[Federal Register: September 18, 2008 (Volume 73, Number 182)]
[Rules and Regulations]
[Page 54207-54223]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr18se08-13]
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Part II
Department of Health and Human Services
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Centers for Medicare & Medicaid Services
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42 CFR Parts 422 and 423
Medicare Program; Medicare Advantage and Prescription Drug Benefit
Programs: Final Marketing Provisions; Final Rule
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DEPARTMENT OF HEALTH AND HUMAN SERVICES
Centers for Medicare & Medicaid Services
42 CFR Parts 422 and 423
[CMS 4131-F]
RIN 0938-AP24
Medicare Program; Medicare Advantage and Prescription Drug
Benefit Programs: Final Marketing Provisions
AGENCY: Centers for Medicare & Medicaid Services (CMS), HHS.
ACTION: Final rule.
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SUMMARY: This final rule revises the Medicare Advantage (MA) program
(Part C) and Medicare Prescription Drug Benefit Program (Part D). The
regulation contains new regulatory provisions regarding marketing
processes for both programs. The revisions to the Part C and Part D
programs are based on lessons we have learned since 2006, the initial
year of the prescription drug program and the revised MA program.
DATES: Effective Date: The provisions of this regulation are effective
September 18, 2008.
FOR FURTHER INFORMATION CONTACT: Chevell Thomas, 410-786-1387.
SUPPLEMENTARY INFORMATION:
I. Background
A. Overview of the Medicare Prescription Drug, Improvement, and
Modernization Act of 2003
The Medicare Prescription Drug, Improvement, and Modernization Act
of 2003 (MMA) (Pub. L. 108-173) was enacted on December 8, 2003. The
MMA established the Medicare Prescription Drug Benefit Program (Part D)
and made revisions to the provisions in Medicare Part C, governing what
is now called the Medicare Advantage (MA) program (formerly
Medicare+Choice). The MMA directed that important aspects of the new
Medicare Prescription Drug Benefit Program under Part D be similar to
and coordinated with regulations for the MA program.
The MMA also directed implementation of the prescription drug
benefit program and revised MA program provisions by January 1, 2006.
The final rules for the MA and Part D prescription drug programs
appeared in the Federal Register on January 28, 2005 (70 FR 4588
through 4741 and 70 FR 4194 through 4585, respectively). Many of the
provisions relating to applications, marketing, contracts, and the new
bidding process, for the MA program, became effective on March 22,
2005, 60 days after publication of the rule, so that the requirements
for both programs could be implemented by January 1, 2006. All of the
provisions regarding the new Part D prescription drug program became
effective on March 22, 2005.
As we have gained more experience with the MA and the Part D
programs, we are revising areas of both programs. Many of these
revisions clarify existing policies or codify current guidance for both
programs. We believe that these changes will help plans understand and
comply with our policies for both programs and aid MA organizations and
Part D plan sponsors in implementing their health care and prescription
drug benefit plans.
B. Relevant Legislative History and Overview
The Balanced Budget Act of 1997 (BBA), Public Law 105-33,
established a new ``Part C'' in the Medicare statute (sections 1851
through 1859 of the Social Security Act (the Act)) which provided for a
Medicare+Choice (M+C) program. Under section 1851(a)(1) of the Act,
every individual entitled to Medicare Part A and enrolled under
Medicare Part B, except for most individuals with end-stage renal
disease (ESRD), could elect to receive benefits either through the
Original Medicare program or an M+C plan, if one was offered where he
or she lived.
The Medicare, Medicaid, and SCHIP Balanced Budget Refinement Act of
1999 (BBRA), Public Law 106-111, amended the M+C provisions of the BBA.
Further amendments were made to the M+C program by the Medicare,
Medicaid, and SCHIP Benefits Improvement and Protection Act of 2000
(BIPA) (Pub. L. 106-554), enacted December 21, 2000.
As noted above, the MMA was enacted on December 8, 2003. Title I of
the MMA added a new ``Part D'' to the Medicare statute (sections 1860D-
1 through 1860D-42) creating the Medicare Prescription Drug Benefit
Program, the most significant change to the Medicare program since its
inception in 1965.
Sections 201 through 241 of Title II of the MMA made significant
changes to the M+C program which was established by the Balanced Budget
Act of 1997 (BBA) (Pub. L. 105-33). Title II of the MMA renamed the M+C
program the MA program and included new payment and bidding provisions,
added authority for new regional MA plans and special needs plans,
reestablished authority for medical savings account (MSA) plans that
had been provided in the BBA on a temporary basis, and made other
changes to the provisions of Part C. Title I of the MMA created
prescription drug benefits under Medicare Part D, and a new retiree
drug subsidy program.
Both the MA and prescription drug benefit regulations were
published separately, as proposed and final rules, though their
development and publication were closely coordinated. On August 3,
2004, we published in the Federal Register proposed rules for the MA
program (69 FR 46866 through 46977) and the Medicare Prescription Drug
Benefit Program (69 FR 46632 through 46863). In response to public
comments on the proposed rules, we made several revisions to the
proposed policies for both programs. For further discussion of these
revisions, see the respective final rules (70 FR 4588-4741) and (70 FR
4194-4585).
Based on what we learned in program experience subsequent to the
promulgation of the initial regulations implementing the MMA, on May
16, 2008, we proposed additional revisions to the Part C and D
regulations that proposed to incorporate certain existing policies into
the regulations, and make some revisions to policies based on program
experience (73 FR 28556). The proposals in this May 16, 2008, notice of
proposed rulemaking (proposed rule) included proposals addressing the
marketing of Part C and Part D plans to Medicare beneficiaries. While
the proposed rule also included a wide range of other proposals, in
this final rule, we are only finalizing certain proposals in the May
16, 2008, proposed rule relating to marketing.
The Medicare Improvements for Patients and Providers Act of 2008
(MIPPA), Public Law 110-275 was enacted on July 15, 2008, and amended
titles XVIII and XIX of the Social Security Act to make various
revisions to the Medicare statute intended to improve the Medicare
program. Section 103 established new statutory prohibitions and
limitations for MA plans and Medicare Prescription Drug plans (PDPs) on
certain sales and marketing activities. Many of these new statutory
marketing provisions were similar (or identical) to provisions that we
proposed in our May 16, 2008, proposed rule. For example, MIPPA
specifically prohibits, while performing marketing activities to
promote or sell MA plans or PDPs, any unsolicited means of direct
contact with beneficiaries, cross-selling of non-health related
products, and providing meals. It also prohibits sales and marketing
[[Page 54209]]
activities in health care settings (excluding common areas) and at
educational events.
MIPPA also places limits on other marketing activities.
Specifically, it limits the following: the scope of the discussion
during an appointment set with a beneficiary to discuss an MA plan or
PDP to what was agreed upon with the beneficiary in advance; the
ability to use names and logos of co-branded network providers on plan
membership and marketing materials; the value of gifts and promotional
items provided to beneficiaries; and the compensation paid by plans to
agents for selling MA and Part D products. In addition, it requires the
training and testing of agents and brokers selling MA and Part D
products. MIPPA also requires plans and CMS to collaborate and share
information with the States.
The above MIPPA provisions enact into statute provisions we
proposed through our authority to establish marketing rules through
rulemaking, and thus effectively would supersede our regulatory
proposals. Pursuant to MIPPA, the marketing prohibitions provisions
mentioned above apply to the plan year beginning on January 1, 2009. In
keeping with statutory intent and based on policy concerns related to
inappropriate marketing activity, we believe that regulations setting
forth important protections for beneficiaries should be in effect
before the 2009 plan year marketing campaign begins this fall on
October 1, 2008. We are finalizing our May 16, 2008 proposals in these
areas in this final rule so that the marketing rules in question can be
effective for the 2009 benefit year marketing campaign, beginning
October 1, 2008. These provisions are set forth in this final rule at
Sec. 422.2268, Sec. 423.2268, 422.111(b) and 423.128(b).
Specifically, this final rule finalizes six new marketing
provisions and modifies the disclosure and dissemination of Part D
information provisions and the file and use provision set forth in the
May 16, 2008, proposed rule. The remaining proposals in the proposed
rule either were superseded by statutory provisions that we will
reflect in the regulations as part of an interim final rule, or will be
finalized in a future final regulation in which we will respond to any
public comments on those proposals in the May 16th proposed rule that
were not superseded by MIPPA provisions.
II. Provisions of the Proposed Regulations
Because this final rule finalizes only the recodification and
modification of existing sections of the marketing regulations at Sec.
422.80, Sec. 423.50, Sec. 422.111, and Sec. 423.128 and finalizes
only six of the new provisions from the proposed rule, we shall only
discuss these aspects of the May 16, 2008 proposed rule here. The
following table displays how the proposed rule proposed to recodify
existing marketing provisions, and the bullets that follow the table
set forth those proposals in the May 16, 2008 proposed rule that we are
addressing in this final rule.
Table 1--Provisions Affecting Both the Part C and Part D Programs
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Part 422 Part 423
Provision Part 422--subpart CFR section Part 423 subpart CFR section
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Marketing: Definitions.............. Subpart V (all 422.2260 Subpart V (all 423.2260
marketing sections). marketing sections).
Review and Distribution of Marketing ....................... 422.2262 ....................... 423.2262
Materials.
Guidelines for CMS Review........... ....................... 422.2264 ....................... 423.2264
Deemed Approval..................... ....................... 422.2266 ....................... 423.2266
Marketing: Standards for MA/Part D ....................... 422.2268 ....................... 423.2268
marketing.
Marketing: Licensing of marketing ....................... 422.2272 ....................... 423.2272
representatives and confirmation of
marketing resources.
Marketing: Employer group retiree ....................... 422.2276 ....................... 423.2276
marketing.
Disclosure requirements and Subpart C.............. 422.111 Subpart C.............. 423.128
Dissemination of Part D information.
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Sec. 422.2262(b) and Sec. 423.2262(b)--we proposed to
eliminate the file and use eligibility process.
Sec. 422.2268(b) and Sec. 423.2268(b)--we proposed to
prohibit the offering of gifts to potential enrollees unless the gifts
are of nominal value, and prohibit providing meals to beneficiaries
while conducting marketing activities. We are only finalizing the
prohibition on meals in this final rule, and thus are separating these
two prohibitions. The nominal gifts provision will be addressed in a
separate rule that implements the requirement that new MIPPA rules be
in place no later than November 15, 2008.
Sec. 422.2268(d) and Sec. 423.2268(d)--we proposed to
extend the prohibition against door-to-door solicitation to include
other instances of unsolicited direct contact including outbound
telemarketing without the beneficiary initiating contact.
Sec. 422.2268(f) and Sec. 423.2268(f)--we proposed to
prohibit the cross-selling of non-health care related products during
any sales, marketing, or presentation for an MA plan or PDP.
Sec. 422.2268(k) and Sec. 423.2268(k)--we proposed to
prohibit conducting sales presentations or distributing and accepting
plan applications in provider offices or other places where health care
is delivered.
Sec. 422.2268(l) and Sec. 423.2268(l)--we proposed to
prohibit conducting sales activities, distributing, or collecting
applications at education events.
Sec. 422.2272(c) and Sec. 423.2272(c)--we proposed that
plans must appoint and use only State licensed representatives to
conduct direct marketing activities in accordance with applicable State
appointment laws.
Sec. 422.111 and Sec. 423.128--we proposed that plans
must disclose the information specified in Sec. Sec. 422.111(b) and
423.128(b) to its members both at the time of enrollment and at least
annually thereafter, 15 days before the annual coordinated election
period.
III. Analysis of and Response to Public Comments
We received a total of 405 timely comments on the May 16, 2008
proposed rule, and will only address here those comments that pertain
to the proposals we are finalizing in this final rule. We received
comments from managed care organizations and other insurance industry
representatives, pharmacy benefit management firms,
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pharmacies and pharmacy education and practice-related organizations,
beneficiary advocacy groups, representatives of health care providers,
States, employers and benefits consulting firms, members of Congress,
beneficiaries, and others. The comments ranged from general support or
opposition to the proposed provisions to very specific questions or
comments regarding the proposed changes.
Brief summaries of each proposed provision, a summary of the public
comments we received, and our responses to the comments are set forth
below.
Medicare Advantage and Prescription Drug Program Marketing Requirements
(Proposed New Subparts V)
A. General
In order to implement standards consistent with ``fair marketing''
practices in accordance with sections 1851(h) and 1860D-1(b)(1)(B)(vi)
of the Act, and to ensure beneficiaries receive the necessary
information to make informed choices during the annual election period,
we proposed to amend and expand our marketing regulations for both the
MA and the Part D programs. Moreover, due to the proposed addition of
new marketing provisions and the need to clarify current marketing
regulations, we proposed to remove Sec. Sec. 422.80 and 423.50 of
subpart B, which currently specify the requirements related to the
approval of marketing materials and instead include this core of our
marketing requirements in a new subpart V at 42 CFR parts 422 and 423
specific to the marketing regulations for each program.
Comment: We received several comments recommending changes to the
content of the existing requirements contained in Sec. 422.80 and
Sec. 423.50.
Response: In the proposed rule we made no changes to the
requirements in Sec. Sec. 422.80 and 423.50 other than to include them
in a new subpart V (Sec. Sec. 422.2260 and 423.2260). Because we did
not propose modifications to the content of this section in the
proposed rule other than relocating the text to a new subpart, the
comments are beyond the scope of this regulation. However, there is one
exception. A commenter requested that we remove the second sentence at
Sec. Sec. 422.2268(a) and 423.2268(a) because it creates ambiguity
with respect to the prohibition outlined in the first sentence. We
agree and are removing the sentence.
Comment: One commenter expressed concern about the time frame for
implementing certain provisions prior to the annual election period
(AEP) and open enrollment period (OEP) and recommended that the
effective date of any provisions of the final regulations be effective
after the 2009 AEP and OEP (April 1 or later). Other commenters
expressed their desire for the provisions to be effective no sooner
than 2010.
Response: This final rule contains the six provisions from the May
2008 proposed rule that we believe should be implemented prior to
October 1, 2008, the beginning of the marketing period for contract
year 2009, in order to protect beneficiaries during the annual election
period. These six provisions are in accordance with requirements
contained in section 103 of MIPPA that will take effect by operation of
statute on January 1, 2009. In light of our program experience, we
believe that the beneficiary protections in these six provisions should
be put into effect before the 2009 benefit year marketing campaign and
annual election period. Other provisions from the May 2008 proposed
rule will be addressed in separate regulations, one will reflect other
statutory provisions in MIPAA, and one will respond to comments on the
other provisions in the May 2008 proposed rule that were not addressed
in MIPAA. We will consider this comment in relation to the latter
remaining provisions.
Comment: A few commenters requested clarification of the extent to
which the proposed marketing requirements apply to cost plans or
employer group plans; recommending that, if the proposed marketing
requirements do not apply to cost plans or employer group plans, CMS
modify the regulations to apply the proposed marketing requirements to
such plans.
Response: Cost plans are subject to provisions found in Sec.
417.28 and the guidance contained in the Medicare Marketing Guidelines
for: Medicare Advantage Plans, Medicare Advantage Prescription Drug
Plans, Prescription Drug Plan, 1876 Cost Plans. Employer group plans
are MA and Part D plans. Additional guidance on employer group plans
will be forthcoming in chapter 9 of the Medicare Managed Care Manual.
The statutory provisions that the provisions of this final rule mirror
only apply to MA plans under Part C and PDPs under Part D.
B. Review and Distribution of Marketing Materials: File and Use (Sec.
422.2262(b), Sec. 423.2263(b))
In addition to moving our requirements concerning the approval of
marketing materials and election forms to Sec. Sec. 422.2262 and
423.2262 of the Part C and Part D program regulations, respectively, we
are proposing to modify the ``file and use'' review process.
While the statute requires the submission of marketing materials to
CMS for a 45 day period of CMS review, based on years of program
experience CMS recognized that some MA organizations consistently met
all marketing standards, and that their marketing materials warranted
less scrutiny. CMS accordingly established a file and use policy that
was designed to streamline the marketing materials approval process for
these MA plans. Under this file and use policy, Medicare health plans
that demonstrated to the satisfaction of CMS that they continually met
a particular high standard of performance were able to publish and
distribute certain marketing materials within 5 days of submission to
CMS under section 1851(h)(1), without waiting for a response from CMS.
In effect, these materials were deemed approved by CMS after 5 days
based on CMS's prior review of earlier materials. The criteria in order
to be eligible for the original file and use policy were that a
contracting entity had to have submitted at least eighteen months of
marketing materials for CMS review, and at least ninety percent of the
materials submitted within the past six months had to meet applicable
marketing standards.
In the regulations implementing the MMA, CMS adopted a separate
file and use policy that was based on the nature of the marketing
materials in question, rather than the track record of the MA
organization or PDP sponsor. Under this policy, an MA organization or
PDP sponsor certifies that it is using either model language already
reviewed and approved by CMS, or types of marketing materials that CMS
has identified as not containing substantive content. As with the
original policy that focused on the organization, the materials covered
by this new file and use certification policy could be used 5 days
after submission, without any explicit approval from CMS. In the case
of MA organizations, this certification is made at the time of
submission, while PDP sponsors are permitted to so certify in their
contracts.
In order to level the playing field among contractors, eliminate
redundancies, and focus resources on materials that have content that
warrants CMS scrutiny, we are proposing to eliminate file and use
status based on an organization's track record, and apply a uniform
policy of applying the file and use policy to marketing materials that
either use model language without substantive modification, or
materials that are
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identified by CMS as not containing substantive content warranting CMS
review. The same approach to certifying that these types of materials
are being used would apply for both MA organizations and Part D
sponsors. We would include the proposed file and use provision in Sec.
422.2262(b) and Sec. 423.2262(b) of the MA and Part D programs,
respectively.
Comment: There were several general comments on the CMS review
process for marketing materials, including a request for further
definition of ``substantive content.''
Response: Over the past 2 years CMS has implemented several
mechanisms to enhance the consistency of our review process, and we
will continue to refine our processes. We consider the suggestion to
make more materials eligible for file and use a good one, and we have
done so recently and may continue to do so in the future. A list of
materials CMS has identified as ``not containing substantive content''
and eligible for file and use is available in the Health Plan
Management System (HPMS) marketing module. With respect to shortening
the review period to 30 days, the statute requires the submission of
marketing materials to CMS for a 45-day period of review. Materials
that are not deemed eligible for the 5-day file and use policy must be
submitted for a 45-day review period. Finally, CMS will take under
consideration suggestions to clarify the review process for plans that
operate in more than one geographic area, and to allow such plans to
submit materials to the lead office only for review.
Comment: One commenter agrees with the 45-day rule for marketing
materials, but suggests that CMS attach the civil monetary penalty (per
enrollee affected) as penalty for violating the certification without
exceptions.
Response: CMS may impose a civil monetary penalty (CMP) on an
organization when the organization's conduct adversely affects or has
the substantial likelihood of adversely affecting one or more
enrollees. One of the violations for which a CMP can be assessed is
that the organization substantially fails to comply with marketing
requirements (Sec. Sec. 422.510(a)(12) and 423.509(a)(9)). If CMS
determines an organization's substantial failure to adhere to marketing
requirements has adversely affected or has the substantial likelihood
of adversely affecting one or more enrollees, CMS may impose a CMP. It
is important to note that CMS has other enforcement options, such as
marketing and enrollment sanctions, for organizations that fail to
adhere to marketing requirements. Under these sanctions, CMS may
restrict a plan from marketing during marketing season or from
accepting new enrollments for a period of time. For example, since
marketing season begins on October 1st of every year, CMS may decide to
impose a sanction against a plan for a marketing violation that
prevents the plan from marketing until a later date, such as October
15th or November 1st. Similarly, CMS may prohibit a plan from accepting
new enrollments for several months.
Comment: We received several comments in support of this rule
change, and one comment opposing our elimination of the file and use
policy for marketing materials.
Response: Section 423.2262 does not eliminate the file and use
process, it only eliminates the file and use status based on an
organization's track record. Instead a uniform policy will be applied,
so that all contractors are eligible to submit any material deemed file
and use qualified.
Comment: CMS received one comment that this change will over burden
CMS and could lead to a negative impact on members. CMS must release
models in time for document preparation and review time to be allowed.
Response: The elimination of file and use based on status will not
increase the number of documents that CMS must review through the 45-
day review process--model documents previously eligible for file and
use will remain eligible for file and use. In addition, CMS is moving
towards more standardization of certain model documents, which will
then increase the number of documents eligible for file and use,
thereby significantly shortening the amount of time required for CMS
review. CMS has successfully released several model documents for plan
review and modification earlier in the year, and will continue towards
that goal.
Comment: Several comments suggested that CMS should add a
requirement that plan sponsors file marketing materials with State
regulators, so that States will be able to differentiate between CMS-
approved and unapproved material and take action accordingly.
Response: It is not necessary for plans to file marketing materials
with State regulators. All CMS approved marketing materials contain a
unique material identification number. If anyone has a question about
the legitimacy of plan marketing material, they can report it to CMS
and it will be verified. If CMS determines that the material was not
reviewed and approved prior to use, we will initiate a compliance
action. If CMS determines that the material was appropriately submitted
and approved, but determines as a result of a complaint that there is a
problem with the material, it will contact the plan to have the
material taken out of use.
C. Standards for MA and PDP Marketing (Sec. Sec. 422.2268, 423.2268)
We proposed making an organizational change for this section,
consistent with our proposal to create a new subpart V at 42 CFR part
422 and part 423 specific to marketing regulations. We are
redesignating Sec. Sec. 422.80 and 423.50 as Sec. Sec. 422.2268 and
423.2268, respectively.
Comment: We received several comments requesting that we clarify
that pharmacies are not obligated to distribute plan information to
beneficiaries for Part D plans with which they do not have contracts.
One commenter stated they do not believe that pharmacies should be
prevented from providing comparative Part D plan information to
patients if they do not accept and display marketing materials from all
Part D sponsors. A commenter stated that some pharmacies may not
contract with some Part D plans, and as a result may not be familiar
with their terms and conditions nor have ready access to those plans'
marketing materials. Some commenters also stated that the regulatory
language in proposed Sec. 422.2268(j) was not consistent with Sec.
423.2268(j). Commenters stated that the final Part D technical rule
that published April 15, 2008, (73 FR 20486) modified 42 CFR 423.50(f)
requiring providers such as a pharmacy provider to display and
distribute comparative plan marketing materials only from plans with
which the provider contracts. One commenter recommended that CMS retain
the recently amended Sec. 423.50(f) and remove the language proposed
in Sec. 422.2268(j) and Sec. 423.2268(j). There were also some
commenters that opposed the existing provision.
Response: We are revising proposed Sec. 423.2268(j) to be
consistent with Sec. 423.50(f)(v) as published in the Policy and
Technical Changes to the Medicare Prescription Drug Benefit final rule
(73 FR 20486) to include `` accept and display materials from MA
organizations or Part D plan sponsors with which the provider, provider
group or pharmacy is contracted.'' We are also modifying the regulatory
language in Sec. 422.2268(j) to be consistent with the language
provided in Sec. 423.2268(j). With respect to commenters that opposed
the provision, as opposed to seeking
[[Page 54212]]
clarification, these comments are outside the scope of this rulemaking.
Comment: One commenter contended that this provision does not
reflect guidance CMS issued October 30, 2006, that allows comparisons
to be limited to SNPs as long as the remaining MA plans are identified.
The Commenter recommended having this guidance explicitly recognized in
the new regulation.
Response: The guidance released on October 30, 2006, references
provider affiliation announcements in which SNPs may announce an
ongoing affiliation or arrangement. This guidance will be included in
the updated Medicare Marketing Guidelines for: Medicare Advantage
Plans, Medicare Advantage Prescription Drug Plans, Prescription Drug
Plan, 1876 Cost Plans and other guidance. This guidance requires that
all affiliated plans be listed on affiliation announcements. In some
cases, a disclaimer indicating that other plans are available is
required. Highlighting the affiliated SNP plans within the list of all
affiliated plans or listing the affiliated SNP plans along with the
disclaimer is consistent with our guidance.
Comment: One commenter requested that CMS continue to allow
providers to use an objective third party to create MA health plan
benefit comparisons (all or a subset) that are distributed to
beneficiaries/patients consistent with the Medicare marketing
guidelines.
Response: This is still allowed. The Medicare Marketing Guidelines
for: Medicare Advantage Plans, Medicare Advantage Prescription Drug
Plans, Prescription Drug Plan, 1876 Cost Plans provides specific
guidance for materials created by third parties.
D. Employer Group Retiree Marketing (Sec. Sec. 422.2276, 423.2276)
We proposed an organizational change for this section, consistent
with our proposal to create a new subpart V at 42 CFR part 422 and part
423 specific to marketing regulations. We are redesignating Sec.
422.80(f) as Sec. 422.2276 and, to be consistent, are adding Sec.
423.2276.
Comment: We received no comments about the reorganization or the
addition of Sec. 423.2276. The only comments received expressed a
concern about employer group marketing materials not being subject to
prior review and approval.
Response: We have considered this comment and believe that employer
group marketing is very different from marketing individual plans.
Therefore, we are finalizing the provision without modification.
E. Licensing of Marketing Representatives and Confirmation of Marketing
Resources (Sec. Sec. 422.2272, 423.2272)
In response to questions from the Part D industry regarding State
licensure of marketing representatives, we adopted in our Medicare
Marketing Guidelines for: Medicare Advantage Plans, Medicare Advantage
Prescription Drug Plans, Prescription Drug Plan, 1876 Cost Plans the
requirement that MA organizations and Part D sponsors that conduct
marketing through employees or independent agents use State-licensed,
certified, or registered individuals to do so, if a State licenses such
agents. The use of only State-licensed marketing representatives helps
ensure that the marketing representatives meet minimum standards of
integrity and professionalism in order to market to Medicare-eligible
beneficiaries. This Medicare requirement permits Medicare to benefit
from State efforts to deny licensure to under-educated, unscrupulous or
otherwise substandard individuals, and helps ensure that Medicare
beneficiaries are not the victims of substandard or inappropriate
marketing activities.
Based on the experience we have gained since the start of the Part
D program, and continued experience with the Medicare Advantage
program, we proposed to codify in the regulation our existing
requirement that MA organizations and Part D sponsors utilize only
State-licensed marketing representatives to do marketing in the States
that license such agents.
We further proposed to add a regulatory requirement to Sec. Sec.
422.2272 and 423.2272 that MA organizations and PDP sponsors that
market through agents, not only be required to use licensed agents, but
would be required to report to States that they are using such agents,
in a manner consistent with State appointment laws. State appointment
laws require MA and PDP sponsors to appoint marketing representatives
before the agent can market a plan's product. Appointment laws may
require an insurance plan to maintain a registry of marketers who sell
their plans, including maintaining a list of license numbers, dates the
individual began selling policies for the insurance company, and
stopped selling plans for the insurance company. While we previously
required only that licensed agents be used, and did not require that
the appointment of such agents be reported to the State agency that
regulates agents, we believe this latter requirement would enable
States to monitor the agents' activities in connection with their
Medicare marketing for the purpose of monitoring the agent's fitness to
engage in marketing in the State. We believe Medicare beneficiaries
would benefit from this State monitoring.
We recognize that, under the preemption provisions in section
1856(b)(3) of the Act (incorporated for PDPs under section 1860D-
12(g)), States do not have the authority to regulate the marketing of
Medicare Part C and D plans. However, as noted, any abuses by an agent
in marketing such plans would have direct relevance to the State's
oversight of the agent generally, and implications for the agent's
marketing of products over which the State has jurisdiction, and
Medicare beneficiaries would benefit from having the agents who engage
in Medicare marketing subject to this State oversight.
In the context of the requirement that MA organizations and Part D
sponsors utilize only State-licensed marketing representatives, and
report the appointment of such agents to States consistent with the
procedures under State appointment laws, it is important to discuss the
activities that would not trigger the need for using State-licensed
marketing representatives. As standard practice, MA organizations and
Part D sponsors employ customer service representatives who answer
questions and accept enrollments on behalf of enrollees who have
decided to enroll in a particular plan offered by the organization. We
recognize that plan customer service representatives play an important
role in disseminating information by answering factual questions posed
by beneficiaries, and that such an activity is distinguishable from the
act of steering to a plan (``marketing,'' as defined in the Medicare
Marketing Guidelines for: Medicare Advantage Plans, Medicare Advantage
Prescription Drug Plans, Prescription Drug Plan, 1876 Cost Plans).
Additionally, taking demographic information from someone who has
decided to enroll in the plan, in order to complete an application, is
not steering in that the beneficiary has already made a choice to
enroll in a plan. Accordingly, we believe providing factual
information, fulfilling a request for materials, and taking demographic
information in order to complete an enrollment application at the
initiative of the enrollee by a customer service representative (CSR),
are legitimate customer service activities that would
[[Page 54213]]
not trigger the need for using State-licensed marketing
representatives.
Comment: Many commenters agreed with the requirement that MA
organizations and Part D sponsors that conduct marketing through agents
must use State-licensed, certified, or registered individuals.
One commenter urged that the proposed rule on licensed agents
include clarifying language similar to the language in the preamble,
and in the Medicare Marketing Guidelines for: Medicare Advantage Plans,
Medicare Advantage Prescription Drug Plans, Prescription Drug Plan,
1876 Cost Plans.
Response: We have considered this comment and have determined that
the proposed provision should be finalized without modification. The
Medicare Marketing Guidelines for: Medicare Advantage Plans, Medicare
Advantage Prescription Drug Plans, Prescription Drug Plan, 1876 Cost
Plans provide the clarification requested and we believe that the
guidelines are the appropriate vehicle to do this.
Comment: A few commenters asked if the appointment of agents/
brokers was warranted for stand-alone prescription drug plans (PDPs),
because the marketing of these plans differs significantly from MA and
MA-PD marketing.
Response: We believe that while the marketing of MA plans may
differ from PDPs, in accordance with provisions in section 103 of MIPPA
that will take effect on January 1, 2009, we are, in this final rule,
requiring effective October 1, 2008, that MA organizations and PDP
sponsors appoint their marketing representatives before the agents can
begin to market a plan's product.
Comment: A few commenters would like the requirement for the
licensing and appointment of independent agents/brokers to be effective
on January 1, 2010 or later.
Response: As we have learned from our experience over the past
several years and in order to better protect Medicare beneficiaries
from practices that could mislead or confuse them, we believe that this
requirement must be implemented before the fall 2008 marketing period
during which plans for 2009 are marketed. These provisions would take
effect by operation of MIPAA effective January 1, 2009, even if we had
not acted to finalize these provisions of the proposed rule in this
regulation. Therefore, we will proceed with implementing these rules as
final and effective October 1, 2008.
Comment: Many commenters suggested that all MA and PDP enrollment
applications should include the National Insurance Producer Registry
(NIPR) license number. A few commenters urged more expansive CMS
oversight and greater investment of resources in enforcement.
Response: We believe that States currently provide appropriate
oversight, and have the necessary reporting mechanisms in place to
track and monitor agent activity. The intent of this requirement is to
strengthen our ability to collaborate with States in addressing
fraudulent and inappropriate marketing practices.
Comment: A number of commenters requested that CMS develop guidance
specifying the information that Plans must provide to States and
establish a streamlined process for data submission.
Response: We believe States currently provide appropriate oversight
and have the necessary reporting mechanisms in place to track and
monitor agent activity. The intent of this requirement is to provide
support to States as they exercise their oversight authority and we
note that the requirement we are finalizing is generally in accordance
with the Medicare Improvements for Patients and Providers Act (MIPPA).
We will consider this comment when updating marketing guidance in the
future.
Comment: Many commenters noted that our proposed regulatory
language did not clearly state that CMS is requiring action that
parallels information requirements under State appointment laws,
because the regulation did not require compliance with all aspects of
the State appointment process. By preventing the application of any
State fees pursuant to the State appointment process, and requiring
plans only to report to States that they are acting ``consistent with
the appointment process'' may undermine States' ability to enforce
their own appointment laws.
A few commenters believed CMS should revise this section to clarify
that State agent appointment laws are enforceable against MA and Part D
plan sponsors.
Response: We have considered these comments. Section 103 of MIPPA
requires that plans pay fees to States under appointment laws,
effective January 1, 2009.
Comment: A commenter questioned if CSRs who respond to
beneficiaries' requests for a meeting with an agent need to be
licensed.
Response: As discussed in the preamble, we recognize that CSRs play
an important role disseminating information by performing activities
like answering factual questions posed by beneficiaries. These
activities are activities that we distinguish from activities that
could result in steering a beneficiary to a particular plan. In keeping
with that context, Customer Service Representatives (CSRs) scheduling
agent appointments in response to a beneficiary request is not an
activity that would require a licensed agent to fulfill.
Comment: A commenter asked if a CSR could answer questions about
plans offered by a sponsor.
Response: Section 422.2272 permits CSRs to answer factual questions
posed by beneficiaries.
Comment: A few commenters asked whether employees of external
agents and brokers who perform ``customer service'' functions, but are
not involved in the actual selling of plan products, could also do so
without being State-licensed or appointed.
Response: Individuals performing customer service functions such as
providing factual information, fulfilling a request for material, and
taking demographic information are considered CSRs. When performing
these functions, they do not need to be State-licensed or appointed.
E. Standards for MA/Part D Marketing (Sec. Sec. 422.2268 and 423.2268)
In addition, we also proposed to clarify in Sec. Sec. 422.2268 and
423.2268 several standards for MA and PDP marketing. In Sec. Sec.
422.2268(d) and 423.2268(d) we clarify that the prohibition on door-to-
door solicitation includes other instances of unsolicited direct
contact, such as outbound calling without the beneficiary initiating
contact, calling to confirm that the beneficiary is in receipt of
mailed information, and accepting appointments made by third parties or
independent agents without the beneficiary initiating contact; but does
not include calling existing members. Although, plans may not contact
former members who have disenrolled or are in the process of
disenrolling. We believe this clarification would help prevent
inappropriate conduct on the part of agents in aggressively pursuing
the marketing of MA plans and PDPs to beneficiaries outside of approved
common areas that may be used for marketing displays and presentations
(for example, approaching beneficiaries directly in parking lots).
We also proposed to clarify in Sec. Sec. 422.2268(l) and
423.2268(l) that plans may not engage in sales or marketing activities,
including the distribution or collection of plan applications, at
educational events. These events may be sponsored by plans or by
outside entities, and are events
[[Page 54214]]
that are promoted to be educational in nature and have multiple
vendors, such as health information fairs, conference expositions,
State-or community-sponsored events, etc. In Sec. Sec. 422.2268(k) and
423.2268(k) we clarified that sales and marketing activities, including
the distribution or collection of plan applications, are only permitted
in common areas of health care settings (for example, hospital
cafeterias or conference rooms), and would be prohibited in areas where
patients primarily intend to receive health care services (for example,
waiting rooms and pharmacy counter areas). The term ``health care
setting'' refers to all settings where providers operate, including but
not limited to pharmacies, physicians' offices, hospitals, and long-
term care facilities. In the proposed rule, we added Sec. 423.2268(i)
to be consistent with Sec. 422.2268(i). We received no comments on
this change.
We further proposed a regulatory requirement in Sec. Sec. 422.2268
and 423.2268, providing additional protections to ensure beneficiaries
are not the victims of inappropriate marketing techniques. In
Sec. Sec. 422.2268(f) and (b) and Sec. 423.2268(f) and (b), we
proposed to prohibit in any MA or Part D sales activity or
presentation, the provision of meals or the cross-selling of non-health
care related products to a prospective enrollee.
Comment: Commenters that supported the unsolicited contact
prohibition requested that CMS further define cold calls by clarifying
if calls are permissible to the following: (1) Existing membership and
beneficiaries that have an existing relationship with a producer, (2)
business reply cards, and (3) follow-up calls on plan mailings.
Response: These clarifications will be updated in the Medicare
Marketing Guidelines for: Medicare Advantage Plans, Medicare Advantage
Prescription Drug Plans, Prescription Drug Plan, and 1876 Cost Plans
and other guidance.
Comment: Many of the comments were not wholly opposed to the
prohibition on meals, and instead were requesting clarification on the
definition of meals.
Response: Comments received will be taken under consideration when
updating the Medicare Marketing Guidelines for: Medicare Advantage
Plans, Medicare Advantage Prescription Drug Plans, Prescription Drug
Plan, and 1876 Cost Plans and other guidance.
Comment: Several commenters opposed the provision prohibiting
outbound calls. Some stated that it is too restrictive, minimizes
growth in the program, and is inconsistent with common marketing
practices. Commenters stated that restricting calls will prevent
beneficiaries from learning about their full range of healthcare
options and is considered discriminatory since it creates an imbalance
with Medigap plans. Some commenters stated this provision impacts low-
income and non-English speaking populations where communication through
mailings has been less effective, specifically beneficiaries with
Medicare and Medicaid. Commenters also stated that the current CMS
rules in the Medicare Marketing Guidelines for: Medicare Advantage
Plans, Medicare Advantage Prescription Drug Plans, Prescription Drug
Plan, 1876 Cost Plans provides adequate protection. Commenters that
supported the provision on unsolicited contacts recommended that CMS
implement reporting requirements to identify and prevent unsolicited
door-to-door sales and require documentation on how an invitation was
secured for an in-home presentation.
Response: We believe that this change is necessary to ensure the
protection of beneficiaries from inappropriate or fraudulent marketing
activities such as high-pressure sales tactics or inappropriate use of
beneficiary information. Section 103 of MIPPA prohibits unsolicited
means of direct contact including door-to-door solicitation or any
outbound telemarketing, and therefore we will proceed without
modification in the final regulation. The Medicare Marketing Guidelines
for: Medicare Advantage Plans, Medicare Advantage Prescription Drug
Plans, Prescription Drug Plan, 1876 Cost Plans and other guidance are
also in the process of being updated and will set forth in detail
requirements for outbound calls to existing membership and plan
mailings.
In response to the comment regarding reporting requirements for
door-to-door solicitation and in-home appointments, we will consider
including detailed guidance in the Medicare Marketing Guidelines for:
Medicare Advantage Plans, Medicare Advantage Prescription Drug Plans,
Prescription Drug Plan, 1876 Cost Plans and other guidance. However,
organizations should have internal reporting requirements established
to maintain appropriate oversight of these and all marketing
activities.
Comment: Some commenters opposed the provision that prohibits sales
activities at educational events. One commenter suggested that CMS
require agents and brokers to register with their carrier and CMS at
seminars and group sales events. Enrollments should be allowed to take
place as a result of the seminar at the end or at a later date. Many
commenters stated that enrollment materials should be available for
distribution only. Commenters supporting the provision also suggested
that there should be a disclaimer provided at education events that
states, ``This is an education event only and no sales activity will be
conducted, including distribution or collection of plan applications.''
Many commenters requested additional clarification on the difference
between sales events and education events. Commenters also stated they
are concerned with CMS' ability to enforce this provision.
Response: We believe the sole purpose of an education event is to
provide objective information about the Medicare program, not steering
an enrollee towards a specific plan or limited number of plans. When a
beneficiary receives informational materials used to promote an
organization or materials that include enrollment information for an
organization, this is considered a marketing activity. Additionally,
section 103 of MIPPA prohibits sales or marketing activities for
enrollment in MA plans in the healthcare setting or at educational
events except in common areas of healthcare settings. Therefore, we are
finalizing the provision as proposed. We will also further clarify here
that sales activities or sales events are marketing activities that
steer or attempt to steer, an undecided potential enrollee towards a
plan, or limited number of plans, including an effort that involves
compensation directly or indirectly to the party conducting the effort
if it may lead to enrollment in a plan. In response to the disclaimer
requirement for education events, we will consider this requirement
when updating the Medicare Marketing Guidelines for: Medicare Advantage
Plans, Medicare Advantage Prescription Drug Plans, Prescription Drug
Plan, 1876 Cost Plans and other guidance.
Comment: One commenter suggested that CMS develop easy to
understand educational materials and require plans to distribute those
materials to beneficiaries, regarding the disenrollment options
available to beneficiaries who may have erroneously or inappropriately
enrolled in an MA-PD or a Private-Fee-for-Service Plan.
Response: We will consider additional methods for ensuring
beneficiaries are aware of their options to disenroll if the
beneficiary has been erroneously or inappropriately enrolled in an MA-
PD or a Private-Fee-for-Service Plan. However, CMS currently provides
several resources that
[[Page 54215]]
organizations can access to provide educational information on the
Medicare Program. For example, plans may refer to the CMS partnership
Web site for general outreach and education information at http://
www.cms.hhs.gov/partnerships. Also beneficiaries may be referred to 1-
800-MEDICARE if they have been inappropriately enrolled in a health
plan.
Comment: We received several comments stating that the provision
for plan sales activities in a healthcare setting is inconsistent with
the Medicare Marketing Guidelines for: Medicare Advantage Plans,
Medicare Advantage Prescription Drug Plans, Prescription Drug Plan,
1876 Cost Plans and is overly restrictive. Commenters requested
clarification on the phrase ``other places where healthcare is
delivered'', and suggested instead to prohibit such activities in
``provider offices, other places where a healthcare provider delivers
healthcare services to a Medicare beneficiary''. One commenter
suggested that CMS model the language included in the recently passed
Medicare bill (MIPPA). Some commenters stated that sales activities and
applications should be prohibited at pharmacies and any part of a
retail store in which a pharmacy is located.
Response: We have reviewed this comment and will revise Sec. Sec.
422.2268(k) and 423.2268(k) to include the following language from
section 103 of MIPPA ``areas where health care is delivered to
individuals, except in the case where such activities are conducted in
common areas in health care settings.''
Comment: Commenters recommended that CMS amend the rule to clarify
that marketing may not take place in areas within healthcare settings
where individuals receive care, rather than in the entire building.
Response: We have considered the comment; however, we will retain
the provision as proposed. Clarification is provided in the Medicare
Marketing Guidelines for: Medicare Advantage Plans, Medicare Advantage
Prescription Drug Plans, Prescription Drug Plan, 1876 Cost Plans where
we state ``Common areas, where marketing activities are allowed,
include areas such as hospital or nursing home cafeterias, community or
recreational rooms and conference rooms. If a pharmacy counter is
located within a retail store, common areas would include the space
outside of where patients wait for services or interact with pharmacy
providers and obtain medications.''
Comment: Commenters stated that CMS did not address in the preamble
or proposed regulation sales activities in hospitals or skilled nursing
facilities. Some commenters stated that the provisions will impact
seniors who are hospitalized or living in long-term care facilities,
and that a waiver should be signed to allow marketing in any section
that is available. Commenters also stated that this provision would
impact beneficiaries that receive care from dialysis facilities where
they lack common areas such as lobbies or patient-accessible areas.
Response: In response to the first comment, the Medicare Marketing
Guidelines for: Medicare Advantage Plans, Medicare Advantage
Prescription Drug Plans, Prescription Drug Plan, 1876 Cost Plans
clarifies that upon request by the beneficiary, plans are permitted to
schedule appointments with beneficiaries residing in long-term care
facilities just as with other individuals living in a private
residence. In response to the comments regarding marketing to patients
that are hospitalized or receiving care in a dialysis center, these are
areas where patients receive care primarily and therefore are
prohibited areas. The preamble provides clarification on activities
that can be permitted in common areas and activities that would be
prohibited. Furthermore, the Medicare Marketing Guidelines for:
Medicare Advantage Plans, Medicare Advantage Prescription Drug Plans,
Prescription Drug Plan, 1876 Cost Plans also provide detail on the
requirements for plan activities in a healthcare setting.
Comment: One commenter recommended that CMS provide clarification
as to whether providers could provide printed materials in waiting
rooms regarding MA or Part D plans, which do not compare or contrast
different health plans but focus instead on a single health plan.
Response: The clarification is provided in the Medicare Marketing
Guidelines for: Medicare Advantage Plans, Medicare Advantage
Prescription Drug Plans, Prescription Drug Plan, 1876 Cost Plans where
it is stated that ``providers are permitted to make available and/or
distribute plan marketing materials for all plans with which the
provider participates.'' Therefore, if a provider is only contracted
with one health plan they are only obligated to display materials for
that plan. Otherwise, the provider must display information from all
plans with which the provider contracts.
Comment: CMS received many comments on the prohibition on providing
meals at marketing events, both in favor and opposed. Commenters in
favor of the prohibition expressed that the inclusion of meals as a
prohibited item would help protect beneficiaries by preventing mass
enrollments without personal attention to the appropriateness of the
plan. Comments opposed to the provision on meals were varied. Some
stated it is overly restrictive, while others stated that there is no
relationship between offering meals at an enrollment event and
inappropriate sales tactics, and that meal settings can allow
beneficiaries to feel more comfortable and less pressured than an in-
home visit. Commenters stated that hosting meal events is a key
marketing strategy, and the provision will have a significant impact on
beneficiary attendance in marketing seminars. Several commenters stated
that the current marketing guidance is sufficient. Some comments
requested clarification on the term meals and the limitation--for
example, is it acceptable if the beneficiary purchases their own meal
or if a volunteer association arranges the meals, or if the meals are
provided at an event where no enrollment forms are distributed or
collected. One commenter stated that limiting food to snacks would be
difficult to enforce. Several organizations made recommendations on
different strategies of implementation, including the suggestions that
organizations should be prohibited from advertising that a meal will be
provided at a plan sponsored event, that meals be allowed at events
where applications are not accepted, that a disclaimer be required that
the meal is not a contingency for signing up for a plan, or that
organizations should be prohibited from spending a dollar limit per
person on all food and beverage items at a given event. Comments were
received that this provision would deny restaurants an important source
of revenue, and that beneficiaries also benefit from the opportunity to
get free meals.
Response: Based on oversight activities, we believe it is important
to protect the integrity of the sales and marketing process by moving
forward with this prohibition. Furthermore, MIPPA prohibits meals at
marketing events. Therefore, we adopt the prohibition on meals as
proposed. The Medicare Marketing Guidelines for: Medicare Advantage
Plans, Medicare Advantage Prescription Drug Plans, Prescription Drug
Plan, 1876 Cost Plans and other guidance will provide more detail on
this requirement. As, noted, the issue of gifts will be addressed
separately.
Comment: One commenter argued that cross-selling of all non-
Medicare
[[Page 54216]]
products should be prohibited, not just non-healthcare related
products. In this commenter's view, a prohibition on all non-Medicare
products would ensure that beneficiaries focus on Medicare related
products. Several commenters were in agreement with prohibiting the
marketing of non-health care related products during a sale of Medicare
Products, but similarly recommended that regulations governing cross-
selling be expanded to bar the cross-selling of all non-Medicare
related products. One commenter recommended that plans be permitted to
cross sell health related items on inbound calls when a beneficiary has
initiated the call. Some commenters requested clarification on what is
considered health related products for the purposes of Medicare cross-
selling requirements. A commenter believed that the agent oversight
would be a huge administrative burden, and that the prohibition of
cross selling would be inconvenient for potential members who are
seeking to purchase other products.
Response: We welcome the support for banning the marketing of non-
health care related products. We are not changing this language to
refer to non-Medicare related products however, for two reasons. First,
non-Medicare health care coverage is subject to Medigap restrictions,
and we would not expect MA organizations or PDP sponsors to attempt to
sell non-Medicare health care products. Also, Congress has addressed
the issue of cross-selling in a new section 1851(j)(2) that, effective
January 1, 2009, prohibits the sale of ``non-health care related
products (such as annuities and life insurance).'' We believe that our
final rule should track the statute in this area.
F. Disclosure of Plan Information (Sec. Sec. 422.111 and 423.128)
We are finalizing our proposal in our May 16, 2008 proposed rule to
specify in Sec. Sec. 422.111(a)(3) and 423.128(a)(3) that plans must
disclose the information specified in Sec. Sec. 422.111(b) and
423.128(b) of the MA and Part D program regulations, respectively, both
at the time of enrollment and at least annually thereafter, 15 days
before the annual coordinated election period. This is essential to
ensuring that current enrollees receive comprehensive information
necessary for making an informed decision regarding their health care
options prior to the annual coordinated election period. Note that
MIPPA made a related change affecting special needs plans disclosure
requirements which we will discuss in a regulation to be published at
or about the same time as this final rule.
Comment: A commenter suggested that new enrollees receive
comprehensive information about their benefit package prior to their
purchase rather than after the sale. The commenter stated that more
comprehensive information is essential for the consumer and the agent
to know ahead of time in order to determine if a product is suitable
for a particular individual.
Response: We agree that disclosure of plan information continues to
be an important feature that allows beneficiaries to make an informed
decision about their healthcare options. MA plans and PDPs are
obligated to provide details on benefits and rules prior to enrollment
through pre-enrollment materials including the Summary of Benefits. The
Summary of Benefits provides comparative information of Original
Medicare and the benefits of the MA plan or PDP. We also believe that
the Medicare & You Handbook along with other information channels such
as the State Health Insurance Assistance Programs (SHIPs) and 1-800-
MEDICARE provides an opportunity for Medicare beneficiaries to receive
comprehensive information prior to enrollment on the choices available
to them. Therefore, we will continue to allow plans the option of
providing the Annual Notice of Change/Evidence of Coverage (ANOC/EOC)
prior to enrollment and upon beneficiary request.
Comment: Several commenters suggested that CMS articulate penalties
for plans that do not adhere to the disclosure requirement for the
ANOC/EOC, since there have been plans that have made these disclosures
far too late in each of the past 3 years.
Response: Pursuant to Sec. Sec. 422.752(c) and 423.752(c), CMS may
impose CMPs on an organization for any of the determinations at Sec.
422.510(a) (except Sec. Sec. 422.510(a)(4)) or 423.509(a) (except
Sec. 423.509(a)(4)) if CMS determines that the organization's conduct
has adversely affected or has the substantial likelihood of adversely
affecting one or more enrollees. Determinations that would justify the
imposition of CMPs include the MA organization or Part D sponsor
failing substantially to carry out the terms of its contract with CMS,
the MA organization or Part D sponsor carrying out its contract with
CMS in a manner that is inconsistent with the effective and efficient
implementation of this part, and the MA organization substantially
failing to comply with the marketing requirements at Sec. 422.80 or
the Part D sponsor substantially failing to comply with the
dissemination of information requirements at Sec. 423.128. Therefore,
if CMS determines an organization's failure to comply with marketing
disclosure requirements supports a determination pursuant to Sec.
422.510(a) or Sec. 423.509(a) and adversely affects or has the
substantial likelihood of adversely affecting one or more enrollees,
CMS may consider imposing a CMP.
Comment: One commenter that supported the disclosure of plan
information requested that CMS extend the proposal to require that
plans disclose information 30 days before the annual coordinated
election period.
Response: We have reviewed this comment and we believe this
provision will allow beneficiaries adequate time to make an informed
decision about their health care options. Therefore, we will proceed
with this provision in the final regulation without modification.
Comment: One commenter stated thirty days prior to the benefit
becoming effective is a more appropriate requirement with respect to
employer groups, when the annual coordinated period is not specified.
Response: Employer sponsored ``800 series'' plans, Direct Contract
plans or individual MA plans that are subject to Medicare marketing and
disclosure requirements are subject to any applicable timing
requirements for issuance of annual disclosure materials prior to the
Annual Election Period (AEP). CMS has waived or modified applicable
timing requirements in certain circumstances where a particular
employer/union sponsor has an open enrollment period that differs from
Medicare's AEP. Under these circumstances, the timing for issuance of
these materials would be based on the employer/union sponsor's open
enrollment period. In circumstances where there is no specified open
enrollment period, CMS will clarify in the Medicare Managed Care Manual
for Employer Groups and the Prescription Drug Benefits Manual for
Employer Groups that disclosure materials based on the AEP must be
received by beneficiaries no later than 15 days before the beginning of
the plan year.
IV. Provisions of the Final Regulations
This final rule relocates to the new subpart V, sections from
subparts B and C related to marketing definitions, marketing materials,
and other marketing requirements:
A. Definitions Concerning Marketing Materials (Sec. Sec. 422.2260,
423.2260)
We are making an organizational change for this section, consistent
with
[[Page 54217]]
our proposal to create a new subpart V of 42 CFR parts 422 and 423
specific to marketing. We are moving the definition of marketing
materials to Sec. Sec. 422.2260 and 423.2260 of the Part C and D
program regulations, respectively.
B. Reviews and Distribution of Marketing Materials: File and Use
(Sec. Sec. 422.2262, 423.2262)
We are making an organizational change for this section,
consistent with our proposal to create a new subpart V of 42 CFR parts
422 and 423 specific to marketing. We are moving Sec. Sec. 422.80(a)
and 423.50(a), which describe the review and distribution of marketing
materials, to Sec. Sec. 422.2264 and 423.2264, respectively, and
making the language consistent between the two sections as 423.50 was
missing the provision now located at Sec. 423.2264(a)(2)(i); allowing
Part D sponsors to distribute their marketing materials 5 days
following their submission to CMS provided the Part D sponsor is deemed
to meet certain performance requirements established by CMS. In
addition to moving these requirements to Sec. Sec. 422.2262 and
423.2262 of the Part C and D program regulations, respectively, we
proposed to modify the ``file and use'' review process. We are moving
forward with our proposal to eliminate the file and use eligibility
process.
C. Guidelines for CMS (Sec. Sec. 422.2264, 423.2264)
We are making an organizational change for this section, consistent
with our proposal to create a new subpart V of 42 CFR parts 422 and 423
specific to marketing regulations. We are moving Sec. Sec. 422.80(c)
and 423.50(d), which describe specific guidelines for CMS review of
marketing materials and election forms, to Sec. Sec. 422.2264 and
423.2264, respectively.
D. Deemed Approval (Sec. Sec. 422.2266, 423.2266)
Consistent with our proposal to create a new subpart V of 42 CFR
parts 422 and 423 specific to marketing regulations, we are making an
organizational change for this section. We are removing Sec. Sec.
422.80(d) and 423.50(e) and adding Sec. Sec. 422.2266 and 423.2266,
respectively. The provision concerns CMS' deemed approval of the
distribution of marketing materials.
E. Standards for MA and PDP Marketing (Sec. Sec. 422.2268, 423.2268)
This final rule also incorporates six of the new provisions from
the proposed rule and relocates several of the provisions that already
existed in Sec. Sec. 422.80 and 423.50. The remaining provisions from
the May 2008 proposed rule will be incorporated into regulations that
will be released later this year. There are four provisions of this
final rule that differ from the May 16, 2008, proposed rule:
Sections 422.2268(a) and 423.2268(a) in the proposed rule
have been modified by removing the sentence, ``This does not prohibit
explanation of any legitimate benefits the beneficiary might obtain as
an enrollee of the MA plan, such as eligibility to enroll in a
supplemental benefit plan that covers deductibles and coinsurance, or
preventive services'' and ``This does not prohibit explanation of any
legitimate benefits the beneficiary might obtain as an enrollee of the
Part D plan,'' respectively. This was done because each sentence
creates ambiguity with respect to the prohibition against cash
inducements in the respective first sentence of the provision.
Sections 422.2268(b) and 423.2268(b) have been
redesignated as Sec. 422.2268(p) and 423.2268(p), respectively. This
modification separates the prohibition against providing meals to
prospective enrollees at promotional and sales activities from the
proposed nominal gifts provision. The nominal gifts provision will be
addressed in a separate rule that implements the requirement that new
MIPPA rules be in place no later than November 15, 2008.
Sections 422.2268(j) and 423.2268(j) in the proposed rule
have been revised in this final rule to be consistent with each other
and with Sec. 423.50(f)(v) published in the April 15, 2008, Policy and
Technical Changes to the Medicare Prescription Drug Benefit final rule.
Sections 422.2268(k) and 423.2268(k) in the proposed rule
have been revised in this final rule to be consistent with the language
in section 103 of MIPPA.
F. Licensing of Marketing Representatives and Confirmation of Marketing
(Sec. Sec. 422.2272, 423.2272)
We are making an organizational change for this section, consistent
with our proposal to create a new subpart V of 42 CFR 422 and 423
specific to marketing regulations. We are moving Sec. Sec.
422.80(e)(2) and 423.50(f)(2), which describe standards of marketing,
to Sec. Sec. 422.2272 and 423.2272, respectively. We are adding
Sec. Sec. 422.2272(c) and 423.2272(c) which require plans to appoint
and use only State-licensed representatives to conduct direct marketing
activities in accordance with State appointment laws.
G. Employer Group Retiree Marketing (Sec. Sec. 422.2276, 423.2276)
We are making an organizational change for this section, consistent
with our proposal to create a new subpart V of 42 CFR 422 and 423
specific to marketing regulations. We are moving Sec. Sec. 422.80(f)
to Sec. 422.2276 and adding Sec. 423.2276, which describe
requirements for employer group retiree marketing.
H. Disclosure of Plan Information (Sec. Sec. 422.111 and 423.128)
We are finalizing our proposal in our May 16, 2008, proposed rule
to specify in Sec. Sec. 422.111(a)(3) and 423.128(a)(3) that plans
must disclose the information specified in Sec. Sec. 422.111(b) and
423.128(b) of the MA and Part D program regulations, respectively, both
at the time of enrollment and at least annually thereafter, 15 days
before the annual coordinated election period.
V. Waiver of 30-Day Delay in Effective Date
Section 553(d) of the APA (5 U.S.C. section 553(d)) ordinarily
requires a 30-day delay in the effective date of final rules after the
date of their publication in the Federal Register. This 30-day delay in
effective date can be waived, however, if an agency finds for good
cause that the delay is impracticable, unnecessary, or contrary to the
public interest, and the agency incorporates a statement of the finding
and its reasons in the rule issued.
In this case, we believe it is in the public interest to implement
these provisions upon publication in order to be effective by October
1, 2008, when MA and PDP marketing season begins. Failure to implement
these provisions prior to the beginning of the marketing season would
hinder CMS's ability to protect its beneficiaries by ensuring that they
receive the necessary information to make informed choices during the
annual election period. These provisions prevent agents and brokers
from engaging in sales and marketing activities that may pressure
beneficiaries to make plan choices for reasons other than those that
best meet their health care needs. Without this waiver, these
provisions would not be effective until January 1, 2009 as specified in
MIPPA.
VI. Collection of Information Requirements
Under the Paperwork Reduction Act of 1995, we are required to
provide 30-day notice in the Federal Register and solicit/public
comment before a collection of information requirement is submitted to
the Office of Management
[[Page 54218]]
and Budget (OMB) for review and approval. In order to fairly evaluate
whether an information collection should be approved by OMB, section
3506(c)(2)(A) of the Paperwork Reduction Act of 1995 requires that we
solicit comment on the following issues:
The need for the information collection and its usefulness
in carrying out the proper functions of our agency.
The accuracy of our estimate of the information collection
burden.
The quality, utility, and clarity of the information to be
collected.
Recommendations to minimize the information collection
burden on the affected public, including automated collection
techniques.
We solicited public comment on each of these issues for the
following sections of this document that contain information collection
requirements:
Section 422.2260 Definitions concerning marketing materials.
Section 422.2260 defines the marketing materials that an MA
organization must provide to Medicare beneficiaries. While there is
burden associated with this requirement, we believe the burden
associated with these requirements is exempt from the requirements of
the Paperwork Reduction Act of 1995 (PRA) as defined in 5 CFR
1320.3(b)(2) because the time, effort, and financial resources
necessary to comply with the requirement would be incurred by persons
in the normal course of their activities.
Section 422.2262 Review and distribution of marketing materials.
Section 422.2262(a)(i) states that at least 45 days before the date
of distribution the MA organization submits the material or form to CMS
for review under guidelines in Section 422.2264 of this Part.
The burden associated with this is the time and effort put forth by
the MA organization to submit the material to CMS for review. We
estimate it would take one MA organization 720 minutes/12 hours to
comply with this requirement. We estimate 670 MA organizations would be
affected annually by this requirement; therefore, the total annual
burden associated with this requirement is 8,040 hours. The burden for
this requirement is approved under OMB: 0938-0753.
This section also requires the MA organization to certify that in
the case of these certain marketing materials designated by CMS, it
followed all applicable marketing guidelines or used model language
specified by CMS without modification.
The burden associated with this requirement is the time and effort
put forth by the MA organization to provide such certification. While
there is burden associated with this requirement, we believe the burden
associated with these requirements is exempt from the requirements of
the Paperwork Reduction Act of 1995 (PRA).
Section 422.2264 Guidelines for CMS review.
Section 422.2264 states that in reviewing marketing material or
election forms under Sec. 422.2262 of this Part, CMS determines that
the marketing materials (a) provide, in a format (and, where
appropriate, print size), and using standard terminology that may be
specified by CMS, the following information to Medicare beneficiaries
interested in enrolling:
(1) Adequate written description of rules (including any
limitations on the providers from whom services can be obtained),
procedures, basic benefits and services, and fees and other charges.
(2) Adequate written description of any supplemental benefits and
services.
(3) Adequate written explanation of the grievance and appeals
process, including differences between the two, and when it is
appropriate to use each.
(4) Any other information necessary to enable beneficiaries to make
an informed decision about enrollment.
(b) Notify the general Public of its enrollment period in an
appropriate manner, through appropriate media, throughout its service
and if applicable, continuation areas.
(c) Includes in the written materials notice that the MA
organization is authorized by law to refuse to renew its contract with
CMS, that CMS also may refuse to renew the contract, and that
termination or non-renewal may result in termination of the
beneficiary's enrollment in the plan.
(d) Ensure that materials are not materially inaccurate or
misleading or otherwise make material misrepresentations.
(e) For markets with a significant non-English speaking population,
provide materials in the language of these individuals.
The burden with these guidelines is the time and effort put forth
by the MA organization to provide adequate written descriptions of
rules, of any supplemental benefits and services, explanation of the
grievance and appeals process, and any other information necessary to
enable beneficiaries to make an informed decision about enrollment. It
also requires the MA organization to notify the general public of its
enrollment period in an appropriate manner and include in the written
materials notice that the MA organization is authorized by law to
refuse to renew its contract with CMS. While there is burden associated
with this requirement, we believe the burden associated with these
requirements is exempt from the requirements of the Paperwork Reduction
Act of 1995 (PRA) as defined in 5 CFR 1320.3(b)(2) because the time,
effort, and financial resources necessary to comply with the
requirement would be incurred by persons in the normal course of their
activities.
Section 422.2272 Licensing of marketing representatives and
confirmation of marketing resources.
Section 422.2272(b) states that an MA organization must establish
and maintain a system for confirming that enrolled beneficiaries have,
in fact, enrolled in the MA plan and understand the rules applicable
under the plan.
The burden associated with this requirement is the time and effort
put forth by the MA organization to establish and maintain such a
system. While there is burden associated with this requirement, we feel
the burden associated with these requirements is exempt from the
requirements of the Paperwork Reduction Act of 1995 (PRA) as defined in
5 CFR 1320.3(b)(2) because the time, effort, and financial resources
necessary to comply with the requirement would be incurred by persons
in the normal course of their activities.
Section 422.2276 Employer group retiree marketing.
Section 422.2276 describes the development of marketing materials
for employer group retiree marketing. While there is burden associated
with this requirement, we believe the burden associated with these
requirements is exempt from the requirements of the Paperwork Reduction
Act of 1995 (PRA) as defined in 5 CFR 1320.3(b)(2) because the time,
effort, and financial resources necessary to comply with the
requirement would be incurred by persons in the normal course of their
activities.
Section 423.2260 Definitions concerning marketing materials.
Section 423.2260 defines the marketing materials that a Part D
Sponsor must provide to Medicare beneficiaries. While there is burden
associated with this requirement, we believe the burden associated with
these requirements is exempt from the requirements of the Paperwork
Reduction Act of 1995 (PRA) as defined in 5 CFR 1320.3(b)(2) because
the time, effort, and financial resources necessary to comply with the
requirement would be incurred by persons in the normal course of their
activities.
Section 423.2262 Review and distribution of marketing materials.
[[Page 54219]]
Section 423.2262(a)(1)(i) requires the Part D sponsor to submit the
marketing material or form to CMS for review under the guidelines in
Sec. 423.2264.
The burden associated with these requirements is the time and
effort put forth by the Part D sponsor to submit the marketing
materials to CMS and to provide certification. We estimate it would
take one Part D sponsor (720 minutes/12 hours) to comply with this
requirement. We estimate 87 Part D sponsors would be affected annually
by this requirement; therefore, the total annual burden associated with
this requirement is 1044 hours. The burden for this requirement is
approved under OMB: 0938-0964.
Section 423.2264 Guidelines for CMS review.
Section 423.2264 reads that in reviewing marketing material or
enrollment forms under Sec. 423.2262, CMS determines (unless otherwise
specified in additional guidance) that the marketing materials (a)
provide, in a format (and, where appropriate, print size), and using
standard terminology that may be specified by CMS, the following
information to Medicare beneficiaries interested in enrolling:
(1) Adequate written description of rules (including any
limitations on the providers from whom services can be obtained),
procedures, basic benefits and services, and fees and other charges.
(2) Adequate written explanation of the grievance and appeals
process, including differences between the two, and when it is
appropriate to use each.
(3) Any other information necessary to enable beneficiaries to make
an informed decision about enrollment.
(b) Notify the general public of its enrollment period in an
appropriate manner, through appropriate media, throughout its service
area.
(c) Include in the written materials notice that the Part D plan is
authorized by law to refuse to renew its contract with CMS, that CMS
also may refuse to renew the contract, and that termination or non-
renewal may result in termination of the beneficiary's enrollment in
the Part D plan. In addition, the Part D plan may reduce its service
area and no longer be offered in the area where a beneficiary resides.
(d) Ensure that materials are not materially inaccurate or
misleading or otherwise make material misrepresentations.
(e) For markets with a significant non-English speaking population,
provide materials in the language of these individuals.
The burden with these guidelines is the time and effort put forth
by the Part D plan to provide adequate written descriptions of rules,
of the grievance and appeals process, and any other information
necessary to enable beneficiaries to make an informed decision about
enrollment. It also requires the Part D plan to notify the general
public of its enrollment period in an appropriate manner and include in
the written materials notice that the Part D plan is authorized by law
to refuse to renew its contract with CMS. While there is burden
associated with this requirement, we believe the burden associated with
these requirements is exempt from the requirements of the Paperwork
Reduction Act of 1995 (PRA) as defined in 5 CFR 1320.3(b)(2) because
the time, effort, and financial resources necessary to comply with the
requirement would be incurred by persons in the normal course of their
activities.
Section 423.2272 Licensing of marketing representatives and
confirmation of marketing resources.
Section 423.2272(b) requires the Part D organization to establish
and maintain a system for confirming that enrolled beneficiaries have
in fact enrolled in the PDP and understand the rules applicable under
the plan.
The burden associated with this requirement is the time and effort
put forth by the Part D sponsor to establish and maintain such a
system. While there is burden associated with this requirement, we
believe the burden associated with these requirements is exempt from
the requirements of the Paperwork Reduction Act of 1995 (PRA) as
defined in 5 CFR 1320.3(b)(2) because the time, effort, and financial
resources necessary to comply with the requirement would be incurred by
persons in the normal course of their activities.
Section 423.2276 Employer group retiree marketing.
Section 423.2276 describes the development of marketing materials
for employer group retiree marketing. While there is burden associated
with this requirement, we believe the burden associated with these
requirements is exempt from the requirements of the Paperwork Reduction
Act of 1995 (PRA) as defined in 5 CFR 1320.3(b)(2) because the time,
effort, and financial resources necessary to comply with the
requirement would be incurred by persons in the normal course of their
activities.
As reflected in the table that follows, the aggregate burden
associated with the collection of information section of this final
rule totals 9,084 hours.
----------------------------------------------------------------------------------------------------------------
Number of Total annual
OMB No. Requirements respondents Burden hours burden (hours)
----------------------------------------------------------------------------------------------------------------
Exempt/None........................... 422.2260................ N/A N/A N/A
0938-0753............................. 422.2262(a)(i).......... 670 12 8,040
0938-0753............................. 422.2264................ N/A N/A N/A
0938-0753............................. 422.2272(b)............. N/A N/A N/A
Exempt/None........................... 423.2260................ N/A N/A N/A
0938-0964............................. 423.2262(a)(1)(i)....... 87 12 1,044
0938-0964............................. 423.2264................ N/A N/A N/A
0938-0964............................. 423.2272(b)............. N/A N/A N/A
-------------------------------------------------------------------------
Total Aggregate Burden............ ........................ .............. .............. 9,084
----------------------------------------------------------------------------------------------------------------
We have submitted a copy of this final rule to OMB for its review
of the information collection requirements described above.
VII. Regulatory Impact Statement
We have examined the impact of this rule as required by Executive
Order 12866 (September 1993, Regulatory Planning and Review), the
Regulatory Flexibility Act (RFA) (September 19, 1980, Pub. L. 96-354),
section 1102(b) of the Social Security Act, the Unfunded Mandates
Reform Act of 1995 (Pub. L. 104-4), Executive Order 13132 on
Federalism, and the Congressional Review Act (5 U.S.C. 804(2)).
Executive Order 12866 (as amended) directs agencies to assess all
costs and
[[Page 54220]]
benefits of available regulatory alternatives and, if regulation is
necessary, to select regulatory approaches that maximize net benefits
(including potential economic, environmental, public health and safety
effects, distributive impacts, and equity). A regulatory impact
analysis (RIA) must be prepared for major rules with economically
significant effects ($100 million or more in any 1 year). The
provisions of this final rule require plans to submit marketing
materials to CMS for review. We estimate the total cost (MA and Part D
programs) of these provisions as $197,295. As a result, this final rule
does not reach this economic threshold and thus is not considered a
major rule.
We use the figure of $14.68 (based on the United States Department
of Labor (DOL) (http://www.bls.gov/oes2006.htm) 2006 BLS occupational
employment statistics for the hourly wages of word processors and
typists) plus the added OMB figures of 12 percent for overhead and 36
percent for benefits to represent average costs to plans, sponsors and
downstream entities. (Note that the wages cited below include the
hourly wage + an additional 48 percent to reflect overhead, benefit
costs for total wages of $21.73). The costs for these provisions, in
the context of each program, are as follows:
Submission of marketing materials, MA program ($21.73 x
8,040 hours = $174,709).
Submission of marketing materials, Part D program ($21.73
x 1,044 hours = $22,686).
The RFA requires agencies to analyze options for regulatory relief
of small businesses, if a rule has a significant impact on a
substantial number of small entities. For purposes of the RFA, small
entities include small businesses, nonprofit organizations, and small
governmental jurisdictions. Most hospitals and most other providers and
suppliers are small entities, either by nonprofit status or by having
revenues of $6.5 million to $31.5 million in any 1 year. Individuals
and States are not included in the definition of a small entity. MA
organizations and Part D sponsors, the only entities that will be
affected by the final provisions, are not generally considered small
business entities. Since they must follow minimum enrollment
requirements (5,000 enrollees in urban areas and 1,500 enrollees in
non-urban areas), the revenue generated from enrollment generally
exceeds the revenue threshold required for analysis. While a very small
rural plan could fall below the threshold, we do not believe that there
are more than a handful of such plans.
A fraction of MA organizations and sponsors are considered small
businesses because of their non-profit status. For an RFA analysis to
be required, 3-5 percent of the identified small entities' revenue
would have to be impacted by the final provisions. We do not believe
that any of these provisions meet this threshold. Many of the
provisions, discussed in section II, Analysis of and Response to Public
Comments, are clarifications of existing policy or require minimal
costs. Therefore, because the rule will not have a significant economic
impact on a substantial number of small entities, we are not preparing
an analysis for the RFA.
In addition, section 1102(b) of the Act requires us to prepare a
regulatory impact analysis if a rule may have a significant impact on
the operations of a substantial number of small rural hospitals. This
analysis must conform to the provisions of section 604 of the RFA. For
purposes of section 1102(b) of the Act, we define a small rural
hospital as a hospital that is located outside of a Metropolitan
Statistical Area and has fewer than 100 beds. We are not preparing an
analysis for section 1102(b) of the Act because we have determined that
this rule will not have a significant impact on the operations of a
substantial number of small rural hospitals.
Section 202 of the Unfunded Mandates Reform Act of 1995 also
requires that agencies assess anticipated costs and benefits before
issuing any rule whose mandates require spending in any 1 year by
State, local or tribal governments, in the aggregate, or by the private
sector of $100 million in 1995 dollars, updated annually for inflation.
That threshold level is currently approximately $130 million. This rule
will have no consequential effect on State, local, or tribal
governments or on the private sector.
Executive Order 13132 establishes certain requirements that an
agency must meet when it promulgates a proposed rule (and subsequent
final rule) that imposes substantial direct requirement costs on State
and local governments, preempts State law, or otherwise has Federalism
implications. This rule will not have a substantial direct effect on
State or local governments, preempt States, or otherwise have a
Federalism implication.
In accordance with the provisions of Executive Order 12866, this
regulation was reviewed by the Office of Management and Budget.
List of Subjects
42 CFR Part 422
Administrative practice and procedure, Health facilities, Health
maintenance organizations (HMO), Medicare, Penalties, Privacy,
Reporting and recordkeeping requirements.
42 CFR Part 423
Administrative practice and procedure, Emergency medical services,
Health facilities, Health maintenance organizations (HMO), Medicare,
Penalties, Privacy, Reporting and recordkeeping.
0
For the reasons set forth in the preamble, the Centers for Medicare &
Medicaid Services amends 42 CFR chapter IV as set forth below:
PART 422--MEDICARE ADVANTAGE PROGRAM
0
1. The authority citation for part 422 continues to read as follows:
Authority: Secs. 1102 and 1871 of the Social Security Act (42
U.S.C. 1302 and 1395hh).
Subpart B--Eligibility, Election, and Enrollment
Sec. 422.80 [Removed]
0
2. Remove Sec. 422.80.
Subpart C--Benefits and Beneficiary Protections
0
3. Amend Sec. 422.111 by revising paragraph (a)(3) to read as follows:
Sec. 422.111 Disclosure requirements
* * * * *
(a) * * *
(3) At the time of enrollment and at least annually thereafter, 15
days before the annual coordinated election period.
* * * * *
0
4. New subpart V is added to read as follows:
Subpart V--Medicare Advantage Marketing Requirements
Sec.
422.2260 Definitions concerning marketing materials.
422.2262 Review and distribution of marketing materials.
422.2264 Guidelines for CMS review.
422.2266 Deemed approval.
422.2268 Standards for MA organization marketing.
422.2272 Licensing of marketing representatives and confirmation of
marketing resources.
422.2274 [Reserved]
422.2276 Employer group retiree marketing.
[[Page 54221]]
Subpart V--Medicare Advantage Marketing Requirements
Sec. 422.2260 Definitions concerning marketing materials.
As used in this subpart--
Marketing materials. Marketing materials include any informational
materials targeted to Medicare beneficiaries which:
(1) Promote the MA organization, or any MA plan offered by the MA
organization.
(2) Inform Medicare beneficiaries that they may enroll, or remain
enrolled in, an MA plan offered by the MA organization.
(3) Explain the benefits of enrollment in an MA plan, or rules that
apply to enrollees.
(4) Explain how Medicare services are covered under an MA plan,
including conditions that apply to such coverage.
(5) May include, but are not limited to, the following:
(i) General audience materials such as general circulation
brochures, newspapers, magazines, television, radio, billboards, yellow
pages, or the Internet.
(ii) Marketing representative materials such as scripts or outlines
for telemarketing or other presentations.
(iii) Presentation materials such as slides and charts.
(iv) Promotional materials such as brochures or leaflets, including
materials for circulation by third parties (for example, physicians or
other providers).
(v) Membership communication materials such as membership rules,
subscriber agreements, member handbooks and wallet card instructions to
enrollees.
(vi) Letters to members about contractual changes; changes in
providers, premiums, benefits, plan procedures etc.
(vii) Membership or claims processing activities (for example,
materials on rules involving non-payment of premiums, confirmation of
enrollment or disenrollment, or annual notification information).
Sec. 422.2262 Review and distribution of marketing materials.
(a) CMS review of marketing materials. (1) Except as provided in
paragraph (b) of this section, an MA organization may not distribute
any marketing materials (as defined in Sec. 422.2260 of this part), or
election forms, or make such materials or forms available to
individuals eligible to elect an MA organization unless--
(i) At least 45 days (or 10 days if using marketing materials that
use, without modification, proposed model language as specified by CMS)
before the date of distribution the MA organization has submitted the
material or form to CMS for review under the guidelines in Sec.
422.2264 of this Part; and
(ii) CMS does not disapprove the distribution of new material or
form.
(2) [Reserved]
(b) File and use. The MA organization may distribute certain types
of marketing materials, designated by CMS, 5 days following their
submission to CMS if the MA organization certifies that in the case of
these designated marketing materials, it followed all applicable
marketing guidelines and, when applicable, used model language
specified by CMS without modification.
Sec. 422.2264 Guidelines for CMS review.
In reviewing marketing material or election forms under Sec.
422.2262 of this part, CMS determines that the marketing materials--
(a) Provide, in a format (and, where appropriate, print size), and
using standard terminology that may be specified by CMS, the following
information to Medicare beneficiaries interested in enrolling:
(1) Adequate written description of rules (including any
limitations on the providers from whom services can be obtained),
procedures, basic benefits and services, and fees and other charges;
(2) Adequate written description of any supplemental benefits and
services;
(3) Adequate written explanation of the grievance and appeals
process, including differences between the two, and when it is
appropriate to use each; and
(4) Any other information necessary to enable beneficiaries to make
an informed decision about enrollment.
(b) Notify the general public of its enrollment period in an
appropriate manner, through appropriate media, throughout its service
area and if applicable, continuation areas.
(c) Include in written materials notice that the MA organization is
authorized by law to refuse to renew its contract with CMS, that CMS
also may refuse to renew the contract, and that termination or non-
renewal may result in termination of the beneficiary's enrollment in
the plan.
(d) Ensure that materials are not materially inaccurate or
misleading or otherwise make material misrepresentations.
(e) For markets with a significant non-English speaking population,
provide materials in the language of these individuals.
Sec. 422.2266 Deemed approval.
If CMS has not disapproved the distribution of marketing materials
or forms submitted by an MA organization with respect to an MA plan in
an area, CMS is deemed not to have disapproved the distribution in all
other areas covered by the MA plan and organization except with regard
to any portion of the material or form that is specific to the
particular area.
Sec. 422.2268 Standards for MA organization marketing.
In conducting marketing activities, MA organizations may not--
(a) Provide cash or other monetary rebates as an inducement for
enrollment or otherwise.
(b) [Reserved]
(c) Engage in any discriminatory activity such as, for example,
attempts to recruit Medicare beneficiaries from higher income areas
without making comparable efforts to enroll Medicare beneficiaries from
lower income areas.
(d) Solicit door-to-door for Medicare beneficiaries or through
other unsolicited means of direct contact, including calling a
beneficiary without the beneficiary initiating the contact.
(e) Engage in activities that could mislead or confuse Medicare
beneficiaries, or misrepresent the MA organization. The MA organization
may not claim it is recommended or endorsed by CMS or Medicare or that
CMS or Medicare recommends that the beneficiary enroll in the MA plan.
It may, however, explain that the organization is approved for
participation in Medicare.
(f) Market non-health care related products to prospective
enrollees during any MA or Part D sales activity or presentation. This
is considered cross-selling and is prohibited.
(g) [Reserved]
(h) [Reserved]
(i) Distribute marketing materials for which, before expiration of
the 45-day period, the MA organization receives from CMS written notice
of disapproval because it is inaccurate or misleading, or misrepresents
the MA organization, its marketing representatives, or CMS.
(j) Use providers or provider groups to distribute printed
information comparing the benefits of different health plans unless the
providers, provider groups, or pharmacies accept and display materials
from all health plans with which the providers, provider groups, or
pharmacies contract. The use of publicly available comparison
information is permitted if approved by CMS in accordance with the
Medicare marketing guidance.
(k) Conduct sales presentations or distribute and accept MA plan
[[Page 54222]]
enrollment forms in provider offices or other areas where health care
is delivered to individuals, except in the case where such activities
are conducted in common areas in health care settings.
(l) Conduct sales presentations or distribute and accept plan
applications at educational events.
(m) Employ MA plan names that suggest that a plan is not available
to all Medicare beneficiaries. This prohibition shall not apply to MA
plan names in effect on July 31, 2000.
(n) [Reserved]
(o) Engage in any other marketing activity prohibited by CMS in its
marketing guidance.
(p) Provide meals for potential enrollees, which is prohibited,
regardless of value.
(q) [Reserved]
Sec. 422.2272 Licensing of marketing representatives and confirmation
of marketing resources.
In its marketing, the MA organization must:
(a) Demonstrate to CMS' satisfaction that marketing resources are
allocated to marketing to the disabled Medicare population as well as
beneficiaries age 65 and over.
(b) Establish and maintain a system for confirming that enrolled
beneficiaries have, in fact, enrolled in the MA plan, and understand
the rules applicable under the plan.
(c) Employ as marketing representatives only individuals who are
licensed by the State to conduct marketing activities (as defined in
the Medicare Marketing Guidelines) in that State, and whom the
organization has informed that State it has appointed, consistent with
the appointment process provided for under State law.
Sec. 422.2274 [Reserved]
Sec. 422.2276 Employer group retiree marketing.
MA organizations may develop marketing materials designed for
members of an employer group who are eligible for employer-sponsored
benefits through the MA organization, and furnish these materials only
to the group members. These materials are not subject to CMS prior
review and approval.
PART 423--VOLUNTARY MEDICARE PRESCRIPTION DRUG BENEFIT
0
5. The authority citation for part 423 continues to read as follows:
Authority: Secs. 1102, 1860D-1 through 1860D-42, and 1871 of the
Social Security Act (42 U.S.C. 1302, 1395w-101 through 1395w-152,
and 1395hh).
Subpart B--Eligibility, Election, and Enrollment
Sec. 423.50 [Removed]
0
6. Remove Sec. 423.50.
Subpart C--Benefits and Beneficiary Protections
0
7. Amend Sec. 423.128 by revising paragraph (a)(3) to read as follows:
Sec. 423.128 Dissemination of Part D Plan Information.
(a) * * *
(3) At the time of enrollment and at least annually thereafter, 15
days before the annual coordinated election period.
0
8. Add new subpart V to read as follows:
Subpart V--Part D Marketing Requirements
Sec.
423.2260 Definitions concerning marketing materials.
423.2262 Review and distribution of marketing materials.
423.2264 Guidelines for CMS review.
423.2266 Deemed approval.
423.2268 Standards for Part D marketing.
423.2272 Licensing of marketing representatives and confirmation of
marketing resources.
423.2274 [Reserved]
423.2276 Employer group retiree marketing.
Subpart V--Part D Marketing Requirements
Sec. 423.2260 Definitions concerning marketing materials.
As used in this subpart--
Marketing Materials. Marketing Materials include any informational
materials targeted to Medicare beneficiaries which--
(1) Promote the Part D plan.
(2) Inform Medicare beneficiaries that they may enroll, or remain
enrolled in a Part D plan.
(3) Explain the benefits of enrollment in a Part D plan, or rules
that apply to enrollees.
(4) Explain how Medicare services are covered under a Part D plan,
including conditions that apply to such coverage.
(5) May include, but are not limited to--
(i) General audience materials such as general circulation
brochures, newspapers, magazines, television, radio, billboards, yellow
pages, or the Internet.
(ii) Marketing representative materials such as scripts or outlines
for telemarketing or other presentations.
(iii) Presentation materials such as slides and charts.
(iv) Promotional materials such as brochures or leaflets, including
materials for circulation by third parties (for example, physicians or
other providers).
(v) Membership communication materials such as membership rules,
subscriber agreements, member handbooks and wallet card instructions to
enrollees.
(vi) Letters to members about contractual changes; changes in
providers, premiums, benefits, plan procedures etc.
(vii) Membership or claims processing activities.
Sec. 423.2262 Review and distribution of marketing materials.
(a) CMS review of marketing materials. (1) Except as provided in
paragraph (a)(2) of this section, a Part D plan may not distribute any
marketing materials (as defined in Sec. 423.2260 of this Part), or
enrollment forms, or make such materials or forms available to Part D
eligible individuals unless--
(i) At least 45 days (or 10 days if using certain types of
marketing materials that use, without modification, proposed model
language as specified by CMS) before the date of distribution, the Part
D sponsor submits the material or form to CMS for review under the
guidelines in Sec. 423.2264; and
(ii) CMS does not disapprove the distribution of new material or
form.
(2) [Reserved]
(b) File and use. The Part D sponsor may distribute certain types
of marketing material, designated by CMS, 5 days following their
submission to CMS if the Part D sponsor certifies that in the case of
these marketing materials, it followed all applicable marketing
guidelines and, when applicable, used model language specified by CMS
without modification.
Sec. 423.2264 Guidelines for CMS review.
In reviewing marketing material or enrollment forms under Sec.
423.2262, CMS determines (unless otherwise specified in additional
guidance) that the marketing materials--
(a) Provide, in a format (and, where appropriate, print size), and
using standard terminology that may be specified by CMS, the following
information to Medicare beneficiaries interested in enrolling:
(1) Adequate written description of rules (including any
limitations on the providers from whom services can be obtained),
procedures, basic benefits and services, and fees and other charges;
(2) Adequate written explanation of the grievance and appeals
process, including differences between the two, and when it is
appropriate to use each; and
(3) Any other information necessary to enable beneficiaries to make
an informed decision about enrollment.
[[Page 54223]]
(b) Notify the general public of its enrollment period in an
appropriate manner, through appropriate media, throughout its service
area.
(c) Include in the written materials notice that the Part D plan is
authorized by law to refuse to renew its contract with CMS, that CMS
also may refuse to renew the contract, and that termination or non-
renewal may result in termination of the beneficiary's enrollment in
the Part D plan. In addition, the Part D plan may reduce its service
area and no longer be offered in the area where a beneficiary resides.
(d) Ensure that materials are not materially inaccurate or
misleading or otherwise make material misrepresentations.
(e) For markets with a significant non-English speaking population,
provide materials in the language of these individuals.
Sec. 423.2266 Deemed approval.
If CMS has not disapproved the distribution of marketing materials
or forms submitted by a Part D sponsor for a Part D plan in a Part D
region, CMS is deemed to not have disapproved the distribution of the
marketing material or form in all other Part D regions covered by the
Part D plan, with the exception of any portion of the material or form
that is specific to the Part D region.
Sec. 423.2268 Standards for Part D marketing.
In conducting marketing activities, a Part D plan may not--
(a) Provide cash or other remuneration as an inducement for
enrollment or otherwise.
(b) [Reserved]
(c) Engage in any discriminatory activity such as, for example,
attempts to recruit Medicare beneficiaries from higher income areas
without making comparable efforts to enroll Medicare beneficiaries from
lower income areas.
(d) Solicit door-to-door for Medicare beneficiaries or through
other unsolicited means of direct contact, including calling a
beneficiary without the beneficiary initiating the contact.
(e) Engage in activities that could mislead or confuse Medicare
beneficiaries, or misrepresent the Part D sponsor or its Part D plan.
The Part D organization may not claim that it is recommended or
endorsed by CMS or Medicare or that CMS or Medicare recommends that the
beneficiary enroll in the Part D plan. The Part D organization may
explain that the organization is approved for participation in
Medicare.
(f) Market non-health care related products to prospective
enrollees during any MA or Part D sales activity or presentation. This
is considered cross-selling and is prohibited.
(g) [Reserved]
(h) [Reserved]
(i) Distribute marketing materials for which, before expiration of
the 45-day period, the PDP Sponsor receives from CMS written notice of
disapproval because it is inaccurate or misleading, or misrepresents
the PDP Sponsor, its marketing representatives, or CMS.
(j) Use providers, provider groups, or pharmacies to distribute
printed information for beneficiaries to use when comparing the
benefits of different Part D plans unless providers, provider groups or
pharmacies accept and display materials from all Part D plan sponsors
with which the providers, provider groups or pharmacies contract. The
use of publicly available comparison information is permitted if
approved by CMS in accordance with the Medicare marketing guidelines.
(k) Conduct sales presentations or distribute and accept Part D
plan enrollment forms in provider offices, pharmacies or other areas
where health care is delivered to individuals, except in the case where
such activities are conducted in common areas in health care settings.
(l) Conduct sales presentations or distribute and accept plan
applications at educational events.
(m) Employ Part D plan names that suggest that a plan is not
available to all Medicare beneficiaries.
(n) [Reserved]
(o) Engage in any other marketing activity prohibited by CMS in its
marketing guidance.
(p) Provide meals for potential enrollees, which are prohibited,
regardless of value.
(q) [Reserved]
Sec. 423.2272 Licensing of marketing representatives and confirmation
of marketing resources.
In its marketing, the Part D organization must--
(a) Demonstrate to CMS's satisfaction that marketing resources are
allocated to marketing to the disabled Medicare population as well as
beneficiaries age 65 and over.
(b) Establish and maintain a system for confirming that enrolled
beneficiaries have in fact enrolled in the PDP and understand the rules
applicable under the plan.
(c) Employ as marketing representatives only individuals who are
licensed by the State to conduct direct marketing activities (as
defined in the Medicare Marketing Guidelines) in that State, and whom
the sponsor has informed that State it has appointed, consistent with
the appointment process provided for under State law.
Sec. 423.2274 [Reserved]
Sec. 423.2276 Employer group retiree marketing.
Part D sponsors may develop marketing materials designed for
members of an employer group who are eligible for employer-sponsored
benefits through the Part D sponsor, and furnish these materials only
to the group members. These materials are not subject to CMS prior
review and approval.
Authority: (Catalog of Federal Domestic Assistance Program No.
93.778, Medical Assistance Program)
(Catalog of Federal Domestic Assistance Program No. 93.773,
Medicare--Hospital Insurance; and Program No. 93.774, Medicare--
Supplementary Medical Insurance Program)
Dated: August 19, 2008.
Kerry Weems,
Acting Administrator, Centers for Medicare & Medicaid Services.
Approved: August 27, 2008.
Michael O. Leavitt,
Secretary.
[FR Doc. E8-21674 Filed 9-15-08; 9:00 am]
BILLING CODE 4120-01-P