CMS Finalizes CY 2025 Medicare Advantage Rule, Confirming Continued Focus on Marketing Practices and Health Equity

Firm Publication

On April 4, the Centers for Medicare & Medicaid Services (CMS) issued the Contract Year (CY) 2025 Medicare Advantage (MA) Final Rule (Final Rule), which will have significant implications for MA plans and other industry stakeholders. The Final Rule demonstrates CMS’s continued scrutiny of marketing practices in the MA space and its focus on beneficiary protections and health equity. The new regulations are applicable beginning with CY 2025, with a few exceptions.

Restrictions on Agent & Broker Compensation

In an attempt to deter what it views as “anti-competitive” behavior and “high pressure tactics” in MA plan marketing, CMS finalized several changes focused on payments made by MA plans to agents, brokers, and Third-Party Marketing Organizations (TPMOs). Specifically, the Final Rule will:

  • Prohibit contract terms between MA plans and agents, brokers, or TPMOs that could have a “direct or indirect effect of creating an incentive that would reasonably be expected to inhibit an agent or broker’s ability to objectively assess and recommend” which plan best meets a beneficiary’s healthcare needs. Examples of prohibited terms include those that make reimbursement rates or contract renewal contingent on meeting higher enrollment rates or quotas, or that provide for bonuses that are otherwise understood to be based on enrollment volume.
  • Set a single agent and broker compensation rate for all MA plans while revising the scope of what is considered “compensation” to include all payments to an agent or broker relating to the initial enrollment, renewal, or services related to enrollment in an MA plan product.
  • Eliminate the existing regulatory framework that allows for separate payments to agents and brokers for administrative services (including, for example, payments for agent- or broker-conducted health risk assessments characterized as an administrative service).

In addition, although CMS initially proposed to increase the national agent and broker compensation amount for new MA enrollments by $31, CMS instead finalized a $100 increase to the fair market value (FMV) compensation rate. This increase was made in response to comments that CMS’s proposal insufficiently accounted for increased costs (primarily call recording, training, and testing) and is meant to compensate for the fact that separate administrative payments may no longer be made to agents and brokers beginning in CY 2025.

These provisions will also apply to the sale of Medicare Prescription Drug Benefit Program (PDP) plans.

Restricted Distribution of Personal Beneficiary Information by Third-Party Marketing Organizations

In response to comments received on its proposal to completely prohibit TPMOs from distributing personal beneficiary data to other TPMOs, the Final Rule will instead allow TPMOs to share such data with other TPMOs for marketing or enrollment purposes if they obtain prior express written consent from the beneficiary. The Final Rule provides that “personal beneficiary data” includes contact information (e.g., name, address, and phone number) and any other information given by the beneficiary for the purpose of finding an MA or PDP plan, including health information, age, gender, or disability.

The Final Rule requires that separate written consent be obtained from the beneficiary for each downstream TPMO that receives the beneficiary’s data through a “clear and conspicuous” disclosure. CMS explained that consent may be obtained, for example, through a website interface, email, or text message. CMS clarified, however, that as an exception to this requirement, a TPMO transferring a live phone call from a beneficiary to another TPMO who can provide real-time assistance (such as an agent or broker) would not require prior express written consent so long as the beneficiary verbally agreed to be transferred during the call.

Annual Health Equity Analysis of Utilization Management Policies and Procedures

CMS finalized its proposal to add new health equity requirements to the composition and tasks of utilization management (UM) committees, requiring UM committees to:

  • Have at least one member with expertise in health equity based on educational degrees, credentials, or experience by January 1, 2025.
  • Conduct an annual health equity analysis at the plan level of the impact of prior authorization on enrollees with specified social risk factors, including receipt of the Part D low-income subsidy, being dually eligible for Medicare and Medicaid, or having a disability. CMS clarified that the data used for the health equity analysis and reporting excludes data on drugs.
  • Post the annual health equity analysis prominently and in an easily accessible manner on the plan’s publicly available website by July 1, 2025, and annually thereafter, and clearly identify the analysis in the website footer. The analysis must be easily accessible to the general public (e.g., free of charge; without requiring an account, password or the submission of personal identifying information; in a machine-readable format that is digitally searchable and downloadable from the website footer link). CMS expects making this information more easily accessible to automated searches and data pulls will assist third parties and researchers in analyzing the data across MA plans and informing the public. Acknowledging the challenges in ensuring the information is comprehensible to the public, CMS will issue operational guidance for the format of the report.

Expansion of Network Adequacy Requirements for Behavioral Healthcare Providers

The Final Rule adds a new facility-specialty type, “Outpatient Behavioral Health” (OBH), to the list of facility-specialty types evaluated as part of an MA plan’s network adequacy review beginning on January 1, 2025. An OBH may include any of the following:

  • Marriage and family therapists.
  • Mental health counselors.
  • Opioid treatment programs.
  • Community mental health centers.
  • Any of the following providers “who regularly furnish or will regularly furnish behavioral health counseling or therapy services including psychotherapy or prescription of medication for substance use disorders”:
    • Physician assistants (PAs), nurse practitioners (NPs), and clinical nurse specialists (CNSs).
    • Addiction medicine physicians.
    • Outpatient mental health and substance use treatment facilities.

In response to commenters’ perceived concerns regarding “ghost networks” of providers who do not “regularly” furnish behavioral health services, CMS clarified that to be considered an OBH facility, PAs, NPs, and CNSs must have furnished certain psychotherapy or medication prescription services (identified in MA regulations) to at least 20 patients within a 12-month period. MA plans will be required, on an annual basis, to independently verify these providers meet this standard using “reliable information” such as claims data or electronic health records. Alternatively, if there is insufficient evidence of past practice (e.g., where the provider is new to independent practice), MA plans must have a “reasonable and supportable” basis for concluding the standard will be met in the next 12 months.

CMS also noted that MA plans are prohibited from submitting a single provider for purposes of meeting more than one provider network requirement (e.g., psychiatry and OBH facility). However, plans may submit providers that hold multiple credentials for purposes of network adequacy evaluation under each applicable category.

The Final Rule includes base time and distance requirements for the OBH facility-specialty type, ranging from 20 minutes/10 miles for large metro areas to 110 minutes/100 miles for counties with extreme access considerations. Beginning on January 1, 2025, MA plans will be able to receive a 10-percentage point credit toward the percentage of beneficiaries that reside within such time and distance standards if the plan includes one or more telehealth providers of that specialty type that provide additional telehealth benefits in its network.

Other Proposals

CMS also finalized other proposed changes relevant to MA and PDP plans, including, but not limited to:

Increasing the Percentage of Dual Eligibles Who Receive Medicare and Medicaid Services from the Same Organization

Beginning on January 1, 2025, the current quarterly special enrollment period (SEP) will be replaced with a monthly SEP for dually eligible individuals and a new monthly “integrated care SEP” will be available to facilitate “aligned enrollment” for full-benefit dually eligible individuals; beginning on January 1, 2027, enrollment in certain Dual Eligible Special Needs Plans (D-SNPs) will be limited to individuals who are also enrolled in an affiliated Medicaid managed care organization (MCO); and beginning on January 1, 2030, the number of D-SNPs an MA organization (MAO), its parent organization, or an entity that shares a parent organization with the MAO can offer in the same service area as an affiliated Medicaid MCO will be limited.

Standardize the MA Risk Adjustment Data Validation (RADV) Appeal Process

Beginning on January 1, 2025, CMS will require MAOs to exhaust all levels of appeal (reconsideration, hearing, and CMS Administrator review) for RADV medical record review determinations before the payment error calculation appeals process begins.

Mid-Year Enrollee Notification of Available Supplemental Benefits

CMS finalized its proposed requirement that MA plans deliver mid-year notice of supplemental benefits (excluding cost-sharing reductions) that are unused by June 30 of a given year, to beneficiaries beginning in January 2026.

SSBCI Program Changes

CMS finalized its proposed changes to the Special Supplemental Benefits for the Chronically Ill (SSBCI) program that will require MA plans to, among other things, demonstrate, through “relevant acceptable evidence,” that an item or service offered as an SSBCI has a reasonable expectation of improving or maintaining the health or overall function of a chronically ill enrollee for coverage beginning on or after January 1, 2025, with application to the CY 2025 bid process. However, instead of requiring MA plans to document their findings that a chronically ill enrollee is ineligible (rather than eligible) for an SSBCI as initially proposed, CMS will require MA plans to document both approvals and denials of SSBCI.

Clarifying the Impact of Failure to Obtain a Novation Agreement

The Final Rule sets forth the enforcement process CMS will follow when a change of ownership occurs without a novation agreement. Such process will vary depending on whether the new owner already participates in the Medicare program in the same service area as the affected contract and may include intermediate enrollment and marketing sanctions.

If you have any questions about the Final Rule, please contact the authors.

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Firm Publication

On April 4, the Centers for Medicare & Medicaid Services (CMS) issued the Contract Year (CY) 2025 Medicare Advantage (MA) Final Rule (Final Rule), which will have significant implications for MA plans and other industry stakeholders. The Final Rule demonstrates CMS’s continued scrutiny of marketing practices in the MA space and its focus on beneficiary protections and health equity. The new regulations are applicable beginning with CY 2025, with a few exceptions.

Restrictions on Agent & Broker Compensation

In an attempt to deter what it views as “anti-competitive” behavior and “high pressure tactics” in MA plan marketing, CMS finalized several changes focused on payments made by MA plans to agents, brokers, and Third-Party Marketing Organizations (TPMOs). Specifically, the Final Rule will:

  • Prohibit contract terms between MA plans and agents, brokers, or TPMOs that could have a “direct or indirect effect of creating an incentive that would reasonably be expected to inhibit an agent or broker’s ability to objectively assess and recommend” which plan best meets a beneficiary’s healthcare needs. Examples of prohibited terms include those that make reimbursement rates or contract renewal contingent on meeting higher enrollment rates or quotas, or that provide for bonuses that are otherwise understood to be based on enrollment volume.
  • Set a single agent and broker compensation rate for all MA plans while revising the scope of what is considered “compensation” to include all payments to an agent or broker relating to the initial enrollment, renewal, or services related to enrollment in an MA plan product.
  • Eliminate the existing regulatory framework that allows for separate payments to agents and brokers for administrative services (including, for example, payments for agent- or broker-conducted health risk assessments characterized as an administrative service).

In addition, although CMS initially proposed to increase the national agent and broker compensation amount for new MA enrollments by $31, CMS instead finalized a $100 increase to the fair market value (FMV) compensation rate. This increase was made in response to comments that CMS’s proposal insufficiently accounted for increased costs (primarily call recording, training, and testing) and is meant to compensate for the fact that separate administrative payments may no longer be made to agents and brokers beginning in CY 2025.

These provisions will also apply to the sale of Medicare Prescription Drug Benefit Program (PDP) plans.

Restricted Distribution of Personal Beneficiary Information by Third-Party Marketing Organizations

In response to comments received on its proposal to completely prohibit TPMOs from distributing personal beneficiary data to other TPMOs, the Final Rule will instead allow TPMOs to share such data with other TPMOs for marketing or enrollment purposes if they obtain prior express written consent from the beneficiary. The Final Rule provides that “personal beneficiary data” includes contact information (e.g., name, address, and phone number) and any other information given by the beneficiary for the purpose of finding an MA or PDP plan, including health information, age, gender, or disability.

The Final Rule requires that separate written consent be obtained from the beneficiary for each downstream TPMO that receives the beneficiary’s data through a “clear and conspicuous” disclosure. CMS explained that consent may be obtained, for example, through a website interface, email, or text message. CMS clarified, however, that as an exception to this requirement, a TPMO transferring a live phone call from a beneficiary to another TPMO who can provide real-time assistance (such as an agent or broker) would not require prior express written consent so long as the beneficiary verbally agreed to be transferred during the call.

Annual Health Equity Analysis of Utilization Management Policies and Procedures

CMS finalized its proposal to add new health equity requirements to the composition and tasks of utilization management (UM) committees, requiring UM committees to:

  • Have at least one member with expertise in health equity based on educational degrees, credentials, or experience by January 1, 2025.
  • Conduct an annual health equity analysis at the plan level of the impact of prior authorization on enrollees with specified social risk factors, including receipt of the Part D low-income subsidy, being dually eligible for Medicare and Medicaid, or having a disability. CMS clarified that the data used for the health equity analysis and reporting excludes data on drugs.
  • Post the annual health equity analysis prominently and in an easily accessible manner on the plan’s publicly available website by July 1, 2025, and annually thereafter, and clearly identify the analysis in the website footer. The analysis must be easily accessible to the general public (e.g., free of charge; without requiring an account, password or the submission of personal identifying information; in a machine-readable format that is digitally searchable and downloadable from the website footer link). CMS expects making this information more easily accessible to automated searches and data pulls will assist third parties and researchers in analyzing the data across MA plans and informing the public. Acknowledging the challenges in ensuring the information is comprehensible to the public, CMS will issue operational guidance for the format of the report.

Expansion of Network Adequacy Requirements for Behavioral Healthcare Providers

The Final Rule adds a new facility-specialty type, “Outpatient Behavioral Health” (OBH), to the list of facility-specialty types evaluated as part of an MA plan’s network adequacy review beginning on January 1, 2025. An OBH may include any of the following:

  • Marriage and family therapists.
  • Mental health counselors.
  • Opioid treatment programs.
  • Community mental health centers.
  • Any of the following providers “who regularly furnish or will regularly furnish behavioral health counseling or therapy services including psychotherapy or prescription of medication for substance use disorders”:
    • Physician assistants (PAs), nurse practitioners (NPs), and clinical nurse specialists (CNSs).
    • Addiction medicine physicians.
    • Outpatient mental health and substance use treatment facilities.

In response to commenters’ perceived concerns regarding “ghost networks” of providers who do not “regularly” furnish behavioral health services, CMS clarified that to be considered an OBH facility, PAs, NPs, and CNSs must have furnished certain psychotherapy or medication prescription services (identified in MA regulations) to at least 20 patients within a 12-month period. MA plans will be required, on an annual basis, to independently verify these providers meet this standard using “reliable information” such as claims data or electronic health records. Alternatively, if there is insufficient evidence of past practice (e.g., where the provider is new to independent practice), MA plans must have a “reasonable and supportable” basis for concluding the standard will be met in the next 12 months.

CMS also noted that MA plans are prohibited from submitting a single provider for purposes of meeting more than one provider network requirement (e.g., psychiatry and OBH facility). However, plans may submit providers that hold multiple credentials for purposes of network adequacy evaluation under each applicable category.

The Final Rule includes base time and distance requirements for the OBH facility-specialty type, ranging from 20 minutes/10 miles for large metro areas to 110 minutes/100 miles for counties with extreme access considerations. Beginning on January 1, 2025, MA plans will be able to receive a 10-percentage point credit toward the percentage of beneficiaries that reside within such time and distance standards if the plan includes one or more telehealth providers of that specialty type that provide additional telehealth benefits in its network.

Other Proposals

CMS also finalized other proposed changes relevant to MA and PDP plans, including, but not limited to:

Increasing the Percentage of Dual Eligibles Who Receive Medicare and Medicaid Services from the Same Organization

Beginning on January 1, 2025, the current quarterly special enrollment period (SEP) will be replaced with a monthly SEP for dually eligible individuals and a new monthly “integrated care SEP” will be available to facilitate “aligned enrollment” for full-benefit dually eligible individuals; beginning on January 1, 2027, enrollment in certain Dual Eligible Special Needs Plans (D-SNPs) will be limited to individuals who are also enrolled in an affiliated Medicaid managed care organization (MCO); and beginning on January 1, 2030, the number of D-SNPs an MA organization (MAO), its parent organization, or an entity that shares a parent organization with the MAO can offer in the same service area as an affiliated Medicaid MCO will be limited.

Standardize the MA Risk Adjustment Data Validation (RADV) Appeal Process

Beginning on January 1, 2025, CMS will require MAOs to exhaust all levels of appeal (reconsideration, hearing, and CMS Administrator review) for RADV medical record review determinations before the payment error calculation appeals process begins.

Mid-Year Enrollee Notification of Available Supplemental Benefits

CMS finalized its proposed requirement that MA plans deliver mid-year notice of supplemental benefits (excluding cost-sharing reductions) that are unused by June 30 of a given year, to beneficiaries beginning in January 2026.

SSBCI Program Changes

CMS finalized its proposed changes to the Special Supplemental Benefits for the Chronically Ill (SSBCI) program that will require MA plans to, among other things, demonstrate, through “relevant acceptable evidence,” that an item or service offered as an SSBCI has a reasonable expectation of improving or maintaining the health or overall function of a chronically ill enrollee for coverage beginning on or after January 1, 2025, with application to the CY 2025 bid process. However, instead of requiring MA plans to document their findings that a chronically ill enrollee is ineligible (rather than eligible) for an SSBCI as initially proposed, CMS will require MA plans to document both approvals and denials of SSBCI.

Clarifying the Impact of Failure to Obtain a Novation Agreement

The Final Rule sets forth the enforcement process CMS will follow when a change of ownership occurs without a novation agreement. Such process will vary depending on whether the new owner already participates in the Medicare program in the same service area as the affected contract and may include intermediate enrollment and marketing sanctions.

If you have any questions about the Final Rule, please contact the authors.

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