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Inspection of Public Comments: All comments received before the close of the comment period are available for viewing by the public, including any personally identifiable or confidential business information that is included in a comment. We post all comments received before the close of the comment period on the following website as soon as possible after they have been received: http://www.regulations.gov. Follow the search instructions on that website to view public comments. CMS will not post on Regulations.gov public comments that make threats to individuals or institutions or suggest that the commenter will take actions to harm an individual. CMS continues to encourage individuals not to submit duplicative comments. We will post acceptable comments from multiple unique commenters even if the content is identical or nearly identical to other comments.
Plain Language Summary: In accordance with 5 U.S.C. 553(b)(4), a plain language summary of this proposed rule may be found at https://www.regulations.gov/.
Deregulation Request for Information (RFI): On January 31, 2025, President Trump issued Executive Order (E.O.) 14192 “Unleashing Prosperity Through Deregulation,” which states the Administration policy to significantly reduce the private expenditures required to comply with Federal regulations to secure America’s economic prosperity and national security and the highest possible quality of life for each citizen. We would like public input on approaches and opportunities to streamline regulations and reduce administrative burdens on providers, suppliers, beneficiaries, and other interested parties participating in the Medicare program. We have made available an RFI at https://www.cms.gov/medicare-regulatory-relief-rfi. Please submit all comments in response to this request for information through the provided weblink. Please note, this is an RFI only. In accordance with the implementing regulations of the Paperwork Reduction Act (PRA), specifically 5 CFR 1320.3(h)(4), this general solicitation is exempt from the PRA. Facts or opinions submitted in response to general solicitations of comments from the public, published in the Federal Register or other publications, regardless of the form or format thereof, provided that no person is required to supply specific information pertaining to the commenter, other than that necessary for self-identification, as a condition of the agency’s full consideration, are not generally considered information collections and therefore not subject to the PRA.
I. Executive Summary
A. Purpose
The primary purpose of this proposed rule is to amend the regulations for the Medicare Advantage (Part C) program, Medicare Prescription Drug Benefit (Part D) program, and Medicare cost plan program. This proposed rule includes a number of changes that would improve these programs for contract year 2027 as well as codify existing sub-regulatory guidance.
We note that, as with previous rules, the new marketing and communications policies in this rule are proposed to be applicable for all contract year 2027 marketing and communications, beginning October 1, 2026.
B. Summary of the Key Provisions
1. Medicare Part D Redesign
This proposal would implement the changes made to the Part D benefit design and the payment obligations of enrollees, Part D plan sponsors, manufacturers, and CMS by section 11201 of the Inflation Reduction Act of 2022 (IRA) (Pub. L. 117-169).
We are proposing to codify the statutory changes to the phases of the Part D benefit made by the IRA related to the deductible, initial coverage limit, the coverage gap, the annual out-of-pocket threshold, and alternative prescription drug coverage options. In alignment with these changes to the Part D benefit, we are also proposing to codify technical and conforming changes to our specialty tier regulations. This proposal would codify additional structural and operational statutory changes to the Part D benefit design, including making changes to the types of payments that count as True Out-Of-Pocket costs (TrOOP), establishing a policy for how an enrollee’s costs for drugs not subject to the Part D defined standard deductible count towards becoming eligible for manufacturer discounts under the Medicare Part D Manufacturer Discount Program (Manufacturer Discount Program), making updates to the methodology for reinsurance payments from us to Part D sponsors, and implementing the Selected Drug Subsidy, among others.
2. Coverage Gap Discount Program
We propose to codify the sunsetting of the Coverage Gap Discount Program and termination of all Coverage Gap Discount Program agreements as of January 1, 2025, in alignment with subsection (h) of section 1860D-14A of the Social Security Act (the Act), as added by section 11201 of the IRA. Specifically, we propose to revise § 423.2300 by adding paragraph (b) to establish applicability dates for the Coverage Gap Discount Program, revise § 423.2345 by adding paragraph (f) to terminate all Coverage Gap Discount Program agreements, as well as make conforming changes for clarity.
3. Manufacturer Discount Program
We propose regulatory changes to codify the Manufacturer Discount Program, established in section 1860D-14C of the Act, as added by section 11201 of the IRA. Under the Manufacturer Discount Program, which replaces the Coverage Gap Discount Program and began on January 1, 2025, manufacturers that enter into a Manufacturer Discount Program agreement are required to provide discounts on applicable drugs in both the initial and catastrophic coverage phases of the Part D benefit. Specifically, we propose to add new subpart AA to part 423 to codify the Manufacturer Discount Program requirements and make several conforming changes throughout part 423 to reflect the new program.
4. Updates to Star Ratings
We have continued to identify enhancements to the Star Ratings program over time to increase the health and wellbeing of enrollees. In this proposed rule, we are proposing changes to simplify and refocus the areas included in the Star Ratings, including changes to the measure set. We also propose to not move forward with the implementation of the Health Equity Index (also called Excellent Health Outcomes for All) reward at §§ 422.166(f)(3) and 423.186(f)(3) and to continue to include the historical reward factor in the Star Ratings methodology at §§ 422.166(f)(1) and 423.186(f)(1). We also solicit comments on ways to further simplify and modify the Star Ratings program to further drive improved quality of care and reduce regulatory burden.
5. Request for Information on Dually Eligible Individual Enrollment Growth in C-SNPs and I-SNPs
Chronic condition special needs plans (C-SNPs) and the number of dually eligible individuals enrolled in these plans have grown significantly between 2021 and 2025. Dually eligible enrollment in institutional special needs plans (I-SNPs) has remained more stable. While C-SNPs and I-SNPs can offer benefits specific to chronic disease and institutional level of care, respectively, they do not integrate Medicare and Medicaid benefits and may not be the best approach for meeting the needs of dually eligible individuals. The growth in C-SNP enrollment could be an intentional approach by MA organizations to circumvent Federal and State requirements for dual eligible special needs plans (D-SNPs), such as States determining which D-SNPs will be offered in a State through their State Medicaid agency contract authority and general coordination and integration requirements. This proposed rule includes a request for information (RFI) to share information with interested parties on these trends and solicit feedback on them as well as on potential policy solutions for future consideration.
6. Request for Information on Future Directions in Medicare Advantage (Risk Adjustment and Quality Bonus Payments)
This RFI will serve as a formal mechanism to solicit comprehensive public input from interested parties, including MA organizations, beneficiary advocates, healthcare providers, as well as technology and industry experts, regarding the future direction of the MA program. The goal of this RFI is to solicit comment on modernizing and improving the MA program that could be implemented through either programmatic changes or through a CMS Innovation Center (CMMI) model. This public comment process will enable us to gather critical feedback on risk adjustment enhancements and quality bonus payment changes. Through this RFI, we are working to ensure any resulting changes would effectively address interested parties’ concerns while achieving objectives of data transparency for beneficiaries to facilitate optimal plan selection, improved quality, enhanced competition, taxpayer savings, and minimizing fraud, waste, and abuse in the MA program.
C. Summary of Costs and Benefits
D. Supplemental Requests for Information
We are requesting comments on several specific areas beyond the various comment opportunities already presented throughout the proposed rule as part of our commitment to reducing regulatory burden while strengthening program integrity. First, we are considering ways to modernize our approach to marketing oversight and agent/broker regulation in the Medicare program while ensuring beneficiaries continue to receive accurate information about plan choices. This includes, but is not limited to, all of the following:
- Modifying the current definition of third-party marketing organization (TPMO) under §§ 422.2260 and 423.2260 to delineate the roles of and requirements applicable to the different kinds of TPMOs.
- Modifying the 5 percent translation requirement found in §§ 422.2267 and 423.2267.
- Removing the requirement for our approval of plan use of the Medicare Card image found in §§ 422.2262(a)(1)(xix) and 423.2262(a)(1)(xviii).
- Eliminating the Outbound Enrollment Verification found in §§ 422.2272(b) and 423.2272(b).
- Modifying testimonial requirements found under §§ 422.2262(b) and 423.2262(b).
- Eliminating mailing statement requirements found under §§ 422.2267(e)(36) and 422.2267(e)(37).
We are also looking specifically at regulatory changes that will assist the agency in taking appropriate action against TPMOs, including agents and brokers who fail to adhere to our requirements. Our goal is to address non-compliance, holding MA plans and Part D sponsors accountable for those TPMOs who provide inaccurate, misleading, and confusing information, or act in a manner contrary to our requirements. We have considered options such as further segmentation of the definition for TPMOs found under §§ 422.2260 and 423.2260 to account for size, scope, and role of various interested parties; however, we recognize the need for industry input before implementing any change. We, therefore, solicit comments on how to hold “bad actors” accountable, while not burdening those TPMOs and plans that adhere to our requirements. We also solicit comments on how to properly align incentives in the agent or broker space, how to identify and address when agents and brokers perform their jobs in good faith but does not adhere to requirements that apply to the MA plan. For example, we welcome comment on whether updates to the training and testing requirements are needed or new ways CMS or MA organizations and Part D sponsors can improve how beneficiaries interact with agents or brokers. We are also soliciting comments on how best to monitor and assess the actions of MA organizations, Part D sponsors, and their downstream entities such as TPMOs, using data driven strategies. We are interested in finding ways to better utilize data—whether it is CMS, plan, first tier, downstream or related entity (FDR), or TPMO data—to review and monitor the MA and Part D market, and to assist us in addressing MA organization and PDP sponsor compliance with our requirements. Likewise, the agency is also seeking interested parties feedback regarding how technology can be leveraged, including on the use of artificial intelligence, to enhance the decision support tools used by beneficiaries and their caregivers.
In addition to issues regarding marketing oversight and agent/broker regulation and consistent with the Administration’s deregulation priorities, we are seeking comment on current reporting processes and data collections to identify specific areas where requirements can be simplified, consolidated, or eliminated while maintaining program integrity and beneficiary protections in the following areas:
- Network adequacy.
- Medical loss ratio (MLR) reporting.
- Benefit, including supplemental benefit, usage and utilization data reporting.
- Requirements related to the SNP model of care (MOC).
We are interested in ideas for streamlining data collection processes for the areas listed previously, including automated data sharing to reduce manual reporting and ideas related to alignment with existing reporting mechanisms. We are also interested in feedback regarding which data elements are the most burdensome to collect and report, as we seek to balance the level of detail required to maintain proper program oversight while promoting efficiency.
Regarding network adequacy, we seek comments on how to simplify the provider and facility network review process overall, including the submission process, the exception request process, and the timing and frequency of the reviews. An example of a way that we could simplify the exception request process is to create a separate pattern of care exception under § 422.116(f)(1), that could be used where the pattern of care in the area is unique and the organization believes their contracted network is consistent with or better than the Original Medicare pattern of care. An organization could use this exception in lieu of demonstrating the current requirements under § 422.116(f)(1)(i), that is: (A) Certain providers or facilities are not available for the MA plan to meet the network adequacy criteria as shown in the Provider Supply file for the year for a given county and specialty type ; and (B) the MA plan has contracted with other providers and facilities that may be located beyond the limits in the time and distance criteria, but are currently available and accessible to most enrollees, consistent with the local pattern of care.
We welcome comments on these topics.
E. Conclusion
Finally, we are clarifying and emphasizing our intent that if any provision of this rule, once finalized, is held to be invalid or unenforceable by its terms, or as applied to any person or circumstance, or stayed pending further agency action, it shall be severable from this rule and not affect the remainder thereof or the application of the provision to other persons not similarly situated or to other, dissimilar circumstances. Through this rule, we propose provisions that are intended to and will operate independently of each other, even if each serves the same general purpose or policy goal. Where a provision is necessarily dependent on another, the context generally makes that clear (such as by a cross-reference to apply the same standards or requirements).
II. Implementation of Certain Provisions of the Inflation Reduction Act of 2022 and the Substance Use-Disorder Prevention That Promotes Opioid Recovery and Treatment for Patients and Communities Act of 2018
A. Medicare Part D Redesign
1. Background
Section 11201 of the Inflation Reduction Act of 2022 (IRA) made significant changes to the Part D benefit design that affect the structure of the Part D benefit and the payment obligations of enrollees, Part D plan sponsors, manufacturers, and CMS. Several of the changes made by section 11201 of the IRA have taken effect already and other changes will go into effect in 2026, as described later.
Section 11201(f) of the IRA directed the Secretary to implement section 11201 of the IRA for 2024, 2025, and 2026 by program instruction or other forms of program guidance. On February 1, 2023, we released guidance outlining changes to the Part D benefit that were specific to Calendar Year (CY) 2024 in the CY 2024 Advance Notice and Rate Announcement.[] In that guidance, we eliminated cost sharing for covered Part D drugs in the catastrophic phase of coverage, consistent with section 1860D-2(b)(4)(A)(i) of the Social Security Act (the Act), as amended by section 11201 of the IRA.[]
On April 1, 2024, we released the Final CY 2025 Part D Redesign Program Instructions.[] In these program instructions, we implemented changes to the structure of the Part D benefit for CY 2025 made by section 11201 of the IRA. Section 11201 of the IRA added section 1860D-2(b)(4)(B)(i)(VII) of the Act to reduce the annual out-of-pocket (OOP) threshold to $2,000 for CY 2025 (to be annually increased by the annual percentage increase, as described in section 1860D-2(b)(6) of the Act). The IRA also amended section 1860D-2(b) of the Act to eliminate the coverage gap phase and added subsection (h) to section 1860D-14A of the Act to sunset the Coverage Gap Discount Program. The IRA added section 1860D-14C of the Act to establish the Manufacturer Discount Program.
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Sean Hocking
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