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Medicare Advantage and Prescription Drug Benefit Programs Final Rule

Timeline of Provisions

Medicare Advantage and Prescription Drug Benefit Programs Final Rule


The Centers for Medicare & Medicaid Services (CMS) distributed its final rule on April 5, 2011, which implements provisions of the health reform law related to the Medicare Advantage (Part C) and Prescription Drug Benefit (Part D) Programs. The final rule also included operation and program changes to both programs for contract year 2012.

Below are details related to key provisions from the health reform law and program changes captured in the final rule. UnitedHealth Group submitted a comment letter to CMS that recommended policy changes for CMS' consideration. Many of the policy changes were adopted by CMS in whole or in part in the final rule. These changes are shown below in blue, italic text.

Health Reform Law Provisions

  • Bid Denial – Clarifies the Secretary of Health and Human Services' authority to deny bids that propose significant increases in cost-sharing or decreases in benefits.
  • Long-term Care Part D Drug Dispensing – Reduces financial waste of Part D drugs in long-term care facilities by requiring dispensing of brand-name prescription drugs in increments of 14 days or less, effective January 1, 2013.
  • Special Needs Plan (SNP) Approval – Establishes a special needs plan approval process based only on an evaluation of the model of care and not on the quality improvement program plan from the National Committee for Quality Assurance.
  • Annual Election Period – Codifies the new beneficiary election periods, including the new annual election period that begins on October 15, 2011.
  • Part D Gap – Codifies statutory changes to close the Part D coverage gap.
  • Benchmark and Rebate Calculations – Codifies changes to the Medicare Advantage benchmark calculation and rebate amounts.

Program and Operation Changes

  • Prohibits Tiered Cost Sharing – Eliminates the proposal that would have prohibited Medicare Advantage organizations from varying the level of cost sharing for basic or supplemental benefits for any reason. CMS will consider further rulemaking related to this practice in the future.
  • Star Rating Appeals Process – Strengthens the administrative review process for Medicare Advantage organizations that appeal their star ratings. The final rule outlines a two-step administrative review process that includes a request for reconsideration and a request for an informal hearing on the record.
  • Customized Enrollee Data – Launches a small pilot program with volunteer organizations in 2012 to test a model Explanation of Benefits (EOB) statement that would mirror the EOB currently provided to Part D enrollees.
  • Medication Therapy Management Program – States that CMS identify an alternative to requiring health benefit plans from contracting with long-term care facilities for the annual Comprehensive Medication Reviews.
  • Release of Parts C and D Data – Requires that plans release on an annual basis certain Parts C and D payment information for research, analysis, and public information functions.

Frequently Asked Questions

What is the objective for health reform updates related to Medicare Advantage and Prescription Drug Benefit?

CMS expects these changes will clarify various program participation requirements, strengthen beneficiary protections, and strengthen its ability to identify strong applicants for Part C and Part D program participation and remove consistently poor performers.