Final Rule Summary Coordination of Enrollment and Disenrollment through MA Organizations and Effective Dates of Coverage and Change of Coverage

Medicare Program; Contract Year 2019 Policy and Technical Changes to the Medicare Advantage, Medicare Cost Plan, Medicare Fee-for-Service, the Medicare Prescription Drug Benefit Programs, and the PACE Program [CMS-4182-F] Final Rule Summary On April 6, 2018, the Centers for Medicare & Medicaid Services (CMS) put on display a final rule to revise the Medicare Advantage (MA) program (Part C) regulations and the Medicare prescription drug benefit program (Part D) regulations to implement certain provisions of the Comprehensive Addiction and Recovery Act (CARA) and the 21 st Century Cures Act. It also finalizes rule revisions and new provisions related to program quality, accessibility and affordability; customer experience; program integrity policies related to payments based on prescriber, provider and supplier status in the MA, Medicare cost plan, Medicare Part D and the PACE programs; updated Medicare Part D electronic prescribing standards; and clarifications and technical changes regarding treatment of Medicare Part A and Part B appeal rights related to premiums adjustments. CMS published the proposed rule in the Federal Register on November 28, 2017 (82 FR 56336). The final rule will appear in the April 16, 2018 Federal Register. Table of Contents I. Executive Summary 3 II. Provisions of the Final Regulations 3 A. Improving Quality, Accessibility, and Affordability 3 1. Implementation of the Comprehensive Addiction and Recovery Act of 2016 3 2. Flexibility in the Medicare Advantage Uniformity Requirements 16 3. Segment Benefits Flexibility 18 4. Maximum Out-of-Pocket Limit for Medicare Parts A and B Services 18 5. Cost-Sharing Limits for Medicare Parts A and B Services 19 6. Meaningful Differences in Medicare Advantage Bid Submissions and Bid Review 20 7. Coordination of Enrollment and Disenrollment through MA Organizations and Effective Dates of Coverage and Change of Coverage 21 8. Passive Enrollment Flexibilities to Protect Continuity of Integrated Care for Dually Eligible Beneficiaries 23 9. Part D Tiering Exceptions 26 Page Page 1

10. Establishing Limitations for the Part D Special Election Period for Dually Eligible Beneficiaries 30 11. MA and PDP Quality Rating System 32 12. Any Willing Pharmacy Standards Terms and Conditions and to Better Define Pharmacy Types 52 13. Changes to the Days Supply Required by the Part D Transition Process 58 14. Expedited Substitutions of Certain Generics and Other Midyear Formulary Changes 59 15. Similar Treatment of Biosimilar and Interchangeable Biological Products and Generic Drugs for Purposes of LIS Cost Sharing 62 16. Eliminating the Requirement to Provide PDP Enhanced Alternative (EA) to EA Plan Offerings with Meaningful Differences 63 17. Request for Information Regarding the Application of Manufacturer Rebates and Pharmacy Price Concessions to Drug Prices at the Point of Sale 64 B. Improving the CMS Customer Experience 65 1. Restoration of the Medicare Advantage Open Enrollment Period 65 2. Reducing the Burden of the Compliance Program Training Requirements 67 3. Medicare Advantage Plan Minimum Enrollment Waiver 68 4. Revisions to Timing and Method of Disclosure Requirements 69 5. Revisions to Parts 422 and 423, Subpart V, Communication/Marketing Materials and Activities 70 6. Lengthening Adjudication Timeframes for Part D Payment Redeterminations and IRE Reconsiderations 76 7. Elimination of Medicare Advantage Plan Notice for Cases Sent to the IRE 77 8. Updating Part D E-Prescribing Standards 77 9. Reduction of Past Performance Review Period for Applications Submitted by Current Medicare Contracting Organizations 79 10. Preclusion List Requirements for Prescribers in Part D and Individuals and Entities in MA 80 a. Preclusion List Part D Provisions 80 b. Preclusion List Part C/Medicare Advantage Cost Plan and PACE Provisions 84 11. Removal of Quality Improvement Project for Medicare Advantage Organizations 88 12. Reducing Provider Burden Comment Solicitation 89 C. Implementing Other Changes 89 1. Reducing the Burden of the Medicare Part C and Part D Medical Loss Ratio Requirements 89 2. Medicare Advantage Contract Provisions 91 3. Late Contract Non-Renewal Notifications 91 4. Contract Request for a Hearing 91 5. Physician Incentive Plans - Update Stop-Loss Protection Requirements 92 6. Changes to the Agent/Broker Compensation Requirements 95 7. Changes to the Agent/Broker Requirements 96 8. Codification of Certain Medicare Premium Adjustments as Initial Determinations 96 9. Eliminate Use of the Term Non-renewal to Refer to a CMS-Initiated Termination 97 III. Collection of Information Requirements 98 IV. Regulatory Impact Analysis 100 Page 2

I. Executive Summary/Background A. Purpose CMS describes that the purpose for the final rule is to: (1) support innovative approaches to improving quality, accessibility, and affordability; (2) improve the CMS customer experience; and (3) implement other changes. CMS says that the regulation is consistent with the Administration s priorities to reduce burden and provides the regulatory framework to develop MA and Part D products that better meet the individual beneficiary s healthcare needs. An additional set of objectives is to help address the opioid epidemic and mitigate the impact of increasing drug prices in the Part D program. B. Summary of the Major Provisions CMS provides a high-level summary of the major provisions of the final rule. 1 In addition, CMS provides a summary of the costs and benefits associated with the final rule. With respect to implementation of the Comprehensive Addiction and Recovery Act of 2016, CMS estimates that the benefits of preventing opioid dependency would result in new savings of $19 million to the Trust Fund because of fewer opioid prescriptions, modestly increasing to a savings of $20 million in 2023 slightly more savings than estimated in its proposed rule. The cost to industry is estimated at about $2.8 million per year. The revisions to the time and method of disclosure requirements will result in a savings of $55 million for each of 2019 through 2023. (In the proposed rule, CMS had estimated that the $55 million in savings would grow to $63 million over the period.) CMS presents additional impact estimates in its Regulatory Impact Analysis (RIA). CMS received 1,669 comment letters. After review, CMS finalizes some of its proposed policies and intends to address others that are not being finalized at this time at a later time. CMS does not address comments related to provisions that it did not finalize. II. Provisions of the Final Regulation A. Improving Quality, Accessibility, and Affordability 1. Implementation of the Comprehensive Addiction and Recovery Act of 2016 (CARA) CMS finalizes proposals with modifications as discussed below to implement the statutory provisions of CARA (P.L. 114-198, enacted on July 22, 2016) which provided new authority for Medicare Part D drug management programs to implement limits on an at-risk beneficiary s access to coverage of opioids. CMS finalizes its framework for Part D sponsors which would be incorporated into 423.153. It builds on an existing Part D Opioid Drug Utilization Review (DUR) Policy and CMS existing 1 Readers may also find the CMS Fact Sheet helpful at: https://www.cms.gov/newsroom/mediareleasedatabase/fact-sheets/2018-fact-sheets-items/2018-04-02.html. Page 3

Overutilization Monitoring System (OMS). Existing 423.153(b)(2) requires a Part D sponsor to have established a drug utilization management program that includes policies and systems to assist in preventing over-utilization and under-utilization of prescribed medications. Under CARA, Part D plan sponsors may establish a drug management program for beneficiaries at-risk for prescription drug abuse. 2 CARA describes the program features, effective for drug management programs on or after January 1, 2019, which include case management as well as the ability to limit an at-risk beneficiary s access to frequently abused drugs. CMS notes that programs that limit a beneficiary s access to pharmacies or prescribers, so-called lock-in programs, are common under Medicaid. Before CARA s passage, however, Medicare Part D included no statutory authority for lock-in programs. The finalized revisions to Medicare s rules would codify that authority for Part D plan sponsors along with the other features of a drug management program as described under CARA. CMS expects that in addition to preventing opioid dependency in beneficiaries, there would be an estimated savings in 2019 of $19 million to the Trust Fund resulting from fewer opioid prescriptions. CMS estimates additional costs to the industry in that year of $2.8 million. Existing Part D Opioid DUR Policy and OMS. Current regulations require Part D plan sponsors to have a DUR policy, ( 423.153) which includes concurrent review for over and underutilization of prescription drug products. In addition, in a series of guidance and call letters, CMS has provided additional detail regarding policies to prevent opioid overutilization. Those policies are described at this website: Improving Drug Utilization Review Controls in Part D https://www.cms.gov/medicare/prescription-drug- Coverage/PrescriptionDrugCovContra/RxUtilization.html. 3 Under existing rules and guidance, CMS expects plan sponsors to have in place appropriate controls at point of sale that include safety edits and quantity limits, use DUR to identify at-risk beneficiaries, provide case management with beneficiaries prescribers, and share data with other Part D sponsors regarding beneficiary overutilization. The existing process includes two parts: retrospective identification of beneficiaries at high risk of opioid overutilization and case management to better coordinate care. CMS expects the Part D plan sponsors Pharmacy and Therapeutics (P&T) committees to develop criteria to do such retrospective identification (enrollees with cancer or in hospice care are excluded.) Case management includes a series of communications with prescribers, and consensus about the appropriate level of opioid use with the plan sponsor implementing the agreed upon claim edit. If prescribers are non-responsive, the plan sponsor can implement a claim edit to prevent further coverage of an unsafe level of drug use. Current guidance includes advance written notice of planned point-of-sale edits to the beneficiary and their prescribers who request the results of case management, and to CMS. CMS launched the Overutilization Monitoring System (OMS) in July 2013 as a tool to monitor Part D plan sponsors effectiveness in complying with 423.153. Under the OMS, CMS sends 2 While a drug management program for beneficiaries at-risk for drug abuse isn t mandated by statute, CMS expects that plans contracting with CMS have such drug management programs. Those expectations are incorporated in a series of CMS Guidance and Call Letters. 3 September 6, 2012 HPMS memo, Supplemental Guidance Related to Improving Drug Utilization Review Controls in Part D. Page 4

plan sponsors quarterly reports about their Part D enrollees who meet criteria for being at high risk of opioid overuse. 4 As part of the existing process, CMS uses criteria for a maximum daily dose of opioids that could be used to identify those at high risk; a dosage of 50 morphine milligram equivalents (MME) is the threshold for increased risk and a maximum daily dosage of 90 MME. Those amounts align with CDC guidelines. 5 Existing initiatives target formulary and utilization management, real-time safety alerts at the pharmacy aimed at coordinated care, retrospective identification of high-risk opioid overutilizers who may need case management, and regular actionable safety reports based on quality metrics to sponsors. CMS indicates that current policies have been successful in reducing high-risk opioid overutilization in the Part D program by 61 percent or about 17,800 beneficiaries over the 2011 to 2016 period. New Finalized Requirements for Part D Drug Management Programs ( 423.100 and 423.153) i. Definitions ( 423.100) CMS finalizes, with minor modifications for clarity, several new definitions in 423.100: A potential at-risk beneficiary is defined as a Part D eligible individual who is identified using clinical guidelines (in 423.100) or for whom a Part D plan sponsor receives a notice upon the beneficiary s enrollment that the beneficiary was identified as a potential at-risk beneficiary under the plan in which the beneficiary was most recently enrolled, such identification had not been terminated upon disenrollment, and the new plan has adopted the identification. An at-risk beneficiary is defined to be a Part D eligible individual (1) who is identified using clinical guidelines; is not an exempted beneficiary; and is determined to be at-risk for misuse or abuse of frequently abused drugs under a Part D plan sponsor's drug management program; or (2) for whom a Part D plan sponsor receives a notice upon the beneficiary s enrollment in such the plan that the beneficiary was identified as an at-risk beneficiary under the prescription drug plan in which the beneficiary was most recently enrolled, such identification had not been terminated upon disenrollment, and the new plan has adopted the identification. CMS addresses several questions about those definitions. A commenter asked if a state Medicaid program includes the beneficiary in a drug management program, must the Part D plan include the beneficiary as well? CMS clarifies that since Medicaid programs potentially apply different criteria, it would not be appropriate to automatically include those beneficiaries in a Part D plan s DUR program. But CMS does encourage plan sponsors to use all reliable sources of legally available information to accurately identify those potentially at-risk or at-risk for abusing drugs. 4 https://www.cms.gov/medicare/prescription-drug-coverage/prescriptiondrugcovcontra/rxutilization.html 5 https://www.cdc.gov/drugoverdose/prescribing/guideline.html. Page 5

The definition of a frequently abused drug is finalized without change. A frequently abused drug is defined as a controlled substance under the Federal Controlled Substances Act that the Secretary determines is frequently abused or diverted, taking into account the drug s schedule designation by the Drug Enforcement Administration, other government or professional guidelines that identify a drug as frequently abused or misused, or an analysis of Medicare or other drug utilization or scientific data. While CMS is not changing the definition of frequently abused drug from the proposed rule, it is including benzodiazepines as frequently abused drugs for CY 2019 based on that definition. CMS was persuaded by comments that use of opioids concurrent with benzodiazepines raises the risk of adverse health events. CMS does not, however, modify the clinical guidelines for 2019. Under the finalized approach, a plan sponsor would be able to identify beneficiaries, based on their use of opioids, who are potentially at-risk or at-risk of abusing drugs and apply a coverage limitation to both their access to opioids and benzodiazepines. In the preamble of the final rule, CMS notes that since two categories of drugs are included as frequently abused drugs, plan sponsors applying a lock-in provision may need to permit a beneficiary to use more than one pharmacy or prescriber to ensure reasonable access. CMS disagrees with a commenter who suggested that plan sponsors be able to include additional frequently abused drugs as part of their DUR programs. CMS believes that to be consistent with the statutory CARA provisions, the determination of frequently abused drugs must not be plan-specific. CMS also declines to exclude abuse-deterrent opioids as frequently-abused drugs because their success as deterrents is unproven for all types of abuse and because there is still potential for addiction to those products. CMS also clarifies that methadone is included as a frequently-abused drug. As stated in the proposed rule, CMS will publish and update a list of frequently abused drugs in Part C&D call letters or in similar guidance subject to public comment. CMS also indicates, in response to a question, that it will use the same process and regulatory standards to determine when a frequently abused drug is no longer such a drug for the purposes of a Part D drug management program. CMS finalizes the definitions of clinical guidelines and program size as proposed except that clinical guidelines will be published in guidance annually beginning with contract year 2020 (instead of 2019) because the 2019 guidelines are published as part of this final rule. CMS defines clinical guidelines for the purposes of a drug management program to be criteria that identify potential at-risk beneficiaries developed in accordance with 423.153(f)(16) and published in guidance annually beginning with contract year 2020. New 423.153(f)(16) states that potential at-risk beneficiaries and at-risk beneficiaries are identified by CMS or the Part D sponsor using clinical guidelines that: (1) are developed with stakeholder consultation; (2) are based on a person acquiring frequently abused drugs from multiple prescribers or pharmacies, the level of frequently abused Page 6

drugs, or a combination of those factors; (3) incorporate expert opinion and an analysis of Medicare data; and (4) include a program size estimate. CMS makes changes to its clinical guidelines for plan year 2019 both in response to comments but also based on a new analysis of the impact of the guidelines on the number of people who would meet the criteria. CMS updated its analysis using 2017 PDE data instead of the 2015 data used prior to issuing the proposed rule. The new analysis indicates many fewer people would be identified as potential at-risk beneficiaries using the proposed criteria (11,753 instead of 33,053). Therefore, CMS finalizes alternative criteria projected to identify a similar number (44,332) of potential at-risk individuals as the proposed rule criteria and adds certain new flexibilities for plans sponsors. CMS does this by finalizing two sets of criteria: o Minimum criteria. Potential at-risk beneficiaries are those using opioids with an average daily MME greater than or equal to 90 mg for any duration during the most recent 6 months and either: 3 (instead of 4) or more opioid prescribers and 3 (instead of 4) or more opioid dispensing pharmacies OR 5 (instead of 6) or more opioid prescribers, regardless of the number of opioid dispensing pharmacies. Sponsors cannot vary these minimum criteria but could apply them more frequently. o Supplemental criteria. For plan sponsors who want the flexibility to impose criteria that will identify more individuals who may be potentially at risk, CMS will allow the use of supplemental criteria: Use of opioids (regardless of average daily dosage) during the most recent 6 months with 7 or more opioid prescribers OR 7 or more opioid dispensing pharmacies. CMS estimates that this criterion would identify an additional 22,841 potential at-risk beneficiaries. CMS notes that OMS will not report to plans based on this supplemental criteria, but plan sponsors using this criteria must report these individuals to OMS. In response to commenters cautioning the use of a maximum MME threshold, CMS reminds sponsors that the maximum threshold is not meant to be a maximum prescribing limit. It is a guideline to identify individuals who may warrant closer monitoring and to initiate case management to determine if the beneficiary is at risk. CMS finalizes its proposal to count prescribers with the same TIN as one prescriber unless any of the prescribers are associated with multiple TINs and to treat pharmacies with more than one location that share real-time electronic data as a single pharmacy. In response to comments, CMS notes that to the extent that sponsors or PBMs do not have access to prescriber TIN numbers or do not have the systems capability to automatically determine when a pharmacy is part of a chain, these determinations will need to be made during case management. Program size is finalized as proposed. It is the estimated population of potential at-risk beneficiaries in drug management programs operated by Part D plan sponsors that the Secretary determines can be effectively managed by such sponsors as part of the process to develop clinical guidelines. Page 7

CMS makes two important changes to its proposed definition of an exempted beneficiary with respect to a drug management program. In response to comments, CMS adds specificity to the exemption for those with a cancer diagnosis so that it applies to individuals who are being treated for active cancer-related pain. In addition, CMS adds an exemption for a person who is receiving palliative or end-of-life care. As finalized, an exempted beneficiary would be an enrollee who has elected to receive hospice care or is receiving palliative or end-of-life care; who is being treated for active cancer-related pain; or who is a resident of a long-term care facility, an intermediate care facility for the mentally retarded (ICF-MR), or another facility for which frequently abused drugs are dispensed through a contract with a single pharmacy. CMS rejects the recommendation of commenters to exempt beneficiaries in assisted living facilities because it believes that most of those facilities do not dispense drugs to their residents through a contract with a single pharmacy. CMS notes, however, that if a plan sponsor learns that a beneficiary resides in such a facility, it must exempt such residents from its drug management program. CMS notes that there are data challenges in identifying people who are receiving palliative or end-of-life care. It indicates that it will continue to explore options and that some plans may need to identify these individuals through the case management process. Requirements of Drug Management Programs CMS finalizes changes as proposed to modify 423.153(a) to add a new sentence indicating that a Part D plan sponsor may establish a drug management program for at-risk beneficiaries as described in paragraph (f) of that section. New paragraph (f), which establishes the requirements for such programs, is finalized with changes as described below: Policies and Procedures. Section 423.153(f)(1) is finalized with changes to add specificity. Under the proposed and final rules, a plan sponsor must have written policies and procedures approved by its applicable P&T committee and reviewed and updated as appropriate. The plan must address all aspects of the program and would be required to include at least the credentials of the personnel conducting case management under the program, the contents of case management files, and monitoring reports about incoming enrollees and about responding to requests from other sponsors for information about those recently disenrolled from the sponsor s prescription drug benefit plan. CMS adds in the final rule that the personnel conducting case management including that the staff must have a current and unrestricted license to practice within the scope of his or her profession. In addition, the final rule specifies that the contents of the case management files must include documentation of the substance of prescriber and beneficiary contacts. Limiting Access to Coverage of Frequently Abuse Drugs. CMS finalizes provisions describing the requirements and features of programs that limit access to coverage of frequently abused drugs with modifications. The following two major changes are incorporated in the final rules: (1) Plan sponsors will not need to obtain agreement from all prescribing providers in order Page 8

to apply a limitation on a beneficiary s coverage so long as all other requirements are met; and (2) CMS is eliminating the required 6-month waiting period before a lock-in requirement can be applied to a beneficiary s coverage of frequently abused drugs. Those changes as well as the other lesser changes, are described in more detail below. In order to limit access to coverage of frequently abused drugs, plan sponsors must engage in case management. CMS finalizes its proposed case management requirements in 423.153(f)(2) with one addition in italics below. As finalized, plan sponsors must send written information to the beneficiary s prescribers that the beneficiary meets the clinical guidelines and is a potential at-risk beneficiary. Where a provider does not respond to that written information, the clinical staff of the sponsor would need to make reasonable attempts to reach out by telephone and in the final rule, by another effective communication method designed to elicit a response from the prescribers within a reasonable period. They must seek to obtain information from the prescribers about any factors in the beneficiary s treatment that are relevant to a determination that the beneficiary is at-risk, including whether prescribed medications are appropriate for the beneficiary or the beneficiary is an exempted beneficiary. For a beneficiary who was identified as potentially at-risk or at-risk by his or her prior plan, a plan sponsor can meet this requirement by obtaining case management information from the previous sponsor. Proposed 423.153(f)(3) provides the ways in which a plan sponsor can limit access to coverage of frequently abused drugs. CMS finalizes the section with modifications to clarify that a plan sponsor can use any or all of the following tools to limit an at-risk beneficiary s access to coverage of frequently abused drugs under its drug management program. A sponsor could: Implement a point-of-sale claim edit for a specific at-risk beneficiary after which the sponsor would not cover one or more of the frequently abused drugs for the beneficiary (unless there is a subsequent determination that a person is no longer at-risk or potentially at-risk or there is a successful appeal); Implement a lock-in requirement where a beneficiary s access to coverage for frequently abused drugs is limited to those prescribed by one or more prescribers; dispensed by one or more network pharmacies; or both (absent a subsequent determination or successful appeal.) Section 423.153(f)(4), which describes the actions that must be taken by a plan sponsor before a beneficiary s access to coverage can be limited, is finalized with a significant change. Under the proposed rule, a sponsor would have needed to conduct the case management described in paragraph (f)(2), obtain agreement of prescribers that the limitation is appropriate, and provide notice to the beneficiary as required in paragraphs (f)(5) and (6) (described below). Under the final rule, a sponsor will only need to obtain the agreement of at least one prescriber instead of obtaining the agreement among multiple prescribers to impose a lock-in or beneficiary specific POS edit. CMS was persuaded by commenters who argued that it would be resource intensive and would likely impede the effectiveness of the rules if plans were required to get all prescribers to agree. Some commenters pointed out that plans will not necessarily have relationships with all prescribers and in some cases, the prescriber may be part of the overutilization problem. In response to a commenter s suggestion, CMS declines, however, to allow an at-risk beneficiary to identify a primary prescriber for the purposes of prescriber agreement. Page 9

CMS finalizes as proposed that a plan sponsor meets case management requirement in the case of prescribers who are unresponsive to a written inquiry if the plan sponsor has made 3 attempts to contact them by telephone within 10 business days. However, a sponsor cannot implement a lock-in requirement in which a beneficiary is limited to one or more prescribers if no prescriber was responsive. CMS eliminates proposed 423.153(f)(4)(iii) because it is duplicative of 423.153(f)(2)(ii). The proposed provision would have specified that a sponsor has met the case management requirement if the beneficiary meets the definition of a potential at-risk beneficiary or an at-risk beneficiary; and the sponsor has obtained the applicable case management information from the sponsor of the beneficiary's most recent plan and updated it as appropriate. CMS made another significant change to 423.153(f)(4) eliminating the proposed limitation (in paragraph (f)(4)(iv),) that would have allowed the lock-in option only be imposed if at least 6 months have passed from when the beneficiary was first identified as at risk and the beneficiary meets clinical guidelines and was included on the most recent CMS identification report. Commenters indicated that the 6-month period worked against the goal of CARA, was not in the spirit of a national public health crisis, and could leave beneficiaries at greater risk for adverse health outcomes. Initial and Second Notices. CMS responds to a number of comments regarding its notice provisions and finalizes one change to proposed 423.153(f)(5), which would require a plan sponsor to provide an initial written notice to a potential at-risk beneficiary if it intends to limit access to frequently abused drugs. The change specifies that an initial notice to indicate a sponsor s intent to limit access for a potential at-risk beneficiary is issued only after conducting case management. Other requirements for the initial notice are finalized as proposed including that the notice must use language approved by the Secretary and be in a readable and understandable form, and that the sponsor must make reasonable efforts to provide the beneficiary s prescriber(s) of frequently abused drugs with a copy of the notice. The initial notice must: (1) Explain that the beneficiary s current or immediately prior Part D plan sponsor identified the beneficiary as potentially at-risk; (2) Describe state and federal public health resources designed to address prescription drug abuse to which the beneficiary has access, including mental health and other counseling services, services covered under Medicare, Medicaid or supplemental plans, and information on how to access such services; (3) Explain the beneficiary s right to a redetermination if the sponsor issues a determination that the beneficiary is at-risk and describe the standard and expedited redetermination processes; (4) Request that the beneficiary submit, within 30 days of the date of the initial notice, information that the beneficiary believes is relevant to the sponsor s determination, including which prescribers and pharmacies the beneficiary would prefer the sponsor to select if the sponsor implements lock-in requirement; Page 10

(5) Explain the meaning and consequences of being identified as an at-risk beneficiary, including the sponsor s drug management program, the limitation the sponsor intends to place on the beneficiary, the timeframe for the sponsor s decision, and if applicable, any limitation on the availability of the dual eligible Medicare/Medicaid beneficiaries (duals) special enrollment period described in 423.38 (described in more detail below); (6) Provide instructions that explain how the beneficiary can contact the sponsor, including how to submit information to the sponsor that the beneficiary believes is relevant to the sponsor s determination (as described in (4) above); (7) Contact information for other organizations that can provide the beneficiary with assistance regarding the sponsor s drug management program; and (8) Other information as determined necessary by CMS. CMS reiterates its expected sequence of steps. The sequence would be to first conduct case management including clinical contact, prescriber verification, and at least one prescriber agreement; then indicate the intent to limit access via this notice. Further, a sponsor should not send an initial notice until the sponsor has been in contact with the beneficiary s prescribers so as to avoid alarming the beneficiary. In response to inquiries from commenters, CMS indicates that it will post initial and second notices the Federal Register to give stakeholders an opportunity to review and comment on those documents. At that point, CMS will provide details about whether and how plans may modify the notices that they issue to beneficiaries if they should decide to do so. CMS declines to propose that notices should be subject to translation requirements because call centers are required to have interpreter services available. CMS will also provide information on federal and state public health resources to include in the initial notice. CMS finalizes 423.153(f)(6), requirements for a second written notice to at-risk beneficiaries upon limiting access to coverage for frequently abused drugs, as proposed. The second notice must use language approved by the Secretary and be in a readable and understandable form. As with the initial notice, the plan sponsor must make reasonable efforts to provide the beneficiary s prescriber(s) of frequently abused drugs with a copy of the notice. The second notice must: (1) Explain that the beneficiary s current or immediately prior Part D plan sponsor identified the beneficiary as at-risk; (2) Explain that the beneficiary is subject to the requirements of the sponsor s drug management program, the limitation the sponsor is placing on the beneficiary s access to frequently abused drugs and the effective end dates of the limits. If applicable, the notice would also describe any limit on access to the special enrollment period (SEP) for dual- Medicare and Medicaid-eligible individuals (described more fully below); (3) If applicable, identify the prescriber(s) or pharmacy(ies) from which the beneficiary must obtain frequently abused drugs for them to be covered by the sponsor; (4) Explain the beneficiary s right to a redetermination under 423.580, describe the standard and expedited redetermination processes and the beneficiary s right to, and conditions for, obtaining an expedited redetermination; (5) Explain that the beneficiary can submit to the sponsor, the prescriber(s) and pharmacy(ies) from which the beneficiary would prefer to obtain frequently abused drugs; Page 11

(6) Include instructions that explain how a beneficiary can contact the sponsor, and how to submit information that the beneficiary believes is relevant to the sponsor s determination; and (7) Other content as determined necessary by CMS. CMS finalizes without change 423.153(f)(7), which describes the specific components of an alternate second notice that is required when the sponsor does not implement a limitation after providing a beneficiary with an initial notice. To reduce beneficiary confusion, the alternate second notice will notify the beneficiary that the sponsor no longer considers the beneficiary to be potentially at-risk and will not limit the beneficiary s access to frequently abused drugs. The notice would also indicate, if applicable, that any SEP limitation (see below for further explanation) is no longer applicable. Section 423.153(f)(8) establishes the timing requirements for second and alternate second notices. CMS finalizes without change that the notices would be required to be provided no less than 30 days after the initial notice. CMS changes, however, the maximum timeline by which sponsors must send the second or alternate notice in response to commenters concerns. Most commenters felt that 90 days was too long considering that potentially at-risk beneficiaries would lose access to their duals SEP during that period. CMS modifies the maximum timeline to be no more than the earlier of the date the sponsor makes the relevant determination or 60 days after the date of the initial notice. CMS retains its proposed exception for plan sponsors who are notified by the most recent plan that the beneficiary was prior enrolled in that plan and that the beneficiary was determined to be at-risk. For those beneficiaries, the new plan could immediately, upon enrollment, provide a second notice and initiate claim edits or a lock-in requirement as long as the lock in requirement limits access to the same location of pharmacy or same prescriber as such limitation under the beneficiary s former plan. CMS also makes clear in the preamble and with clarifying text in preamble of the final regulation that a gaining plan that chooses to immediately impose the restrictions of the prior plan does not need to re-send an initial notice but must issue a new version of the second notice. Lock-In Program Requirements. Beneficiary Preferences. CMS finalizes without change 423.153(f)(9) which provides, subject to exceptions described below, that if a sponsor intends to impose a lock-in requirement and a beneficiary identifies his or her preferred pharmacy or prescriber, then the plan sponsor must implement the lock-in based on those preferences, assuming that the pharmacy or prescriber are in the plan s network. The sponsor would also be required to notify the beneficiary of such selection in the second notice (or if not feasible due to the timing of the beneficiary identifying his or her preference, no later than 14 days after receiving such preference.) CMS provides a clarification that at-risk beneficiaries who are entitled to fill prescriptions or receive services from Indian Health Service, Tribal, and Urban Indian organization pharmacies may select among those pharmacies or prescribers to be their preferred pharmacy(s) or prescriber(s) even if they are not in-network. In response to the recommendation of commenters, Page 12

CMS considers whether there should be limitations on the number of times a beneficiary can change their preferences. CMS declines to adopt such a limit noting that it must balance opioid abuse and misuse with reasonable access to pharmaceuticals and identifies several types of circumstances in which a beneficiary might legitimately need to change their preferred pharmacy. CMS notes that plan sponsors do not have to adopt changes based on new beneficiary preferences and should not if it believes that such changes are contributing to abuse or diversion. CMS also indicates that it will monitor this issue going forward. Section 423.153(f)(10) is adopted unchanged. It provides an exception to 423.153(f)(9) in a case in which the plan sponsor believes that the beneficiary s preferred prescriber or pharmacy would contribute to the beneficiary s prescription drug abuse. If not honoring the beneficiary s preference, the sponsor would be required to provide notice at least 30 days in advance and would need to include a rationale for not honoring the preference. Assuring Reasonable Access. In 423.153(f)(11), CMS identifies the factors that a plan sponsor would need to ensure reasonable access in establishing a lock-in requirement. CMS finalizes these provisions with minor modifications to improve clarity. Under the provision, in designating a prescriber or pharmacy under a lock-in requirement, the sponsor would need to take into account a beneficiary s geographic location, beneficiary preference, past use of prescribers or pharmacies, impact on cost-sharing and travel time. The sponsor would also need to consider beneficiaries who live in multiple residences, access in the case of natural disasters or similar situations, and access to emergency services. The final rule indicates that beneficiary preference would be given higher priority than a beneficiary s geographic location. Section 423.153(f)(12), adopted with modifications to improve clarity, ensures that a plan sponsor identifies more than one prescriber or pharmacy if multiple prescribers or pharmacies are medically necessary for the at-risk beneficiary. Section 423.153(f)(13) requires plan sponsors to notify a prescriber or pharmacy that a beneficiary has been identified for inclusion in the drug management program and that the prescriber(s) or pharmacy(ies) is being selected as the beneficiary s designated prescriber or pharmacy. Before conveying that information to the beneficiary, the sponsor must receive confirmation from the selected prescriber(s) or pharmacy(ies) that such selection was accepted. CMS adds in the final rule that the notification occurs during case management. Termination of an at-risk determination. CMS finalizes 423.153(f)(14) with a significant change. As proposed, an at-risk determination would terminate at the earlier of the date that the beneficiary demonstrates through a subsequent determination or a successful appeal that he or she is no longer at-risk or the end of the 12-month period after the limitation becomes effective as determined by the date of the second notice. In response to comments that an automatic 12-month termination is arbitrary, too short, or could increase the likelihood of adverse outcomes, CMS is providing in the final rule a process for extending the determination for an additional 12 months. The plan sponsor must determine at the end of the one-year period that there is a clinical basis to extend the limitation, must obtain agreement of a prescriber of frequently-abused drugs for the beneficiary, and must provide another notice to the beneficiary Page 13

(consistent with the requirements for the second written notice). A lock-in provision cannot be extended if no prescriber is responsive. Timelines. Section 423.156(f)(15) addresses disclosures and timelines between CMS and plan sponsors. CMS finalizes the provision with two changes one change to a timeline as indicated below and a second change to establish a timeline for sponsors that receive a notice from the most recent plan. Under the finalized provision, CMS will identify each potential at-risk beneficiary to the sponsor of the plan that the beneficiary is enrolled in. Likewise, a Part D sponsor that operates a drug management program is required to disclose any data or information as CMS requires to CMS. Plan sponsors would be required to respond to CMS within 30 days of receiving a report of a potential at-risk beneficiary; provide information to CMS about a potential at-risk beneficiary that the sponsor identifies within 30 days of the most recent CMS report on potential at-risk beneficiaries; provide information to CMS within 7 days (instead of 7 business days) of an initial or second notice or termination date; transfer case management information upon request of a new plan sponsor as soon as possible but no later than 2 weeks from the new sponsor s request when an at-risk beneficiary or potential at-risk beneficiary disenrolls from the sponsor s plan and enrolls in another plan offered by the gaining sponsor if the edit or limitation has not yet been terminated. In the final rule, CMS adds that a sponsor must provide information to CMS about any potential at-risk beneficiary identified via notice from a former plan sponsor within 30 days from the date of the most recent CMS report identifying potential at-risk beneficiaries. Clinical guidelines. Unchanged in the final rule, 423.153(f)(16) requires that the clinical guidelines for drug management programs be developed with stakeholder consultation, based on a person obtaining frequently abused drugs from multiple prescribers or pharmacies or the level of abused drugs, derived from expert opinion and an analysis of Medicare data, and include a program size estimate. SEP for Dual Medicare and Medicaid Eligible Individuals. CMS also finalizes with one addition, modifications to 423.38(c)(4) to limit the availability of the SEP for low-income subsidy eligible individuals who are designated to be potential at-risk or at-risk. Under the final rule, once an individual is identified as potentially at-risk or at-risk and the sponsor intends to limit access to frequently abused drugs, the sponsor would provide an initial notice to the beneficiary and the duals SEP would no longer be available to that individual. The limitation becomes effective as of the date the Part D plan sponsor identifies the individual as potential atrisk. In the final rule, CMS adds clarity by specifying that unless the beneficiary s potential atrisk or at-risk status has been terminated, the beneficiary will not be able to use the duals SEP. In the preamble to the final rule, CMS clarifies that before a beneficiary s access to the duals SEP can be limited, the sponsor must have already engaged in case management. In response to comments, CMS explains in the preamble that the limitation on access to the duals SEP does not impact the availability of other SEPs and provides additional operational detail about how sponsors will be able to know a beneficiary s at-risk status for implementing this limitation. CMS declines to incorporate exemptions for Indian Health Service-eligible individuals or for individuals who are newly diagnosed with a condition that requires coverage of a drug not available on their existing plan s formulary. Page 14

Reconsideration and Appeals. CARA requires that an individual identified as at-risk be able to appeal that determination, as well as a coverage determination for a prescription product, the selection of a prescriber or pharmacy under a lock-in requirement, and information sharing for subsequent plan enrollments. CMS reaffirms in the final rule, that it considers all of those aspects of the drug management program to be part of a beneficiary s at-risk determination. As such, a beneficiary seeking reconsideration or appeal could seek reconsideration or appeal of all of those relevant elements together. CMS finalizes its proposals to provide individuals seeking reconsideration or appeal of an at-risk determination to have a right to a plan level appeal followed by the right to an independent review if the plan level review affirms the initial adverse decision with two changes: In the final rule, CMS adds a new definition of at-risk determination to 423.560 to mean a decision made under a plan sponsor s drug management program in accordance with 423.153(f) that involves the identification of an individual as an at-risk beneficiary for prescription drug abuse; a limitation, or the continuation of a limitation, on an at-risk beneficiary s access to coverage for frequently abused drugs (i.e., a beneficiary specific point-of-sale edit or the selection of a prescriber and/or pharmacy and implementation of lock-in); and information sharing for subsequent plan enrollments. This definition helps to clarify the types of actions that are appealable: the identification of a beneficiary as atrisk; a point-of-sale edit; the selection of a prescriber or pharmacy under a lock-in; and information sharing between plans. CMS clarifies that the determinations made under 423.153(f) are collectively considered to be an at-risk determination as defined in 423.560. CMS addresses a number of questions about the appeals process including those related to: Whether a potential at-risk beneficiary (in addition to one determined to be at-risk) should also have appeals rights; Required notices of appeals rights; Whether a re-determination under this provision is considered a coverage determination; Whether underlying criteria for determining at-risk status is appealable; How to handle appeals of multiple actions; How to effectuate a redetermination of at-risk status; Whether a person appealing their at-risk status should have restrictions applied to their coverage of frequently abused drugs during the appeals process; The timelines for the process; The availability of exceptions and whether a drug approved through the exceptions process could be terminated; Review criteria; and Handling and reporting of appeals. CMS acknowledges concerns about the timeline for implementing the provisions and responded to commenters who asked for more information on how to coordinate between a plan sponsor s formulary-level coverage rules and the rules for a drug management program under the finalized Page 15

rules. CMS indicates that a plan s formulary level rules apply more broadly while the DUR rules incorporated at this time apply to potential at-risk and at-risk beneficiaries. CMS responded to a request that it confirm that nothing in the final rule impacts PACE organizations waivers of Part D requirements in 423.153 (relating to drug utilization management) and if existing waivers of 423.153 could be extended to include the finalized DUR provisions at 423.153(f) unless such a waiver is not needed due to the voluntary nature of drug management programs. CMS replied that PACE organizations are not excluded from OMS reporting under the current policy. CMS points out that because of the voluntary nature of the provisions under 423.153(f), a waiver is not necessary for PACE organizations but if PACE organizations implement drug utilization management activities covered under 423.153(f), then they must comply with the requirements of 423.153(f). 2. Flexibility in the Medicare Advantage (MA) Uniformity Requirements Under sections 1852(d) and 1854(c) of the Social Security Act (the Act), benefits under MA plan must be available and accessible to and premiums must be uniform for each enrollee in the plan. CMS has until the present time required MA plans to offer all enrollees access to the same benefits at the same level of cost sharing. 6 CMS has determined that it has the authority under those statutory provisions and the implementing regulation at 422.100(d) to permit MA organizations (MAOs) to: reduce cost sharing for certain covered benefits; offer specific tailored supplemental benefits; and offer lower deductibles for enrollees that meet specific medical criteria, provided that similarly situated enrollees (that is, all enrollees who meet the identified criteria) are treated the same. This statutory interpretation, according to CMS, enables MA plans to vary supplemental benefits as well as premium and cost sharing. Moreover, MA plans would be able to exercise the uniformity flexibility within each segment of an MA plan. CMS says that these flexibilities will be available to plans beginning in CY 2019. CMS provides examples of the flexibility it envisions under the new interpretation. It would allow, for example, an MA plan to offer an enrollee with diabetes benefits such as: reduced cost sharing for endocrinology visits; more frequent foot exams as a supplemental benefit; and a lower deductible. In response to inquiries from commenters, CMS says that plans may eliminate deductibles or copays altogether as well as reducing them but the flexibility does not extend to premiums. CMS indicates that it will provide additional guidance before the CY 2019 bids are due. CMS cautions that limitations apply to its proposed new MA plan flexibility stemming from section 1852(b)(1)(A) of the Act. This provision prohibits an MA plan from denying, limiting or conditioning the coverage or provision of a service or benefit based on health-status related factors. It is implemented as the non-discrimination requirement in 422.100(f)(2) and 422.110(a). CMS has interpreted that the purpose of this requirement is to protect high-acuity 6 The one exception is for the limited number of plans participating in the CMS MA Value-Based Insurance Design (VBID) demonstration. Page 16