On December 4, 2014, CMS issued additional guidance regarding rewards and incentives programs (“RI Programs”).  This guidance elaborates on whether an RI Program can target members with specific diseases, whether rewards can be tied to health outcomes, how to value rewards and incentives, and gives examples of appropriate and inappropriate rewards and incentives.

Historically, MA plans have been able to offer limited rewards and incentives to members in order to entice them to receive preventive services that had zero-cost sharing in accordance with guidelines set forth in Chapter 3 of the Medicare Managed Care Manual.  In May of 2014, CMS promulgated final regulations that provide MA plans much more flexibility in implementing rewards and incentives programs for members. Under the regulations, MA plans are allowed to create programs that provide members rewards and incentives for participating in activities focused on promoting improved health, preventing injuries and illness, and promoting efficient use of health care resources, defined in the guidance as “Preventive Services.”

A permissible rewards and incentives program must: (1) be offered in relation to an entire service or activity, which an MA plan can divide across a series that amounts to a service or activity; (2) be of a value that is expected to impact member behavior but not exceed the value of the Preventive Service the member is receiving; (3) otherwise comply with all relevant fraud and abuse laws including the AKS and CMP; (4) be designed so that all members can earn rewards; and (5) not discriminate based on a variety of demographic facts and health status, including disability, chronic diseases, institutional status, or frailty.  The rewards and incentives offered may not be cash or other monetary rebates and may only be offered to current members, not potential members.

The December guidance makes clear that RI Programs:

• Must be made flexible to accommodate individuals who are unable to fulfill a specific requirement, for example, an internet-based program must have an alternative participation method to accommodate members without internet access.

• Can be designed to reward health behavior over time but may not be tied to health outcomes.

• Must establish reasonable and appropriate values for the rewards and incentives that are offered in accordance with CMS requirements, and be less than the value of the Preventive Service the member receives.

• May not offer cash or monetary rebates or reduced cost-sharing or premiums.

• May offer gift cards that cannot be redeemed for cash.

• May offer discount coupons that are not redeemable for cash.

• May award members with points that can be accumulated to obtain a member’s select reward.

• May not offer a “chance” as a reward, therefore rewards and incentives may not be based on probability.

• Must directly benefit the member.

An MA plan may include information regarding its RI Programs in its marketing material so long as it is provided to all current and potential members without discrimination.  CMS is not currently collecting information from MA plans regarding their RI Programs, but MA plans are expected to document such programs and be prepared to provide such information upon request.