I. Executive Summary and Background
A. Executive Summary
1. Purpose
This final rule from the Centers for Medicare & Medicaid Services (CMS), a division of the Department of Health and Human Services (HHS), addresses key modifications to the Medicare Advantage (MA or Part C), Medicare Prescription Drug Benefit (Part D), and Medicare Cost Plan programs. These revisions are mandated by specific sections of the Bipartisan Budget Act of 2018 (BBA of 2018) and the 21st Century Cures Act (Cures Act). While some may inquire Which Act Will Gradually Phase Out Medicare Managed Care Programs, it’s crucial to understand that these legislative changes are not designed to dismantle managed care. Instead, they are strategically aimed at refining and strengthening these programs to better serve beneficiaries and ensure their long-term sustainability. The rule also incorporates several enhancements and clarifications to existing CMS policies, alongside technical updates to improve program operations.
2. Summary of the Major Provisions
a. Medicare Advantage (MA) Plan Options for End-Stage Renal Disease (ESRD) Beneficiaries (§§ 422.50, 422.52, and 422.110)
Effective January 1, 2021, the Cures Act removes the long-standing prohibition on individuals with End-Stage Renal Disease (ESRD) from enrolling in Medicare Advantage plans. This rule codifies this significant change, expanding access to MA plans for ESRD beneficiaries and aligning their enrollment options with those of other Medicare beneficiaries. This change is reflected in revisions to §§ 422.50(a)(2), 422.52, and 422.110, marking a new era of inclusivity in Medicare Advantage.
b. Medicare Fee-for-Service (FFS) Coverage of Costs for Kidney Acquisitions for Medicare Advantage (MA) Beneficiaries (§ 422.322)
Complementing the expanded enrollment for ESRD beneficiaries, this rule implements a pivotal payment shift. Starting January 1, 2021, the costs associated with kidney acquisitions for transplant, for MA enrollees, will be covered under the original Medicare Fee-for-Service (FFS) program, not by MA plans. This adjustment, mandated by the Cures Act and codified in § 422.322, streamlines the payment process for these high-cost procedures and ensures consistent coverage under original Medicare.
c. Exclusion of Kidney Acquisition Costs From Medicare Advantage (MA) Benchmarks (§§ 422.258 and 422.306)
Reflecting the shift of kidney acquisition costs to FFS, this rule also adjusts the financial benchmarks for MA plans. Effective January 1, 2021, the calculation of MA benchmarks and capitation rates will exclude the estimated standardized costs for kidney acquisitions. This ensures accurate and equitable payment to MA plans, aligning with their revised coverage responsibilities. These changes are formalized in §§ 422.258(d) and 422.306.
d. Medicare Advantage (MA) and Part D Prescription Drug Program Quality Rating System (§§ 422.162, 422.166, 423.182, and 423.186)
Enhancements to the Star Ratings system are finalized in this rule to further improve the predictability and stability of these ratings. Key changes include:
- Increased Weighting of Patient Experience and Access Measures: The weight of patient experience, complaints, and access measures in the Star Ratings system is increased from 2 to 4, underscoring the importance of beneficiary perspectives and ease of access to care.
- Outlier Removal Methodology: The rule finalizes the use of Tukey outlier deletion, a standard statistical method, to remove outliers before calculating cut points for Star Ratings. This enhances the stability and predictability of the system, though its implementation is delayed until the 2024 Star Ratings (based on the 2022 measurement year).
- Removal of Rheumatoid Arthritis Management Measure: The Rheumatoid Arthritis Management measure is removed from the Star Ratings program, aligning with the measure steward’s decision to retire it from the HEDIS measurement set.
- Part D Statin Use in Persons with Diabetes Measure Weighting Category Update: The Part D Statin Use in Persons with Diabetes measure’s weighting category is updated to reflect its nature more accurately.
These quality rating system changes are implemented through revisions to §§ 422.162, 422.166, 423.182, and 423.186.
e. Medical Loss Ratio (MLR) (§§ 422.2420, 422.2440, and 423.2440)
Several amendments are made to the Medical Loss Ratio (MLR) regulations to ensure a more accurate and comprehensive reflection of healthcare expenditures:
- Expanded Definition of Incurred Claims: The definition of “incurred claims” in § 422.2420 is broadened to include all amounts paid by MA organizations for covered services, irrespective of whether the recipient is a “provider” as strictly defined. This change ensures that payments for innovative supplemental benefits, which may not be delivered by traditional providers, are included in the MLR calculation.
- Codification of Credibility Definitions and Factors: The definitions of partial, full, and non-credibility, along with associated credibility factors, are formally codified in §§ 422.2440 and 423.2440. This enhances transparency and regulatory certainty.
- Deductible Factor for MA MSA Contracts: A deductible factor is introduced to the MLR calculation for MA Medical Savings Account (MSA) contracts in § 422.2440. This adjustment acknowledges the higher variability in claims experience associated with high-deductible health plans, ensuring a fairer MLR assessment for MSA plans.
f. Medicare Advantage (MA) and Cost Plan Network Adequacy (§§ 417.416 and 422.116)
To bolster network adequacy and beneficiary access, this rule codifies the existing network adequacy methodology and introduces key policy enhancements in §§ 417.416 and 422.116:
- Codification of Existing Methodology: The established network adequacy methodology is codified, enhancing transparency and predictability for MA and Cost plans.
- Rural Network Adequacy Standards Adjustment: In non-urban counties (Micro, Rural, and CEAC), the percentage of beneficiaries required to reside within maximum time and distance standards is reduced from 90% to 85%, acknowledging the unique challenges of network development in rural areas.
- Telehealth Provider Credit: MA plans receive a 10-percentage point credit towards network adequacy percentages when contracting with telehealth providers in specific specialties (including Dermatology, Psychiatry, Cardiology, and Primary Care). This recognizes the role of telehealth in expanding access, particularly in underserved areas.
- Certificate of Need (CON) Law Credit: A 10-percentage point credit is also available for MA plans operating in states with CON laws or other anti-competitive restrictions that limit provider or facility availability. This credit aims to mitigate the impact of state regulations that may hinder network development and beneficiary access.
g. Special Election Periods (SEPs) for Exceptional Conditions (§§ 422.62, 422.68, 423.38, and 423.40)
To provide beneficiaries with greater flexibility and protection in enrollment decisions, this rule codifies several existing Special Election Periods (SEPs) and establishes new ones in §§ 422.62, 422.68, 423.38, and 423.40:
- Codification of Existing SEPs: Several SEPs previously implemented through subregulatory guidance are now formally codified, including SEPs for Government Entity-Declared Disasters or Other Emergencies, Employer/Union Group Health Plan (EGHP) elections, and individuals disenrolling due to CMS sanctions.
- New SEPs: Two new SEPs are established: one for individuals enrolled in plans placed in receivership and another for those in plans identified as consistent poor performers. These new SEPs offer crucial protections for beneficiaries in vulnerable situations.
3. Summary of Costs and Benefits
| Provision | Description | Impact |
|---|---|---|
| Medicare Advantage (MA) Plan Options for End-Stage Renal Disease (ESRD) Beneficiaries (§§ 422.50, 422.52, and 422.110) | Codifies Cures Act requirement removing enrollment prohibition for ESRD beneficiaries in MA plans, effective January 1, 2021. | Net costs to the Medicare Trust Funds estimated to range from $23 million in 2021 to $440 million in 2030. |
| Medicare Fee-for-Service (FFS) Coverage of Costs for Kidney Acquisitions for Medicare Advantage (MA) Beneficiaries (§ 422.322) | Codifies Cures Act requirement for Medicare FFS to cover kidney acquisition costs for MA beneficiaries, effective January 1, 2021. | Net costs to the Medicare Trust Funds estimated to range from $212 million in 2021 to $981 million in 2030. |
| Exclusion of Kidney Acquisition Costs from Medicare Advantage (MA) Benchmarks (§§ 422.258 and 422.306) | Codifies Cures Act requirement excluding kidney acquisition costs from MA benchmarks and capitation rates, effective January 1, 2021. | Net savings estimated to range from $594 million in 2021 to $1,346 million in 2030. |
| Medicare Advantage (MA) and Part D Prescription Drug Program Quality Rating System (§§ 422.162, 422.166, 423.182, and 423.186) | Increases weight of patient experience/complaints and access measures; finalizes Tukey outlier deletion (delayed until 2024 Star Ratings). | Net cost of $345.1 million in 2024, transitioning to net savings reaching $999.4 million by 2030. Net reduction in spending through 2030 is $4.1 billion. |
| Medical Loss Ratio (MLR) (§§ 422.2420, 422.2440, and 423.2440) | Expands “incurred claims” definition; codifies credibility definitions/factors; applies deductible factor for MA MSA contracts. | (1) Neutral dollar impact. (2) Unlikely to have any impact. (3) Gradually increasing cost of $1 to $6 million per year, totaling $40 million through 2030. |
| Medicare Advantage (MA) and Cost Plan Network Adequacy (§§ 417.416 and 422.116) | Codifies network adequacy methodology, adjusts rural standards, and introduces telehealth/CON law credits. | Unlikely to have any impact on the Medicare Trust Fund. |
| Special Election Periods (SEPs) for Exceptional Conditions (§§ 422.62, 422.68, 423.38, and 423.40) | Codifies existing SEPs and establishes new SEPs for individuals in plans placed in receivership or identified as poor performers. | No added impact, as it codifies existing practices. |
B. Background
This final rule is informed by public feedback received on the proposed rule published on February 18, 2020. CMS received approximately 490 timely responses containing multiple comments from a diverse range of stakeholders, including MA health plans, Part D sponsors, beneficiary advocacy groups, providers, pharmacies, states, telehealth organizations, and policy research organizations. These comments were carefully considered and have informed the provisions finalized in this rule. CMS acknowledges that some comments were outside the scope of the proposed rule and will address remaining proposals from the February 2020 proposed rule in subsequent rulemaking.
II. Implementation of Certain Provisions of the Bipartisan Budget Act of 2018
A. Special Supplemental Benefits for the Chronically Ill (SSBCI) (§ 422.102)
The Bipartisan Budget Act of 2018 (BBA of 2018) introduced new authorities for supplemental benefits within Medicare Advantage (MA) plans, specifically targeting chronically ill enrollees. This rule codifies existing CMS guidance and parameters for these Special Supplemental Benefits for the Chronically Ill (SSBCI) at § 422.102(f), aligning with section 1852(a)(3)(D) of the Act.
The BBA of 2018 expanded the scope of supplemental benefits, allowing MA plans to offer additional benefits to chronically ill enrollees that have a “reasonable expectation of improving or maintaining the health or overall function of the chronically ill enrollee,” even if these benefits are not primarily health-related. The legislation defines a “chronically ill enrollee” as an individual with:
- One or more comorbid and medically complex chronic conditions that are life-threatening or significantly limit overall health or function.
- A high risk of hospitalization or other adverse health outcomes.
- A need for intensive care coordination.
This rule codifies this definition at § 422.102(f)(1)(i). MA plans may consider enrollees with conditions on the CMS-maintained list of severe or disabling chronic conditions as meeting the first criterion of the definition. Plans also have the flexibility to identify other chronic conditions not on the list if they meet the statutory definition.
SSBCI may include benefits not primarily health-related, such as meals, transportation for non-medical needs, pest control, and home modifications, provided they meet the statutory requirement of having a reasonable expectation of improving or maintaining the health or overall function of the chronically ill enrollee. MA plans are expected to document their determinations of enrollee eligibility for SSBCI based on the statutory definition and make this information available to CMS upon request.
To ensure transparency and consistency, MA plans offering SSBCI must have written policies based on objective criteria for determining enrollee eligibility and for determining which SSBCI benefits an enrollee is eligible to receive. These policies and documentation must be made available to CMS upon request. The determination of benefits an enrollee is entitled to receive under SSBCI is considered an organization determination and is subject to standard MA appeals processes.
CMS received approximately 62 comments on the SSBCI proposal, with widespread support for CMS’s flexible approach. Commenters sought clarification on various aspects of the SSBCI policy, including the definition of “intensive care coordination” and the use of functional status in eligibility determinations. CMS responded by emphasizing the flexibility afforded to MA plans in interpreting these terms and developing objective criteria for SSBCI eligibility. While concerns were raised about potential confusion for enrollees and the potential for discrimination, CMS reiterated existing non-discrimination rules and the requirement for clear communication of SSBCI benefits to enrollees. Commenters also requested additional guidance on allowable SSBCI benefits, particularly concerning meals, transportation, and durable medical equipment (DME). CMS clarified that MA plans have broad discretion in designing SSBCI, provided they meet the statutory and regulatory requirements.
After considering these comments, CMS is finalizing § 422.102(f) largely as proposed, with minor technical revisions to the regulation text for clarity.
B. Contracting Standards for Dual Eligible Special Needs Plan (D-SNP) Look-Alikes (§ 422.514)
This final rule addresses the emergence of “D-SNP look-alike” plans, which are non-SNP MA plans that enroll a disproportionately high number of dually eligible individuals but do not adhere to the specific regulatory and state contracting requirements of D-SNPs. These D-SNP look-alikes pose a challenge to the effective implementation of federal and state efforts to integrate care for dually eligible beneficiaries.
To address this issue, CMS is establishing contracting standards at § 422.514 to limit the proliferation of D-SNP look-alikes. This new regulation prohibits CMS from entering into or renewing contracts for non-SNP MA plans that exceed specific dually eligible enrollment thresholds in states where D-SNPs or similar integrated care plans exist.
The rule specifies that CMS will not contract with or renew contracts for non-SNP MA plans that:
- Project in their bid that 80% or more of their enrollment will be dually eligible, or
- Have actual enrollment of 80% or more dually eligible individuals, unless the plan is new and has minimal enrollment (less than one year old with under 200 enrollees).
To minimize disruption for beneficiaries, the rule includes a transition process (§ 422.514(e)) allowing MA organizations with D-SNP look-alikes to transition enrollees to other qualifying MA-PD plans, including D-SNPs, within the same parent organization. This transition process ensures continuity of coverage and allows enrollees to benefit from the care coordination and Medicaid integration features of D-SNPs.
CMS received widespread support for the D-SNP look-alike proposal, with commenters agreeing that these plans undermine Medicare-Medicaid integration efforts. Some commenters expressed concerns about potential disruptions to beneficiary services and choice, prompting CMS to delay implementation of the contract limitations for existing D-SNP look-alikes by one year, until plan year 2023. This delay provides MA organizations with additional time to develop compliant D-SNP products and ensure a smooth transition for enrollees.
Commenters also raised questions about the definition of dually eligible individuals, the enrollment threshold, and the transition process. CMS clarified that the 80% threshold includes both full- and partial-benefit dually eligible individuals and that the threshold applies at the plan level. The transition process allows for movement to MA plans within the same parent organization, maintaining continuity of care. While CMS encourages transitions to D-SNPs, it acknowledges that some enrollees may be transitioned to non-SNP plans if they meet specific criteria, ensuring affordability and continued access to benefits.
After considering all comments, CMS is finalizing § 422.514(d) and (e) with minor modifications, including a one-year delay in implementation for existing D-SNP look-alike contract limitations (until plan year 2023) and technical clarifications to the transition process to ensure it applies only within the same plan type (e.g., HMO to HMO). A new paragraph (f) is added to clarify that actions taken consistent with paragraph (d) warrant special consideration for exemptions from certain application denials.
III. Implementation of Certain Provisions of the 21st Century Cures Act
A. Medicare Advantage (MA) Plan Options for End-Stage Renal Disease (ESRD) Beneficiaries (§§ 422.50, 422.52, and 422.110)
The 21st Century Cures Act (Cures Act) significantly amended section 1851 of the Act, lifting the longstanding prohibition on individuals with End-Stage Renal Disease (ESRD) from enrolling in Medicare Advantage (MA) plans. This rule codifies these statutory changes in §§ 422.50(a)(2), 422.52(c), and 422.110(b), effective for plan years beginning on or after January 1, 2021.
Historically, individuals with ESRD were generally barred from enrolling in MA plans, with limited exceptions. The Cures Act removes this barrier, granting ESRD beneficiaries the same MA enrollment options as other Medicare beneficiaries. This change reflects a commitment to providing comprehensive and coordinated care for individuals with ESRD, recognizing the potential benefits of MA plans in managing their complex healthcare needs.
The rule revises § 422.50(a)(2) to clarify that the prohibition on MA enrollment for ESRD beneficiaries only applies to coverage before January 1, 2021. Similarly, § 422.52(c) is revised to specify that CMS’s authority to waive the enrollment prohibition for ESRD beneficiaries applies only to plan years before 2021. Section 422.110(b) is updated to reflect that the exception to the non-discrimination requirement related to ESRD is also applicable only for plan years before 2021.
CMS received widespread support for this provision, with commenters emphasizing the potential for improved care coordination, enhanced supplemental benefits, and reduced out-of-pocket costs for ESRD beneficiaries enrolled in MA plans. Commenters sought clarification on various operational aspects of the enrollment change, including the elimination of the employer/union group waiver for ESRD enrollment, the impact on the 30-month coordination of benefits period for ESRD beneficiaries, and the process for obtaining and reconciling ESRD status information for payment purposes. CMS clarified that the employer/union group waiver will no longer be effective starting January 1, 2021, and that the 30-month coordination of benefits period remains in effect for ESRD beneficiaries. CMS also addressed questions about data collection and reporting processes, enrollment form updates, and coordination with state Medicaid agencies regarding D-SNP enrollment for ESRD beneficiaries. While concerns were raised about the potential for aggressive marketing to ESRD patients and the need for beneficiary education, CMS emphasized existing marketing regulations and the agency’s commitment to providing educational resources to beneficiaries. Despite concerns about the timing of implementation amid the COVID-19 pandemic, CMS emphasized the statutory mandate to implement this change effective January 1, 2021, and the potential benefits of MA enrollment for ESRD beneficiaries during the public health emergency.
After considering all comments, CMS is finalizing the revisions to §§ 422.50(a)(2), 422.52(c), and 422.110(b) as proposed, removing the prohibition on ESRD beneficiaries enrolling in MA plans, effective January 1, 2021.
B. Medicare Fee-for-Service (FFS) Coverage of Costs for Kidney Acquisitions for Medicare Advantage (MA) Beneficiaries (§ 422.322)
Section 17006(c) of the Cures Act amended sections 1851 and 1852 of the Act to shift the financial responsibility for kidney acquisition costs for MA enrollees from MA plans to the original Medicare Fee-for-Service (FFS) program. This rule codifies these changes by adding a new paragraph (d) to § 422.322, specifying that expenses for organ acquisitions for kidney transplants are an exception to the general rule that MA plans are responsible for covering all Medicare Part A and Part B benefits for their enrollees. Effective January 1, 2021, original Medicare FFS will cover these costs directly.
This change aligns payment responsibility with the original Medicare program for kidney acquisition costs, streamlining the process and ensuring consistent coverage for MA enrollees needing kidney transplants. The rule clarifies that this change applies only to kidney acquisitions, not to organ acquisitions for other types of transplants, and that PACE organizations must continue to cover kidney acquisition costs for their participants.
CMS received supportive comments on this provision, with commenters appreciating the clarity and alignment it provides. Commenters requested further guidance on billing and reimbursement procedures for kidney acquisition costs under FFS Medicare, particularly concerning direct billing to Medicare Administrative Contractors (MACs) and the specific costs payable under FFS. CMS clarified that, effective January 1, 2021, FFS Medicare will cover kidney acquisition costs for MA beneficiaries according to established FFS billing and reimbursement processes outlined in CMS manuals. Hospitals will bill MACs directly for these costs, and payment will be made through the Medicare cost report. CMS also provided clarification on the distinction between cadaveric and living donor organ acquisition costs, directing stakeholders to relevant CMS manuals for detailed information.
After considering all comments, CMS is finalizing the regulatory changes to § 422.322 as proposed, ensuring FFS Medicare coverage of kidney acquisition costs for MA beneficiaries, effective January 1, 2021.
C. Exclusion of Kidney Acquisition Costs From Medicare Advantage (MA) Benchmarks (§§ 422.258 and 422.306)
To ensure fiscal neutrality and accurate payment to MA plans, this rule also implements changes to the calculation of MA benchmarks and capitation rates, excluding kidney acquisition costs. Section 17006(b) of the Cures Act amended section 1853 of the Act to require that the Secretary’s estimate of standardized costs for payments for organ acquisitions for kidney transplants be excluded from Medicare Advantage (MA) benchmarks and capitation rates, effective January 1, 2021. This rule codifies these changes by revising §§ 422.258 and 422.306.
Specifically, the rule amends § 422.258 to reflect that, for 2021 and subsequent years, the base payment amount used to calculate MA benchmarks must be adjusted to exclude payments for kidney acquisitions. Conforming amendments are also made to paragraphs (d)(5) and (6) of § 422.258 to ensure consistency in the exclusion of kidney acquisition costs from the calculation of applicable percentages. Section 422.306 is revised to add a new paragraph (d), explicitly describing the required adjustment to exclude kidney acquisition costs from the calculation of MA annual capitation rates, ensuring alignment with the statutory requirements.
CMS received comments on the proposed regulatory changes, primarily focused on the methodologies for excluding kidney acquisition costs from MA benchmarks and developing MA ESRD state rates. Commenters requested greater transparency and data regarding the carve-out methodology, expressed concerns about the magnitude of the carve-out, and suggested alternative calculation approaches. CMS responded by reiterating that the methodology for calculating the kidney acquisition cost carve-out was detailed in the 2021 Advance Notice and Rate Announcement, emphasizing that the methodology was developed to comply with the statutory requirements of the Cures Act. CMS also clarified that the exclusion of kidney acquisition costs applies to MA ESRD state rates, ensuring consistent application across all MA payment calculations. While commenters raised broader concerns about ESRD rates and dialysis payment policies, CMS clarified that these issues were outside the scope of the proposed rule but would be considered for future rulemaking.
After considering all comments, CMS is finalizing the proposed changes to §§ 422.258(d) and 422.306 as proposed, ensuring the exclusion of kidney acquisition costs from MA benchmarks and capitation rates, effective January 1, 2021.
IV. Enhancements to the Part C and D Programs
A. Reinsurance Exceptions (§ 422.3)
To address industry concerns and provide greater clarity regarding the use of reinsurance in Medicare Advantage (MA), this rule establishes a new regulation at § 422.3, implementing the exception at section 1855(b)(1) of the Act. This provision allows MA organizations to obtain insurance (reinsurance) or make other arrangements for costs exceeding a specified threshold, mitigating financial risk while maintaining primary responsibility for providing healthcare services to enrollees.
Under § 422.3(a), MA organizations have two options for reinsurance:
- Stop-Loss Insurance: MA organizations can purchase insurance or make arrangements to cover costs exceeding $10,000 per enrollee per contract year for basic benefits. This option limits the organization’s financial exposure to exceptionally high individual enrollee costs.
- Pro Rata Insurance: MA organizations can purchase pro rata insurance that shares costs proportionally from the first dollar, provided the actuarial value of the insured risk is equivalent to or less than the value of stop-loss insurance for costs exceeding $10,000 per member per year. This option offers flexibility in risk-sharing arrangements while maintaining actuarial equivalence to the stop-loss option.
The rule clarifies that these reinsurance limits apply only to basic benefits, not to supplemental benefits offered by MA organizations. It also emphasizes that MA organizations remain ultimately responsible for furnishing covered benefits to enrollees, regardless of reinsurance arrangements.
CMS received 13 comments on the reinsurance proposal, with general support for codifying the ability of MA organizations to purchase stop-loss insurance. However, concerns were raised about the complexity and potential difficulty in calculating actuarial equivalency for pro rata insurance. Commenters requested clarification on various aspects of the reinsurance regulation, including its applicability to different types of reinsurance arrangements and the definition of “intensive care coordination.”
In response to these comments, CMS clarified that the pro rata insurance option is intended to provide flexibility while ensuring actuarial equivalence to the stop-loss option. To address concerns about complexity, CMS clarified that actuarial equivalence can be determined using reasonable actuarial methods, such as calculating the expected percentage of claim costs exceeding $10,000 per member per year. The final rule also clarifies that the regulation at § 422.3(a) is specifically about implementing section 1855(b)(1) of the Act and does not address other types of risk sharing arrangements permitted under section 1855(b)(2) through (4) of the Act. The final rule also clarifies that for purposes of 1855(b) of the Act and for § 422.3, CMS will evaluate compliance at the parent organization level, such that risk sharing or allocations of losses and costs among wholly-owned subsidiaries will not be evaluated. Finally, the final rule clarifies that the type of payment arrangement used between an MA organization and contracting physicians, other health professionals or institutions for the financial risk specified in section 1855(b)(4) of the Act is not limited by paragraph (a).
After considering all comments, CMS is finalizing § 422.3 with modifications to clarify the actuarial equivalency standard for pro rata insurance and to ensure the regulation text is clear about the amount of risk MA organizations must retain.
B. Medicare Advantage (MA) and Part D Prescription Drug Program Quality Rating System (§§ 422.162, 422.166, 423.182, and 423.186)
1. Measure-Level Star Ratings (§§ 422.166(a), 423.186(a))
To enhance the stability and predictability of the Star Ratings system, this rule finalizes the use of Tukey outer fence outlier deletion methodology for non-CAHPS measures in §§ 422.166(a) and 423.186(a). This statistical method removes extreme outliers from the measure score distribution before applying hierarchical clustering to determine cut points for Star Ratings. The Tukey outer fence outlier deletion method identifies outliers as scores falling below (Q1 − 3 × IQR) or above (Q3 + 3 × IQR), where Q1 is the first quartile, Q3 is the third quartile, and IQR is the interquartile range.
This outlier removal methodology is intended to mitigate the impact of extreme scores on cut point calculations, leading to more stable and predictable Star Ratings from year to year. While the outlier deletion methodology is finalized in this rule, its implementation is delayed until the 2024 Star Ratings (based on the 2022 measurement year) to allow for further evaluation and stakeholder input.
CMS received numerous comments on the proposed Tukey outlier deletion methodology, with a majority opposing its implementation at this time, citing concerns about its appropriateness for skewed data and the need for further research on alternative outlier removal methods. Commenters also raised concerns about the potential impact of outlier deletion on plans serving complex populations and requested more detailed information on CMS’s analyses and the potential impact on individual plans.
In response to these comments, CMS clarified the rationale for adopting Tukey outlier deletion, emphasizing its transparency, robustness to distributional shape, and effectiveness in stabilizing cut points. CMS also addressed concerns about the method’s applicability to skewed data, noting that the Tukey outer fence method is non-parametric and does not assume a normal distribution. While acknowledging commenters’ suggestions for alternative outlier removal methods and lower guardrail caps, CMS maintained that the proposed Tukey outlier deletion methodology strikes the right balance between stability and accuracy in cut point determination. CMS also addressed concerns about the potential impact on SNPs, clarifying that simulations showed minimal differential impact on SNP versus non-SNP contracts.
To provide additional transparency and allow plans to assess the potential impact of the outlier deletion methodology, CMS committed to displaying simulations of Tukey outlier deletion in HPMS for the 2021, 2022, and 2023 Star Ratings. Recognizing the potential impact of the COVID-19 pandemic on measure scores, CMS delayed the implementation of Tukey outlier deletion for one additional year, until the 2024 Star Ratings.
2. Measure Weights (§§ 422.166(e), 423.186(e))
This rule finalizes the proposal to increase the weight of patient experience/complaints measures and access measures in the Star Ratings system from 2 to 4, as codified in §§ 422.166(e) and 423.186(e). This change, effective for the 2023 Star Ratings (based on the 2021 measurement period), reflects CMS’s commitment to prioritizing the patient voice and enhancing the patient-centeredness of the Star Ratings program.
The increased weighting applies to measures such as the CAHPS survey, complaints, access, and call center measures, all reflecting key aspects of beneficiary experience and access to care. CMS believes that elevating the weight of these measures will incentivize MA plans and Part D sponsors to prioritize improvements in these areas, leading to better beneficiary experiences and improved access to care.
CMS received mixed comments on the proposed weight increase. While some commenters supported the increased emphasis on patient experience and access, the majority opposed the doubling of the weight, arguing that it overemphasizes patient experience at the expense of clinical outcome measures and may not accurately reflect the quality of clinical care. Commenters also raised concerns about the potential for unintended consequences, such as plans focusing on improving patient satisfaction scores at the expense of clinical quality and preventive care. Some commenters suggested a more gradual increase in weighting, while others questioned the validity and reliability of CAHPS measures.
In response to these comments, CMS acknowledged the importance of clinical outcome measures but emphasized the intrinsic value of patient experience as a key dimension of healthcare quality. CMS cited research demonstrating the positive association between patient experience and various aspects of healthcare quality, including adherence to treatment, clinical processes, and health outcomes. CMS clarified that the weight increase is intended to complement, not supplant, the focus on clinical quality, and that outcome measures continue to be heavily weighted in the Star Ratings system. CMS also addressed concerns about the validity and reliability of CAHPS measures, highlighting their robust psychometric properties and widespread use in healthcare quality measurement. While acknowledging concerns about potential unintended consequences, CMS believes that the increased weighting of patient experience and access measures is a necessary step towards creating a more patient-centered Star Ratings program.
After considering all comments, CMS is finalizing the increase in the weight of patient experience/complaints measures and access measures from 2 to 4, effective for the 2023 Star Ratings.
3. Reclassification of the Statin Use in Patients With Diabetes (SUPD) Measure (§§ 422.164(d)(2), 423.184(d)(2))
This rule finalizes the proposal to reclassify the Statin Use in Persons with Diabetes (SUPD) measure from an intermediate outcome measure to a process measure, effective for the 2023 Star Ratings (based on the 2021 measurement period). This reclassification, reflected in revisions to §§ 422.164(d)(2) and 423.184(d)(2), aligns with the measure steward’s (PQA) clarification of SUPD as a process measure, recognizing that the measure assesses statin use as a process of care rather than directly measuring health outcomes.
CMS received broad support for the SUPD measure reclassification, with commenters agreeing that the measure’s specifications and focus on statin initiation, rather than adherence or clinical outcomes, are more consistent with a process measure classification. Commenters also noted that reclassification would align the SUPD measure with the Part C Statin Therapy for Patients with Cardiovascular Disease measure, which is already classified as a process measure. Some commenters urged CMS to exercise caution in future measure reclassifications and weight changes and to consider replacing the SUPD measure with the HEDIS Statin Therapy for Patients with Diabetes (SPD) measure, which they deemed more clinically relevant. CMS acknowledged these comments, clarifying that the reclassification of SUPD was based on the measure steward’s guidance and that CMS will continue to evaluate and refine measures in the Star Ratings program.
After considering all comments, CMS is finalizing the reclassification of the SUPD measure as a process measure, effective for the 2023 Star Ratings.
G. Conclusion
This rule is economically significant under Executive Order 12866 and a major rule under the Congressional Review Act. The net annualized impact of this rule is estimated to be a cost of about $1.9 million per year. However, due to transfers, there is net annualized reduced spending by government agencies (the Medicare Trust Fund and Treasury) of $290-$335 million. The rule advances key policy objectives, including strengthening Medicare Advantage, improving care quality, and enhancing beneficiary access to
