CMS Finalizes Medicare Advantage and Part D Oversight Rule

Last Friday, the Centers for Medicare and Medicaid Services (CMS) published a long-awaited final rule for Medicare Advantage (MA) that increases the agency’s efforts to provide oversight to participating plans.

The rule includes new reasons for denying contracts or expanding contracts based on past performance. Modern Healthcare reports that MA plans will also need to demonstrate that the provider network for the plan meets CMS requirements prior to plan approval.

CMS also included regulations to increase regulations on third-party marketing organizations (TPMOs) for MA and Part D plans. According to ThinkAdvisor, the rule explicitly defines a TPMO as any organization that is paid to “perform lead generation, marketing, sales and enrollment-related functions as a chain of enrollment.” TPMOs will also be required to use a standard disclaimer.

Regulations on TPMOs follow a slew of beneficiary complaints to CMS regarding communication disruption or confusion caused by TPMO’s aggressive marketing practices. Now, these organizations will be required to inform beneficiaries that their information will be given to licensed agents for future contracts.

The rule also includes a proposal to require all possible pharmacy price concessions to be included in the Part D negotiated price.

America’s Health Insurance Plans (AHIP), the largest health insurance lobby in the nation, expressed its displeasure with the negotiated drug price requirement:

Only pharmacists benefit from this requirement, with seniors and taxpayers paying the price through higher premiums. We do appreciate CMS delaying implementation of the rule to 2024, so that Part D plan sponsors and health insurance providers will have some time to attempt to mitigate the impact on seniors.

The Better Medicare Alliance’s (BMA) President and CEO Mary Beth Donahue took responsibility for the one-year delay in the implementation of the pass-along discounts for Part D plans:

Finally, Better Medicare Alliance is pleased that CMS honored our request to delay certain pharmacy price concession provisions in the rule for one year, giving the Medicare Advantage community additional time to address operational challenges and uncertainties.

Following support of the proposed rule, the American Medical Association applauded the strengthened oversight on Medicare Advantage plans:

Sunlight is said to be the best disinfectant, and that’s what this rule is all about. It will bring sunlight into the decision-making process, so patients know the MA plan they enroll in has an adequate network.

Read the press release for the final rule at CMS.