Fact Sheets

Contract Year 2021 and 2022 Medicare Advantage and Part D Proposed Rule (CMS-4190-P)

Contract Year 2021 and 2022 Medicare Advantage and Part D Proposed Rule
Fact Sheet

On February 5, 2020, the Centers for Medicare & Medicaid Services (CMS) issued a proposed rule that updates Medicare Advantage (MA or Part C) and the Medicare prescription drug benefit (Part D) program to give seniors more choices and lower out-of-pocket costs, and to encourage price transparency. The proposed rule is another step in lowering drug costs for seniors, increasing competition, and further advancing the agency’s efforts to strengthen and modernize the popular MA and Part D programs.

The proposed rule implements several changes stemming from federal laws related to the Part C and D programs—including the Bipartisan Budget Act of 2018 (BBA of 2018), the Substance Use-Disorder Prevention that Promotes Opioid Recovery and Treatment (SUPPORT) for Patients and Communities Act (the SUPPORT Act), and the 21st Century Cures Act (the Cures Act). The proposed rule also addresses the opioid epidemic across CMS programs and continues CMS’s Patients Over Paperwork initiative to reduce “red tape” that depletes resources from our healthcare system.  

If finalized, the proposed changes would result in an estimated $4.4 billion savings to the federal government over ten years, largely arising from proposed refinements to the MA and Part D Quality Star Rating system. We expect some savings will also be passed onto beneficiaries in the form of increased benefit offerings and reduced premiums or cost sharing.  

As part of the Patients Over Paperwork initiative to reduce unnecessary burden to increase efficiencies and the beneficiary experience, CMS is seeking comment from the public on proposals to codify many longstanding policies on the MA and Part D programs that have been previously adopted through sub-regulatory guidance such as the annual Call Letter and other guidance documents.  CMS will not publish a Call Letter for 2021. We believe that codifying the policies in regulation provides additional transparency and program stability, and allows MA organizations and Part D plan sponsors to develop more innovative plan designs. In addition, CMS will issue HPMS memoranda to communicate instructions, such as those around bidding, in advance of the bid deadline.  Through this regulation, the final Rate Announcement, the bid pricing tool materials and bidding instruction memoranda, plans will have all of the information needed to prepare Part C and D bids for 2021.

This fact sheet discusses the major provisions of the proposed rule, including a number of changes to strengthen and improve the MA and Part D programs and the Programs of All-Inclusive Care for the Elderly (PACE), and other changes for contract year 2021 and 2022. The proposed rule can be downloaded from the Federal Register at:

Implementing Certain Cures Act Provisions

Medicare Advantage (MA) Plan Options for End-Stage Renal Disease (ESRD) Beneficiaries

The Cures Act amended the Social Security Act (the Act) to allow all Medicare-eligible individuals with ESRD to enroll in MA plans beginning January 1, 2021. CMS is proposing to codify this statutory change in regulation. This proposed rule takes an important step in improving the lives of beneficiaries with ESRD, which is a priority in alignment with the Executive Order on Advancing American Kidney Health. By removing the barrier that beneficiaries with ESRD now face in terms of enrolling in MA plans, we are empowering them to choose the type of Medicare coverage that best meets their needs. This proposed rule also implements related MA and Medicare FFS payment changes made by the Cures Act—FFS coverage of kidney acquisition costs for MA beneficiaries and exclusion of such costs from MA benchmarks.”  

Enhancements to the Part C and D Programs

Medicare Advantage (MA) and Part D Prescription Drug Program Quality Rating System

The Part C and D Star Ratings support CMS efforts to improve the level of accountability for the care provided by health and drug plans, physicians, hospitals, and other Medicare providers. In addition to routine measure updates and technical clarifications to the Star Ratings, CMS proposes to further increase the predictability and stability in the Star Ratings by directly reducing the influence of outliers on cut points. We also propose to further increase measure weights for patient experience/complaints and access measures from 2 to 4, reflecting CMS’s commitment to put patients first and to empower patients to work with their doctors to make healthcare decisions that are best for them.

Permitting a Second, “Preferred”, Specialty Tier in Part D

Part D sponsors and pharmacy benefit managers have requested a second specialty tier option, suggesting this would encourage the use of more preferred, less expensive agents, reduce enrollee cost sharing, and reduce costs to CMS. In response, with a proposed effective date of January 1, 2021, we propose to: allow Part D sponsors to establish a second, “preferred” specialty tier with lower cost sharing than the current specialty tier; codify the maximum cost sharing for the higher specialty tier; codify the methodology that determines and increases the specialty tier cost threshold; require sponsors to permit tiering exceptions between the two specialty tiers; and permit sponsors to determine which drugs go on either tier subject to the proposed cost threshold. This proposal supports the agency’s commitment to lowering drug prices for the Medicare population.

Beneficiary Real Time Benefit Tool (RTBT)

CMS proposes that each Part D plan implement a beneficiary RTBT that will allow enrollees to view plan-provided, patient-specific, real-time formulary and benefit information by January 1, 2022. Plans would be able to use existing secure patient portals, develop a new portal, or use a computer application to fulfill this requirement. Plans would be required to also make this information available to enrollees who call the plan’s customer service call center. In order to encourage enrollees to use the beneficiary RTBT, we also propose to allow plans to offer rewards and incentives to their enrollees who log onto the beneficiary RTBT or seek to access this information via the plan’s customer service call center.  

Establishing Pharmacy Performance Measure Reporting Requirements

Under the Part D program, plans currently do not have to disclose to CMS the measures they use to evaluate pharmacy performance in their network agreements. The measures used by plans potentially impact pharmacy reimbursements. Therefore, CMS proposes to require Part D plans to disclose such information to enable CMS to track how plans are measuring and applying pharmacy performance measures. CMS will also be able to report this information publicly to increase transparency on the process and to inform industry in their recent efforts to develop a standard set of pharmacy performance measures. CMS is also seeking comment on the Part D pharmacy performance measures more broadly, including recommendations for potential Part D Star Ratings metrics to incentivize the uptake of a standard set of measures.

Medical Loss Ratio (MLR)

CMS proposes to amend the MA MLR regulations to allow MA organizations to include in the MLR numerator as “incurred claims” all amounts paid for covered services, including amounts paid to individuals or entities that do not meet the definition of “provider” as defined at § 422.2, in alignment with changes to MA supplemental benefits in recent years. In addition, CMS proposes to add a deductible-based adjustment to the MLR calculation for MA medical savings account (MSA) contracts receiving a credibility adjustment. The proposed adjustment would remove a potential deterrent to the offering of MSAs by MA organizations that may be concerned about their inability to meet the MLR requirement as a result of random variations in claims experience, the risk of which is greater under health insurance policies with higher deductibles. This proposal aligns with President Trump’s Executive Order on Protecting and Improving Medicare for Our Nation’s Seniors for the Department of Health and Human Services to propose regulatory changes that reduce barriers to obtaining MSAs.

Implementing Several Opioid Provisions of the SUPPORT Act

Continuing the fight against the opioid epidemic, the proposed rule implements several provisions of the Substance Use-Disorder Prevention that Promotes Opioid Recovery and Treatment (SUPPORT) for Patients and Communities Act that require Part D plans to educate beneficiaries on opioid risks, alternate pain treatments, and safe disposal of opioids. The proposed rule also expands drug management programs and medication therapy management programs, through which Part D plans review with providers opioid utilization trends that may put beneficiaries at-risk and provide beneficiary-centric interventions. These provisions will help prevent and treat opioid overuse.

Codifying Existing Part C and D Program Policy  

Medicare Advantage (MA) and Cost Plan Network Adequacy

CMS proposes to strengthen network adequacy rules for MA plans by codifying our existing network adequacy methodology, but we are also proposing new policies to improve access in rural areas and encourage the use of telehealth in all areas. In rural areas, we are proposing to reduce the required percentage of beneficiaries that must reside within the maximum time and distance standards from 90% to 85% and inviting comment regarding additional changes to improve MA access in rural areas. To encourage and account for telehealth providers in contracted networks, we are proposing that MA plans receive a 10% credit towards the percentage of beneficiaries that must reside within required time and distance standards when the plan contracts with telehealth providers for Dermatology, Psychiatry, Cardiology, Otolaryngology, and Neurology. We are soliciting comment regarding whether to expand this credit to other specialty provider types.   

Supplemental Benefit Requirements

We are proposing to codify existing policy with respect to supplemental benefits, including the Managed Care Manual (Chapter 4) definition of a supplemental benefit, the expanded definition of “primarily health related,” and the reinterpreted uniformity requirements, including that reductions in cost sharing are an allowable supplemental benefit.

Special Election Periods (SEPs) for Exceptional Conditions

We are proposing to codify a number of SEPs that we have adopted and implemented through sub-regulatory guidance as exceptional circumstances SEPs. Among the proposed SEPs are the SEP for Individuals Affected by a FEMA-Declared Weather-Related Emergency or Major Disaster, the SEP for Employer/Union Group Health Plan elections, and the SEP for Individuals Who Disenroll in Connection with a CMS Sanction. Two SEPs that do not currently exist in guidance are also being proposed: the SEP for Individuals Enrolled in a Plan that has been identified by CMS as a Consistent Poor Performer and the SEP for Individuals Enrolled in a Plan Placed in Receivership. Codifying our current policy for these SEPs will provide transparency and stability for stakeholders about the MA and Part D programs and about the nature and scope of these SEPs by ensuring that the SEPs are changed only through additional rulemaking.

Implementing Certain BBA of 2018 Provisions

Special Supplemental Benefits for the Chronically Ill (SSBCI)

CMS is proposing a minor policy modification to SSBCI. Previously, CMS limited the chronic conditions an enrollee must have to be eligible under SSBCI to those conditions outlined in the Medicare Managed Care Manual (Chapter 16b).  However, the agency recognizes that there may be other chronic conditions that may meet the statutory definition of a chronic condition, but are not included in Chapter 16b. Therefore, beginning in contract year 2021, CMS is proposing that plans be allowed to target other chronic conditions.

“Look-Alike” Dual Eligible Special Needs Plans

CMS proposes to limit MA plans that are Dual Eligible Special Needs Plan (D-SNP) “look-alikes.” These “look-alike” plans, which have similar levels of dual eligible enrollment as D-SNPs but are not subject to the federal regulatory and state contracting requirements applicable to D-SNPs, circumvent federal regulatory and state contracting requirements that otherwise apply to D-SNP products. The Medicare Prescription Drug, Improvement, and Modernization Act created D-SNPs to allow for Medicare Advantage (MA) products that exclusively serve individuals dually eligible for Medicare and Medicaid. D-SNPs must meet a number of additional requirements, relative to non-SNP MA plans, related to health risk assessments, models of care, and Medicaid integration. Most recently, the Bipartisan Budget Act (BBA) of 2018 required CMS to establish additional requirements related to Medicaid integration for D-SNPs.  The “look-alike” D-SNPs impede the ability of states and CMS to meaningfully implement existing and new statutory requirements for D-SNPs that Congress created in the BBA by allowing plans that fail to meet the requirement to create look-alikes instead.

Under the proposed rule, CMS proposes to not enter into or renew a contract for an MA plan that is a non-SNP plan that either:

  • Projects in its bid that 80 percent or more of the plan’s total enrollment are enrollees entitled to medical assistance under a state plan under Title XIX, or
  • Has actual enrollment, as determined by CMS using the January enrollment of the current year, consisting of 80 percent or more of enrollees who are entitled to medical assistance under a state plan under Title XIX, unless the MA plan has been active for less than one year and has enrollment of 200 or fewer individuals at the time of such determination.

Under the proposed rule, MA plans exceeding this threshold would be able to transition their membership into a D-SNP or another zero-premium plan offered by the MA organization.  

Proposed Changes to the Programs of All-Inclusive Care for the Elderly (PACE)

CMS proposes to reduce the administrative burden for PACE organizations by proposing to allow service delivery requests be approved in full by an interdisciplinary team (IDT) member at the time the request is made. This proposal eliminates the requirement that the IDT conduct a reassessment of the participant for service delivery requests that can be approved.  We are also proposing to enhance participant protections by improving the participant appeals process, adding additional participant rights, increasing requirements related to the provision of services, and ensuring PACE organizations appropriately document care in the medical record while maintaining original communications from caregivers and others. CMS is also proposing to bolster CMS’s ability to access records, improve the regulatory framework relating to required services in PACE, and set out appeal processes for PACE organizations following certain enforcement actions.