On January 6, 2022, the Centers for Medicare and Medicaid Services (“CMS”) issued the proposed rule on  Contract Year 2023 Policy and Technical Changes to the Medicare Advantage and Medicare Prescription Drug Benefit Programs (the “Proposed Rule”).  Per CMS, the Proposed Rule will reduce out-of-pocket prescription drug costs, improve price transparency and market competition under the Part D program, strengthen consumer protections to ensure Medicare Advantage (“MA”) and Part D beneficiaries have accurate and accessible information about their health plan choices and benefits, strengthen CMS oversight of MA and Part D plans, and improve the integration of Medicare and Medicaid programs for individuals enrolled in dual eligible special needs plans (“D-SNPs”).  CMS failed to mention that the Proposed Rule will also result in additional administrative burdens and increased costs for MA organizations (“MAOs”) and Part D sponsors.

Key provisions of the Proposed Rule are summarized below.  Comments are due by March 7, 2022.

  1. Enrollee Participation in Plan Governance (§ 422.107)

The Proposed Rule would require MAOs offering one or more D-SNP(s) in a State to have one or more enrollee advisory committees that serve the D-SNP(s) offered by the MAO in that State. An MAO would be able to choose between establishing one single enrollee advisory committee for one or multiple D-SNPs in that State or establishing more than one committee in that State.   The advisory committee would be required to have a reasonably representative sample of enrollees of the population enrolled in the D-SNP or other individuals representing those enrollees. “Representative sample” is intended to incorporate multiple characteristics of the total enrollee population of the D-SNP(s) served by the enrollee committee, including but not limited to geography and service area, and demographic characteristics. CMS believes the establishment and maintenance of such a committee is a “valuable beneficiary protection” to ensure enrollee feedback is heard and to help identify and address barriers to high-quality, coordinate care. This proposal intends to ensure enrollees are engaged in defining, designing, participating in, and assessing their care systems.

CMS provides that D-SNPs should work with enrollees and their representatives to establish the most effective and efficient process for enrollee engagement, but declines to propose Federal requirements as to the specific frequency, location, format, participant recruiting and training methods, or other parameters for these committees beyond certain minimum requirements. However, though CMS is “nonprescriptive on meeting frequency, location, format, enrollee recruitment, training, and other parameters,” CMS encourages D-SNPs to adopt identified best practices to ensure meetings are accessible to all enrollees, including but not limited to enrollees with disabilities, limited literacy (including limited digital literacy), and lack of meaningful access to technology and broadband.

CMS advises that it would provide technical assistance to D-SNPs to share engagement strategies and other best practices, leveraging the body of technical assistance developed for Medicare Medicaid Plans (“MMPs”). CMS asserts that its experience with existing requirements for MMPs and Program of All – Inclusive Care for the Elderly (PACE) organizations demonstrates that the use of advisory committees improves plans’ ability to meet their enrollees’ needs by providing plans with a deeper understanding of the communities the plans serve and the challenges and barriers their enrollees face, as well as serving as a convenient mechanism to obtain enrollee input on plan policy and operational matters.

  1. Standardizing Housing, Food Insecurity, and Transportation Questions on Health Risk Assessments (§ 422.101)

Building on CMS’s experience with other programs and model tests, CMS proposes to require all SNPs, starting in contract year 2024 (or later), to include one or more standardized questions on the topics of housing stability, food security, and access to transportation as part of their health risk assessments (“HRAs”). CMS anticipates these questions will help SNPs gather the necessary information in order to conduct a comprehensive risk assessment of each individual’s physical, psychosocial, and functional needs and will inform the development and implementation of each enrollee’s comprehensive individualized plan of care, in accordance with regulatory requirements. CMS proposes that the exact language of these questions would be specified in sub-regulatory guidance, rather than specifying the question in regulations, so that CMS could further modify to maintain consistency with standardized questions that are developed for other programs while still providing MAOs with clear requirements (although examples were provided in the proposed rule). However, at a minimum, CMS notes it intends to align selected questions with the Social Determinants of Health (“SDOH”) Assessment data element established as part of the United States Core Data for Interoperability Version 2, when finalized and where applicable.

CMS notes many SNPs may already include questions related to these issues in their HRA tools because of the purpose of an HRA. However, for those that haven’t, CMS believes these changes would better equip SNPs to meet their members’ needs, by providing SNPs “a more complete picture of the risk factors that may inhibit enrollees from accessing care and achieving optimal health outcomes and independence.” CMS also thinks this information would equip MAOs with the individual-level information that would help them better connect people to covered services and social service organizations and public programs that can help resolve housing instability, food insecurity, or transportation challenges.

Additionally, CMS anticipates the standardization of HRAs will eventually facilitate better data exchange among SNPs, as well as facilitate satisfaction of care management requirements. And while CMS does not currently collect specific data elements from HRAs for all SNP enrollees, by standardizing HRA questions, CMS would be able to collect those specific data elements (although CMS does not anticipate collecting data elements from the HRA as part of this collection of information).

CMS will be submitting the proposed HRA questions to OMB for review. However, CMS notes they are also considering several alternatives to their question standardization proposal, including whether to require fewer or more assessment questions on additional topics related to social risk factors, or different combinations of questions from the post-acute care patient/resident assessment instruments and AHC Model HRSN Screening Tool. CMS welcomes comments on its proposal and alternatives, including adding questions regarding health literacy, social isolation, or other areas, as well as when CMS would need to issue sub-regulatory guidance providing the specific questions to be included in the HRA to ensure that MAOs would have sufficient time to incorporate the required questions.

  1. Refining Definitions for Fully Integrated and Highly Integrated D-SNPs (§§ 422.2 and 422.107)

In the preamble of the Proposed Rule, CMS states that it hopes to improve the integration of Medicare and Medicaid programs for individuals enrolled in D-SNPs.  One method of integration for dually eligible beneficiaries is to use contracting strategies that maximize the opportunity for D-SNPs and Medicaid managed care organizations (“MCOs”) to have aligned enrollment, i.e., the beneficiary is enrolled in a D-SNP and MCO offered by the same parent company in the same geographic area. The proposed D-SNP provisions build on, among other things, the experiences of MMPs to better align and integrate benefits for dually eligible beneficiaries.

CMS proposes to require, for 2025 and subsequent years, that all fully integrated dual eligible special needs plan (“FIDE SNPs”) have exclusively aligned enrollment meaning their Medicaid beneficiaries will be exclusively enrolled in an affiliated MCO, and cover Medicaid home health, durable medical equipment, and behavioral health services through a capitated contract with the State Medicaid agency. CMS also proposes to require that each highly integrated dual eligible special needs plan’s (“HIDE SNP”) capitated contract with the State apply to the entire service area for the D-SNP for plan year 2025 and subsequent years.

  1. Additional Opportunities for Integration through State Medicaid Agency Contracts

CMS proposes to codify new pathways through which States can use contracts between D-SNPs and their Medicaid agencies to require that certain D-SNPs with exclusively aligned enrollment (a) establish contracts that only include one or more D-SNPs within a State, and (b) integrate materials and notices for enrollees. CMS believes this will help individuals better understand their coverage. Further, because Star Ratings are assigned at the contract level, CMS hopes this will lead to greater transparency on the quality ratings for the D-SNPs, allowing CMS and States to better identify disparities between dually eligible beneficiaries and other beneficiaries and target interventions accordingly.

CMS also proposes mechanisms to better coordinate State and CMS monitoring and oversight of certain D-SNPs when a State has elected to require these additional levels of integration, including granting State access to certain CMS information systems. CMS believes its proposals would improve Federal and State oversight of certain D-SNPs (and their affiliated MCOs) through greater information-sharing among government regulators.

Based on its experience with MMPs, CMS would apply certain MMP features to FIDE SNPs and, in some cases, to HIDE SNPs, including:

  • Capitation for Medicare cost-sharing (FIDE SNPs only).
  • Continuation of Medicare benefits pending appeal (FIDE SNPs and certain HIDE SNPs)
  1. Attainment of the Maximum Out-of-Pocket Limit (§§ 422.100 and 422.101)

To ensure MA plan benefits do not discriminate against higher cost enrollees, MA plans are required to establish a limit on beneficiary cost-sharing for Medicare Part A and B services after which the plan pays 100 percent of the service costs. According to the April 15, 2011 final rule, in calculating the maximum out-of-pocket (“MOOP”) amount, MA plans are allowed to count only those amounts the individual enrollee is responsible for paying, net of any state responsibility or exemption from cost-sharing toward the MOOP limit, rather than the cost-sharing amounts for services the plan has established in its plan benefit package. In practice, this does not cap the amount a state could pay for a dually eligible MA enrollee’s Medicare cost-sharing, and results in state Medicaid programs paying more in Medicare cost-sharing for dually eligible enrollees.

The Proposed Rule at §§ 422.100 and 422.101 revises the regulations to require that all costs for Medicare Parts A and B services accrued under the plan benefit package are counted towards the MOOP limit, regardless of whether that cost sharing is paid by the beneficiary, Medicaid, other secondary insurance, or remains unpaid because of State limits on the amounts paid for Medicare cost-sharing and dually eligible individuals’ exemption from Medicare cost-sharing. CMS believes the change is necessary for four reasons:

  • Will result in equal treatment under the MOOP limit for dually eligible MA enrollees compared to how Medicare-only enrollees are treated. Medicare-only MA enrollees receive the protection afforded by the MOOP limit after they have accrued cost-sharing under the MA plan benefit whether they have paid this cost-sharing or still owe their providers for some or all of the cost-sharing.
  • Will ensure that the providers serving dually eligible enrollees in MA plans receive the same benefit from the MOOP limit that providers receive when they serve Medicare-only MA enrollees, based on our understanding of how some MA plans pay providers after the MOOP limit is reached.
  • Is consistent with the statutory requirement at section 1902(a)(25)(G) of the Act[1] that the State plan must provide that the State prohibits any health insurer, in enrolling an individual or in making any payments for benefits to the individual or on the individual’s behalf, from taking into account that the individual is eligible for or is provided medical assistance under Medicaid.
  • Would bring consistency to how MAOs determine if the MOOP limit has been attained, since it is based entirely on the claims adjudicated by the MAO regardless of the enrollee’s dual eligibility status, providing MAOs with a straightforward method of determining when the MOOP limit has been attained based on claims data that the MAO has in its possession.

CMS projects its proposal would result in increased bid costs for the MOOP for some MA plans, a portion of which would result in increased Medicare spending of $3.9 billion over 10 years. But CMS contends that cost is partially offset by lower Federal Medicaid spending of $2.7 billion and the portion of Medicare spending paid by beneficiary Part B premiums, which totals $600 million over 10 years. So the alleged net 10-year cost estimate for the proposal is $614.8 million.

  1. Special Requirements during a Disaster or Emergency (§ 422.100(m))

Entering the third year of the COVID-19 public health emergency, CMS seeks to clarify the period of time during which MAOs must comply with the special requirements at 42 CFR 422.100(m) to ensure access for enrollees to covered services throughout the disaster or emergency period. As currently drafted, the regulation is ill-equipped to address renewable disaster/emergency declarations or disasters/emergencies with unevenly distributed impacts across a service area or nationally. The regulation states that a disaster/emergency declaration ends when any of the following events occur: the source that issued the declaration declares an end, CMS declares an end, or 30 days have elapsed since the declaration and no end date was identified. Not surprisingly, CMS fielded questions about how to apply 422.100(m) given the COVID-19 pandemic and has taken the opportunity to codify prior guidance and resolve ambiguities.

CMS proposes to explicitly limit the application of the special requirements to when there is a disruption in access to health care, which would be defined as “an interruption or interference in access to health care throughout the service area such that enrollees do not have the ability to access contracted providers or contracted providers do not have the ability to provide needed services causing MA organizations to fail to meet the prevailing patterns of community health care delivery in the service area under § 422.112(a).” MAOs would have the initial responsibility to assess whether there is a disruption in access.

The obligation to comply with the special requirements would end 30 days after the latest of last disaster/emergency declaration is ended (whether state of federal) or there is no longer a disruption to access of health care. CMS also notes that there may be instances—such as COVID-19—where there is a national public health emergency, but disruptions of access occur only in certain service areas. In those instances, MAOs must comply with the special requirements until 30 days after the disruption of access to health care ends. When there is no end date specified in the disaster/emergency declaration, then the special requirements expire 30 days after the deadline for renewing the declaration.

  1. Amend MA Network Adequacy Rules by Requiring a Compliant Network at Application (§ 422.116)

Effective with applications for CY2019, CMS discontinued its policy of requiring MAOs demonstrating network adequacy as a condition of CMS approval of their initial and service area expansion applications.  CMS now proposes to reinstitute network adequacy reviews as part of the application process commencing with the CY2024 application cycle.

While acknowledging the sufficiency of its current practice of triennial reviews of MAOs’ provider networks for compliance with network adequacy requirements, CMS believes that a return to reviewing applicants’ provider networks will help ensure overall bid integrity, result in improved product offerings, and protect beneficiaries.

Recognizing that applicants may not have a fully compliant network in place when applicants are submitted, CMS proposes to allow the 10-percentage point credit towards the percentage of beneficiaries residing within published time and distance standards for the contracted network in the pending service area, at the time of application and for the duration of the application review. As of January 1 of the applicable contract year, the 10-percentage point credit would no longer apply, and MA organizations’ provider networks would need to be in full compliance for the entire service area.

  1. Allow CMS to Calculate Star Ratings for Certain Measures for 2023 Given Impacts of the COVID-19 Public Health Emergency (§ 422.166)

CMS develops and publicly posts a 5-star rating system for MA and Part D plans based on the requirement to disseminate comparative information, generally based on measures of performance during a period that is 2 calendar years before the year for which the Star Ratings are issued.

In the interim final rule titled “Medicare and Medicaid Programs; Policy and Regulatory Revisions in Response to the COVID–19 Public Health Emergency” published on April 6, 2020 (‘‘March 31st COVID-19 IFC’’), CMS adopted a series of changes to the 2021 and 2022 Star Ratings to address the disruption to data collection and impact on performance for the 2020 measurement period posed by the public health emergency for COVID-19. And due to the scope and duration of the COVID-19 public health emergency, CMS codified a change to the 2022 Star Ratings methodology in the interim final rule titled “Medicare and Medicaid Programs, Clinical Laboratory Improvement Amendments (CLIA), and Patient Protection and Affordable Care Act; Additional Policy and Regulatory Revisions in Response to the COVID-19 Public Health Emergency”, published and effective on September 2, 2020 (“September 2nd COVID-19 IFC”), changing (a) the disaster policy rules for calculating the non-CAHPS measure-level cut points for the 2022 Star Ratings, and (n) the calculation of the performance summary and variance thresholds for the reward factor.

In response to the September 2nd COVID-19 IFC, commenters requested the following clarifications:

  • Whether CMS anticipates the impacted Health Outcomes Survey (“HOS”) data collection period would not be until 2021 and the “higher of” methodology would be applicable to reporting year 2023 for HOS measures,
  • Whether, based on the timing applicable to 2020 disasters, the HOS and Healthcare Effectiveness Data and Information Set (“HEDIS”)-HOS measures would receive the higher of current or prior year measure-level Star Ratings in the 2023 Star Ratings, and
  • Whether the regulatory change to the 60 percent rule made by the September 2nd COVID-19 IFC would apply beyond the 2022 Star Ratings.

The Proposed Rule attempts to address these points by adding § 422.166(i)(12) to remove the 60 percent rule for affected contracts, ensuring that CMS is able to:

  • Calculate the 2023 Star Ratings cut points for the three HEDIS measures derived from the HOS survey (Monitoring Physical Activity, Reducing the Risk of Falling, and Improving Bladder Control), and
  • Include these measures in the determination of the performance summary and variance thresholds for the reward factor for the 2023 Star Ratings.

Without the proposed change, CMS contends that it could not calculate these measures for the 2023 Star Ratings or include them in the 2023 reward factor calculation since all contracts may qualify for the extreme and uncontrollable circumstances adjustment for COVID-19. So by removing the 60 percent rule, all contracts affected by COVID-19 with at least 25 percent 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 as noted above and described at § 422.166(i)(3)(iv).

  1. Past Performance Methodology to Better Hold Plans Accountable for Violating CMS Rules (§§ 422.502 and 422.503)

CMS has an obligation to ensure the organizations with which it contracts will provide health care services to beneficiaries in a high-quality manner. To avoid poor performers, CMS has issued several sets of regulations enabling CMS to deny applications associated with poor performing providers. The most recent of these was issued in January 19, 2021.  However, only a handful of applications have been denied based on prior past performance (i.e., just three denials since 2017).

The Proposed Rule at §§ 422.502, 422.504, 423.503, and 423.505 seeks to expand the bases for application denial to include the following:

  • Star Ratings History – CMS’ Star Ratings are provided to beneficiaries to help them make informed health care choices. CMS has concluded that providing for an application denial based on a 1-year history of low Star Ratings (i.e., 2.5 or lower) is consistent with CMS’ current practice of graduated enforcement. CMS also does not want to provide an organization at risk of being terminated in 2 years, based on its Star Ratings history, with an opportunity to expand.
  • Bankruptcy Proceedings – Since bankruptcy may result in the closure of an organization’s operations, CMS believes permitting an organization to expand while under bankruptcy proceedings is not in the best interest of the MA or Part D program. Based on this, CMS believes applications from organizations that have filed for or are in bankruptcy should be denied.
  • Compliance Actions – CMS proposes codifying the types of compliance notices which will be used as a factor in CMS’s review of an organization’s past performance, including Notices of Non-Compliance (“NONCs”), Warning Letters (“WLs”), and Corrective Action Plans (“CAPs”). Further, CMS proposes assigning points to each type of compliance action based on the type of notice and then apply a compliance action threshold to determine if the application should be denied (i.e., CAP – 6 points, WL – 3 points, NONC – 1 point). CMS will then total the points accrued for each organization, and those at or above a specified threshold (i.e., 13 points) may have applications for new contracts or service area expansions denied on the basis of past performance.

CMS contends these new denial reasons will enhance its ability to ensure poor performers are not allowed to enter into or expand in MA.

  1. Increasing Plan Oversight of Third-Party Marketing Organizations And Addressing Other Marketing and Communications Requirements (§§ 422.2260 and 423.2260, 422.2267 and 423.2267, 422.2274 and 423.2274)

Citing a significant increase in third party marketing of MA and Part D plans and in marketing related complaints from beneficiaries directly attributed to the activities of third party marketing organizations (“TPMOs”), CMS is proposing several requirements that would increase plan oversight of and accountability for the actions of such organizations their subcontractors.  First, CMS proposes to define TPMOs as “organizations that perform lead generation, marketing, sales, and enrollment related functions as a part of the chain of enrollment (the steps taken by a beneficiary from becoming aware of an MA plan or plans to making an enrollment decision). TPMOs may be a first tier, downstream or related entity (FDRs), as defined under § 422.504(i),[2] but may also be entities that are not FDRs but provide services to customers including an MA plan or an MA plan’s FDR.”  CMS hopes this definition will cast a sufficiently broad net to capture the scope of the types of entities that may be in a position of marketing Medicare health and drug plans.

Second, CMS would requires MAOs and Part D sponsors to ensure that any TPMO with which they do business, either directly or indirectly, utilizes the following standardized disclaimer where appropriate: “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.”  The disclaimer would have to be prominently displayed on the TPMO’s website and marketing materials, as well as provided verbally, electronically, or in writing, depending on how the TPMO is interacting with the beneficiary.

Third, as part of their oversight responsibilities, plans that do business with a TPMO, either directly or indirectly through an FDR, would be responsible for ensuring that the TPMO adheres to any requirements that apply to the plan.  Plans (and their FDRs), in their contracts, written arrangements, or agreements with TPMOs, would have to require TPMOs to: (i) disclose to the plan any subcontracted relationships used for marketing, lead generation, and enrollment; (ii) require sales calls with beneficiaries to be recorded in their entirety; and (iii) have TPMOs report to plans any staff disciplinary actions associated with Medicare beneficiary interaction on a monthly basis.

Finally, plans would be required to ensure that TPMOs conducting lead generating activities must inform the beneficiary that his or her information will be provided to a licensed agent for future contact, or that the beneficiary is being transferred to a licensed agent who can enroll him or her into a new plan.

  1. Greater Transparency in Medical Loss Ratio Reporting (§§ 422.2460 and 423.2460)

The MA and Part D medical loss ratio (“MLR”) reporting requirements from 2014 to 2017 closely tracked the level of detail required for commercial MLR reporting. Consistent with President Trump’s Executive Order on alleviating regulatory burdens, CMS simplified the MA and Part D MLR reporting requirements for CY 2018 to 2022—MAOs and Part D sponsors only had to report each contract’s MLR and the remittance amount, if any. But the MAOs and Part D sponsors still had to perform detailed data collection and analysis to calculate the MLR and remittance (if any) and remained subject to audit and oversight of the underlying analyses, so it is unclear the extent to which that change alleviated regulatory burdens. What was clear, however, is that CMS and the public had less line of sight into MAO and Part D sponsor MLR compliance outside of audits. CMS also noted an increase in the annual number of contracts that failed to achieve the minimum MLR and had to pay remittances since CY 2018.

CMS now proposes to reinstate the more detailed MLR reporting requirements that had been in effect for contract years 2014 to 2017, which required reporting of the underlying data used to calculate and verify the MLR and any remittance amount, such as incurred claims, total revenue, expenditures on quality improving activities, non-claims costs, taxes, and regulatory fees. CMS also would resume publicly releasing the more detailed MLR  data, consistent with the disclosures of commercial MLR reporting, to improve market transparency and beneficiary choice. CMS will update the MLR Reporting Tool to address change to the MLR calculation since 2017 (the last time the Tool had been used) and to separate out certain line items (such as certain supplemental benefits) to enable better transparency and comparison.

CMS also proposes to collect additional details regarding plan expenditures so it can better assess the accuracy of MLR submissions, the value of services being provided to enrollees under MA and Part D plans, and the impacts of recent rule changes that removed limitations on certain expenditures that count toward the 85 percent MLR requirement. These changes are consistent with CMS’s recent statements about commercial MLR reporting, which push for more clearly defined, objectively measurable, and well-documented clinical or quality standards to support provider incentives and more precise documentation around quality improvement activities.

  1. Pharmacy Price Concessions to Drug Prices at the Point of Sale (§ 423.100)

Part D sponsors are required to provide beneficiaries with access to “negotiated prices” for covered Part D drugs. Under the definition of “negotiated prices” at § 423.100, the negotiated price is the price paid to the network pharmacy or other network dispensing provider for a covered Part D drug dispensed to a plan enrollee that is reported to CMS at the point-of-sale by the Part D sponsor. This point-of-sale price is used to calculate beneficiary cost-sharing as well as other program purposes including to determine plan, manufacturer (in the coverage gap), and CMS liability during the course of the payment year, subject to final reconciliation following the end of the coverage year.  Currently, “negotiated prices” must include all network pharmacy price concessions except those contingent amounts that cannot “reasonably be determined” at the point-of-sale, such as any performance-based pharmacy price concessions that lower the price a sponsor ultimately pays for a drug.

Citing the widespread use and exclusion from negotiation prices of performance-based price concessions by Part D sponsors and their pharmacy benefit managers (“PBMs”), CMS proposes to delete the current definition of negotiated prices and replace it with a definition of “negotiation price” that defines the term as the lowest amount a pharmacy could receive as reimbursement for a covered Part D drug under its contract with the Part D plan sponsor or the sponsor’s intermediary (that is, the amount the pharmacy would receive net of the maximum negative adjustment that could result from any contingent pharmacy payment arrangement and before any additional contingent payment amounts, such as incentive fees).

To implement the proposed change at the point of sale, Part D sponsors and their PBMs would load revised drug pricing tables reflecting the lowest possible reimbursement into their claims processing systems that interface with contracted pharmacies.  If a pharmacy is ultimately paid an amount above the lowest possible reimbursement (such as in situations where a pharmacy’s performance under a performance-based arrangement triggers a bonus payment or a smaller penalty than that assessed for the lowest level of performance), the difference between the negotiated price reported to CMS and the final payment to the pharmacy would need to be reported as negative direct or indirect remuneration (“DIR”).  For applicable drugs during the coverage gap, Part D sponsors 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.

CMS would also define “price concession”, which has not yet been defined by CMS.  Price concession would be defined as “any form of discount, direct or indirect subsidy, or rebate received by the Part D sponsor or its intermediary contracting organization from any source that serves to decrease the costs incurred under the Part D plan by the Part D sponsor. Examples of price concessions include but are not limited to: discounts, chargebacks, rebates, cash discounts, free goods contingent on a purchase agreement, coupons, free or reduced-price services, and goods in kind.”

The proposed changes would take effect on January 1, 2023, meaning, if finalized, Part D sponsors would need to account for the changes in the bids that they submit for contract year 2023.

FOOTNOTES

[1] 42 U.S.C. § 1396a(a)(25)(G).

[2] The definition appears at 42 C.F.R. § 422.500.