOS, Part C and D Reporting Requirements, PDE, Medicare Plan Finder (MPF) pricing files, and data from the Medicare Beneficiary Database Suite of Systems, the Medicare Advantage Prescription Drug (MARx) system, and other federal data sources.
CMS also changed the standard of review in hearings as part of the reconsideration process. Previously, the clear and convincing evidence standard applied. The Final Rule implements a preponderance of evidence standard whereby the burden is on MAOs to show CMS’s calculations or that the measures and values in question were incorrect. Moreover, the CMS hearing officer’s decision is subject to review and modification by the CMS administrator within 10 business days of issuance, and only becomes final and binding if the CMS Administrator does not review and issue a decision within that timeframe.
The reconsideration process for QBP determinations has often been seen as a futile process given the narrow scope of review and perception that CMS will not make changes. However, the process can be helpful if MAOs have legitimate challenges. Moreover, given the importance of Stars and QBPs, it will be critical for MAOs to undertake all efforts to ensure their Stars scores are accurate. The change to the evidentiary burden will help MAOs as it lowers the standard of proof in the informal hearing process. At the same time, this is a marked change from the current state where the hearing officer’s decision is final and binding upon issuance because it now offers the opportunity for the CMS Administrator to modify decisions without any identifiable basis.
4. Annual health equity analysis of utilization management policies and procedures
The Final Rule introduces policy changes aimed at promoting health equity and addressing concerns about the utilization management practices, such as prior authorization, used by MAOs. It requires MAOs to adjust their Utilization Management (UM) Committee by including at least one member with expertise in health equity. This expertise should be demonstrated through relevant educational degrees, experience in identifying population disparities, and leading organizational policies, programs, or advocacy efforts for health equity. Additionally, the UM Committee is tasked with conducting an annual health equity analysis, using specified metrics, that evaluates the impact of prior authorization on enrollees with social risk factors compared to those without. MAOs are required to publicly share the results of the analysis on their websites in a prominent and easily accessible manner, ensuring transparency and facilitating public access to health equity information without any barriers.
5. Behavior health access/network adequacy
The Final Rule includes the addition of “Outpatient Behavior Health” to the list of facility-specialty providers that MAOs must include in their networks to meet CMS’s network adequacy standards. Outpatient Behavior Health encompasses various providers, including marriage and family therapists, mental health counselors, opioid treatment program providers, addiction medicine physicians, outpatient mental health and substance use treatment facilities, and nurse practitioners (NPs), physician assistants (PAs) and clinical nurse specialists (CNSs), who offer behavior health counseling or therapy services covered by Medicare. MAOs are required to verify annually that the PAs, NPs and CNSs they add to their network to meet the Outpatient Behavior Health facility-specialty requirements have provided services to at least 20 patients within a 12-month period. MAOs must provide reliable data, such as claims data, prescription drug claims data, electronic health records and the like, to verify their providers meet these requirements.
In addition, CMS is adding Outpatient Behavior Health to the list of specialty types receiving a 10% credit toward meeting time and distance standards when the organization includes at least one telehealth provider of that specialty.
CMS encourages MAOs to use the “Evaluate my Network” tool to ensure the organizations are providing all of the required facility-specialty providers.
While most plans have strong networks, this new requirement will likely result in “surge pricing” for behavioral health providers (particularly larger providers with vast networks) in order to ensure adequacy.
6. Right to appeal a termination of coverage for non-hospital provider services
MAOs are required to issue a Notice of Medicare Non-Coverage (NOMNC) to beneficiaries who are current recipients of services at covered skilled nursing, home health, or comprehensive outpatient rehabilitation facilities, when those services are being terminated. Beneficiaries then have a set deadline to fast-track appeal the non-coverage to a quality improvement organization (QIO), and any appeal after the set deadline is designated as untimely.
Previously, MAOs were required to review untimely fast-track appeal requests, whereas members of traditional Medicare would have their untimely fast-track appeal sent directly to a QIO. Under the Final Rule, CMS shifts the duty to review these untimely fast-track appeals from the MAO to the QIO, aligning the fast-track appeal rights of MAO beneficiaries and traditional Medicare enrollees. In addition, the rule eliminates a regulation that stated a beneficiary would forfeit their appeal right once services terminated, further bringing the rights of MAO beneficiaries in line with those of traditional Medicare enrollees.
This will help ease the administrative burden on plans, with CMS indicating that MAOs are anticipated to save $683,910 annually and QIOs are expected to bear that cost.
In-depth 2024-073
