CMS has Issued the 2024 Medicare Advantage and Part D Final Rule
On April 5, 2023, CMS issued the 2024 Medicare Advantage and Part D Final Rule (CMS-4201-F), giving the industry explicit guidance about utilization management criteria.
1) What is the effective date of this Final Rule?
Although most final rules take effect 30 days after being published, there are occasions when the effective date is deferred for a longer period to allow key stakeholders to prepare for the changes. The regulation itself does not create any utilization review criteria, but rather codifies long-standing guidance that has previously been addressed in the Social Security Act, CMS regulations, technical guidance, and sub-regulatory direction through the Agency that is already in effect. In this case, the Final Rule was published on April 5, 2023, and the effective date – meaning when it becomes a binding regulation – is June 5, 2023.
Note that there are other provisions of the Final Rule, such as the Biden Administration’s new prescription drug law, the new low-income subsidy, and the LI-NET Program, all of which will take longer to adequately implement. There are also requirements that MA organizations have a medical director, a utilization management committee, and that all utilization policies be reviewed. These provisions of the Final Rule will become effective January 1, 2024.
2) Will MAOs now be required to follow the 2-midnight rule?
Yes. CMS clarified that MA plans must comply with Traditional Medicare coverage criteria, including NCDs, LCDs, and general guidance regarding inpatient admissions and the applicability of the Two-Midnight Rule (2MN) in determining the medical necessity of “basic benefits” (Part A and Part B benefits). An MA plan must provide coverage, by furnishing, arranging for, or paying for an inpatient admission when, based on consideration of complex medical factors documented in the medical record, the inpatient admission is deemed medically necessary because the admitting physician expects the patient to require hospital care that crosses two-midnights (the Benchmark rule). Compliance with general coverage and benefit conditions includes coverage criteria for inpatient admissions at 42 CFR 412.3, the Inpatient Only procedure list, requirements for coverage of Skilled Nursing Facility Care and Home Health Services under 42 CFR part 409, and Inpatient Rehabilitation Facilities coverage criteria at 42 CFR 412.622(a)(3).
CMS will not require MA plans to recognize the two-midnight presumption, which presumes medical necessity if a hospital stay spans two or more midnights after the inpatient order. Because the presumption provides guidance to contractors regarding which cases to make the focus of review activity, CMS did not limit MA organizations from reviewing these cases. However, in the review of these cases, the “benchmark” would still apply with regard to medical necessity determinations.
3) Will there be any impact to SNF qualifications for MA beneficiaries?
CMS has directed MA plans to comply with the general coverage and benefit conditions included in Traditional Medicare laws, including the requirements for payment of Skilled Nursing Facility (SNF) care per 42 CFR 409. Bear in mind that 42 CFR 422.101(c) indicates an MAO may elect to furnish coverage of posthospital SNF care in the absence of the 3-day qualifying stay. In this Final Rule, CMS’ direction does not eliminate that discretion, but provides for the MA plan to either provide SNF coverage without requiring the Medicare FFS coverage requirement or to adhere to the more strict Traditional Medicare coverage requirement.
“This rule provides MA organizations the flexibility to cover, as a basic benefit, SNF stays for MA enrollees that would not be otherwise coverable in Traditional Medicare, if the beneficiary had not met the prior qualifying hospital stay of 3 days prior to admission in the SNF.”
4) Can the MAO's still deny for lack of medical necessity?
Yes. This regulation does not prohibit medical necessity reviews, but rather requires MA plans to apply coverage criteria set forth by Traditional Medicare.
“When deciding whether an item or service is reasonable and necessary for an individual patient, we expect the MA plan to make this medical necessity decision in a manner that most favorably provides access to services for the beneficiary and align with CMS’s definition of reasonable and necessary as outlined in the Medicare Program Integrity Manual, Chapter 13, section 13.5.4.”
It also does not prohibit use of external criteria such as InterQual or MCG, but does prohibit their use in isolation to change coverage of payment criteria already established under Traditional Medicare laws. The rule further allows for these external coverage criteria if/when Traditional Medicare coverage criteria are not fully established, so long as basic Medicare benefits are provided as per 42 CFR 422.101 and a physician experienced in Medicare coverage reviews same – 42 CFR 422.566.
This position is consistent with previous CMS, DOJ, and OIG guidance that such tools may be used as a part of the utilization review process but are not “dispositive” (cannot be the basis of a final determination) and are not binding on either CMS or hospitals.
Another approach would be to apply Traditional Medicare rules to a case, and if these rules are satisfied, the care was medically necessary. No matter how the plan evaluates the case, if its determination is different, the process used was “more restrictive” than that of Medicare and prohibited with regard to Part A and Part B “basic benefits” under the Social Security Act and CMS regulations.
5) Will prior authorizations still be required?
Yes, but with new limitations. CMS has expressly limited the use of prior authorization policies only to confirm the presence of diagnoses and satisfaction of other medical criteria that a service is medically necessary (based upon Traditional Medicare criteria)
Additionally, once a prior authorization has been granted, it shall remain valid for as long as is deemed medically necessary to avoid disruptions in care. The prior authorization must also stay valid for 90 days if the enrollee chooses to change MA plans.
We will be speaking much more regarding this issue in the near future. Plans will only be able to apply internal policies if CMS is silent on the evaluation in policy, NCD, LCD, and manual guidance. Plans will need to show that CMS has no guidance before developing their own. Also, there are requirements regarding the “expertise” required of the plan’s staff involved in the evaluation of a case, and the processes for developing and approving policies, which must be available to the public for comment, and provided in the case of denial to those wishing to appeal.
6) What, if any, penalties will there be for MAOs failing to adhere to this regulation?
CMS currently monitors MA organization compliance through account management activities, complaint tracking and reporting, and auditing activities. These oversight operations alert CMS to any issues with access to care, and CMS may require MA plans to address these matters if they arise.
In addition, 42 CFR 422.752 speaks to CMS’s ability to impose “intermediate sanctions” (per 422.750) on any MA organization (per 422.760) including but not limited to suspension of enrollment of Medicare beneficiaries and/or suspension of payment, while 42 CFR 422.750 speaks to Civil Monetary Penalties.