CMS Issues 2023 Final Rule: Renewed Focus on Dual Eligibles and Member Out-of-Pocket Costs

In this commentary, Sara Ratner, senior vice president, government markets and strategic initiatives, Icario, reviews requirements health plans should be aware of under CMS' recently issued 2023 Final Rule.

On April 29, 2022, the Centers for Medicare & Medicaid Services (CMS) released the Contract Year (CY) 2023 Medicare Advantage and Part D Final Rule.

While the final rule is consistent with the January 2022 proposed rule, the changes represent a shift in CMS policy with an increased focus on alignment and coordination for dual eligibles and a commitment to addressing the increases in beneficiary cost-sharing and improved consumer protections through new regulation.

The following details the significant provisions and potential impact.

Improved Experience for Dual Eligibles

Through this final rule, CMS seeks to improve integration for dual eligible special needs plans (D-SNPs) with exclusively aligned enrollment, minimum integration standards, coordination of Medicare and Medicaid benefits, and unified grievance and appeals procedures.

CMS has a strong focus on improving D-SNPs as part of the final rule, and many of the proposals leverage many of the characteristics of Medicare-Medicaid Plans (MMP). The MMP Financial Alignment Initiative was designed to improve outcomes and experiences for full-benefit dual eligibles. The most popular MMP model is a capitated plan where CMS, the State, and health plans enter into a 3-way contract to coordinate Medicare and Medicaid services to beneficiaries. These plans operate as Medicare Advantage prescription drug plan (MA-PD) organizations and Medicaid managed care organizations (MCOs).

Key to these plans are the following elements:

• Enrollee participation in plan governance
• Social needs assessments
• High beneficiary satisfaction
• Inclusion of behavioral health benefits
• Joint oversight of an integrated model fosters quality improvement
• State investment is critical for success

Applying some of these principles, the final rule has a strong focus on how to improve D-SNPs for better outcomes, member experience, and benefit alignment.

#1 Enrollee Participation in Plan Governance

This final rule adopts a proposal requiring that MA organizations offering a D-SNP must establish 1 or more enrollee advisory committees in each State to solicit direct input on enrollee experiences. These committees have been successful for MMPS and created a forum for feedback to improve plan benefits and beneficiary experience. It also enables plans to better understand the communities they serve, including challenges and barriers.

These committees must have a representative sample of the population enrolled in the plan. This requires plans to incorporate multiple characteristics into the committee, including geographic and demographic characteristics. In addition, the committee must, at a minimum, solicit inputs for ways in which the plan can improve services, coordination of services, and health equity.

The final rule is not prescriptive on committee meeting frequency, location, format, and training; however, audit protocols will require documentation of the advisory committee meetings. CMS references the Resources for Integrated Care (partnering with Community Catalyst) for resources and guidelines around implementing advisory committees.

#2 Standardizing Housing, Food Insecurity, and Transportation Question on D-SNP Health Risk Assessments

Social determinants of health (SDoH) have been a central focus for CMS; however, the industry lacks a consistent vehicle to understand the barriers and frictions. While data supports the scope and impact, CMS has little programmatic beneficiary insight into these barriers across plans and populations.

D-SNPs are currently required to complete an initial and annual reassessment of an individual’s physical, psychosocial, and functional needs and provide an individualized care plan (ICP) that addresses any needs. However, individuals may also have risk factors related to unmet social needs that influence those areas addressed in the health risk assessment (HRA), especially food insecurity, housing, and transportation.

To foster a uniform understanding of SDoH across plans and its impact on health care and outcomes, the final rule requires that all SNPs (including chronic, individual, and D-SNPs) include one or more questions addressing food insecurity, housing, and transportation. While CMS specified the topic areas via regulation, the questions derived from CMS-specified validated screening instruments will be outlined in sub-regulatory guidance to allow flexibility.

CMS will align selected questions with the Social Determinants of Health Assessment data element established as part of the USCDI v2. The final rule reiterates its reference to those examples of questions outlined in the proposed rule, which is based on the Accountable Health Communities Health-Related Social Needs Screening Tool:

CMS does not require plans to resolve all identified risks but rather to address any risks in these SDoH questions through the ICP. However, the ICP does need to support the plan’s effort in consulting enrollees on the unmet social needs as part of developing the care plan.

The final rule also reiterated CMS’s consideration of alternatives, such as using the postacute care patient/resident assessment instrument questions on health literacy and social isolation:

• How often do you need to have someone help you when you read instructions, pamphlets, or other written material from your doctor or pharmacy?
• How often do you feel lonely or isolated from those around you?

CMS declined to incorporate these alternatives in the final rule. It also declined to consider using SDoH more broadly, such as in the Star Ratings program and risk adjustment, noting that “payment policy and quality rating programs [are] outside the scope of this rulemaking,” although it was discussed in the CY 2023 Rate Announcement.

While CMS evaluated 2024 and 2025 effective dates, the final rules provide that the questions from domains referenced above will begin in Contract Year (CY) 2024.

#3 Redefining FIDE and HIDE D-SNPs

The fully integrated dual eligible (FIDE) and highly integrated dual eligible (HIDE) SNP definitions have been confusing and inconsistent. Through this final rule, CMS is making changes to the definitions, which will support a greater understanding of the different types of D-SNPs, clarify beneficiary options, and improve integration.  

The current definition of FIDE SNP does not require that MA limit enrollment to only those individuals enrolled in the affiliated MCO. Separately, “aligned enrollment” is when a full-benefit dually eligible individual enrolls in a D-SNP and receives coverage of Medicaid benefits from the D-SNP or Medicaid MCO that is: 1) the same organization as the MA plan offering the D-SNP, 2) its parent organization; or 3) another entity that is owned or controlled by the D-SNP's parent organization. State policy governing D-SNPs that refers to aligned enrollment means ”exclusively aligned enrollment.”  

However, the current definition of FIDE SNP allows certain forms of unaligned enrollment in Medicare and Medicaid coverage, with a member being in one parent’s FIDE SNP for Medicare coverage but a separate company’s (or State fee-for-service) for Medicaid services. As a result, CMS proposed and finalized a change to the definition of FIDE SNP to have exclusively aligned enrollment for years 2025 and beyond.  

This means all FIDE SNPs, with the same legal entity holding the MA and Medicaid contract: 1) be capitated (with certain exceptions) for all Medicaid services, and 2) operate unified grievance and appeal processes. Those current FIDE SNPs that no longer qualify and lose the frailty adjustment would be HIDE SNPs beginning in 2025.  

Plans with partial-benefit duals would no longer maintain FIDE designation. For those plans in States that do not require exclusively aligned enrollment, CMS provides a crosswalk exception for the plan to create separate plan benefit packages for aligned and unaligned enrolled to maintain the aligned enrollee frailty adjustment.  

In addition, the final rule requires FIDE SNPs to cover Medicare cost-sharing for qualified and nonqualified Medicare full-benefit dual eligible FIDE SNP enrollees. This eases provider burden for serving these beneficiaries, as a provider can submit a single claim for the FIDE SNP enrollee, and the plan would adjudicate the Medicare and Medicaid payment and cost-sharing. 

FIDE SNPs must also cover the following to the extent to which such benefits are covered for dually eligible beneficiaries by the State Medicaid Program: specified primary, acute, and long-term care benefits and services. The rules clarified that nonemergency medical transportation is not a primary or acute service. The FIDE SNP must also cover Medicaid behavioral health services, and starting in 2025, also cover home health and medical supplies, equipment, and appliances. 

CMS also clarified the definition of HIDE SNPs requiring the plan to cover long-term services and supports, including 1) community-based long-term services and supports, and some days of coverage of nursing facility services during the plan year; or 2) behavioral health services. 

For plan year 2025 and subsequent years, the FIDE and HIDE SNP must cover the entire service area for the dual eligible special needs plan. 

#4 New Integration Opportunities Through Medicaid Contracts

One challenge with monitoring D-SNPs is that a D-SNP is often operated as part of a larger MA contract that includes multiple plans, including nonspecialized plans that are open to all Medicare beneficiaries, not just dual eligible beneficiaries.

As a result, CMS codified its proposal, creating new vehicles, starting in the 2024 plan year, through which States can require exclusively aligned D-SNPs be operated as part of D-SNP-only MA contracts and exclude other plan types. With MA performance currently being reported at the contract level, this change would allow greater visibility and transparency into the D-SNP contract performance on HEDIS, CAHPS, HOS, and Star Ratings.

This change also facilitates better integration of beneficiaries’ materials and notices. Material integration is initially identified for the Summary of Benefits, Formulary, and combined Provider and Pharmacy Directory with the potential for future expansion. States and CMS can collaborate to develop other integrated materials. CMS believes this will help individuals better understand their coverage and improve quality for dual eligible enrollees.

The final rule also affords the opportunity for States and CMS to collaborate on oversight activities. This is particularly relevant to State monitoring and oversight of certain D-SNPs when there are these additional levels of integration, including the ability to give the State visibility to certain CMS information systems such as Health Plan Management System.

#5 Attainment of Maximum Out-of-Pocket

The beneficiary cost-sharing limit, known as maximum out-of-pocket (MOOP), in an MA plan (after which the plan pays 100% of MA costs) has been established to limit beneficiary out-of-pocket costs. Once MOOP has been met, the plan pays 100% of the cost.

MOOP may be counted based on only those amounts an individual enrollee is responsible for paying net of State responsibility or a cost-sharing exemption, rather than cost-sharing amounts in the plan’s benefit package. As a result, the amount a State could pay for a dual eligible remains uncapped. This inadvertently negatively impacts providers since a D-SNP may continue to deduct payments to providers during this cost-sharing period and, often with D-SNPs, create uncollected debt.

The final rules change the way MOOP is calculated based on the accrual of all cost-sharing in the plan benefit. This happens whether that cost-sharing is paid by the beneficiary, Medicaid, or other secondary insurance, or remains unpaid because of State limits on the amounts paid for Medicare cost-sharing and dual eligible individuals’ exemption from Medicare cost-sharing.

Adding these in would cause cost-sharing MOOP to accrue faster, at which point Medicare pays 100% of Parts A and B coverage. As such, MA organizations are responsible for tracking out-of-pocket spending accrued by the enrollee and must alert enrollees and contracted providers when the MOOP limit is reached.

Special Requirements During a Disaster or Emergency

The final rules clarify that the special requirements to ensure access for enrollees to covered services throughout a disaster or emergency period (including public health emergencies) apply when there is a disruption in access to health care as the triggering event (in addition to a disaster or emergency).

The rule also clarifies the period of time during which MA organizations must comply with the special requirements to ensure access for enrollees to covered services throughout a disaster or emergency period (including public health emergencies), especially when the end date is unclear and the period renews several times.

MA Network Adequacy Rules

Currently, through a triennial review process, plans submit their provider networks to CMS for review at the contract level. While plans must attest to meeting the provider network adequacy requirements, they are not required to demonstrate this before a bid is submitted, and network adequacy is not assessed as part of the application process. However, CMS noted that MA plans continue to have failures in their networks.

The final rule changes this process to require plans, starting with the CY 2024 application cycle, to demonstrate compliance with network adequacy standards as part of the MA application process for new and expanding service areas. To eliminate difficulties an MA organization has in complying with building a full network, the final rule adopts a time-limited 10 percentage point credit toward meeting the applicable network adequacy standards for the application evaluation.

In addition, due to the difficulty of having a full provider network almost a year in advance of a contract becoming operational, CMS is permitting letters of intent to be used in lieu of signed provider contracts at the time of the application.

Quality Rating System

As background, CMS issued an emergency regulation on August 25, 2020, that changed its policy on extreme and uncontrollable circumstances for the 2022 Star Ratings. As part of that, CMS modified its disaster policy, which historically applied if there was a minimum of 60% of enrollees in a qualifying area impacted. This resulted in contract scores being excluded from measure-level cut point calculations and performance summary and variance thresholds for the Reward Factor.

The 2020 emergency regulations modified this, removing the 60% rule since all States qualified for the exclusion with the impact of COVID-19, and used 2020 contract performance in calculating 2022 Star Rating (nonCAHPS) cut points. Subsequently, CMS allowed plans to use the higher of their 2020 or 2021 ratings for their 2022 Star Ratings.

For some measures, such as the cross-sectional measures collected through the Health Outcomes Survey (HOS), Star Ratings are based on performance up to 3 calendar years prior to the Star Rating year. For example, the HOS survey administered in 2021 asks about care received (eg, whether a health care provider advised the member to start, increase, or maintain their level of exercise or physical activity) in the 12 months prior to the survey’s administration—that is, a period of time covering parts of the 2020 and 2021 calendar years—and the data is used for the 2023 Star Ratings.

As described in the 2019 Final Part C and D Rule, for measures derived from the HOS survey (Monitoring Physical Activity, Reducing the Risk of Falling, and Improving Bladder Control), the disaster policy adjustment is for 3 years after the extreme and uncontrollable circumstance. As such, the 2023 Star Ratings would adjust measures derived from the HOS survey for 2020 extreme and uncontrollable circumstances.

The final rule addresses the 2023 Star Ratings for measures derived from the 2021 HOS survey only to remove the 60% rule for affected contracts. This amendment would ensure that CMS is able to calculate the Star Ratings cut points for the 3 HEDIS measures derived from the HOS survey and include these measures in the determination of the performance summary and variance thresholds for the reward factor for the 2023 Star Ratings.

Without removing the 60% rule for HEDIS measures derived from the HOS survey, CMS would not be able to calculate these measures for the 2023 Star Ratings or include them in the 2023 reward factor calculation. By removing the 60% rule, all affected contracts (that is, contracts affected by the 2020 COVID-19 pandemic) with at least 25% of their enrollees in Individual Assistance areas at the time of the disaster will receive the higher of the 2022 or 2023 Star Rating (and corresponding measure score) for each of the HEDIS measures collected through the HOS survey.

Methodology for Holding Plans Accountable for Violating CMS Rules

Current CMS application approvals do not consider an organization’s past performance in existing contracts. The January 2021 final rule limited the basis for denial on past performance to intermediate sanctions and failure to maintain fiscal soundness. The 2023 final rule expanded the bases for application denial to include low Star Ratings history, bankruptcy proceedings, and certain CMS compliance actions (notices of noncompliance, warning letters, and corrective action plans).

The final rule adopted the proposal that contracts that have 2.5 or fewer Stars for Part C or Part D summary rating or a combination of Parts C and D summary ratings for 2 years will be subject to application and service area expansion denials.

In addition, CMS proposed to assign points to each type of compliance action to determine if an application should be denied: 6 points for corrective action plan, 3 points for warning letter, and 1 point for notices of noncompliance. Due to past performance, contracts with 13 or more compliance action points may have new contract applications or service area expansions denied.

New Marketing and Communication Requirements

CMS finalized its proposed changes to marketing and communication requirements to address the concerns of third-party marketing organizations (TPMOs). It also adopted requiring MA and Part D plans to create a multi-language insert (MLI) that would inform the reader that interpreter services are available for free in the top 15 languages used in the United States.

Previously, CMS required plans to include the MLI with the Summary of Benefits, Annual Notice of Change/Evidence of Coverage, and the enrollment form informing the reader that interpreter services are available in Spanish, Chinese, Tagalog, French, Vietnamese, German, Korean, Russian, Arabic, Italian, Portuguese, French Creole, Polish, Hindi, and Japanese—the 15 most common nonEnglish languages in the United States.

Separately, CMS required translation services for any nonEnglish language that is the primary language for at least 5% of the individuals in a benefit plan service area. The MLI was not required for languages that fall below the 5% language threshold. In addition, the Office of Civil Rights (OCR) separately required all “significant communications” to include taglines informing the availability of interpreter services for the 15 languages above.

Because of the duplication, in 2016, CMS removed the MLI; however, OCR also issued a final rule repealing the “significant communications” requirements and requiring that a covered entity (including health plans) take reasonable steps to ensure meaningful access to its programs or activities by individuals with limited English proficiency. CMS contends the nonEnglish requirements should be maintained by OCR, including oversight and management since its rulemaking is HHS-wide rather than exclusively limited to CMS.

While interpreter services have been required, the notice of availability requirements was lost and created a gap. The notification of interpreter services provides a vehicle for individuals with limited English proficiency to gain access to required interpreter services. These 2023 final regulations reinstitute the MLI requirement, requiring the insert in the 15 most common languages above, stating the following:

“We have free interpreter services to answer any questions you may have about our health or drug plan. To get an interpreter, just call us at [1-xxx-xxx-xxxx]. Someone who speaks [language] can help you. This is a free service.”

This statement is also required for any languages that meet the 5% threshold, and in all required materials.

CMS has increased concern about the activities of TPMOs due to the increase in the number of complaints reported about these organizations that allege misleading beneficiaries about advertised benefits. As a result, CMS finalized its proposal to implement oversight of TPMOs, defined as “organizations that are compensated to perform lead generation, marketing, sales, and enrollment-related functions as a part of the chain of enrollment, that is the steps taken by a beneficiary from becoming aware of a plan or plans to make an enrollment decision.” The final rule clarified that the definition includes independent agents and brokers. TPMOs may be first tier, downstream, and related entities (FDRs) but may also be customers of an MA or Part D plan or customers of an MA or Part D plan’s FDRs.

TPMOs must also use the following disclaimer in any marketing materials and on their website, and potentially verbally and in writing depending on the circumstance:

“We do not offer every plan available in your area. Any information we provide is limited to those plans we do offer in your area. Please contact Medicare.gov or 1-800-MEDICARE to get information on all of your options.”

CMS requires that plans have additional oversight obligations for TPMOs that function in tandem with FDR requirements when applicable. Plans that directly or indirectly work with TPMOs are responsible for ensuring that the TPMO adheres to any requirements that apply to the plan.

CMS finalized requirements for plans (and their FDRs) in their contracts, written arrangements, or agreements with TPMOs, to require TPMOs to disclose to the plan any subcontracted relationships used for marketing, lead generation, and enrollment. This extends to requiring sales calls with beneficiaries to be recorded in their entirety and having TPMOs report to plans any staff disciplinary actions associated with Medicare beneficiary interaction on a monthly basis. TPMOs conducting lead-generating activities must inform the beneficiary that their information will be provided to a licensed agent for future contact or that the beneficiary is being transferred to another individual for further assistance.

Plans need to ensure their FDR and vendor oversight teams understand these requirements and allocate resources for additional oversight and monitoring activities. By expanding oversight in this area, CMS expects plans to be more transparent and accountable for member experience during this part of the sales and marketing process.

Transparency in Medical Loss Ratio Reporting

The final rule reinstates the detailed medical loss ratio (MLR) reporting requirements that were in effect for contract years 2014-2017, which required reporting of the underlying data used to calculate and verify the MLR and any remittance amount.

CMS is reinstating the MLR Reporting Tool with the following changes:

• The formulas will be updated to incorporate changes to the MLR calculation that have been finalized since CMS stopped using the MLR Reporting Tool (after CY 2017)
• CMS will separate out items that are currently consolidated in the MLR Reporting tool, such as low-income cost-sharing subsidy amounts
• CMS will separate out the single in the MLR Report for claims incurred during the contract year covered by the MLR Report into separate lines for Medicare Parts A and B benefits, and additional supplemental benefits

CMS is also proposing the collection of additional details regarding plan expenditures to understand the value of services being provided to enrollees. This requires reporting additional detail behind the different types of supplemental benefits provided to members.

Pharmacy Price Concessions to Drug Prices at the Point of Sale

This final rule adopts the January 2022 proposal and creates significant changes for how plans calculate direct and indirect remuneration (DIR), impacting bids, revenue, and cost-sharing. To understand the implications of this change, it is important to outline the background for this rule.

Part D sponsors must provide beneficiaries with negotiated prices for covered Part D drugs. Negotiated price is the price paid to the network pharmacy for a covered Part D drug dispensed to a plan enrollee at the point of sale. This point-of-sale price is the basis upon which the Part D benefit is adjudicated and dictates the enrollee cost-sharing.

Historically, negotiated prices must include all price concessions from network pharmacies except those that cannot reasonably be determined at the point of sale. This “reasonably determined” exception is the focus of the CMS final rule. While negotiated prices may take into account price concessions (discounts, direct/indirect subsidies, rates, and DIR), since many price concessions cannot ”reasonably be determined,” plans may, but are not required to, apply rebates and other price concessions at the point-of-sale to lower cost-sharing.

At the end of the year, these price concessions must be reported to CMS as DIR and used in the calculation of the final plan payment. Aggregate price concessions in the form of lower subsidies, reduced beneficiary premium, and lower prices must be reported as DIR and factored into the plan’s bid for the upcoming year. Amounts received in DIR above amounts factored into the plan bids can increase plan revenue.

Applying price concessions as DIR after the point of sale inures to the benefit of the plan sponsor (although it can also create lower premiums) and applying at the point of sale can reduce beneficiary cost-sharing. In addition, applying price concessions as DIR moves a beneficiary through the coverage gap faster since they assume a greater cost-sharing obligation.

Pharmacy price concessions now account for a larger share than ever before of reported DIR and a larger share of total gross drug costs in the Part D program. Much of this growth occurred after 2012 when the use by Part D sponsors tied price concessions to a pharmacy’s performance (performance adjustments) on measures defined by the Part D sponsor (such as Star Ratings). Performance adjustments occur after the point of sale and have not been included in the price of the drug at the point of sale since they cannot “reasonably be determined” at that time.

According to CMS, these performance adjustments have disproportionately impacted poor performers more than high performers, meaning pharmacy benefit managers are recouping greater amounts from poor performers than paid to high performers. While these price adjustments may be reflected in lower Part D premiums, they do not necessarily translate into lower cost-sharing obligations, potentially resulting in a beneficiary paying a larger portion of the actual drug cost.

Consistent with the proposed rule, the final rule directly addresses pharmacy price concessions included in the definition of “negotiated price” and modifies the definition to the lowest possible reimbursement a network pharmacy will receive, in total, for a particular drug, taking into account all pharmacy price concessions. The definition deletes the “reasonably determined” exception. As such, price concessions from network pharmacies, negotiated by Part D sponsors and their contracted pharmacy benefit managers, must be reflected in the negotiated price available at the point of sale and reported to CMS on the prescription drug event data, even if the price concessions are contingent on pharmacy performance.

Recognizing that it may be infeasible for all price concessions to be accounted for at point of sale, in the comments to the final rule, CMS qualifies this by stating the policy would ensure negotiated prices “take into account at least some price concessions” to be passed along in the form of lower-cost sharing at the point of sale. The goal of the rules is to influence beneficiary cost-sharing and not what is ultimately paid to the pharmacy.

The final rule requires negotiated prices to reflect the lowest possible reimbursement that a network pharmacy could receive from a particular Part D sponsor for a covered Part D drug. All price concessions would need to be included at the point of sale but do not need to include any upside incentive payments. As a result, the point-of-sale price of a drug reported to CMS would equal the final reimbursement that the network pharmacy would receive for that drug under the arrangement if the pharmacy’s performance score were the lowest possible. Any incentive payments received by the pharmacy would be reported as negative DIR.

The proposed rule created a distinction in negotiated price definition between drugs in and out of the coverage gap. For nonapplicable drugs in the coverage gap and during the noncoverage gap phases of the Part D benefit for applicable drugs, claims would be adjudicated using the negotiated price, determined using the lowest possible reimbursement to the pharmacy. For applicable drugs during the coverage gap, plans would have the flexibility to determine how much of the pharmacy price concessions to pass through at the point of sale, and beneficiary, plan, and manufacturer liability in the coverage gap would be calculated using this alternate negotiated price.

In the final rule, CMS modified this proposal, providing that the negotiated price is determined using the lowest possible reimbursement to the pharmacy across all phases of the Part D benefit, including the coverage gap.

In addition, CMS reaffirmed that the definition of negotiated price must be inclusive of all spread in which inflated prices contain a portion of costs that should be treated as administrative costs. As such, these are not considered drug costs and are not part of the actual cost of the benefit.

The effective date for the pharmacy price concession changes is January 1, 2024.

In Summary

The final rule is heavily focused on improving care and coordination for high-risk beneficiaries (D-SNPs), as well as cost-sharing obligations of the member. With the financial alignment initiative concluding, CMS policy is encouraging greater alignment and integration between Medicare and Medicaid in D-SNP plans.

To begin to understand how beneficiaries are impacted by nonhealth care barriers, CMS is requiring D-SNPs to leverage the initial and annual health risk assessment to screen for food insecurity, housing instability, and transportation. While this is a requirement and subject to the data validation audit, CMS has not implemented a payment policy to use these assessments for risk scoring or bonus payments. However, there is indication through the 2023 Rate Notice and other CMS commentary that payment policy may be used in the future to remove barriers around SDoH and health equity. As a result, plans should be steadfast in collecting this data even before CY 2024.

In addition, states may require the D-SNPs to be operated as part of an MA contract that only contains D-SNPs (and excludes other plans). This would provide greater transparency as to how the D-SNP is performing since it would be measured independent of a larger MA contract that includes multiple plans open to all Medicare beneficiaries and not only dual eligibles. This may place greater pressure on medical loss ratios and MA Star Ratings with plans having a smaller population against which they are measured.

The provision with the greatest financial impact involves the changes in MOOP. The final rule calculates a beneficiary reaching the MOOP based on cost-sharing requirements of the plan and not on whether the amounts are paid by the beneficiary. This will ultimately save state Medicaid programs from paying additional cost-sharing amounts. However, this change can depress the amounts a plan has available for supplemental benefits or increase the premium charged to the member.

The last provision with significant consequence relates to moving pharmacy price concessions to point of sale. With the greatest impact to the federal government, moving price concessions may increase costs, with the increases in the direct and low-income subsidies. While comments suggested premiums may increase since price concessions are not reported as DIR, the more immediate impact is cost-sharing decreases at point of sale, benefiting the member.

There are many potential implications from this change that range from contracting arrangement and preferred network structures to formulary strategy. The effective date for this is January 2024, giving plans the ability to plan for the CY 2024 bid cycle.