Kusserow’s Corner: Medicare Advantage and Part D Benefit Programs Proposed Rule Change (CMS-4159-P)

*This article was updated from its original version in order to properly reflect recent changes in the status of the proposed rule.*

CMS issued a 678-page proposed rule designed to strengthen protections, improve health care quality, and reduce costs for Medicare beneficiaries with private Medicare Advantage (MA) plans and Part D prescription drug plans in 2015.  It is intended to bring extensive reforms to Part C and D program, partly through regulations implementing provisions of the Affordable Care Act.  Stated objectives are to “(1) clarify various program participation requirements; (2) make changes to strengthen beneficiary protections; (3) strengthen [its] ability to identify strong applicants for Part C and Part D program participation and remove consistently poor performers; and (4) make other clarifications and technical changes.”

A significant portion of the proposed rule is devoted to addressing areas of fraud and abuse in these programs, and is in response to the fact that there has been insufficient attention to enforcement efforts.  CMS claims addressing these problems that will save Medicare $1.34 billion over five years, if made into a final rule.  Some of the significant proposed changes include:

  1. Providing authority for CMS to impose intermediate sanctions and civil monetary penalties.  Currently only the HHS Office of Inspector General (OIG) has these authorities.
  2. Giving additional audit authority to CMS and the right to “timely” inspect or otherwise evaluate the quality, appropriateness, and timeliness of services performed under the contract
  3. Allowing CMS to request and collect information from pharmacy benefit managers, pharmacies, and other related entities “to better detect fraud,” and increases CMS’ ability to collect identified Medicare overpayments from MA plans and Part D sponsors.
  4. Giving CMS the power to revoke a physician or eligible professional’s Medicare enrollment when he or she has a pattern or practice of prescribing Part D drugs that is “abusive and represents a threat to the health and safety of Medicare beneficiaries, or fails to meet Medicare requirements.”
  5. No longer requiring the Part D plans to include substantially all drugs from two drug classes (antidepressant and immunosuppressant) on all Part D formularies.
  6. Revising the regulatory definition of negotiated prices to require all price concessions from pharmacies to be reflected in negotiated prices.
  7. Requiring physicians and eligible professionals to formally enroll in Medicare in order to write prescriptions for covered Part D drugs including verifying their credentials and disclosing professional discipline and criminal history during the enrollment process, as well as providing authority to CMS to exclude those not enrolled from prescribing Part D-reimbursed drugs.
  8. In order to “provide a consistent bidding framework for all sponsors, allowing them to focus on quality, rather than quantity, in development of their bids,” Prescription Drug Plan Sponsors would not be able to offer more than two Part D plans in the same service area.
  9. Implementing the ACA requirement that MA plans and Part D sponsors report and return identified Medicare overpayments.
  10. Expanding rewards and incentive programs that do not discriminate against any MA beneficiaries that focus on encouraging participation in activities that promote improved health, efficient use of health care resources, and preventing injuries and illness.
  11. Stopping mail-order pharmacies from charging copayments at a lower rate than retail pharmacies by requiring one-month mail order-filled supplies.
  12. Requiring U.S. citizenship and lawful presence eligibility for Part C and Part D enrollment.

CMS seeks public comments to the proposed program changes, 60 days after the date of display of the proposed rule in the Federal Register.  CMS will consider these comments in developing the final rule, which will generally be effective for Contract Year 2015 operations.

In response to criticims of the proposal on March 10, 2014, CMS Administrator Marilyn Tavenner sent a letter to Congress, announcing that not all the proposed changes would move forward. In particular the letter stated:

The proposed rule included many important provisions related to the Medicare Part C and D prescription drug program.  During the rule’s comment period, we received numerous concerns about some elements of the proposal from members of Congress and stakeholders.  In particular, we heard concerns about the proposals to lift the protected class definition on three drug classes, to set standards on Medicare Part D plans’ requirements to participate in preferred pharmacy networks, to reduce the number of Part D plans a sponsor may offer, and clarifications to the non-interference provisions.  Given the complexities of these issues and stakeholder input, we do not plan to finalize these proposals at this time.  We will engage in further stakeholder input before advancing some or all of the changes in these areas in future years.  That said, we plan to finalize proposals related to consumer protections (e.g., ensuring access to care during natural disasters), anti-fraud provisions that have bipartisan support (e.g., strengthening standards for prescribers of prescription drugs), and transparency (e.g., broadening the release of privacy-protected Part D data) after taking into consideration the comments received during the public comment period. (Emphasis added.)

Richard P. Kusserow served as DHHS Inspector General for 11 years. He currently is CEO of Strategic Management Services, LLC (SM), a firm that has assisted more than 3,000 organizations and entities with compliance related matters. The SM sister company, CRC, provides a wide range of compliance tools including sanction-screening.

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