Health Headlines – May 9, 2022

CMS Issues Final Rule for Medicare Advantage and Part D Plans – On April 29, 2022, CMS issued its final rule for Medicare Advantage (MA) and Part D plans with updates including reduced out-of-pocket costs for prescription drugs and improved consumer protections. CMS published the final rule in the Federal Register today.  The key highlights of the final rule are summarized below. 

• Lower Out-of-Pocket Prescription Drug Costs. The final rule requires Part D plans to pass on price concessions they receive from network pharmacies to beneficiaries at the point of sale beginning in 2024. This policy aims to reduce beneficiary out-of-pocket costs and improve price transparency and market competition in the Part D program.

• Marketing and Communications Oversight. Notably, the final rule adds a broad definition of third-party marketing organization (TPMO), requires that TPMOs use a disclaimer with consumers in certain instances, imposes requirements be in contracts with TPMOs, and requires MA and Part D plans to impose additional requirements on TPMOs.  The final rule also includes changes to marketing and communications requirements to ensure Medicare beneficiaries receive accurate and accessible information about coverage. These changes include reinstating multi-language inserts in all required documents informing beneficiaries of the availability of interpreter services, codifying enrollee ID card standards, disclaimer requirements for limited access to preferred cost sharing pharmacies, and plan website instructions on enrollment and appointing a representative.  

• Uninterrupted Access to Care During Disasters and Emergencies. CMS’s final rule clarifies policies to provide MA plan beneficiaries with uninterrupted access to services during disasters and emergencies. These policies require MA plans to cover services provided by non-contracted providers and waive gatekeeper referral requirements when there is a declaration of disaster or emergency and disruption in access to health care in the plan’s service area.

• Updated Network Adequacy Standards. The final rule requires MA applicants to demonstrate they have a sufficient network of contracted providers to care for beneficiaries before CMS will approve an application for a new or expanded contract. This updated policy aims to strengthen CMS’s oversight of an organization’s ability to provide an adequate network of providers to deliver care to MA enrollees.

• Additional MA and Part D Application Standards. CMS included additional standards for evaluating past performance in an MA and Part D organization’s application for a new contract or service area expansion of an existing contract. The final rule allows CMS to deny applications based on Star Ratings of 2.5 or lower, bankruptcy or a filing of bankruptcy, and exceeding designated thresholds for compliance actions.

• Reinstatement of Medical Loss Ratio Reporting. CMS is reinstating medical loss ratio (MLR) reporting requirements and expanding reporting requirements for MA supplemental benefits. This requires MA and Part D plans to report the underlying cost and revenue information needed to calculate and verify the MLR percentage and remittance amount, if any. Also, plans will need to report the amounts they spend on various types of supplemental benefits not available under original Medicare.

• Changes to Quality Rating System. The final rule provides changes to enable CMS to calculate 2023 Part C Star Ratings for the three Healthcare Effectiveness Data and Information Set (HEDIS) measures collected through the Health Outcomes Survey (HOS). It also contains a series of changes that were established in the March 31, 2020 COVID-19 interim final rule and the September 2, 2020 COVID-19 interim final rule to the 2021 and 2022 Star Ratings to accommodate the disruption to data collection posed by the COVID-19 pandemic.

• Simplified Enrollee Materials. The final rule codifies a mechanism through which states can require dual eligible special needs plans to use integrated materials that make it easier for dually eligible individuals to understand the full scope of their Medicare and Medicaid benefits. This update is a result of input from dually eligible individuals and aims to simplify complex coverage information to help enrollees better understand their coverage.

• Assessments of Social Determinants of Health. The final rule requires all MA special needs plans to annually assess certain social risk factors for their enrollees. To help better identify the risk factors that may impact the ability for enrollees to access care and achieve optimal health outcomes, the final rule requires that all SNP HRAs include at least one question from a list of screening instruments specified by CMS on housing stability, food security, and access to transportation.

• Updated Maximum Out-of-Pocket Limits. The final rule closes a loophole for dually eligible MA enrollees who have high medical costs that exceed the maximum out-of-pocket limit established by the MA plan.  This loophole had resulted in lower payment to providers serving dually eligible MA enrollees than providers serving non-dually eligible MA enrollees. 

A CMS fact sheet on the final rule can be found here and the full text of the final rule can be found here.
Reporter, Jasmine Becerra, Atlanta, +1 404 572 3537, jbecerra@kslaw.com.

OIG Issues Favorable Advisory Opinion Regarding Non-Profit Efforts to Provide Financial Assistance and Free Items to Individuals with Disease  -- On May 2, 2022, OIG posted Advisory Opinion 22-10, regarding a proposal to provide financial assistance and free items to individuals with a particular disease. The Requestor, a non-profit organization dedicated to providing resources, services, and support to individuals with a particular disease, proposed to provide financial assistance for certain past MRI tests and to distribute cooling and mobility items to individuals with the disease. OIG determined that it would not impose administrative sanctions in connection with the Anti-Kickback Statute (AKS) or the Beneficiary Inducements Civil Monetary Penalty (CMP) provision.

The Proposed Arrangements

The proposed arrangements would only apply to individuals with the particular disease state that the non-profit serves. OIG previously opined favorably on the Requestor’s proposal to assist low-income individuals with obtaining future MRIs. This request proposed to expand the program described in the previous request to provide financial support (up to a specified monetary cap) to individuals who received MRIs in the past six months.
Requestor also sought approval for a program (Distribution Program or Program) to distribute free cooling and mobility items to low-income individuals diagnosed with the disease state, such as cooling vests or accessories (a Cooling Item), and equipment designed to improve safety, mobility, activities of daily living, and wellness (a Mobility Item).  Each individual may only receive one Cooling Item and one Mobility Item in a specified time frame. Requestors pay suppliers fair market value to deliver the Cooling and Mobility Items directly to the individual at no cost to the individual. Some of the Cooling and Mobility Items may be reimbursable by a Federal health care program, but the Requestor certified that it is not a provider or supplier and does not bill, directly or indirectly, any payor, including Federal health care programs. The Requestor’s Distribution Program is funded by donations from corporations, individuals and foundations (Donors), including some Donors that manufacture, supply, or furnish items and provide services reimbursable by a Federal health care program (Suppliers).

The MRI Arrangement

OIG advised that both proposals would constitute prohibited remuneration, but OIG would not impose administrative sanctions in connection with the AKS or the Beneficiary Inducements CMP provision. OIG determined that the proposal to extend the already-approved MRI program to cover past MRIs, as opposed to only future MRIs, did not change the risk analysis conducted in Advisory Opinion 15-14. OIG concluded that the Proposed Modification presents a minimal risk of fraud and abuse under the AKS, and it would not impose sanctions under the Beneficiary Inducements CMP.

The Distribution Program

OIG determined that the Distribution Program potentially would generate remuneration in two streams: (1) Donors’ contributions to Requestor; and (2) Requestors’ use of donations to furnish free items to qualifying individuals. Both streams of remuneration could induce Requestor to recommend, or for eligible individuals to self-refer to, items or services manufactured, distributed, supplied, or furnished by a Donor, potentially implicating the AKS. However, OIG found several safeguards in the arrangement that supported its decision not to impose administrative sanctions under the AKS, including that:

• The Program is unlikely to result in increased costs to the federal healthcare programs or beneficiaries because the Cooling and Mobility items are not billed to any federal healthcare program. The Requestor cannot bill any payor and does not bill any qualifying individual.

• The Program is unlikely to steer or influence individuals to self-refer to a Supplier in the future for other federally reimbursable items or services manufactured, distributed, or supplied by the Supplier, because nothing would require individuals to order such items or services from a clinical perspective.

• The Program is sufficiently independent of the donors’ financial interests. Requestor also does not refer individuals to, recommend, or arrange for the use of any particular practitioner, provider, insurance plan, manufacturer, or supplier that is a Donor; or any item or service manufactured, distributed, supplied, or furnished by a Donor.

• Eligibility determinations under the program are based on objective, uniform criteria without regard to the identify of an individual’s health care provider, practitioner, supplier, prescribed drugs, insurance plan, or referring party, if any.

OIG also concluded that, with respect to the Beneficiary Inducements CMP, Donors’ contributions to the Requestor, and the Requestors’ use of the contributions to furnish items free of charge, could influence individuals to select an item or service for which payment may be made in whole or in part by Medicare or a State health care program. However, for the reasons stated above, OIG concluded that it would exercise its discretion and not impose sanctions under the Beneficiary Inducements CMP.

The Advisory Opinion may not be relied upon by anyone other than the Requestor.  A copy of Advisory Opinion 22-10 is available here.

Reporter, Alana Broe, Atlanta, +1 404 572 2720, abroe@kslaw.com.