CMS delays but finalizes changes on network adequacy

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The final rule implementing the “Policy Year 2023 Policy and Technical Changes to the Medicare Advantage and Medicare Prescription Drug Benefit Programs” is now available for review and is expected to be published in the Federal Register on May 9, 2022. The final rule adopts the proposed change that requires initial applicants and service area expansion applicants to submit their proposed contracted networks during the application process. The final rule defers this change from policy year 2023 to policy year 2024.

In making this change, CMS is essentially reverting to its pre-2019 process, when it began allowing plans to certify network suitability for new contract or service area extension applications, and relies on its triennial network review process to assess compliance with network adequacy standards. for new and expanded contracts.

Based on three years of experience, CMS expressed concern that the certification-only process could affect the integrity of the bidding process. He specifically noted that a number of plans asked to reduce the service area identified in their bid proposal once they realized they did not have sufficient network for one or more counties included in the service area. The number identified as requesting such changes is low: since 2019, five organizations have requested changes to the service area of ​​a total of 10 plans after the bid submission deadlines. However, according to CMS, when a plan needs to revise its bid to remove a county, it’s likely that the original bid submission was not complete, timely or accurate.

CMS also noted that its post-application network adequacy reviews showed a tendency for organizations to continue to have inadequate networks even after their contract became operational. CMS found a total of 19 plans falling into this category.

The initial issue driving the change in 2019 has not gone away, namely the potential challenge for applicants to secure a full vendor network nearly a year before the contract becomes operational. The application is usually submitted in February – around 10 months before the contract year which starts on January 1st. CMS has received many comments about the difficulty of securing final contracts in time for the bidding process, particularly in underserved areas or those with relatively few vendors. .

CMS acknowledged the validity of the comments on the plans and did not fully explain why it decided to change the application process for all plans, rather than use its authority to take action against the small number of plans that have demonstrated a network adequacy compliance issue – such as disapproving a request for a new contract or service area expansion for a plan that seeks to change its service area after the bid is submitted, or suspend registration until an operational plan meets network adequacy standards. Instead, CMS will provide two types of fairly limited flexibility to organizations to mitigate the impact of change:

  1. CMS will credit 10 percentage points on the percentage of recipients residing within the published time and distance standards for the contracted network in the standby service area, at the time of application and for the duration of the review demand.
  2. CMS will allow plans to use Letters of Intent (LOIs) instead of signed vendor contracts, at the time of application and for the duration of application review. The letter of intent must be signed by both the EM organization and the supplier. Applicants should advise CMS of their use of Letters of Intent to meet network standards.

At the start of the contract year (i.e. 1 January), this flexibility would no longer apply and plans would have to meet network adequacy standards for the entire service area with final contracts signed with suppliers and facilities.

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