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Medicare Advantage and Part D: CMS Issues Final Rule

April 10, 2024

We recently brought an alert dealing with allegations against Medicare Advantage (MA) to the effect that MA plans were more prone to deny claims or delay payments when compared to Medicare or third-party payers. Medicare Advantage is back in the news—but, this time, for another reason.

Last week, the Centers for Medicare and Medicaid Services (CMS) issued a final rule that revises the Medicare Advantage Program, Medicare Prescription Drug Benefit Program (Medicare Part D), Medicare Cost Plan Program, Programs of All-Inclusive Care for the Elderly (PACE), and Health Information Technology Standards and Implementation Specifications. This alert will act to summarize some of the key highlights of the rule that may be particularly applicable to the hospital space.

Anti-Competitive Measures

Many individuals with Medicare rely on agents and brokers to help navigate complex Medicare choices as they comparison shop for coverage options. The final rule increases the national agent/broker fixed compensation amount for initial enrollments into a Medicare Advantage or Part D plan by $100, which is an amount higher than what was proposed ($31). This increase is intended to eliminate variability in payments and improve the predictability of compensation for agents and brokers. This increase will be added to agent and broker compensation payments for the Annual Election Period in Fall 2024 and applied to all enrollments effective in CY2025 and future contract years.

Additionally, the final rule generally prohibits contract terms between Medicare Advantage organizations/Part D sponsors and middleman Third Party Marketing Organizations (TPMOs), such as field marketing organizations, which may directly or indirectly create an incentive to inhibit an agent or broker’s ability to objectively assess and recommend the plan that is best suited to a potential enrollee’s needs.

Limiting Data Sharing

Some TPMOs have been selling and reselling personal beneficiary data, which can undermine existing rules that prohibit cold calling people with Medicare and result in other aggressive marketing tactics for Medicare Advantage and Part D plans. To curtail this practice, the final rule mandates that personal beneficiary data collected by a TPMO for marketing or enrolling the individual into a Medicare Advantage or Part D plan may only be shared with another TPMO when prior express written consent is given by the individual. Further, the TPMO must obtain this written consent through a transparent and prominently placed disclosure from the individual to share the information.

Promoting Lower Cost Biologicals

CMS is finalizing two changes to provide Part D sponsors with more flexibility to make midyear substitutions of biosimilars for their reference products on their formularies:

  • All biosimilars may be substituted as formulary maintenance changes. Part D sponsors may treat formulary substitutions of all biosimilars for their reference products as “maintenance changes” that would not require explicit prior approval by CMS. Treating all biosimilar substitutions as maintenance changes means that midyear formulary substitutions of biosimilars for their reference products would apply to all enrollees (including those already taking the reference product prior to the effective date of the change) following a 30-day advance notice to affected enrollees.
  • New interchangeable biological products may be immediately substituted. CMS is finalizing additional flexibility for interchangeable biological products not on the market at the time that Part D sponsors submit their initial formulary for CMS approval. Part D sponsors meeting certain requirements have the additional option to immediately substitute a new interchangeable biological product for a reference product and provide notice of the change to affected enrollees after making such change.

Medication Therapy Management Program

CMS is finalizing improved targeting criteria for the Medicare Part D Medication Therapy Management (MTM) program that will help ensure more consistent, equitable, and expanded access to MTM services. Specifically, the rule applies the following to MTM eligibility criteria:

  • Add HIV/AIDS to the list of core chronic diseases, requiring plan sponsors to include all ten core chronic diseases identified by CMS in their targeting criteria.
  • Require plan sponsors to include all Part D maintenance drugs and expressly state that Part D sponsors retain the flexibility to include all Part D drugs in their targeting criteria.
  • Revise the methodology for calculating the MTM cost threshold to be commensurate with the average annual cost of eight generic drugs (set at $1,623 for CY 2025).

To see the full treatment of the final rule’s provisions, you can view the CMS fact sheet at:

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