CMS Releases Final Rule for MA Plans and Medicare Prescription Drug Benefit Program

The Centers for Medicare and Medicaid Services (CMS) recently released a final rule for Medicare Advantage plans (MA) and the Medicare Prescription Drug Benefit Program for calendar year (CY) 2024.

The rule increases oversight of MA plans and seeks better alignment with Medicare fee-for-service (FFS), including clarifying that MA plans cannot use clinical criteria guidelines that are more restrictive than Medicare FFS to ensure that MA beneficiaries receive access to the same medically necessary care which is increasingly important as enrollment in MA continues to grow.

As recently reported, 59% of Michigan’s total Medicare beneficiaries are enrolled in an MA plan, with enrollment by county ranging from 42% to 75%. The final rule:

  • Prohibits MA plans from limiting or denying coverage for a Medicare-covered service based on their own internal or proprietary criteria if such restrictions do not exist under Medicare FFS.
  • Explicitly states that MA plans must adhere to the Two-Midnight Rule, the Inpatient Only List and case-by-case expectation criteria that apply for Medicare FFS.
  • Prohibits MA plans from denying coverage or redirecting post-acute care to a lower level unless the patient explicitly does not meet the Medicare coverage criteria required for the recommended level of care.
  • Explicitly states that MA plans must provide both coverage and payment for care provider to stabilize an emergency medical condition determined using the prudent layperson standard regardless of the final diagnosis.
  • Requires health plan physician or other professionals to have expertise in the field of medicine related to the service being requested in the prior authorization (PA).
  • Requires PAs to be valid for an entire course of approved treatment and provide a minimum 90-day transition period if an enrollee undergoing treatment switches to a new MA plan.
  • Establishes additional processes to oversee MA plan utilization management programs including an annual review of policies to ensure compliance with Medicare rules and consistency with current clinical guidelines.
  • Strengthens behavioral health network adequacy requirements in several ways:
    • MA plans are currently required to provide access to an adequate network of “appropriate providers”, including primary care physicians, specialists, hospitalists and others. Plans are also required to demonstrate that the network includes an adequate number of psychiatrists and inpatient psychiatric facilities. This rule adds providers that specialize in behavioral health services to this list, including clinical psychologists and licensed clinical social workers.
    • Codifies standards for appointment wait times for primary care and behavioral health services.
    • Clarifies that emergency behavioral health services are not subject to PA.
    • Requires MA plans to notify enrollees when the enrollee’s behavioral health or primary care provider is dropped from the network mid-year.
    • Amends general access to services standards to explicitly include behavioral health services.
    • Requires MA plans to establish care coordination programs to increase parity between behavioral and physical health services.
  • Restricts MA plan marketing practices to protect beneficiaries from misleading advertisements and pressure tactics designed to increase enrollment.
  • Expands requirements for MA plans to provide culturally and linguistically appropriate services.
  • Establishes a new Health Equity Index to be incorporated into the MA plan Star Ratings beginning in 2027 to improve performance for patients with certain social risk factors.
  • Implements statutory provisions of the Inflation Reduction Act and the Consolidated Appropriations Act of 2021 related to the prescription drug affordability and coverage for eligible low-income individuals.

The CMS indicates that it intends to release a second rule to address remaining proposals from the December 2022 proposed rule that were not addressed in this rule, with the second rule to have a later effective date, expected to be no earlier than Jan. 1, 2025.

Members with questions should contact Vickie Kunz at the MHA.

Upcoming Webinars on Medicare FFS Quality-based Programs

The MHA is partnering with DataGen to host two free webinars focused on Medicare fee-for-service (FFS) quality-based programs, which can reduce hospital inpatient FFS payments by up to 6%, depending upon hospital performance. The webinars are scheduled for June 7 and June 14 at 1:30 p.m. ET.

The first webinar will review the Medicare value-based purchasing program. Due to the pandemic, the Centers for Medicare and Medicaid Services (CMS) neither penalized nor rewarded hospitals for fiscal years (FYs) 2022 and 2023, but will do so for FY 2024. The CMS withholds 2% from Medicare FFS inpatient claims, totaling approximately $1.7 billion nationally, with these funds redistributed based on performance. The latest estimates indicate 27 Michigan hospitals will be subject to a $2.8 million payment penalty for FY 2024, with 54 hospitals gaining $6.7 million. Members are encouraged to register for the value-based purchasing webinar.

The second webinar will review the Medicare readmissions reduction (RRP) and hospital acquired conditions (HAC) reduction programs. The CMS opted not to penalize hospitals under the HAC program for FY 2023, but penalties resume in FY 2024, with 25% of hospitals nationally subject to a 1% payment penalty. The RRP evaluates readmissions for six medical conditions, with hospitals subject to penalties of up to 3% that is applied to Medicare inpatient payments for all FFS discharges. The latest FY 2024 estimates indicate 66 Michigan hospitals will be subject to a $12 million RRP penalty, with 24 hospitals subject to a $9.5 million HAC penalty. Members are encouraged to register for the RRP and HAC webinar.

Hospital quality department and finance staff are encouraged to participate in these webinars, which will be recorded and available for future reference. Members with questions should contact Vickie Kunz at the MHA.

MHA Drafts Comments on 340B Provisions and REH Payment Policies

The MHA has drafted comments in response to the Centers for Medicare and Medicaid Services (CMS) proposed rule to update the Medicare fee-for-service (FFS) outpatient prospective payment system (OPPS) for calendar year 2023. The MHA submitted comments regarding the 340B provisions in mid-August urging the CMS to:

  • Restore payment rates for 340B drugs to average sales price (ASP) plus 6%.
  • Hold all hospitals harmless for 2018-2022 claims.
  • Find new funds to restore 340B payments to ASP plus 6% with no reduction to the outpatient conversion factor.

The MHA also prepared comments in response to the proposed payment policies for rural emergency hospitals (REHs), a new hospital designation established by the Consolidated Appropriations Act, for critical access hospitals and rural prospective payment system hospitals with fewer than 50 beds.

The MHA recently posted hospital-specific estimated impact reports of the OPPS proposed rule on the hospital association reporting portal (HARP) for members to access and encourages hospitals to review the impact of the proposed rule on their operations and submit comments to the CMS by 5 p.m. Sept. 13. The CMS is expected to release a final rule to update the OPPS, including finalization of REH payment policies around Nov. 1 for the Jan. 1, 2023 effective date.

The MHA will provide an updated impact analysis following release of the final rule. Members with questions should contact Vickie Kunz at the MHA.

CMS Releases FY 2023 Final Rule to Update Long-term Care Hospital PPS

The Centers for Medicare and Medicaid Services (CMS) recently released a final rule to update the Medicare fee-for-service (FFS) long-term care hospital (LTCH) prospective payment system (PPS) for fiscal year (FY) 2023, which begins Oct. 1, 2022. The rule will:

  • Increase the standard federal rate by a net 3.8% for cases that meet LTCH criteria for services provided by LTCHs in compliance with CMS quality program reporting requirements.
  • Continue paying cases that fail to meet the required LTCH criteria (diagnosis-related group (DRG), intensive care unit, or ventilator criteria) at the site-neutral rate under the dual-rate payment system implemented in FY 2016.
  • Establish a high-cost outlier (HCO) threshold of $38,518 for cases paid based on the LTCH standard rate, up 17% from the current $33,015 threshold, resulting in fewer cases qualifying for an outlier payment. The CMS adjusts this threshold annually to maintain outlier payments at the targeted 8% of aggregate LTCH payments. Cases paid at the site neutral rate are subject to the inpatient PPS HCO, finalized at $38,859 for FY 2023.
  • Set a permanent cap to limit annual wage index decreases at 5%.
  • Calculate Medicare Severity-Long Term Care-DRG relative weights using an averaging approach, with COVID-19 cases included and excluded and then averaging the two sets of relative weights.
  • Set a permanent cap on annual decreases at 10% for MS-LTC-DRG relative weights to mitigate negative impacts of significant weight decreases.

The MHA is continuing to review the final rule and will provide hospitals with an updated impact analysis in the near future. Members with questions should contact Vickie Kunz at the MHA.