The Centers for Medicare & Medicaid Services (CMS) late Friday released its final rule for the Medicare Advantage (MA) and Part D prescription drug programs. The final rule revises MA and Part D regulations related to marketing and communications and makes changes to quality ratings, medical loss ratio reporting, special requirements during disasters or public emergencies, and reduces out-of-pocket costs for prescription drugs under Part D.

The final rule, which will be published in the Federal Register on May 9, provides MA beneficiaries uninterrupted access to necessary services during disasters and emergencies, like the COVID-19 pandemic, and will reduce out-of-pocket costs for prescription drugs beginning in 2024 thanks to a new requirement that Part D plans pass along the price concessions received from pharmacies at the point of sale.

RELATED: CMS releases 2023 Medicare Advantage Proposed Rule: Aims to tighten marketing of MA plans

CMS said in an announcement that the final rule will help close health disparities by delivering person-centered integrated care that can lead to better health outcomes for enrollees and improve the operational functions of Medicare and Medicaid. The rule also requires all MA special needs plans to annually assess certain social risk factors for their enrollees because identifying social needs is a key step to delivering person-centered care, CMS said.

Here are 10 of the major changes outlined in the rule, most of which were initially proposed in January:

Lowers cost at the pharmacy counter: To lower the out-of-pocket costs of prescription drugs for Plan D beneficiaries, beginning Jan. 1, 2024, CMS will require Part D plans to apply all price concessions they receive from network pharmacies to the negotiated price at the point of sale. CMS will redefine the negotiated price as the baseline, or lowest possible, payment to a pharmacy across all phases of the Part D benefit. In addition to reducing beneficiary out-of-pocket costs, CMS said the policy will improve price transparency and market competition in the Part D program.

Improves marketing and communications oversight: CMS has finalized changes it proposed in January to marketing and communications requirements to ensure Medicare beneficiaries receive accurate and accessible information about Medicare coverage. The changes are meant to strengthen oversight of third-party marketing organizations to detect and prevent the use of confusing or potentially misleading activities to enroll beneficiaries in MA and Part D plans. CMS will reinstate the inclusion of a multi-language insert in all required documents to inform beneficiaries of the availability of interpreter services, will codify enrollee ID card standards, adds a requirement related to a disclaimer for limited access to preferred cost sharing pharmacies, includes plan website instructions on how to appoint a representative, and website posting of enrollment instructions and forms.

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Proves access to care during disasters and emergencies: CMS has revised and clarified timeframes and standards associated with coverage obligations of MA plans during disasters and emergencies. MA plans must comply with special requirements (including policies to cover services provided by non-contracted providers and to waive gatekeeper referral requirements) when there is both a declaration of disaster or emergency (including a public health emergency) and disruption in access to health care in the MA plan’s service area.

Looks at past performance to deny an application for a new contract or service area expansion: CMS has added new 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. Currently, CMS can 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.

Requires proof of network adequacy: MA plans must prove 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. The 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, CMS said it will allow applicants a 10-percentage point credit toward the percentage of beneficiaries residing within published time and distance standards. Additionally, based on comments CMS received after publication of the proposed rule, the agency will 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.

Reinstates MLR reporting requirements: CMS will reinstate medical loss ratio (MLR) reporting that were in effect for contract years 2014–2017. The agency currently requires that MA organizations and Part D sponsors report the percentage of revenue spent on patient care and quality improvement and the amount of any remittance that must be paid to CMS for failure to meet the 85 percent minimum MLR requirement. The final rule requires MA organizations and Part D sponsors to report the underlying cost and revenue information needed to calculate and verify the MLR percentage and remittance amount, if any. In addition, MA organizations must report the amounts they spend on various types of supplemental benefits not available under original Medicare, such as dental, vision, hearing, and transportation.

Makes technical change to Part C and Part D Quality Rating System: The technical change will allow CMS to calculate 2023 Part C Star Ratings for three Healthcare Effectiveness Data and Information Set (HEDIS) measures collected through the Health Outcomes Survey (HOS): Monitoring physical activity, reducing the risk of falling, and improving bladder control. CMS said that without the change, it would have been unable to calculate 2023 Star Ratings for these measures for any MA contract since all contracts qualify for the extreme and uncontrollable circumstances adjustment for COVID-19. CMS will also finalize changes that were established in the COVID-19 interim final rules to the 2021- and 2022-Star Ratings to accommodate the disruption to data collection posed by the COVID-19 pandemic.

Requires enrollee input on D-SNP operations: CMS will require all D-SNPs establish and maintain one or more enrollee advisory committees for each state in which the D-SNP is offered and that D-SNPs consult with advisory committees on various issues, including ways to improve health equity for underserved populations.

Address social determinants of health and special needs plan (SNP) health risk assessments (HRA): CMS wants HRAs to include specific standardized questions on housing stability, food security, and access to transportation, all known to be important contributors to overall health. The agency will require that all SNP HRAs include at least one question from a list of screening instruments specified by CMS on each of these three areas but will not require that all SNPs use the same specific standardized questions. The agency said the final rule will help better identify the risk factors that may inhibit enrollees from accessing care and achieving optimal health outcomes and independence and enable MA SNPs to take these risk factors into account in enrollee care plans.

Simplifies appeals and grievance processes: The final rule applies new appeals and grievance processes to all D-SNPs that enroll the same beneficiaries who receive their Medicaid coverage through an affiliated Medicaid managed care organization (MCO). Beneficiaries will now go through one Medicare-Medicaid appeals process at the plan level, rather than filing separate, potentially duplicative, appeals with both the D-SNP and the Medicaid MCO.

For more information about these changes, including those specific to D-SNPs and dual eligible beneficiaries, click here to see a CMS fact sheet and the unpublished final rule.