CY 2019 Medicare Part C and D policy changes and updates finalized

CMS has issued a Final rule making revisions to the Medicare Advantage (MA) (Part C) and prescription drug benefit (Part D) programs based on its continued experience in the administration of these programs and to implement certain provisions of the Comprehensive Addiction and Recovery Act of 2016 (CARA) (P.L. 114-198) and the 21st Century Cures Act (P.L. 114-255). The major provisions of the Final rule include: (1) the implementation of the CARA provisions governing the establishment of drug management programs, (2) revisions to timing and method of disclosure requirements for MA and Part D plans, and (3) preclusion list requirements for prescribers in Part D and individuals and entities in MA, cost plans, and Programs of All-Inclusive Care for the Elderly (PACE) (Final rule, 83 FR 16440, April 16, 2018).

On November 28, 2017, CMS published the Proposed rule (see Proposed CY 2019 Part C and D changes address opioid misuse and numerous other policy concerns, Health Law Daily, November 17, 2017). While this Final rule finalizes several of the provisions from the Proposed rule, there are a number of provisions from the Proposed rule that CMS intends to address later and a few that it does not intend to finalize. These provisions are discussed in the Final rule.

CARA provisions

CARA includes new authority for Part D plans to establish drug management programs effective on or after January 1, 2019. This Final rule establishes a framework under which Part D plan sponsors may establish a drug management program for beneficiaries at risk for prescription drug abuse or misuse, or “at-risk beneficiaries.” Specifically, under drug management programs, Part D plans will engage in case management of potential at-risk beneficiaries, through contact with their prescribers, when such beneficiary is found to be taking a specific dosage of opioids or obtaining them from multiple prescribers and multiple pharmacies who may not know about each other. Sponsors may then limit at-risk beneficiaries’ access to coverage of controlled substances that CMS determines are “frequently abused drugs” to a selected prescribers or network pharmacies after case management with the prescribers for the safety of the enrollee.

CMS also limits the use of the special enrollment period (SEP) for dually- or other low income subsidy (LIS)-eligible beneficiaries by those LIS-eligible beneficiaries who are identified as at-risk or potentially at-risk for prescription drug abuse under such a drug management program. Finally, these provisions will codify the current Part D Opioid Drug Utilization Review (DUR) Policy and Overutilization Monitoring System (OMS) by integrating this current policy with drug management program provisions.

The purpose of these CARA drug management program provisions is to create a lock-in status for certain at-risk beneficiaries. In addition to the benefits of preventing opioid and benzodiazepine dependency in beneficiaries, CMS estimates, in 2019, a reduction of $19 million in Trust Fund expenditures because of reduced opioid scripts. This $19 million reduction modestly increases to a $20 million reduction in 2023.

Timing and method of disclosure requirements

CMS is finalizing changes to align the MA and Part D regulations in authorizing CMS to set the manner of delivery for mandatory disclosures in both the MA and Part D programs. CMS will use this authority to allow MA plans to meet the disclosure and delivery requirements for certain documents by relying on notice of electronic posting and provision of the documents in hard copy when requested, when previously the documents, such as the Evidence of Coverage (EOC), had to be provided in hard copy. CMS is also changing the timeframe for delivery of the MA and Part D EOC to the first day of the Annual Election Period (AEP), rather than 15 days prior to that date.

Allowing MA and Part D plans to provide the EOC electronically will alleviate plan burden related to printing and mailing and reduce the number of paper documents that enrollees receive from plans. In addition, changing the date by which plans must provide the EOC to enrollees will (1) allow plans more time to finalize the formatting and ensure the accuracy of the information in the EOC, and (2) separate the mailing and receipt of the EOC from the Annual Notice of Change (ANOC), which describes the important changes in a patient’s plan from one year to the next.

CMS estimates that 67 percent of the current 47.8 million beneficiaries will prefer use of the internet versus hard copies. This will result in a savings to the industry of $54.7 million each year, 2019 through 2023, due to a reduction in printing and mailing costs.

Preclusion list requirements for prescribers and providers

The Final rule rescinds the current regulatory requirement that prescribers of Part D drugs and providers of MA services and items must enroll in Medicare in order for the drug, service, or item to be covered. Instead, a Part D plan sponsor will be required to reject, or require its pharmacy benefit manager to reject, a pharmacy claim for a Part D drug if the individual who prescribed the drug is included on the “preclusion list.” Similarly, an MA service or item will not be covered if the provider that furnished the service or item is on the preclusion list.

The preclusion list will consist of certain individuals and entities that are currently revoked from the Medicare program under 42 CFR sec. 424.535 and are under an active reenrollment bar, or have engaged in behavior for which CMS could have revoked the individual or entity to the extent applicable if they had been enrolled in Medicare, and CMS determines that the underlying conduct that led, or would have led, to the revocation is detrimental to the best interests of the Medicare program.

CMS estimates that for 2019, the preclusion list provision will save providers $34.4 million. For 2020 and future years, there will be no savings. The $34.4 million in savings to providers arises because of removal of the requirement of MA providers and suppliers and Part D prescribers to enroll in Medicare as a prerequisite for furnishing health care items and services. Part C providers and suppliers will save $24.1 million in reduced costs while Part D providers will save $10.3 million in reduced costs.

More choices and lower premiums available for MA and PDPs in CY 2018

As calendar year (CY) 2018 approaches, CMS reports that both the Medicare Advantage (MA) and the Part D prescription drug plan (PDP) programs continue to grow, currently providing care and services to more than one-third of Medicare beneficiaries. CMS also reports that the average monthly premium for an MA plan will decrease, enrollment in MA is projected to reach an all-time high, and premiums for a basic PDP will fall for the first time since 2012.

Earlier this year, CMS announced new policies in the 2018 Rate Announcement and Final Call Letter that support flexibility, efficiency, and innovative approaches that are designed to improve quality accessibility and affordability in MA and PDP programs.

MA program data

CMS data provides the following information regarding the MA program for CY 2018:

  • MA enrollment is projected to be an all-time high of 20.4 million beneficiaries, representing a 9-percent (1.7 million) increase from 18.7 million in CY 2017.
  • MA average monthly premiums will decrease by $1.91 to $30.
  • 99 percent of Medicare beneficiaries will have access to at least one MA health plan in their area.
  • More than 85 percent of Medicare beneficiaries will have access to 10 or more MA plans.
  • The average number of MA plan choices per county will increase by two plans—up to approximately 29 plan choices per county.
  • Access to popular supplemental benefits, such as dental, vision, and hearing, continues to grow in MA plans.
  • Approximately 77 percent of MA enrollees in 2017 will have the same or lower premium in 2018 if they continue in the same plan.

PDP program data

CMS projects that the average monthly premium for a basic Medicare PDP in CY 2018 will decrease by $1.20 to an estimated $33.50 per month. CMS also reports that all Medicare beneficiaries will have access to at least one stand-alone Medicare PDP.

Medicare Open Enrollment improvements

CMS is announcing several consumer-friendly improvements so that people with Medicare can make an informed choice between original fee-for-service Medicare and MA plans during open enrollment. These improvements include: (1) updating the “Medicare & You” handbook to better explain coverage options; (2) establishing a help wizard on Medicare.gov that will point to resources to help make informed health care decisions; and (3) establishing a new email communication opportunity to improve the customer service experience through important messages and reminders.

Kusserow on Compliance: HHS Office of Inspector General adopts new Anti-kickback safe harbors

In a Final rule effective January 6, 2017, the HHS Office of Inspector General OIG amended the rules to the Anti-Kickback Statute (AKS) by adding new safe harbors that protect certain payment practices and business arrangements from sanctions under the AKS. The law provides criminal penalties for individuals or entities that knowingly and willfully offer, pay, solicit, or receive remuneration in order to induce or reward the referral of business reimbursable under federal health care programs. This law was so broad that, as Inspector General, I requested Congress to create an administrative alternative. Upon enactment, I was permitted to identify and create safe harbors that would identify practices that would not result in enforcement actions.  The changes created additional safe harbors that enhance flexibility for providers and others to engage in health care business arrangements to improve efficiency and access to quality care while protecting programs and patients from fraud and abuse. They include:

Changes to existing safe harbors for cost-sharing waivers. Changes were made to the definition of the term “remuneration,” allowing the waiver or reduction of certain patient cost-sharing obligations. Previously, there were cost-sharing waiver exceptions that included waivers for some amounts owed for inpatient hospital services, and amounts owed by individuals who qualified for subsidized services or amounts paid to federally qualified health care centers or certain other qualified health care facilities. The new rule expands these existing safe harbors to cover cost-sharing waivers issued to beneficiaries in all federal health care programs, which includs Medicare, Medicaid, the State Children’s Health Insurance Program (SCHIP), TRICARE, the Veterans Health Administration (VHA) program, and the Indian Health Service (IHS) program.

Waivers or reductions by pharmacies. Pharmacies will now be allowed to reduce or waive cost-sharing amounts imposed under a federal health care program if the waivers or reductions are not offered as part of an advertisement or solicitation which could result in abusive steering of patients. Waivers or reductions offered to certain individuals eligible for Medicare Part D subsidies need only meet the no-advertising, no-solicitation requirement to fall within this safe harbor. For waivers or reductions offered to individuals not eligible for subsidies, the pharmacy must meet several additional requirements. It must not routinely waive or reduce cost-sharing amounts, and must only waive the cost-sharing amounts “after determining in good faith that the individual is in financial need or after failing to collect the cost-sharing amounts after making reasonable collection efforts.”  Providers should note that this rule only applies to pharmacies, and thus would not allow a physician to waive cost-sharing for Part B drugs.

Waivers or reductions for emergency ambulance services. Cost-sharing reductions or waivers for emergency ambulance services will now be allowed, but extend only to emergency ambulance services furnished by a state, municipality, or federally recognized Indian tribe. However, they must not take into account insurance or financial status of the beneficiary, nor can the ambulance provider shift costs to a federal health care program.

Free or discounted shuttle service and local transportation. A new safe harbor will allow eligible entities to provide free or discounted local transportation or shuttle services, as long as they meet defined requirements. An eligible entity is any individual or entity, except for individuals or entities (or family members or others acting on their behalf) that primarily supply health care items, such as durable medical equipment suppliers, pharmaceutical companies, and pharmacies. Transportation is divided into two categories: (1) a “shuttle service” provided by an eligible entity and (2)other transportation offered to federal health care program beneficiaries. Eligible entities must meet five standards: (1) have the availability of the free or discounted local transportation services set forth in a policy, applied uniformly and consistently and not determined in a manner related to volume or value of federal health care business; (2) not be air, luxury, or ambulance-level transportation; (3) not market or advertise the services, nor market health care items and services during the course of transportation, or pay drivers on a per-beneficiary-transported basis; (4) only make the transportation available to established patients; and (5) bear the cost of the transportation services and not shift the burden onto federal health care programs, other payers, or individuals. Simply put, hospitals and other eligible entities will be able to provide some forms of transport services for their patients without fear of violating the AKS, so long as they meet the applicable safe harbor requirements laid out above.

Protected remuneration between FQHCs and Medicare Advantage. Another safe harbor was created that will protect any remuneration between a federally qualified health center (FQHC) (or an entity controlled by such a health center) and a Medicare Advantage (MA) organization pursuant to a written agreement required by regulations. The payment to the FQHC must not be less than the level and amount of payment that the MA organization would make to a non-FQHC entity. Provision of free space by the FQHC to the MA organization would not be covered by the safe harbor, because arrangements must be related to MA plan enrollees being treated at the FQHC. Similarly, financial support from the MA to the FQHC for outreach services or infrastructure costs, for example, would not be covered.

Medicare Coverage Gap Discount Program. A new safe harbor was created that supplements the already-existing statutorily-based Medicare Coverage Gap Discount Program, which allows prescription drug manufacturers to enter into an agreement with HHS to provide access to discounts on drugs at the point of sale. “Applicable drugs” furnished to “applicable beneficiaries” under the Medicare Coverage Gap Discount Program will not be considered remuneration. The rule requires manufacturers to be “in compliance with the requirements of the Medicare Coverage Gap Discount Program,” rather than “in full compliance with all requirements” of the program. “A manufacturer that knowingly and willfully provided discounts without complying with the requirements of the Medicare Coverage Gap Discount Program could be subject to sanctions.”

Technical revision of the AKS. There is in the Final rule a technical correction pertaining to referral services, whereby the language was changed inadvertently in 2002 to say “. . . business otherwise generated by either party for the referral service . . .” and is now changed back to the 1999 language, “. . . business otherwise generated by either party for the other party”.

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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Copyright © 2016 Strategic Management Services, LLC. Published with permission.

MA and Part D benefit administration not always straightforward

Although the idea that private insurers can be more efficient than the government in offering health plans may be a matter of opinion, over 17 million Medicare beneficiaries have taken “advantage” of the option by enrolling in Medicare Advantage (MA). At the American Health Lawyers Association (AHLA) Fundamentals of Health Law conference, Thomas Barker, partner at Foley Hoag LLP, noted that MA enrollment has steadily increased over the past 10 years. Medicare Part D coverage is also an important benefit for those taking outpatient medications. Despite beneficiaries’ reliance on these programs, administration of the benefits still has some kinks.

Medicare Advantage

MA plans are available to those entitled to Part A or eligible to enroll in Part B. MA plans are required to offer all original Medicare benefits, but may implement their own cost-sharing and benefit designs as long as they are actuarially equivalent to original Medicare. For example, original Medicare only covers skilled nursing care under Part A if the beneficiary has been in an inpatient hospital for three days prior to nursing facility admission. Most MA plans do not impose this rule.

MA plans are required to implement the same cost sharing for four particular categories: chemotherapy administration, renal dialysis, skilled nursing care, and “other benefits specified by CMS” (of which there are none to date). Congress reasoned that this would provide for predictability in benefit design.

Local and national coverage decisions

Original Medicare may not pay for items and services that are not reasonable and necessary for diagnosis or treatment. CMS issues national coverage decisions on reasonableness and necessity of certain therapies and technologies, which apply to MA plans. If a national coverage decision has not been issued for a certain item or service, local CMS contractors have the power to issue their own decisions. Barker explained that this is when MA plan design starts to get complicated.

If an MA plan is only operating in a regional market, it must apply the local coverage decisions. However, if multiple markets are covered, the MA plan has the option of applying the coverage decision even to enrollees who are outside of the decision’s jurisdiction. In cases where no decision has been issued, nationally or locally, MA plans have some discretion. Although CMS has not clarified its position, Barker interprets the available information to mean that MA enrollees are entitled to the same benefits as original Medicare beneficiaries living in their area. Yet at the same time, CMS seems to give MA plans some discretion to use the medical necessity criteria of other local plans or develop their own evidence-based criteria.

Part D

Medicare Part D is completely offered through private plans, which are extremely competitive (compared to MA plans’ requirement to bid against an established benchmark). Part D operation also differs from MA due to the increased flexibility in benefit design. Although there is a statutorily established design, fewer than 10 percent of Part D enrollees are in such a plan. Almost all plans offer a different coverage design that is actuarially equivalent to the standard benefit. Most commonly, these plans have no deductible and have a three-tiered cost-sharing amount as opposed to coinsurance.

Beneficiaries who choose to enroll in Part D are entitled to “coverage of covered Part D drugs.” Although the definition is basic, some challenges have emerged. The drug must be FDA approved and only dispensed pursuant to a prescription, can be a vaccine and insulin, can be used for a “medically-accepted indication,” and must not be expressly excluded from coverage or covered by Parts A or B. Although Part B covers some drugs, such as those that are physician-administered, CMS contractors can make differing determinations over whether a Part B-covered drug is usually self-administered. This results in some drugs covered under Part B in some jurisdictions and under Part D in others.

The “medically-accepted indication” phrase in the statute has also presented some challenges. Barker noted that this entire issue turns on grammar as much as it does administrative law. After establishing that the drug must be prescribed and FDA approved, it says “and such term includes…any use of a covered Part D drug for a medically accepted indication.” In a relevant lawsuit, a physician prescribed a drug approved as a fertility drug to treat a rare form of ovarian cancer. Although there was compendia support, it would not have met the “medically accepted indication” definition and the Part D plan denied coverage. The court rejected the government’s argument that the phrase “and includes” is definitional, finding that reading the phrase as illustrative was more logical. Therefore, according to the court, a Part D drug does not have to be prescribed for a medically accepted indication in order to be covered.