The Centers For Medicare & Medicaid Services Proposes Changes To The Medicare Advantage And Medicare Part D Programs

Introduction

On December 27, 2022, the Centers for Medicare & Medicaid Services ("CMS") released proposed changes and clarifications concerning the Medicare Advantage ("MA") and the Medicare Prescription Drug ("Part D") programs through a Notice of Proposed Rulemaking (the "Proposed Rule"). The Proposed Rule focuses on changes designed to improve beneficiary transparency around prior authorization, offer additional formulary flexibility, increase health equity, and clarify CMS's position on when an overpayment is "identified" by an MA Organization ("MAOs") for purposes of triggering the False Claims Act's ("FCA") "60 day rule."

In particular, the Proposed Rule includes a new requirement that prior authorization approvals by MAOs remain valid for the duration of a beneficiary's course of treatment; introduction of a health equity index ("HEI") reward for Star Rating calculations, which includes contract performance monitoring for enrollees with certain social risk factors, as well as additional Star Rating changes; imposition of new and enhanced marketing requirements for Medicare and Part D to prevent misleading advertising; codification of CMS's processes for review and approval of negative formulary changes by Part D sponsors; and the agency's adoption of UnitedHealthcare's position on MAO FCA liability amidst developing case law.¹

This Alert summarizes the above key changes in the Proposed Rule and discusses potential implications and considerations for stakeholders.

Summary of Key Changes to Proposed Rule

• The Proposed Rule would clarify coverage criteria for basic benefits, conditions of MAO use of prior authorization, and would impose additional utilization management requirements including establishment of a utilization management committee ("UM Committee"). Under current MA rules, MAOs that offer coordinated care plans are required to ensure continuity of care and integration of services with their contracted provider networks.² In furtherance of ensuring continuous care and as a response to stakeholder comments that the prior authorization process may restrict access to care and limit options for ongoing treatment, the Proposed Rule would require that an MAO's prior authorization approval remain valid for the duration of the approved course of treatment and that an MAO provide a minimum 90-day transition period when an enrollee who is currently undergoing treatment switches to a new MA coordinated care plan. Except in cases of emergency, urgently needed, and stabilization services, current regulations require that all services covered by MA coordinated care plans require prior authorization.³ The Proposed Rule would permit a coordinated care plan to impose prior authorization restrictions only for purposes of confirming the presence of diagnoses or other medical criteria and ensuring that a service or benefit is medically necessary or clinically appropriate based on standards specified in ' 422.101(c)(1).⁴ Further, during an enrollee's initial 90 days with a new MA coordinated care plan or when an enrollee is new to Medicare, the MA coordinated care plan would not be permitted to subject any active course of treatment to additional prior authorization requirements, even if a service would be furnished by an out-of-network provider,⁵ so that treatment is not interrupted. Note that, under the rule proposed last month by CMS related to interoperability and patient access ("Interoperability and Patient Access Proposed Rule"), impacted MAOs would be required to send prior authorization decisions within 72 hours for expedited requests and within seven calendar days for standard requests⁶. Additionally, under the Interoperability and Patient Access Proposed Rule, CMS proposed new electronic prior authorization measures to streamline review and approvals, and the creation of policies to make the MA prior authorization process more transparent and efficient.⁷ These changes come in response to feedback from stakeholders and findings from an Office of the Inspector General ("OIG") report, which identified certain strict MAO prior authorization practices as barriers to care (the "OIG Report").⁸ The Proposed Rule would further codify CMS standards restricting use of MAOs' internal coverage criteria to limit care. CMS maintains a long-standing policy requiring that MAOs make medical necessity determinations based on internal policies, which include coverage rules⁹ that are no more restrictive than traditional Medicare's¹⁰ national coverage determinations ("NCDs")¹¹ and local coverage determinations ("LCDs")¹² and are approved by an MAO's medical director.¹³ The OIG Report was particularly critical of MAOs imposing prior authorization requirements that were more restrictive than those under traditional Medicare, noting that MAOs imposed additional burdens on beneficiaries seeking care through evidence-based clinical criteria that, while non-existent in traditional Medicare, do not expressly contradict Medicare coverage rules.¹⁴ The OIG Report highlighted the ambiguity between "more restrictive" requirements and requirements that are not "contradictory" to Medicare coverage rules. The Proposed Rule would codify the requirement that MAOs make medical necessity determinations based on express coverage and benefit designs approved by HHS, and would clarify that an MAO must adhere to all traditional Medicare coverage and benefit guidelines (i.e., those established in NCDs, LCDs, and general coverage and benefit conditions under Medicare rules) Under the Proposed Rule, an MAO may create its own internal access criteria (such as prior authorization requirements) that do not contravene the traditional Medicare coverage criteria, but these access criteria must be transparent and informed by current evidence in widely used treatment guidelines or clinical literature. The Proposed Rule also would impose greater transparency around internal MAO medical necessity determinations Specifically, under the Proposed Rule, MAOs would be required to provide a publicly accessible summary to CMS, enrollees, and providers, and a list of sources of evidence that they considered when developing internal coverage criteria related to medical necessity determinations, as well as their rationale for the coverage criteria. CMS reasons that this proposed change would protect beneficiaries by ensuring that coverage criteria are supported by current and widely used treatment guidelines and ensuring that MAOs are developing criteria that are consistent with traditional Medicare requirements. A similar requirement is proposed under the Interoperability and Patient Access Proposed Rule, which would require impacted payors to post certain prior authorization metrics publicly on their website or via a publicly accessible hyperlink on an annual basis.¹⁵ Finally, the Proposed Rule would impose additional obligations upon utilization management ("UM") in order to promote access to care Specifically, the Proposed Rule specifies that MAOs would have to establish a UM Committee that works to ensure that the prior authorization policies are consistent with current Medicare NCDs and LCDs, guidance, statutes, and regulations, and are updated as needed. The Proposed Rule would require the UM Committee to annually review all medical services that require prior authorization and other utilization management policies, and document its findings. The Proposed Rule would establish specific composition and qualification standards for the UM Committee and implement standards related to Committee members' disclosed financial interests and conflicts of interest. The UM Committee would be responsible for developing, revising and updating the MA plan's utilization management policies on an as-needed basis, and documenting the reasons underlying its UM policy decisions.

• CMS seeks to provide greater flexibility around certain midyear formulary changes for Part D sponsors. Currently Part D sponsors are allowed to immediately remove from its formulary¹⁶ a brand name drug and substitute its newly released generic equivalent. When this immediate substitution policy was first adopted, it did not apply to biological products Now that there is at least one interchangeable biologic product on the market, CMS proposes allowing Part D plan sponsors greater flexibility to make certain immediate substitutions in the formulary, such as for interchangeable biologic products, when immediate substitution would...