On November 15, CMS published a proposed rule, which, as currently written, has potentially significant implications for Medicare Advantage (MA) plans and Medicare Prescription Drug Benefit Program (PDP) plans in Contract Year (CY) 2025 with a limited number of provisions to be applicable beginning with CY 2026.

The proposals demonstrate CMS’s continued focus on improving beneficiary protections and health equity and, if finalized, would further restrict MA plans’ arrangements with agents, brokers and other marketing entities; increase access to certain behavioral health providers; and add new health equity components to MA plans’ Utilization Management (UM) functions, among other things. Comments to the proposed rule are due by January 5, 2024.

Proposed Restrictions on Agent & Broker Compensation

The proposed rule signals CMS’s growing concern with what it views as “anti-competitive” elements of arrangements between MA plans and agents, brokers, and other entities like third-party marketing organizations (TPMOs) that market and sell MA plans. Specifically, CMS expressed concern that MA plans may be circumventing compensation rules for agents and brokers by offering them certain additional payments for attracting enrollees that are classified as “administrative” or “add-on” payments rather than as “compensation,” to which certain CMS-set limits normally apply. As a result, CMS proposes to prohibit certain contract terms between MA plans and agents, brokers and TPMOs. Specifically, the proposals would:

  • Prohibit any contract terms between MA plans and agents, brokers, or TPMOs that could “reasonably be expected to inhibit an agent or broker’s ability to objectively assess and recommend” which plan best meets a beneficiary’s healthcare needs. Examples of prohibited terms would be those that make bonuses or contract renewal contingent on meeting higher enrollment rates or quotas or that provide for bonuses that are otherwise understood to be based on enrollment volume.
  • Set a single agent and broker compensation rate for all MA plans while revising the scope of what is considered “compensation” to include all payments to an agent or broker relating to the initial enrollment, renewal, or services related to enrollment in an MA plan product.
  • Eliminate the regulatory framework that allows for separate payment to agents and brokers for administrative services (including, for example, payments for agent- or broker-conducted health risk assessments characterized as an administrative service).

CMS also proposes to increase the national MA compensation amount for CY 2025 for agents and brokers by $31 to $642 based on the current CY 2024 national MA initial enrollment cap of $611 according to a CMS fact sheet regarding the proposed rule; such an increase is intended to account for increased administrative costs, such as the costs for training, testing and call recording.

These proposed changes would also apply to the sale of PDP plans by agents and brokers.

Proposed Expansion of Network Adequacy Requirements for Behavioral Healthcare Providers

CMS proposes adding a new facility-specialty type, “Outpatient Behavioral Health” (OBH), to the list of facility-specialty types evaluated as part of an MA plan’s network adequacy review. In proposing this change, CMS cites recent developments, including a new Part B benefit category (available starting January 1, 2024) for marriage and family therapist (MFT) and mental health counselor (MHC) services, and evidence of increased utilization of services for certain addiction medicine specialty providers.

OHB facility, the new facility-specialty type, would encompass the following:

  • MFTs and MHCs.
  • Opioid Treatment Programs.
  • Community Mental Health Centers.
  • Those of the following provider types who regularly furnish or will regularly furnish behavioral health counseling or therapy services (including psychotherapy or prescription of medication for substance use disorders):
    • Physician assistants, nurse practitioners, and clinical nurse specialists.
    • Addiction medicine physicians.
    • Outpatient mental health and substance use treatment facilities.

MA plans would be prohibited from submitting a single provider for purposes of meeting more than one provider network requirement (e.g., psychiatry and OBH facility).

The proposed new base time and distance requirements for the OBH facility-specialty type would range from 20 minutes/10 miles for large metro areas to 110 minutes/100 miles for counties with extreme access considerations. Under the proposal, MA plans would be able to receive a 10-percentage point credit toward the percentage of beneficiaries that reside within such time and distance standards if the plan includes one or more telehealth providers of that specialty type that provide additional telehealth benefits in its network.

Proposed Annual Health Equity Analysis of Utilization Management Policies and Procedures

CMS proposes adding new health equity requirements to the composition and tasks of UM committees, noting that UM functions in MA, particularly prior authorization, may disproportionately impact historically underserved populations and their access to care.

Under the proposed rule, UM committees would be required to:

  • Have at least one member with expertise in health equity based on educational degrees, credentials or experience.
  • Conduct an annual health equity analysis at the plan level of the use of prior authorizations. This analysis would contain standard metrics and assist with identifying whether prior authorizations resulted in persistent disparities among enrollees with specified social risk factors (SRFs) (e.g., receiving a low-income subsidy, being a dually eligible enrollee, or having a disability) compared to enrollees without the specified SRFs. The standard metrics would include the percentage of standard or expedited prior authorization requests that were approved, denied, approved after appeal or extension of the review timeframe and the average and median time between the request submission and the MA plan’s determination.
  • Post the annual health equity analysis prominently on the plan’s publicly available website by July 1, 2025, and annually thereafter, and clearly identify the analysis in the website footer. The analysis must be easily accessible to the general public (e.g., no charge, no password, and digitally searchable).

CMS is also soliciting specific comments on additional enrollee groups, items, or services (e.g., behavioral health treatment) that should be disaggregated for further health equity review, among other things.

Other Proposals

CMS also proposed other changes relevant to MA and PDP plans, including, but not limited to:

  • Increasing the Percentage of Dual Eligibles Who Receive Medicare and Medicaid Services from the Same Organization. CMS proposes to replace the current quarterly special enrollment period (SEP) with a monthly SEP for dually eligible individuals; create a new monthly “integrated care SEP”; limit enrollment in certain D-SNPs to individuals who are also enrolled in an affiliated Medicaid managed care organization (MCO); and limit the number of D-SNPs an MA organization (MAO), its parent organization, or an entity that shares a parent organization with the MAO can offer in the same service area as an affiliated Medicaid MCO (in order to reduce “choice overload” of D-SNP options in certain markets).
  • Standardize the MA Risk Adjustment Data Validation (RADV) Appeal Process. CMS proposes to require MAOs to exhaust all levels of appeal (reconsideration, hearing, and CMS Administrator review) for RADV medical record review determinations before the payment error calculation appeals process begins.
  • Mid-Year Enrollee Notification of Available Supplemental Benefits. Expressing concern that utilization of supplemental benefits is still relatively low, CMS proposed a new requirement that MA plans provide enrollees with a list of any available unused supplemental benefits as of June 30 of each CY.
  • SSBCI Program Changes. CMS proposes changes to the Special Supplemental Benefits for the Chronically Ill (SSBCI) program that would require MA plans to, among other things, demonstrate, through “relevant acceptable evidence,” that an item or service offered as an SSBCI has a reasonable expectation of improving or maintaining the health or overall function of a chronically ill enrollee. The proposal, if finalized, would also require MA plans to document their findings that a chronically ill enrollee is ineligible (rather than eligible) for an SSBCI.

If you have any questions about the proposed rule or need assistance drafting comments to the proposed rule, please contact the authors.