The Biden administration takes steps to further address concerns LeadingAge has raised related to Medicare Advantage (MA) prior authorizations, flexible supplemental benefit card benefits, marketing and communication concerns, and an array of other issues in its 700+ page CY 2026 Medicare Advantage, Part D and Programs of All-Inclusive Care for the Elderly (PACE) policy and technical proposed rule ( “CY26 MA Rule”).  In the rule, the Centers for Medicare and Medicaid Services (CMS) also explores ways to curtail vertically integrated organizations from counting payments to related entities as patient care as part of the medical loss ratio.  What isn’t known is how much of the proposed rule will be finalized by the incoming Trump Administration.

The MA rule, published in the Federal Register on December 10, 2024, outlines policies for how the MA program would operate in calendar year 2026, if the rule were to be finalized. Comments can be submitted here and are due at 5 p.m. ET on January 27, 2025. It is important to note that while the rule was proposed by the Biden Administration, whether or not it is finalized in whole or in part will be decided by the Trump Administration.

CMS notes that several areas of the proposed rule seek to address issues raised by stakeholders—such as LeadingAge—and also identified through its “ongoing 2024 program audits” on compliance. Below is a summary of key elements of the proposed rule:

Flex Cards:  LeadingAge met with Deputy Administrator Jon Blum and other CMS staff in September 2024 to outline a series of issues that have arisen related to MA plans’ offering supplemental benefits through flexible benefit cards (“flex card”). This proposed rule attempts to address a number of the concerns we articulated – transparency and benefit access—but is silent on whether these flex cards should be considered in determining an individual’s eligibility for government assistance programs like federal rental assistance. Specifically, the rule would prohibit the plans from marketing the amount of a supplemental benefit that is delivered through a flex card and the fact that the benefit is delivered via a flex card. Plans would instead need to identify only the services or items they offer as supplemental benefits.

CMS also proposes to require plans to provide instructions for enrollees on how to access the flex card benefits and set up customer service to support enrollees with any questions.  Plans would also be required to to ensure the flex cards were used for their intended, eligible purpose via real-time verification.

Finally, CMS reminded plans that all benefits offered by the plan, including flex card benefits, must be accessible and adequate. In cases, where they are not, the plan must permit enrollees to access the benefit through out-of-network vendors at in-network cost sharing levels. Also, if an enrollee is unable to use the flex card with a particular vendor (e.g. affordable housing provider), the plan would be required to provide an “alternate method”—like submitting receipts to be reimbursed—to access the benefit.

Prior Authorizations: Much of the focus in the proposed rule related to prior authorization seeks to clarify the limited situations in which plans can use their own “internal coverage criteria” (ICC) to make coverage determinations for traditional Medicare benefits. To achieve this, CMS updates the definition of the term and makes it explicit that ICC “may only be used to supplement or interpret already existing content with in the Medicare coverage and benefit rules.”  Plans are prohibited from adding new or unrelated criteria for determining when an item or service is covered. Regulations currently require plans to make their ICCs publicly available but often this information has been buried or embedded in existing plan policies or resides on the plan’s website and is only accessible by registering one’s email or establishing an account. CMS is proposing beginning January 1, 2026 that plans must list each ICC it uses, its rationale and the evidence supporting it including how it benefits the enrollee on its website. This information must be displayed prominently on the plan’s website, including being identified in a footer on the website, and must be available to the public without fee, login or account set up requirements. In addition, all ICCs referenced in plan policies must be marked or labeled as such. CMS would also prohibit plans from using ICC to automatically deny coverage for basic benefits without taking into account an individual’s circumstances (e.g. no blanket policies) and plans could not discriminate based upon any factor related to the enrollee’s health status. The latter item might keep plans from denying care for older adults who are residents of long-stay nursing homes and are being denied post-acute skilled nursing facility services because the plan thinks these two settings provide the same type of services.

More granular data about prior authorization impacts on disadvantaged populations. As of January 1, 2025, plans’ utilization management committees must conduct an annual health equity analysis of the use of prior authorizations to determine if it disproportionally impacts individuals with one or more social risk factors. Originally, plans were to report this information in aggregate. LeadingAge, along with others, expressed the need for more granular level data to be reported for transparency and oversight. In response, CMS is now proposing that plans report their equity analysis for each covered item or services requiring prior authorization. If finalized, this change could generate better data to show how these plan practices present barriers to accessing skilled nursing facility and home health services and in particular, which populations face the greatest access barriers.

Clarifications on MAO Determinations, Appealability, Provider Notifications and Payment Protections for Concurrent Reviews. CMS is proposing four other revisions to existing regulations related to plans’ obligations to cover traditional Medicare benefits and the associated organization determinations (which includes prior authorizations (PAs) and concurrent reviews). First, CMS clarifies that MA organization (MAO) determinations are not appealable in cases where the enrollee has no further liability to pay for the services in question. In other words, coverage determinations are appealable but payment determinations are subject to the provider-plan contract terms. However, in the proposed rule, CMS clarifies that an enrollee’s financial liability is unknown until a provider submits a claim and the MAO makes a determination regarding this payment, which means more of these determinations are appealable than the MAOs have permitted. In addition, coverage decisions made while a person is receiving services,  like a level of care devision or a concurrent review, are to be treated as a type of organization determination that is appealable and subject to other related requirements. Third, the rule establishes that MAO’s must notify providers of its decision when the  provider initiates a request for an organization determination on behalf of an enrollee.  And finally, CMS is proposing to alter the rules under which an MAO can re-open and modify an approved authorization under “good cause.” CMS states, that just because payment decisions are not subject to the appeals process, does not mean an MAO can forgo “its obligation to pay its contracted providers for services rendered.” While we are pleased to see this instruction from CMS, it is unclear if these revisions are only applicable to inpatient hospital admissions as written. We will be asking CMS for clarification on this point as part of our comments and recommending it should apply to other services such as skilled nursing facility care and home health services that are pre-approved.

Artificial Intelligence Guardrails: CMS proposes “to ensure services are provided equitably irrespective of delivery method or origin, whether from human or automated systems.” Therefore, it proposes to  add “artificial intelligence” to the definition of an “automated system.” This could impact the use of patient care decision support tools or algorithms like nhPredict.

Medical Loss Ratios (MLRs) and Provider Quality and Bonus Payments. MLRs reflect an MA plans costs (numerators) in comparison to their revenues (denominator) for all of their enrollees. In MA, the numerator includes incurred claims, prescription drug costs, certain quality improvement initiatives, and amounts spent to reduce enrollees’ Part B Premiums. Administrative costs, marketing and profits cannot be included in the numerator. CMS is proposing a series of changes to what plans must report and how MLRs are calculated for MA and Part D plans with an intent to better align requirements across MA, Medicaid and Commercial insurance products.

CMS is proposing new limits to what plans would be permitted to report in the numerator. CMS proposes to permit MA plans to only report incentive and bonus payments as part of the numerator in cases where the payments are “are tied to clearly defined, objectively measurable, and well-documented clinical or quality improvement standards that apply to providers,” and to explicitly prohibit plans from including administrative costs for their reported quality improving activities.  If finalized, we would expect MA plans to look closely at their bonus and quality incentive payments to providers to ensure that the measures they are currently using would qualify them to count these payments as incurred claims. Provider payment arrangements that a MA plan cannot count in the numerator of the MLR could jeopardize its ability to meet the requirement that 85% of premiums are spent on patient care vs. administrative costs. Plans under the 85% ratio must issue a payment to CMS for the difference between the percent spent and the required 85%. Both providers and those who lead MA plans should look closely to their current arrangements to make sure these arrangements will comply in 2026, if this is finalized.

CMS is also pursuing a number of updates to its process for auditing plans and returning to more detailed reporting of plan expenses and rationale for which categories they are assigned as part of the MLR reporting process. This includes reporting information on provider payment arrangements in three categories — fee-for-service, alternative payment models and population-based payments — as part of their standard annual reporting requirements. Given that the MLR reporting requirements were simplified under the prior Trump Administration, it is unclear whether these more robust reportng requirements and revised audit standards will be finalized. However, the number of plans missing the MLR has nearly doubled since that time.

Request for Information (RFI) on MLR Policies to Address Vertical Integration Concerns. Policymakers are also grappling with ways to address concerns about plans that are vertically integrated with providers, pharmacies and other related health care entities and how premium dollars flow among these entities. CMS has included a Request for Information (RFI) soliciting feedback on whether CMS should adopt policies regarding how MA MLRs are calculated to address their concerns about vertical integration in MA and Part D plans. LeadingAge members who lead MA or special needs plans (SNPs) and are also service providers will want to weigh in on this RFI. CMS is wondering whether it should limit the amount of transfer payments incurred by related parties that can be reported in the MLR numerator, or redefine incurred claims to only include payments that are net of direct or indirect remuneration among other ideas.

Finally, the proposed rule covers many additional issues of tangential interest to members including:

• Marketing and Communications. The rule outlines certain new information that agents and brokers must communicate to beneficiaries (e.g. eligibility for Medigap coverage if they enroll in MA and later return to traditional Medicare), and requiring these representatives to ask if the person has additional questions.
• Provider Directories. CMS wants more transparency around which supplemental benefit providers deliver care in the home and which providers are in-network for each plan. They propose to require MA plans to include supplemental benefit providers who deliver care in the home in their provider directories and to submit these full provider directories to CMS for inclusion in its online, comparative Medicare plan finder tool.
• Better Integration for Duals. CMS proposes that applicable integrated dual-eligible SNPs be required to issue a single plan identification card for both plans, and conduct a single health risk assessment instead of one for each plan — Medicaid and Medicare. They also set timeframes for completing the initial HRA and the corresponding person-centered individualized care plan.

Please reach out to Nicole Fallon with any questions or comments you have on these provisions. She will be working on drafting a comment letter in response to the proposed rules for submission no later than January 27, 2025. Members are also encouraged to join the next LeadingAge Managed Care Solutions Network meeting at 3 p.m. ET on January 9, 2025 to share their input on the proposed rule and hear the latest updates on MA. Contact Nicole Fallon for Zoom details.