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Medicare Advantage Proposed Rule and Final Inpatient Rule

January 16, 2024

Medicare Advantage Proposed Rule for 2025

The United States Centers for Medicare & Medicaid Services (“CMS”) has proposed new rulemaking (88 FR 78476) to revise the Medicare Advantage (Part C) (“MA”) regulations for 2025. CMS is proposing new health equity requirements for prior authorization policies and procedures to aid in the disproportionate access to care for underserved populations. The key proposals include:

  • requiring MA plans to include a health equity expert on their utilization management committees;
  • the utilization management committees would be required to conduct an annual analysis of the plans’ prior authorization policies and procedures to survey the insureds’ social risk factors, such as eligibility for Part D low-income subsidies, dual eligibility for Medicare and Medicaid, or having a disability, and compare it to the enrollees without those risk factors; and
  • payers would be required to post this analysis publicly on their website.

The proposed rule also seeks to improve access to behavioral health for MA beneficiaries by requiring plans to have adequate networks of outpatient behavioral health centers. Specifically, CMS proposed adding a new facility type, which includes marriage and family therapists, mental health counselors and addiction or drug and alcohol counselors. The MA plan would receive a 10% credit if their outpatient behavioral health network includes one or more telehealth providers.

CMS is also proposing changes to the Risk Adjustment Data Validation (“RADV”) appeal regulations so that MA organizations may request a medical record review determination appeal or a payment error calculation error, but not at the same time. Under the current rule, appeals move through each process concurrently, which can result in inconsistent decisions. The proposed rule, however, only allows MA organizations to request payment error calculation after the medical record review determination is completed.

The proposed rule also introduces new standards to limit MA plans’ payments to brokers and limit third-party marketers, which many Medicare beneficiaries rely on when choosing a plan. CMS seeks to reduce inappropriate beneficiary steering that interferes with competition among plans. The proposed rule caps the compensation that plans can pay brokers at $632, eliminating any variability in payments and also prohibits MA plans from paying third-party marketers, or “middlemen,” volume-based bonuses for enrollment into certain plans.

Further, to increase the utilization of benefits, the proposed rule requires MA plans to issue a mid-year notice to its enrollees and make them aware of any supplemental benefits available to them that were not accessed during the first six months of the year. CMS also proposed MA plans to provide special supplemental benefits for the chronically ill and to update marketing requirements to prevent misleading marketing for certain benefits that are not available to everyone.

Finally, the proposed rule would increase the percentage of beneficiaries dually eligible for Medicare and Medicaid who receive integrated services and reduce the number of plans that can enroll dually eligible individuals outside of the open enrollment period to reduce “aggressive” marketing tactics throughout the year.

A fact sheet for the proposed rule may be accessed here.

Inpatient Prospective Payment System Final Rule

CMS recently released the fiscal year (“FY”) 2024 Inpatient Prospective Payment System (“IPPS”) and long-term care hospital (“LTCH”) payment system final rule (88 FR 77211) correcting technical errors in the final rule published August 28, 2023 (88 FR 58640). The rule updates Medicare payment policies and quality reporting programs for inpatient hospital services.

CMS finalized a 3.1% increase to the FY 2024 IPPS payment rates from a 3.3% increase to the market basket percentage estimate, offset by a 0.2% decrease due to productivity adjustments. This will increase IPPS payments to hospitals by $2.2 billion. CMS also decreased the LTCH payment rates by 0.2%, or $6 million.

CMS also will continue policies from FY 2020 to address low-wage index hospitals, which includes many rural hospitals. Additionally, because IPPS payments are based on the use of hospital resources in patients’ treatment, the rule finalizes changes to the Social Determinants of Health (“SDOH”) diagnosis codes for homelessness from non-complication or comorbidity to complication or comorbidity.

The final rule addresses a number of changes to the Hospital Inpatient Quality Reporting Program and Medicare Promoting Interoperability Program and finalized the New COVID-19 Treatments Add-on Payment that was available during the public health emergency to sunset at the end of FY 2023.

A fact sheet for the CMS final rule may be accessed here.

Changes to the Medicare Promoting Interoperability Program

As discussed above, CMS finalized changes to the Medicare Promoting Interoperability Program in the 2024 IPPS final rule. The program was first established to encourage eligible hospitals and critical access hospitals (“CAHs”) to adopt the use of certified electronic health record (“EHR”) technology (“CEHRT”).

CMS adopted a 180-day EHR reporting period in calendar year (“CY”) 2025 and for new participating hospitals, changed the payment adjustment period to two years after the CY in which the reporting period occurs. CMS also finalized a requirement for eligible hospitals to report an annual self-assessment of nine Safety Assurance Factors for EHR Resilience (“SAFER”) Guides.

For both the Medicare Promoting Interoperability Program and the Hospital IQR Program, CMS added three new electronic clinical quality measures (“eCQMs”) that participating hospitals can select from as one of three self-selected eCQMs: (1) Hospital Harm — Pressure Injury eCQM; (2) Hospital Harm — Acute Kidney Injury eCQM; and (3) Excessive Radiation Dose or Inadequate Image Quality for Diagnostic Computed Tomography (CT) in Adults (Hospital Level — Inpatient) eCQM.

This will begin in the CY 2025 reporting period. A fact sheet for the CMS final rule may be accessed here.

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