CMS Has Issued the 2024 Medicare Advantage and Part D Final Rule Providing Explicit Guidance to the Industry

Overview

On April 5, 2023, CMS issued the 2024 Medicare Advantage and Part D Final Rule (CMS-4201-F), giving the industry explicit guidance relating to utilization management criteria for Medicare Advantage Plans.  CMS also provided clear guidance holding managed care organizations accountable for complying with traditional Medicare regulations.

With limited exception, this regulation becomes effective June 5, 2023. Certain provisions regarding the new prescription drug subsidies and utilization management policies will become applicable beginning January 1, 2024.  Although not an exhaustive review of the entire Rule, what follows is a summary of the most relevant and impactful provisions of this Rule to our clients.

Key Updates:

CMS has taken steps to codify guidance regarding inpatient admission standards, nationally accepted coverage criteria and external coverage criteria. Pursuant to this guidance, CMS has now codified guidance requiring MA plans to comply with and adhere to established Medicare standards and criteria. With clear and concise specificity, CMS has asserted that MA plans must comply with both national and local coverage determinations (NCDs and LCDs), as well as general coverage and benefit criteria included under Traditional Medicare for “basic (Part A and Part B) benefits”.  The intent of this Final Rule was not only to provide clarity to preexisting guidance, but pursuant to 2022 OIG recommendations, it also set out to establish new guidance for MAO application of clinical criteria in medical necessity reviews.

Given the assertion that MA plans must adhere to Traditional Medicare guidance, CMS received (and used this Final Rule to address) numerous comments and questions pertaining to inpatient admissions and the applicability of the Two-Midnight Rule (2MN), as well as the Inpatient Only List (IPO), to Medicare Advantage. CMS directly addressed these questions, first by offering a clarification and amendment to regulatory text, stating that based upon their review and interpretation of the statute, the Inpatient Only list does apply to Medicare Advantage.  CMS stated:

[I]f Traditional Medicare covers a service only when certain conditions are met, these conditions must be met in order for the service to be considered part of the Traditional Medicare benefits that must be included as basic benefits covered by an MA plan.

With equal veracity, CMS confirmed that the criteria listed within 42 CFR 412.3 (a-d) – otherwise known as the Two-Midnight Rule, and The Benchmark – also applies to Medicare Advantage. They did acknowledge that because the two-midnight presumption is considered instructional guidance for the selection of cases for review, CMS will defer to MA plans with regard to selection of cases for review, and therefore the two-midnight presumption will not apply to MA plans.

CMS also took this opportunity to address the approach of most MA plans to apply external criteria such as InterQual or Milliman as their standard utilization management tool.

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.

Expressly, CMS prohibited the use of these tools – in isolation – and without regard to established CMS guidance and Traditional Medicare coverage policies to make medical necessity determinations.  In other words, while CMS does not prohibit the use of these tools in general, they state:

MA plans may not use InterQual or MCG criteria, or similar products, to change coverage or payment criteria already established under Traditional Medicare laws [bold added by author].

CMS finalized guidance regarding the now restricted applicability of prior authorizations.  Recognizing that the majority of MA plans are coordinated care plans, which are designed to manage the cost, quality and utilization of care by ensuring medical necessity, CMS acknowledged the necessity of the prior authorization.  They also; however, called out the need for such authorizations to be made expeditiously, so as not to delay medically necessary care.  To that end, CMS has expressly limited the use of prior authorization policies ONLY to confirm the presence of diagnoses or other medical criteria and that a service is medically necessary based on Traditional Medicare standards.

 [P]rior authorization policies for coordinated care plans may only be used to confirm the presence of diagnoses or other medical criteria and/or ensure that an item or service is medically necessary based on standards specified in this rule.

Once a prior authorization has been granted, it shall remain valid for as long as is deemed medically necessary to avoid disruptions in care, and should a beneficiary choose to change MA plans, the prior authorization must stay valid for 90-days while in coverage transition. CMS has indicated the provisions addressing prior authorization in this Final Rule are intended to compliment the more robust guidance released in the December 2022: Advancing Interoperability and Improving Prior Authorization Processes Proposed Rule (CMS-0057-P).

CMS finalized the requirement that MA plans with UM policies must establish an UM committee that is led by a plan medical director who is responsible for ensuring clinical accuracy of all organization determinations and reconsiderations involving medical necessity.

We are finalizing the proposal that beginning on and after January 1, 2024, MA plans may not use any policies that have not been reviewed or approved by the UM committee established for the plan. Any policy that has not been reviewed or approved by the deadline may not be used by the MA plan until it has been reviewed (and revised as necessary) and approved by the UM committee.

 CMS also provided clarification in this Final Rule regarding MA coding and payment methodologies. While CMS acknowledged they are prohibited from interfering with the payment terms between an MA Plan and its contracted providers, they also note that the code sets and coding guidelines used by MA organizations are the same as those used in Traditional Medicare. As such, an MA plan is prohibited from deviating from national standard coding sets and guidance, which are the same as in Traditional Medicare.

Additionally, the Rule expressly reminds MA organizations that they must adhere to the Federal requirement of the Social Security Act section 1852(a)(2) which mandates MA plans reimburse non-contracted providers according to Traditional Medicare (FFS) payment systems.

Key Take-Aways:

• Effective June 5, 2023 if not immediately (as this has been longstanding guidance) – MAOs will be expected to adhere to Traditional Medicare coverage criteria, 2MN and the IPO to be considered compliant with this regulation.
• The burden and delays caused by revalidating prior authorizations, especially for patients with clearly documented needs, should be reduced if not eliminated by this Final Rule.
•  Coding rules applicable to traditional Medicare will also be applicable to Medicare Advantage organizations.

This document provides a summary of the most important and timely content for clients.  Additional information on prior authorization requirements will be in subsequent documents. CMS has released a Fact Sheet which highlights the updates and offers additional insight into Agency intent and Comments and Responses to this Final Rule.