Fact Sheets

CMS Finalizes Policy Changes and Updates for Medicare Advantage and the Prescription Drug Benefit Program for Contract Year 2019 (CMS-4182-F)

CMS Finalizes Policy Changes and Updates for Medicare Advantage and the Prescription Drug Benefit Program for Contract Year 2019 (CMS-4182-F)

On April 2, 2018, the Centers for Medicare & Medicaid Services (CMS) issued a final rule that updates Medicare Advantage (MA) and the prescription drug benefit program (Part D) by promoting innovation and empowering MA and Part D sponsors with new tools to improve quality of care and provide more plan choices for MA and Part D enrollees. In addition to creating opportunities for innovation and additional plan choices in MA and Part D, the final changes will result in an estimated $295 million in savings a year for the Medicare program over 5 years (2019 through 2023) – resulting in lower premiums or additional benefits.

CMS is committed to supporting flexibility and efficiency throughout the MA and Part D programs. The MA and Part D programs have been successful in allowing for innovative approaches for providing Medicare and Part D benefits to millions of Americans. In Spring 2017, CMS released a Request for Information that solicited ideas to transform Medicare Advantage and the prescription drug benefit so that Medicare beneficiaries have robust options in their health care and prescription drug coverage. CMS received numerous ideas in response to the Request for Information on how to improve Medicare Advantage and the prescription drug benefit from beneficiaries, Medicare Advantage and Part D sponsors, advocacy groups, and other stakeholders. The policies in the final rule are responsive to this feedback.

This fact sheet discusses the major provisions of the final rule. The final rule can be downloaded from Federal Register at

Patients over Paperwork Initiative

Earlier this year, CMS launched the “Patients Over Paperwork” Initiative, a cross-cutting, collaborative process that evaluates and streamlines regulations with the goal of reducing unnecessary burden, increasing efficiencies, and improving the beneficiary experience. The final rule furthers this initiative and would empower patients and doctors in making decisions about patient healthcare. Specifically, the final rule reduces regulatory burdens by:

  • Authorizing CMS to permit plans to use notice of electronic posting (and provision of copies upon request) to satisfy disclosure requirements for certain bulky documents to Medicare beneficiaries, thereby empowering patients with the information to make their own healthcare decisions;
  • Eliminating requirements that plans submit, in addition to their bids, similar and overlapping accounting information;
  • Making it easier for plans to communicate with beneficiaries by streamlining government review and approval of marketing materials used by plans; and
  • Eliminating enrollment requirements for healthcare providers and prescribers that bring value to Medicare Advantage and Part D beneficiaries.

Final Policy Changes to Medicare Advantage and the Prescription Drug Benefit Program

Ensure Additional Transparency for Star Ratings
CMS annually calculates and publishes Star Ratings for participating Part C (Medicare Advantage) and Part D plans. Beneficiaries rely on the Star Ratings to help inform plan choice, and CMS uses the ratings to calculate Quality Bonus Payments for Part C plans. CMS historically has announced changes to the Star Ratings framework, measures, and methodology through the annual Medicare Parts C and D Call Letter.

In the final rule, CMS is codifying key aspects of the Part C and D Star Ratings methodology, including the principles for adding, updating, and removing measures, and the methodology for calculating and weighting measures. CMS is also setting:

  • New rules related to how Star Ratings are assigned when contracts consolidate to more accurately reflect the performance of all contracts (surviving and consumed) involved in the consolidation for consolidations approved on or after January 1, 2019 as required by the Bipartisan Budget Act of 2018 provision, and
  • New methods for applying scaled reductions when CMS determines that the data for the appeals measures are not complete to allow for reductions proportionate to the seriousness of the data issueThese changes will increase Star Ratings predictability, allowing plans to make investments in improving the quality of care for Medicare beneficiaries.

Unnecessary Limits on Medicare Advantage Plan Variety Current regulations place unnecessary limits (called “meaningful difference” requirements) on the variety of plans an MA organization can offer in the same county.
Beginning in CY 2019, CMS is eliminating the requirement that MA plans offered by the same organization in the same county comply with unnecessary limits requiring differences among the organization’s plans beginning with CY 2019 MA bid submissions. CMS is concerned the current requirement may result in organizations reducing the value of certain benefit offerings in order to make their benefit packages comply with these unnecessary limits. This may include instances where differences in benefit packages exist but are not incorporated in the agency’s evaluation (e.g., unique benefit packages based on enrollee health conditions). CMS expects that eliminating the meaningful difference requirement will improve the plan options available for beneficiaries. New flexibilities in benefit design and more sophisticated approaches to consumer engagement and decision-making should help beneficiaries, caregivers, and family members make more informed plan choices.

Flexibility in the Medicare Advantage Uniformity Requirements
CMS has reinterpreted uniformity requirements for Part C benefits offered to MA enrollees. These changes give MA plans new tools to improve care and outcomes for enrollees by allowing MA plans the ability to reduce cost sharing for certain covered benefits, offer specific tailored supplemental benefits, and offer different deductibles for beneficiaries that meet specific medical criteria. This final rule highlights how the new benefit design will be an option for all MA plans.

Allowing Electronic Delivery of Certain Beneficiary Documents
CMS is separating the delivery date of the Annual Notice of Change (ANOC) from the Evidence of Coverage (EOC) so Medicare beneficiaries receive the ANOC first as a stand-alone document. This would allow beneficiaries to better focus on the most important information, such as the upcoming changes to their current plan. In addition, MA and Part D sponsors can now provide certain materials, such as the EOC, electronically. When doing so, plans would be required to provide beneficiaries with easy access to hardcopy materials, if they prefer.

Updates to the Definition of Marketing
Currently, a variety of materials that are not intended to steer a beneficiary into a particular plan fall under the regulatory definition of marketing and its related requirements, including a statutory requirement that these materials be subject to CMS review. CMS is changing the definition to include only materials that are most likely to lead to a beneficiary to make an enrollment decision. This will allow CMS to focus its oversight efforts on these materials to help ensure that beneficiaries are making the right decisions for their health care needs.

This change lessens the burden of marketing submission on plans and CMS reviewers. To account for those materials that will now fall outside of the new marketing definition, CMS is adopting more appropriate requirements and oversight for a new category of materials and activities called “communications.”

Implementation of the Comprehensive Addiction and Recovery Act of 2016 (CARA)
CMS is implementing new CARA requirements to provide an important additional tool to combat the growing opioid epidemic that is devastating families and communities across the nation. CARA requires CMS to establish through regulation a framework that allows Part D sponsors to implement drug management programs. Under such programs, a sponsor can limit at-risk beneficiaries’ access to coverage for frequently abused drugs beginning with the 2019 plan year. CMS will designate opioids and benzodiazepines as frequently abused drugs.

Drug management programs will be integrated with CMS’s existing Overutilization Monitoring System (OMS). The clinical guidelines used to determine if a beneficiary is potentially at-risk, which are based on using opioids from multiple prescribers and/or multiple pharmacies, will be expanded from those used in OMS currently. Sponsors will be allowed to limit an at-risk beneficiary’s access to frequently abused drugs to a selected prescriber(s) and/or pharmacy(ies) (“lock-in”), and through the use of beneficiary-specific point-of-sale (POS) claim edits, which are already permitted under the current policy. Part D sponsors may not implement such limitations unless they have engaged in case management with the prescribers of these drugs, and beneficiaries can submit prescriber and pharmacy preferences.

CMS will also exempt beneficiaries who are being treated for active cancer-related pain, are receiving palliative or end-of-life care, or are in hospice or long-term care from drug management programs. CMS is limiting the availability of the special enrollment period (SEP) for dually or other low income subsidy (LIS) eligible beneficiaries who are identified as at-risk or potentially at-risk for prescription drug abuse under such drug management programs. At-risk determinations, which include prescriber and pharmacy lock-in, will be subject to the existing beneficiary appeals process.

Maximum Out-of-Pocket and Cost Sharing Limits
CMS is revising the regulations controlling maximum out-of-pocket (MOOP) limits, to enable future changes to CMS’s existing methodology of using the 85th and 95th percentiles of projected beneficiary out-of-pocket Medicare Fee-For-Service (FFS) spending beginning no earlier than in CY 2020. CMS will then have authority to change and implement additional levels of MOOP limits, as well as provide flexibility to encourage plan offerings with lower MOOP limits. In addition, CMS will be able to update discriminatory cost sharing standards using a new standard beginning no earlier than in CY 2020.

Default Enrollment
CMS is codifying changes to a current enrollment mechanism that allows MA organizations to provide seamless continuation of coverage for their beneficiaries once they become Medicare eligible.

Passive Enrollment Opportunities to Protect Continuity of Integrated Care for Dually Eligible Beneficiaries
In an effort to promote integrated care, continuity of care, and partnership with states, CMS is codifying a limited expansion of its regulatory authority in circumstances when beneficiary enrollment is disrupted by changes in health plan participation. This change allows passive enrollment for full-benefit dually eligible beneficiaries from a non-renewing integrated D-SNP to another comparable plan. This process will be conducted after consulting with a state Medicaid agency, and where other conditions are met to ensure continuity and quality of care.

Part D Tiering Exceptions
CMS is revising existing policy related to tiering exceptions, including the permissible limitations Part D plan sponsors may apply to tiering exception requests. We are eliminating the provision allowing plans to exclude a dedicated generic tier from the tiering exceptions process, and establishing a framework based on the type of drug (brand, generic, biological product) requested and the cost-sharing of applicable alternative drugs. We are also clarifying that cost-sharing for approved requests is at the lowest applicable tier when alternatives are on multiple lower tiers, and that authorized generic drugs are treated as generics for purposes of tiering exceptions.

Limitation to the Part D Special Enrollment Period for Dual and Other LIS-Eligible Beneficiaries
To ensure that Part D plan sponsors are better able to administer benefits, including coordination of Medicare and Medicaid benefits, we are revising the Special Election Period (SEP) for dual-eligible and LIS beneficiaries from an open-ended monthly SEP to one that may be used only once per calendar quarter during the first nine months of the year. The final rule also establishes separate SEPs that can be used in the following circumstances: (1) within a certain period of time after a CMS or state-initiated enrollment; and (2) within a certain period of time after a change to an individual’s LIS or Medicaid status.

Any Willing Pharmacy Standard Terms and Conditions and Better Define Pharmacy Types
This provision clarifies Part D rules and CMS expectations regarding statutorily-required any willing pharmacy provisions, and revises the definition of retail pharmacy. This provision also establishes deadlines by which Part D sponsors must respond to requests for standard pharmacy contracting terms and conditions.

Changes to the Days’ Supply Required by the Part D Transition Process
To reduce waste, we are conforming the transition supply provided in the long term care setting (currently 90 days) to the transition supply provided in the outpatient setting (currently 30 days) so that the transition supply in both settings is for the same period. We are also changing the “30-day transition supply” to “an approved month’s supply” so that it will now be equivalent to the approved month’s supply for the applicable plan bid. Thus, Part D sponsors will be required to provide an approved month’s supply in both the long term care and outpatient settings.

Expedited Substitutions of Certain Generics and Other Midyear Formulary Changes
The final rule provides more formulary flexibility by, for instance, permitting Part D sponsors to immediately substitute generics for brand name drugs on the same or lower cost-sharing tier if they meet certain requirements, which include generally advising enrollees beforehand that such changes can occur without a specific advance notice and later providing information to affected enrollees about any specific generic substitutions that occur.

Similar Treatment of Biosimilar and Interchangeable Biological Products and Generic Drugs for Purposes of Low Income Subsidy (LIS) Cost Sharing
This provision further encourages the use of lower-cost alternatives by applying generic cost-sharing to biosimilar and interchangeable biological products for LIS Part D enrollees throughout all phases of the benefit. This policy alone is expected to generate savings to the Medicare program of $10 million in 2019.

Part D Meaningful Differences between Enhanced Alternative (EA) Plans
CMS is eliminating an unnecessary limit – the “meaningful difference” requirement – for PDP Enhanced Alternative (EA) benefit designs offered by the same organization in the same region. CMS is not changing this requirement as it applies between PDP Basic and EA prescription drug plan offerings.

Manufacturer Rebates and Pharmacy Price Concessions to Point of Sale
The proposed rule included a Request for Information soliciting comment on potential policy approaches for applying some manufacturer rebates and all pharmacy price concessions to the price of a drug at the point of sale. We appreciate the detailed submissions from stakeholders and will use the ideas and comments provided in response to this Request for Information to evaluate and consider proposals for future rulemaking.

Restoration of the Medicare Advantage Open Enrollment Period
The 21st Century Cures Act eliminates the existing MA disenrollment period that currently takes place from January 1st through February 14th of every year and, effective for 2019, replaces it with a new Medicare Advantage open enrollment period (OEP) that will take place from January 1st through March 31st annually. The new OEP allows individuals enrolled in an MA plan, including newly MA-eligible individuals, to make a one-time election to go to another MA plan or Original Medicare. Individuals using the OEP to make a change may make a coordinating change to add or drop Part D coverage.

Lengthening Adjudication Timeframes for Part D Payment Redeterminations and Independent Review Entity Reconsiderations
CMS is lengthening existing timeframes for adjudicating enrollee payment appeal requests at the redetermination and independent review entity (IRE) reconsideration levels from a maximum of 7 calendar days to a maximum of 14 calendar days. This change will provide additional time to adjudicate payment requests in situations where beneficiaries have already obtained the requested medications.

Reducing Burden on Plans by Eliminating MA Plan Notice of Forwarded Appeals
CMS also is removing the current requirement that MA plans send notice to an appellant when his/her appeal case file is forwarded to Medicare’s Part C IRE. Under its contract with CMS, the Part C IRE will continue to notify MA enrollees of forwarded cases. Eliminating this redundant enrollee notice will ease burden on plans without adversely impacting enrollee protections.

Update to Part D Electronic Transaction Standard
CMS is updating the current electronic prescribing standard for the Part D e-Prescribing Program (the National Council for Prescription Drug Programs (NCPDP) SCRIPT Standard). New versions of standards are created when standard setting organizations like the NCPDP review their existing standards, ballot and recommended changes and adopt new versions of existing standards. CMS is adopting the NCPDP SCRIPT Standard, Version 2017071 beginning on January 1, 2020. The prior version (NCPDPD Version 10.6) was adopted in November 1, 2013.

Preclusion List Requirements for Prescribers in Part D and Individuals and Entities in Medicare Advantage, Cost Plans, and PACE
CMS is eliminating the prescriber and provider enrollment requirement for Part C and Part D, and instead is compiling a “Preclusion List” of prescribers, individuals, and entities that fall within either of the following categories: (a) are currently revoked from Medicare, are under an active reenrollment bar, and CMS determines that the underlying conduct that led to the revocation is detrimental to the best interests of the Medicare program; or (b) have engaged in behavior for which CMS could have revoked the prescriber, individual, or entity to the extent applicable if they had been enrolled in Medicare, and CMS determines that the underlying conduct that would have led to the revocation is detrimental to the best interests of the Medicare program. Under this option, CMS will make the Preclusion List available to Part D prescription drug plans and Medicare Advantage plans. Plans would be required to deny payment for claims submitted by, or associated with prescriptions written by prescribers and providers on the list.

Focusing Plans on Improving Chronic Condition Management CMS is removing the Quality Improvement Project (QIP) from the Quality Improvement (QI) requirements. The QIP is duplicative of activities MA plans are already doing to meet other plan needs and requirements. The removal of the QIP and the continued implementation of the Chronic Care Improvement Program (CCIP) allows MA plans to focus on one project that supports improving the management of chronic conditions, a CMS priority, while reducing the duplication of other QI initiatives.

Reducing Unnecessary Paperwork Burden: Medical Loss Ratio
CMS is finalizing the proposal to significantly reduce the amount of MLR data that MA organizations and Part D sponsors submit to CMS on an annual basis. Under these new rules, MA organizations and Part D sponsors will only report the MLR percentage and amount of any remittance owed to CMS for each contract. CMS is also finalizing our proposal to revise the MLR calculation to include in the MLR numerator all expenditures related to fraud reduction activities (including fraud prevention, fraud detection, and fraud recovery) and Medication Therapy Management (MTM) programs. 

Codification of Part A and Part B Premium Adjustments as Initial Determinations
CMS is codifying the existing policy of treating FFS premium adjustments as initial determinations, which gives beneficiaries subject to these adjustments full appeal rights.