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CMS 2023 Final Rule: 6 Regulatory Takeaways to Prioritize

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The waves of regulatory changes just keep coming, and you will want to keep your eyes on the horizon to stay afloat amidst this sea of change. Even though the ink has barely dried on the 2023 CMS Final Rate Announcement, on Friday April 29th, CMS finalized another set of sweeping structural rule changes that will impact Medicare Advantage and Part D plans in the coming years.

In the latest 2023 Medicare Advantage and Part D Final Rule, CMS introduced the first major drug pricing action from the Biden administration, increased oversight of third-party marketing organizations, expanded medical loss ratio (MLR) reporting requirements, established new maximum out-of-pocket limits, and set forth numerous structural and Star Ratings changes which will impact plans significantly in the next few years.

After carefully reviewing the 613-page document with our magnifying glasses, the following are some of the most significant regulatory changes Medicare Advantage (MA) plans and Dual Special Needs Plans (D-SNP) should pay close attention to:

D-SNP’s Star Ratings Separated from MA Star Ratings

Recognizing the powerful motivation Star Ratings represent and the significant challenges faced by Star Ratings teams, as well as their use by beneficiaries as they shop for plans, CMS finalized its plan to remedy the current inability to understand or assess the performance of a specific D-SNP within a specific state when the D-SNP is operated as part of a larger MA contract. CMS will now allow states with integrated care programs to require MA plans to establish a contract that only includes one or more of the state’s D-SNPs, which will allow for Star Ratings for that contract to reflect the D-SNPs’ local performance. This will help each state better drive quality improvement for their dually eligible beneficiaries, better attach the quality incentives to the specific populations, and more easily identify disparities between D-SNPs and other MA plans.

Reducing Pharmacy Prices at the Point of Sale

The final rule requires plans to apply price concessions, including rebates and all other financial impacts arising from performance-based payment models, at the point of sale beginning in January 2024. These changes will significantly change premiums and out-of-pocket costs for beneficiaries and, despite the long-term positive impacts, is likely to create significant short-term confusion and will impact some beneficiaries negatively. Though CMS had previously aimed to implement this in 2023, the additional year delay allows plans adequate time to thoughtfully incorporate these changes into bids and prepare members and providers for potentially significant drug pricing and premium changes.

Standardizing Health Risk Assessments With Social Risk Factors

Beginning in contract year 2024, SNPs will now be required to conduct annual health risk assessments (HRAs) which include at least one question each regarding housing stability, food security, and access to transportation. CMS will not require plans to use the same questions, but has provided a list of screening instruments from which the questions must be selected. This rule applies to all D-SNP plans and sets the stage for CMS future rulemaking surrounding health equity throughout the MA program.

Star Ratings Now Impact New Contract & Service Area Expansion

The final rule establishes new Past Performance criteria for applications for new MA contracts or service area expansions of existing contracts. In addition to bankruptcy filings, medical loss ratio reporting, and network adequacy, CMS will also deny applications from plans with any combination of either a Part C Summary Rating, Part D Summary Rating, or overall Star Rating of 2.5 or less Stars for the most recent 2 years of Star Ratings. This provision will be applied at the legal entity level, meaning that if any one of the contracts under the legal entity meets any one of the reasons for denial, all new applications and service area expansions under that legal entity will be denied.

Increased Marketing Oversight

CMS finalized changes to marketing and communications requirements to strengthen oversight of third-party marketing organizations. With the looming potential return of the Beneficiary Access and Performance Problems star measure, this continues to reinforce the agency’s emphasis on compliance.

Streamlined SNP Administrative Processes

CMS expanded the universe of D-SNP plans for which unified appeals and grievance procedures apply and established a mechanism by which states can require the D-SNPs in D-SNP-only contracts to use integrated materials. This administrative change simplifies the process and making it easier for beneficiaries to understand their benefits and coverage across both Medicare and Medicaid in ways which account for the often lower health literacy experienced by dually eligible beneficiaries. CMS will also now require D-SNPs to establish enrollee advisory committees, which are intended to provide plan sponsors with feedback on health equity and access issues.

With such significant technical and structural change looming, it can be hard to establish a reliable path to success. Every member of our team has weathered seasons of significant change, and established strategies for 4+ star success even during the most tumultuous periods of industry change. If you need help, please contact me at Melissa.Smith@Healthmine.com for more information.

Melissa is a well-known thought leader and healthcare strategist with proven success developing enterprise-wide solutions to improve Star Ratings, HEDIS scores, quality performance, health outcomes, and the member experience. As EVP of Healthmine’s advisory division, she helps clients evaluate market dynamics and opportunities, optimize distribution channels, and fulfill strategic planning needs.

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