Summary
Effective plan year 2011, provides authority to CMS to reject MA and Part D plan bids for excessive cost-sharing increases or decreases in benefits.
Implementation Status
This section was implemented by CMS in the April 15, 2011, Final Rule governing MA and Part D (see pp. 21448-51).
On January 6, 2014, CMS issued a proposed rule delineating Contract Year 2015 MA and Part D policy and technical changes. The rule proposes, among other things, to limit and redefine, based on new criteria, Part D’s protected drug classes to initially include anticonvulsants, antiretrovirals and antineoplastics — but not antidepressants and immunosuppressants – as “drug categories and classes of clinical concern” for the 2015 coverage year. The rule addresses each of these provisions of the ACA in some manner. A CMS fact sheet is available. Comments are due by March 7.
On March 10, 2014, the Administration informed top Congressional leaders that it will not finalize some of the key changes to Part D that it had proposed in a draft regulation issued January 10. The elements of the Proposed Rule that the Administration will not finalize include: (1) Changes to the Six Protected Classes, which would have excluded mental health and immunosuppressive drugs from these protections (such as a requirement that plans cover all drugs in these classes), among other revisions; (2) Reductions in the number of plans a Part D sponsor may offer; (3) Limitations on the use of preferred pharmacies; and (4) New interpretation of the non-interference provisions. The Administration notes it will gather additional input and effectively reserves the right to advance changes in these areas in future years. But no changes will be made for the CY15 plan year. It will move forward with other elements of the Rule, as discussed in the Administration’s letter to Congressional members. A copy of the letter is available externally here.
On May 19, CMS issued a final rule on MA and Part D contract year 2015 technical changes. While the final rule codifies a number of fraud and abuse-related proposals, as signaled in an earlier letter to Congress the final rule does not adopt controversial proposed modifications to Part D protected drug classes or limitations on offering more than two Part D plans in a given region. The rule addresses each of these provisions of the ACA in some manner. A fact sheet is available here.’
On Apr. 6, 2015 CMS released the CY 2016 MA Rate Announcement (press release; fact sheet) delineating the agency’s changes in the MA capitation rate methodology and risk adjustment methodology, as well as some policy changes under Part D. Citing a non-discretionary change to expected growth rates, CMS estimates that, on average, MA plans will see a +1.25% revenue increase relative to CY15 and +3.25% when coupled with an additional 2.0% expectation for coding trend. This compares to -0.95% from policy-driven changes the Advance Notice (+1.05% with the same coding expectation).
On Feb. 19, 2016, CMS released its estimates of the CY 2017 Medicare Advantage (MA) Advanced Notice and Draft Call Letter delineating the agency’s planned changes in the MA capitation rate and risk adjustment methodologies, as well as key policy changes under Part D. An agency press release is available here. CMS estimates that, on average, MA plans will see a +1.35 percent revenue increase relative to CY 2016 due to Advance Notice policies.
Statutory Text
SEC. 3209. AUTHORITY TO DENY PLAN BIDS. (a) IN GENERAL.—Section 1854(a)(5) of the Social Security Act (42 U.S.C. 1395w–24(a)(5)) is amended by adding at the end the following new subparagraph: ‘‘(C) REJECTION OF BIDS.— ‘‘(i) IN GENERAL.—Nothing in this section shall be construed as requiring the Secretary to accept any or every bid submitted by an MA organization under this subsection. ‘‘(ii) AUTHORITY TO DENY BIDS THAT PROPOSE SIGNIFICANT INCREASES IN COST SHARING OR DECREASES IN BENEFITS.—The Secretary may deny a bid submitted by an MA organization for an MA plan if it proposes significant increases in cost sharing or decreases in benefits offered under the plan.’’. (b) APPLICATION UNDER PART D.—Section 1860D–11(d) of such Act (42 U.S.C. 1395w–111(d)) is amended by adding at the end the following new paragraph: ‘‘(3) REJECTION OF BIDS.—Paragraph (5)(C) of section 1854(a) shall apply with respect to bids submitted by a PDP sponsor under subsection (b) in the same manner as such paragraph applies to bids submitted by an MA organization under such section 1854(a).’’. (c) EFFECTIVE DATE.—The amendments made by this section shall apply to bids submitted for contract years beginning on or after January 1, 2011.