Marketing and communications requirements
CMS proposes three measures related to the marketing practices of third-party marketing organizations (TPMOs). First, it proposes a broad definition of TPMOs as organizations, including first tier, downstream, or related entity (FDRs) that are compensated to perform lead generation, marketing, sales, and enrollment-related functions as a part of the chain of enrollment. Second, the rule would require TPMOs to use a disclaimer and disclose to beneficiaries that their contact information will be provided to an agent or broker. Third, it would require plans that do business with TPMOs, whether directly or through an FDR, to ensure the TPMO adheres to any requirements that apply to the plan or to the TPMO, including the disclaimer and transparency requirements addressed above. These proposed rules are intended to address CMS’s concern with the increased and potentially misleading marketing practices of TPMOs, which have purportedly caused a recent spike in consumer complaints.
In addition, the proposed rule would require MA and Part D plans to create a multi-language insert that would inform the reader, in the top 15 languages used in the United States, that interpreter services are available for free. The insert would need to be included in any CMS-required material under 42 C.F.R. sections 422.2267(e) and 423.2267(e) (evidence of coverage, summary of benefits, etc.).
Maximum out-of-pocket limits
CMS proposes that beginning in plan year 2023, MOOP limits for MA plans would be calculated based on the accrual of all cost-sharing in the plan benefit, regardless of whether the payment comes from the member, Medicaid, secondary insurance, or other unpaid amounts due to state payment limits. Currently, MA plans have the option to count only the amounts a beneficiary is responsible for paying toward MOOP limits.
Network adequacy standards
The proposed rule would require MA plans applying for new and expanded service areas to demonstrate that they meet network adequacy standards (codified at 42 C.F.R. section 422.116) as part of their application. CMS would deny any application where the applicant cannot demonstrate network adequacy. Current rules require MA applicants to attest that their network is adequate, but applications are not denied based on network adequacy.
However, since applications are due nearly a year ahead of contracts, the proposed rule provides leeway for applicants in new or expanding service areas. Specifically, these applicants would have a 10-percentage point credit toward the percentage of beneficiaries residing within the published time and distance standards. This credit would not apply once the plan is operational.
Negotiated prices of Part D drugs
The proposed rule would change the definition of “negotiated prices” for Part D pharmacy drugs. Negotiated prices are reported to CMS at the point of sale and are used to calculate beneficiary cost sharing, but they can be higher than the pharmacy’s ultimate payment due to contractual post-sale reductions. The new definition would be the lowest amount a pharmacy could be reimbursed for the drug by the Part D plan or intermediary. Put differently, this would be the amount the pharmacy would receive including any potential negative adjustments under the contract (such as performance-based price concessions) and excluding potential additional payments (such as incentive fees).
To implement this change, Part D plans and pharmacy benefit managers would need to update their claim processing systems with revised drug pricing tables for contracted pharmacies that reflect the pharmacy’s lowest possible reimbursement. This requirement would take effect January 1, 2023, such that Part D applicants would need to account for these changes in their bids for 2023 contracts.
Other proposed revisions
The proposed rule also contemplates the following:
- Requiring MA organizations that offer dual eligible special needs plans (D-SNPs) to establish an enrollee advisory committee in each operating state to solicit direct input on D-SNP enrollee experiences
- Requiring MA special needs plans (SNPs) to include new, standardized questions on housing stability, food security, and access to transportation as part of their health risk assessments
- Requiring – beginning plan year 2025 – that fully integrated, dual eligible special needs plans (FIDE SNPs) have exclusively aligned enrollment and have a capitated contract with the state that covers certain services at the full Medicaid benefit
- Requiring – beginning plan year 2025 – that highly integrated dual eligible special needs plans (HIDE SNPs) also have a capitated contract with the state that covers certain services at the full Medicaid benefit
- Allowing CMS to consider an MA plan applicant’s record of Star Ratings, bankruptcy issues, and compliance actions, in addition to the current consideration of net worth and history of sanctions, in determinations regarding new or expanded MA contracts
- Requiring submission of additional information in medical loss ratio reporting such as incurred claims, total revenue, expenditures on quality-improving activities, non-claims costs, taxes, and regulatory fees
- Proposing to define the term “price concession” – which has not yet been defined in statutes or regulations – to broadly include all forms of discounts and direct or indirect subsidies or rebates that serve to reduce the costs incurred under Part D plans by Part D sponsors
Comments on the proposed rule are due by March 7, 2022. Please contact the author with any questions.
Client Alert 2022-013
