On January 8, 2014, we noted several proposed changes to the Medicare Part C and D programs as delineated in CMS’ January 8th proposed rule (hereinafter “Proposed Rule”). On Monday, May 19, 2014, CMS issued the final rule, titled Medicare Program; Contract Year 2015 Policy and Technical Changes to the Medicare Advantage and the Medicare Prescription Drug Benefit Programs (hereinafter the “Final Rule”). The Final Rule will be codified at 42 C.F.R. Parts 417, 422, 423, and 424. Although the Final Rule codifies many provisions of the Proposed Rule, an array of provisions in the Final Rule differ. For practitioners comfortable with provisions contained in the Proposed Rule, we suggest a careful reading of the Final Rule as various high-impact provisions have been modified or deleted. A summary of key deviations from the Proposed Rule, contained in the Final Rule, are as follows:

  1. Agent/Broker Program Modifications:
    • The Final Rule eliminates the proposed changes to agent/broker training and testing requirements;
    • The Final Rule replaces the proposed 35% of FMV cap with a 50% of FMV cap on MAO or sponsor compensation to independent agents for plan enrollee renewals for years two through six as codified at §§ 422.2274 and 423.2274.
  2. Drug Categories or Classes of Clinical Concern:
    • The Final Rule eliminates all proposed criteria for drug categories of clinical concerns;
    • The Final Rule maintains the existing six protected classes.
  3. Improving Payment Accuracy – Overpayment Identification and Overpayment Returns:
    • Response to comments in the Final Rule clarify that the 60-day period for reporting and returning overpayments begins on the date an organization identifies it has received an overpayment, with the term identification including awareness of erroneous data submitted to CMS that caused or will cause CMS to overpay the organization, rather than the date of calculation of such overpayment;
    • The Final Rule modifies the Proposed Rule overpayment provision § 422.326(d), which requires reporting and returning of overpayments within 60 days, by including at the end of paragraph § 422.326(d) the phrase “unless otherwise directed by CMS for the purpose of § 422.311,” in order to clarify that, when an MA organization has a contract selected for a RADV audit under § 422.311, during the audit the MA organization will not be allowed to report and return overpayments under § 422.326 that are due to errors in the data used to risk-adjust payments for the audited contract;
    • The Final Rule revises the §§ 422.326(c) and 423.360(c) definition of “identified overpayment” as “an overpayment when the MA organization has determined, or should have determined through the exercise of reasonable diligence, that the MA organization has received an overpayment,” thereby eliminating the proposed definition of “actual knowledge” or “acts in reckless disregard or deliberate ignorance of the existence of the overpayment”;
    • Response to comments in the Final Rule clarify the term “applicable reconciliation” for Part C and Part D programs;
    • The Final Rule applies the 6-year look-back period to fraud-related overpayments by eliminating the following proposed statement from §§ 422.326(e) and 423.360(e), “Overpayments resulting from fraud are not subject to this [6-year] limitation of the look-back period.”
  4. Effects of Pharmacy Price Concessions in Negotiated Prices:
    • The Final Rule codifies the proposed revision of the definition of “negotiated prices” at § 423.100, which requires that all pharmacy price concessions be included in negotiated prices; however, the Final Rule modifies the exception on contingent price concessions as excluding those contingent price concessions that “cannot reasonably be determined at the point of sale.”
  5. Medical Records Review and Diagnosis Accuracy:
    • The Final Rule eliminates proposed amendments at § 422.310(e), which would have required any medical records review process by an MA organization to be “designed to determine the accuracy of diagnoses” submitted under §§ 422.308(c)(1) and 422.310(g)(2), thereby vitiating the potential burden on MA organizations of analyzing the medical judgment of each physician whose patient records are reviewed.
  6. Proposed Rule Provisions Not Included and to be Finalized Subsequently:
    • The Final Rule omits several provisions of the Proposed Rule that will be implemented at a later date, ranging from provisions clarifying various program participation requirements to payment accuracy improving provisions;
    • Pages 29 and 30 of the Final Rule publication, accessible below, denote such omitted provisions.
  7. Various Other Program Modifications.

The Final Rule is accessible online. (The Proposed Rule is also accessible online.)
The CMS publication of the Final Rule is a lengthy 478 pages and contains many program modifications unmentioned above. For further in-depth analysis of the Final Rule, please contact the Squire Sanders Health Care Practice Group.