News & Insights


June 1, 2020

Health Headlines – June 1, 2020

CMS Issues Final Rule for MA and Part D Plans Just Ahead of Plan Bidding Deadline -- On May 22, 2020, CMS issued a final rule for CY 2021 implementing a portion of the Medicare Advantage (MA) and Prescription Drug Benefit (Part D) proposed rule it issued on February 18, 2020 (the Final Rule).  The primary purpose of the Final Rule is to implement certain sections of the Bipartisan Budget Act of 2018 (the BBA of 2018) and The 21st Century Cures Act (the Cures Act) relating to the MA and Part D programs before the contract year 2021 MA plan bids are due, per statute, by the first Monday in June.  The Final Rule also implements a number of other proposals CMS deemed as relevant to MA plan bids and the COVID-19 pandemic, highlighted below.  The Final Rule is expected to be published in the Federal Register on June 2, 2020.  CMS plans to address the remaining proposed provisions through a second final rule issued at a later date.

Implementing the Cures Act

MA Plan Options for ESRD Beneficiaries

The Cures Act expanded enrollment options for individuals with end stage renal disease (ESRD) and required CMS to make associated payment and coverage changes to the MA and original Medicare programs.  Previously, individuals with ESRD were prohibited from enrolling in MA plans, with some limited exceptions.  Effective January 1, 2021, the Final Rule removes this prohibition and updates the payment regulations accordingly. 

Coverage of Costs for Kidney Acquisitions

The Final Rule implements coverage of kidney acquisition costs for MA beneficiaries under Medicare fee-for-service coverage.  The Cures Act excluded coverage under MA plans for organ acquisitions of kidney transplants from the MA benefits and instead required coverage for those costs under the original Medicare fee-for-service program.  CMS has made changes to its payment regulations accordingly and has removed kidney acquisition costs from the MA benchmarks.  These changes will take effect January 1, 2021. 

Implementing the BBA of 2018

Special Supplemental Benefits for the Chronically Ill

Through the Final Rule, CMS has announced it is expanding its special supplemental benefits for the chronically ill (SSBCI).  Previously, CMS limited the chronic conditions an enrollee must have to be eligible under SSBCI to those conditions outlined in the Medicare Managed Care Manual, Chapter 16b.  CMS has acknowledged, however, that there may be other chronic conditions that may meet the statutory definition of a chronic condition but are not included in the Chapter 16b list. Therefore, beginning in contract year 2021, CMS is allowing MA plans to consider any chronic condition not identified on this list if the enrollee meets the following criteria:

  • Has one or more comorbid and medically complex chronic conditions that is life threatening or significantly limits the overall health or function of the enrollee;
  • Has a high risk of hospitalization or other adverse health outcomes; and
  • Requires intensive care coordination.

Phasing out Dual-Eligible Special Needs Plan “Look-alikes”

CMS is also finalizing its proposal to phase out Dual Eligible Special Needs Plan (D-SNP) “look-alikes.”  SNPs are MA plans that are specifically designed to provide targeted care and limit enrollment to individuals with special needs, which are typically individuals in long term care facilities, entitled to medical assistance under Medicaid or individuals with severe or disabling chronic conditions.  D-SNP plans are designed to assist dual-eligible (eligible for both Medicare and Medicaid) individuals in navigating the two programs through a single delivery system.  Look-alike plans, however, have similar levels of dual eligible enrollment as D-SNPs but avoid the federal regulatory and state contracting requirements applicable to D-SNPs.  The BBA of 2018 required CMS to establish additional requirements related to Medicaid integration for D-SNPs.  In light of this requirement, CMS is now phasing out D-SNP look-alikes and will not enter a contract: 

  • Starting for 2022, for a new MA plan – other than a SNP – that projects in its bid that 80 percent or more of the plan’s total enrollment will be entitled to Medicaid; or
  • Starting for 2023, for a renewing MA plan – other than a SNP – that has actual enrollment of 80 percent or more of enrollees who are entitled to Medicaid, unless the MA plan has been active for less than one year and has enrollment of 200 or fewer individuals at the time of such determination.

Other Changes to MA and Part D Plans

Quality Rating System

In the Final Rule, CMS has finalized changes to the MA and Part D Quality Rating System.  Specifically, CMS is increasing the weight of patient experience/complaints and access measures from 2 to 4.  CMS is also finalizing its proposal to directly remove outliers prior to calculating the cut-off points to further increase the predictability and stability of the Star Ratings System but is delaying the application of outlier deletion until the 2022 measurement year which coincides with the 2024 Star Ratings produced in October 2023.

Medical Loss Ratio

CMS finalized amendments to the medical loss ratio (MLR) regulations to allow MA organizations to include in the MLR numerator as “incurred claims” all amounts paid for covered services, including amounts paid to individuals or entities that do not meet the definition of “provider” at 42 C.F.R. § 422.2.  CMS also added a deductible-based adjustment to the MLR calculation for MA medical savings account (MSA) contracts receiving a credibility adjustment. According to CMS, this adjustment removes a potential deterrent to the offering of MSAs by MA organizations that may be concerned about their inability to meet the MLR requirement as a result of random variations in claims experience, the risk of which is greater under health insurance policies with higher deductibles.

Network Adequacy

CMS finalized its proposal to revise network adequacy rules for MA plans by addressing maximum time and distance standards in rural areas, telehealth and certificate of need (CON) laws.  For instance, CMS is reducing the percentage of beneficiaries that must reside within the maximum time and distance standards in non-urban counties from 90 percent to 85 percent in order for an MA plan to comply with network adequacy standards. Also, MA plans will be eligible to receive a 10-percentage point credit towards the percentage of beneficiaries residing within published time and distance standards when they contract with telehealth providers for certain provider specialties. 

Special Election Periods (SEPs) for Exceptional Conditions

SEPs allow an individual to request enrollment in, or disenrollment from, MA and Part D plans outside of open enrollment if certain conditions are met.  In the Final Rule, CMS is codifying SEPs that it had previously implemented through sub-regulatory guidance as exceptional circumstances SEPs. Among the finalized SEPs are the SEP for Government Entity-Declared Disaster or Other Emergency, the SEP for Employer/Union Group Health Plan (EGHP) elections and the SEP for Individuals Who Disenroll in Connection with a CMS Sanction. CMS has also established two additional SEPs for exceptional circumstances: the SEP for Individuals Enrolled in a Plan Placed in Receivership and the SEP for Individuals Enrolled in a Plan that has been identified by CMS as a Consistent Poor Performer.  These rules take effect January 1, 2021. 

The Final Rule is available here.  CMS’s fact sheet is available here

Reporter, Michael L. LaBattaglia, Washington, D.C., +1 202 626 5579,

OIG Releases Its Strategic Plan for Oversight of COVID-19 Response and Recovery – On Tuesday, May 26, 2020, OIG released its Strategic Plan for Oversight of COVID-19 Response and Recovery (the Strategic Plan).  The Strategic Plan addresses the use and disbursement of the resources HHS has made available in response to COVID-19, which may become potential targets of abuse, fraud, waste, or other mismanagement.  The stated mission is to “[p]rovide objective oversight to promote the economy, efficiency, effectiveness, and integrity of HHS programs, as well as the health and welfare of the people they serve.”  The Strategic Plan also provides insights into how OIG intends to identify potential misuse and ensure that the relief funds are used as intended, as well as how it intends to use the lessons learned to promote efficiency after the public health emergency ends.

The Strategic Plan sets forth four goals that drive OIG’s strategic planning and mission execution, which are to: (1) protect people, (2) protect funds, (3) protect infrastructure and (4) promote effectiveness of HHS programs.  The Strategic Plan provides objectives under each of those goals and practical steps OIG plans to take, many of which are focused on audits, evaluations and reviews, and making recommendations to HHS.

Goal 1: Protect People

In furtherance of its goal to protect people, HHS has set forth three objectives: assisting and supporting ongoing COVID-19 response efforts while maintaining independence; fighting fraud and scams; and assessing the impact of HHS programs on the health and safety of beneficiaries and the public.

For the first objective of assisting ongoing COVID-19 response efforts, OIG plans to “[i]ssue guidance on the application of OIG’s administrative fraud enforcement authorities to support providers delivering needed patient care during the public health emergency.” It also will conduct “rapid-cycle reviews of conditions affecting HHS beneficiaries or health care and human services providers to inform and support effective COVID-19 response efforts.”  Finally, OIG plans to deploy law enforcement personnel as needed to protect HHS personnel and resources. 

For the second objective of fighting fraud and scams, OIG plans to investigate suspected fraud in coordination with federal, state, local, and tribal law enforcement partners, prioritizing cases involving patient harm.  The agency will also alert HHS, its beneficiaries, and the public to fraud schemes related to COVID-19, including testing and identity theft scams.

For the third objective of assessing the impacts of HHS programs, OIG plans to conduct audits and evaluations in health care settings as well as of HHS operations.

Goal 2:  Protect Funds

The Strategic Plan’s first objective in its goal to protect HHS funds from fraud, waste, and abuse is to prevent, detect, and remedy such waste or misspending. To that end, OIG will conduct audits and evaluations of HHS’ system for awarding, disbursement, and use of funds. It will also audit fund recipients to assess whether they met use, reporting, and other requirements, recommending recovery of misspent funds where appropriate. OIG further plans to participate in and coordinate closely with the Pandemic Response Accountability Committee (PRAC) to prevent and detect any fraud, waste, abuse, or mismanagement.

The second objective is to fight fraud that diverts COVID-19 funding or exploits emergency flexibilities.  OIG plans to identify and investigate suspected fraud, conduct audits and evaluations to identify program vulnerabilities and recommend safeguards, and alert HHS, enforcement partners and industry stakeholders to potential fraud risks or schemes.

Goal 3:  Protect Infrastructure

The Strategic Plan points out the critical importance of the security of HHS information technology systems, infrastructure, and the personal information and data collected and maintained by various HHS programs. OIG’s objective here is to protect the security and integrity of IT systems and health technology.  OIG plans to audit HHS’ capabilities for detecting IT vulnerabilities and incidents, mitigating threats, and restoring IT services. OIG will also audit whether known cybersecurity vulnerabilities related to networked medical devices, telehealth platforms, and other technologies being used have been mitigated. Finally, OIG will investigate cybersecurity threats to and attacks on HHS systems and provide technical assistance to HHS to support a secure and robust IT infrastructure.

Goal 4:  Promote Effectiveness

OIG plans to highlight lessons learned from relevant historical work and new analyses to make recommendations to support HHS’ effective preparation for, and responses to, future emergencies. The Strategic Plan’s stated objectives here are to support the effectiveness of federal, state, and local COVID-19 response and recovery efforts, as well as to leverage successful practices and lessons learned to strengthen HHS programs for the future.

In supporting the effectiveness of the current response and recovery efforts, OIG plans to conduct audits and evaluations of such efforts and identify opportunities for increasing effectiveness. It will also conduct audits and evaluations to help ensure that recipients of the funding achieve program goals.

Looking further out for leveraging practices and lessons for the future, OIG plans to identify such successful practices and lessons learned now at various levels and make recommendations.  The agency will review pandemic preparedness planning to identify how funding was spent, as well as the utility of preparedness plans and activities. OIG will also review recommendations for improvements. Finally, it plans to assess the impacts of COVID-19 emergency flexibilities to inform decisions after the current situation ends, such as impacts of expanded telehealth in Medicare during the emergency and implications for future policies.

Reporter, Yujin Chun, Los Angeles, ‪+1 213 443 4322,

King & Spalding Business Recovery Task Force

Healthcare organizations now must navigate the challenge of both resuming and continuing work in the context of the ever-changing “new normal.”  To help our healthcare clients address this challenge, the King & Spalding Coronavirus Business Recovery Task Force has created a tool for healthcare organizations to assess and strengthen their recovery response.  Access the COVID-19 Recovery Response Assessment for Healthcare Organizations here.  Access the Coronavirus Business Recovery – Return to Work Hub here.