The Centers for Medicare & Medicaid Services (CMS) released its Final Rule on Contract Year 2023 Policy and Technical Changes to the Medicare Advantage and Medicare Prescription Drug Benefit Programs (Final Rule) late last week.  We summarized the major provisions of the CY 2023 Proposed Rule in a blog series in January, noting that the proposals sought to increase consumer protections and reduce health disparities, with a strong emphasis on policies impacting individuals who are dually eligible for Medicare and Medicaid.

This is the first post in our series on the Final Rule.  Here, we discuss one of the more controversial provisions that CMS finalized and which will have immediate impacts on almost all Medicare Advantage (MA) plans: policy changes to the maximum out-of-pocket (MOOP) rules requiring that all cost-sharing, including cost sharing paid by secondary payors, be included in the calculations for MOOP.  CMS is requiring the changes to be implemented in 2023 and thus reflected in the bids due next month.  As part of this policy change, the MA plan must also notify dually eligible enrollees and their providers when enrollees have reached the MOOP limit.

While CMS grouped the MOOP discussion with its D-SNP policies because it specifically impacts individuals with Medicare and Medicaid, this change affects all MA plans with any beneficiaries who have secondary insurance (e.g., Medicaid, employer coverage). 

Current regulations require MA plans to establish a limit on beneficiary cost-sharing for Medicare Parts A and B services, after which the plan pays 100% of the service costs. MA plans are permitted to count only the enrollee contribution towards the MOOP limits, rather than counting the total cost-sharing amounts owed.  This results in amounts paid by a secondary payor not being counted towards MOOP and results in virtually no cap on the amount state Medicaid programs could pay for a dually eligible beneficiary’s MA cost-sharing.  Further, currently, MA plans do not need to count the amount of Medicare cost-sharing that remains unpaid for providers serving dually eligible enrollees as a result of balance-billing prohibitions and State lesser-of policies. CMS states in the Final Rule that it believes this results in discriminatory policies for providers who serve dually eligible individuals and negatively affects access to care for dually eligible individuals.    

As a result, CMS finalized its proposal to require MOOP be calculated using the total cost-sharing established by the MA plan, meaning, effective January 1, 2023, MA must count the following towards MOOP limit:

• Cost-sharing paid a beneficiary;

• Any cost-sharing paid by a secondary or supplemental insurance (e.g., Medicaid, employer(s), and commercial insurance), and

• Any cost-sharing that remains unpaid because of limits on Medicaid liability for Medicare cost-sharing under lesser-of policy and the cost-sharing protections afforded certain dually eligible individuals.

CMS clarifies that this also includes charitable contributions to cost-sharing, noting that reductions in cost-sharing can implicate the Anti-Kickback Statute (AKS) and beneficiary inducement prohibition. 

While states, MedPAC, and MACPAC are pleased with this change, plans pushed back hard, citing the likelihood of increased premiums and a reduction in supplemental benefits.  CMS acknowledged that this policy will likely result in premium increases across MA plans, especially D-SNPs or plans with high populations of dual eligibles.  However, CMS believes these added costs could be “absorbed by plan profit margins” rather than a reduction in supplemental benefits.

In terms of notification, the Final Rule also clarifies that the MA plans must alert enrollees and providers when a dually eligible individual attained the MOOP so providers know they no longer need to bill Medicaid.  CMS states that the notification cannot be the same notification provided to non-dually eligible individuals, as that would cause confusion.  In terms of guidance on this issue, CMS states “attainment of the MOOP limit can be accurately described by telling enrollees they have reached the stage in their benefit when their plan will pay all the cost of your care, and that their providers no longer need to bill Medicaid.”

Even though plans requested that CMS delay implementation to 2024 or 2025, CMS declined to do so.  MA plans must take this policy change into account for its 2023 bids due in June.  These notices must also be prepared by plan year 2023.