On April 4, 2024, the Centers for Medicare & Medicaid Services (CMS) released the Contract Year 2025 Policy and Technical Changes to the Medicare Advantage (MA) and Medicare Prescription Drug Benefit Programs (Part D) Final Rule (link) and accompanying fact sheet (link). Unless otherwise noted, the provisions in this final rule are applicable to coverage beginning January 1, 2025.

Notably, CMS finalized permitting Part D sponsors to treat substitutions of biosimilar biological products other than interchangeable biological products as “maintenance changes,” which do not require CMS approval and apply to all beneficiaries following a 30-day notice.

Below, ADVI provides highlights from this rule. If you have any questions or would like further information, please do not hesitate to contact your ADVI Account Manager.

Changes to an Approved Formulary: Biosimilar Biological Product Maintenance Changes and Timing of Substitutions

CMS is finalizing the proposal to allow Part D sponsors to treat formulary substitutions of all biosimilars for their reference products as “maintenance changes” that would not require explicit prior approval by CMS.
Currently, Part D sponsors must obtain approval from CMS before making a midyear formulary change that removes a reference product and replaces it with a biosimilar other than an interchangeable biological product. If approved, the Part D sponsor may only apply the change to beneficiaries who begin therapy after the effective date of the change.
CMS is also finalizing proposals to permit Part D sponsors that meet all requirements for immediate substitution to:
Immediately substitute an interchangeable biological product for its reference product, a new unbranded biological product for its corresponding brand name biological product, and a new authorized generic for its brand name equivalent; and
Substitute upon 30 days’ notice any biosimilar biological product for its reference product.
Note: These provisions were initially proposed in the CY 2024 MA & Part D proposed rule, released in December 2022.

Dual Eligibles

CMS finalized with some modifications the following changes, with the stated goal of increasing the percentage of dually eligible managed care enrollees who receive Medicare and Medicaid services from the same organization:

Replace the current quarterly special enrollment period (SEP) with a one-time-per month SEP for dually eligible individuals and other Part D LIS eligible individuals to elect a standalone PDP.
Create a new integrated care SEP to allow dually eligible individuals to elect an integrated D-SNP on a monthly basis.
Limit enrollment in certain D-SNPs to those individuals who are also enrolled in an affiliated Medicaid managed care organization (MCO)
Limit the number of D-SNP plan benefit packages an MA organization can offer for full-benefit dually eligible individuals in the same service area that it, its parent organization, or any entity that shares a parent organization with the MA organization offers an affiliated Medicaid MCO.

Beginning in 2026, CMS also finalized a policy to apply cost-sharing limitations on certain out-of-network services offered by local or regional PPO plans that are Dual Eligible Special Needs Plans (D-SNPs). Additionally, CMS finalized the proposed amendment stating that for an MA organization offering a local PPO plan or regional PPO plan, cost sharing for out-of-network services under D-SNP PPOs will be limited to the existing cost sharing limits now applicable to specific in-network services for all MA plans, as follows:

Cap cost sharing for chemotherapy administration services (including chemotherapy/radiation drugs and radiation therapy integral to the treatment regimen, other Part B drugs, and renal dialysis services) at the cost sharing for those services under Traditional Medicare.
Limit cost sharing for skilled nursing care, home health services, and several categories of durable medical equipment to cost sharing under Traditional Medicare, provided that the MA plan meets certain maximum out-of-pocket limit requirements.

Medication Therapy Management (MTM)

CMS is finalizing the proposal that all Part D sponsors must include all core chronic diseases in their targeting criteria for identifying beneficiaries who have multiple chronic diseases. CMS is finalizing the nine core chronic diseases currently identified, and adding HIV/AIDS, making a total of ten chronic diseases. Sponsors may target additional chronic diseases beyond those codified.
The ten chronic diseases are: (1) Alzheimer’s disease; (2) Bone disease-arthritis (including osteoporosis, osteoarthritis, and rheumatoid arthritis); (3) Chronic congestive heart failure; (4) Diabetes; (5) Dyslipidemia; (6) ESRD; (7) HIV/AIDS; (8) Hypertension; (9) Mental health (including depression, schizophrenia, bipolar disorder, and other chronic/disabling mental health conditions); and (10) Respiratory disease (including asthma, COPD, and other chronic lung disorders).
CMS is not finalizing the proposal to decrease the maximum number of Part D drugs a sponsor may require for targeting beneficiaries taking multiple Part D drugs from eight to five for Contract Year 2025; they are retaining the maximum number as eight.
CMS is finalizing the provision that sponsors must include all Part D maintenance drugs and to provide flexibility for sponsors to include all Part D drugs in their targeting criteria.
Sponsors will not be permitted to limit the Part D maintenance drugs included in MTM targeting criteria to specific Part D maintenance drugs or drug classes.
CMS is finalizing the provision to set the MTM cost threshold at the average cost of eight generic drugs.
CMS will calculate the dollar amount of the MTM cost threshold based on the average daily cost of a generic drug using PDE data from the plan year that ended 12 months prior to the applicable plan year.
Based on analysis of 2023 PDE data, the MTM cost threshold will be $1,623 for 2025. The MTM cost threshold will be published in the annual Part D Bidding Instructions memo for future years.

Drug Management Programs

Part D sponsors are required to have a drug management program (DMP) for beneficiaries at risk of abuse or misuse of frequently abused drugs (currently defined as opioids and benzodiazepines).
CMS is finalizing as proposed to amend the definition of “excepted beneficiary” by replacing the reference to “active cancer-related pain” with “cancer-related pain,” aligning regulation with the 2022 CDC Guideline regarding applicability in individuals with cancer.

Access to Behavioral Health Providers

CMS finalizes the addition of a new facility-specialty provider category, “Outpatient Behavioral Health” to its MA network adequacy standards. Specialists in this new facility-specialty category include Marriage and Family Therapists (MFTs), Mental Health Counselors (MHCs), Opioid Treatment Program (OTP) providers, Community Mental Health Centers, addiction medicine physicians, and other providers who regularly furnish addiction medicine and behavioral health services covered by Medicare.
To further qualify under this facility-specialty provider category, MA plans must independently verify that the provider that will be added to their network has provided or will provide services to at least 20 patients within a 12-month period. This information can be verified using MA plan claims data, prescription drug claims data, electronic health records, or similar data.
CMS notes that the Outpatient Behavioral Health facility-specialty provider category will be added to the specialty types that will receive a 10% credit toward meeting required time and distance standards.
The MA organization’s contracted network of providers must include one or more telehealth providers of that specialty type who provide additional telehealth benefits for covered services.

Changes to MA and Part D Benefits

Definition of Basic Benefits
CMS is finalizing as proposed to update the definition of “basic benefits” at § 422.2 as a technical change to align with existing law.
Special Supplemental Benefit for the Chronically Ill (SSBCI) – “Reasonable Expectation” of Improving the Health or Overall Function
CMS is finalizing to require an MA organization that includes an item or service as SSBCI in its bid to demonstrate through “relevant acceptable evidence” that the item or service has a reasonable expectation of improving or maintaining the health or overall function of a chronically ill enrollee.
Mid-Year Notice of Unused Supplemental Benefits
CMS is finalizing as proposed to require MA organizations to send mid-year notices to enrollees with information pertaining to each supplemental benefit available during the plan year that the enrollee has not used.
Annual Health Equity Analysis of Utilization Management (UM) Policies
CMS is finalizing changes to the composition and responsibility of the UM Committee. These changes include requiring at least one UM Committee member to have expertise in health equity, and to have the UM Committee conduct an annual health equity analysis on the use of prior authorization at the plan level.

Enrollment and Appeals

Revising Initial Coverage Election Period Timeframe
The Initial Coverage Election Period (ICEP) is a period when an individual who first becomes entitled to Medicare Part A benefits and enrolls in Medicare Part B may elect an MA plan.
CMS is finalizing without modification to extend the timeframe for the ICEP to provide beneficiaries with additional time to decide if they would like to receive coverage through MA.
Appealing Termination of Coverage for Non-Hospital Provider Services
CMS is finalizing as proposed to:
Require the Quality Improvement Organization, instead of the MA plan, to review untimely fast-track appeals of an MA plan’s decision to terminate services in a skilled nursing facility, comprehensive outpatient rehabilitation facility, or by a home health agency.
Eliminate the provision requiring forfeiture of an enrollee’s right to appeal a termination of service decision when they leave the facility.
Part C and D Reporting Requirements
CMS is finalizing technical changes to regulation text at §§ 422.516 and 423.514.
Timeframes for Filing an Appeal
CMS is finalizing as proposed to require requests for Part C reconsiderations, Part D redeterminations, Part D at-risk redeterminations, and Part D Independent Review Entity (IRE) reconsiderations be filed within 60 calendar days after receipt of the written determination notice.
Authorized Representatives for Parts C/D Elections
CMS is finalizing as proposed to codify guidance on the definition of “authorized representative.”
Open Enrollment Period for Institutionalized Individuals (OEPI)
CMS is finalizing as proposed to codify guidance that defines when the OEPI ends.
Beneficiary Choice of C/D Effective Date if Eligible for Multiple Election Periods
CMS is finalizing as proposed to require MA organizations or Part D plan sponsors to allow beneficiaries who qualify for multiple election periods to choose the election period that results in the desired effective date.

Other Notable Topics Addressed in the Final Rule

Establishing guardrails for agent and broker compensation.
Limiting distribution of personal beneficiary data by Third Party Marketing Organizations (TPMOs).
Codifying the complaints resolution timeline for the Complaints Tracking Module.

ADVI will continue monitoring developments and the next steps. This is a delayed release. ADVI Instant content is distributed in real-time for retainer clients. Get in touch to learn more about how we can support your commercialization, market access, and policy needs.