AHLA's Speaking of Health Law
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AHLA's Speaking of Health Law
Evolving Expectations: Medicare Advantage Compliance for Plans and Providers
Kathy Roe, Managing Attorney, Health Law Consultancy, speaks with Annie Shieh and Judith Waltz, Partner, Foley & Lardner, about the impact of recent changes to Medicare Advantage (MA) compliance on plans and providers. They discuss what plans and providers are responsible for when it comes to MA compliance, the current MA landscape, MA compliance changes from a plans perspective (including the current Administration and the 2026 Final Rule), MA compliance changes from a provider perspective (including the 60-day refund rule and recent litigation), and administrative enforcement actions. Annie and Judith spoke about this topic at AHLA’s 2025 Annual Meeting in San Diego, CA. From AHLA’s Payers, Plans, and Managed Care Practice Group.
Watch this episode: https://www.youtube.com/watch?v=vjRzb0UiNuY
Learn more about the AHLA 2025 Annual Meeting that took place in San Diego, CA: https://www.americanhealthlaw.org/annualmeeting
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Learn more about AHLA’s Payers, Plans, and Managed Care Practice Group: https://www.americanhealthlaw.org/practice-groups/practice-groups/payers-plans-and-managed-care
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SPEAKER_02:Hello, AHLA members. Welcome to today's podcast. I'm Kathy Rowe. I am an attorney with Health Law Consultancy in Chicago, and I am the chair of the Payers Plans and Managed Care Practice Group. Today I'm bringing you two speakers who presented on a managed care topic at this summer's AHLA annual meeting. Annie, Judy, you want to introduce yourself? Hi everyone.
SPEAKER_01:My name's Annie Shea, and I have 16 years of experience in Medicare Advantage Compliance. I am also on this year's AHLA Annual Meeting Planning Committee. So very excited to look forward to what new topics and speakers will be coming our way. And I'm also former chair of the Payers Plans Managed Care Practice Group, same as Kathy. Judy, you want to take it away?
SPEAKER_03:Sure. So my name is Judy Waltz. I'm a partner with Foley and Lardner in the San Francisco office. I chair our health care practice, which is about 60 dedicated healthcare lawyers. The first part of my career I spent with the federal government in an office that has now been decommissioned, so to speak, with in the San Francisco Regional Office of the General Counsel. I had the pleasure of speaking with Annie this summer at AHLA and would encourage everyone to attend the annual meeting. It's a very fun, not just uh educational event. And I am a former chair of the HLA regulatory accreditation and payment practice group, which is um one that I would highly recommend, as well as the PPMC. So, Annie, are you ready to jump in?
SPEAKER_01:Yeah, let's get started. So, what we'd like to cover today is really how Medicare vanish compliance impacts plans and providers. So, where we'd like to start is whose responsibility is it, anyways? And the short answer to that question is it's both of our responsibilities. And I'm kind of speaking from the plan perspective because that's where my career started. So, health plans have four primary areas in responsibility for vetting providers. First is monthly screening. So that requires checking against the OIG exclusion list as well as the GSA and the CMS preclusion list if you're involved in Medicare. So that's the first requirement. And one of the tricky areas is if you do delegate claims processing to an entity, you also need to make sure that they are checking that monthly exclusion list. CMS will actually vet this through their financial audits. They will target claims for precluded providers to see if plans and their delegates are paying them. So make sure you watch out for that one little risk area, which is the exclusion and preclusion lists. Second, plans are expected to maintain at least 10 years of records on any kind of investigations they've conducted of providers, and those would include both in and out of network providers. Third, plans have a requirement to not only identify but recommend providers for exclusion. And that includes referrals to the CMS Medic, which is a contractor that investigates fraud, waste, and abuse for Medicare. Fourth, plans are required to comply with law enforcement and regulator requests for fraud, waste, and abuse. So that's the continuum of what plans are expected to do. Judy, do you want to cover what providers are responsible for from a managed career?
SPEAKER_03:Yeah. So so it's many of the obligations that are assigned to providers come through contracts, not through regulations, because CMS has its privity, which is a word I never thought I would use again after law school. I remember thinking about, you know, like I there were many things that I heard in law school that I didn't see the relevance for my future life, and privity unbelievably in the Medicare um sector is very important. So CMS has privity with the plans in this respect and not directly with the providers to those plans. So plans will will plans under their contracts with CMS have many obligations that they then pass on to the providers. So some of the things that Annie talked about, exclusion lists and preclusion lists, which we can talk about in some detail down the line, are obligations that are passed down to the providers to check and make sure that their staff is not on either of those lists. State Medicaid programs have additional requirements that they often, well, that that CMS requires the contracts to include. So you can as a as a provider, you can assure that that uh you are meeting your contractual terms that are coming directly from CMS, but not for direct um enforcement. So we're gonna talk about some other things that have evolved, particularly in light of the LinCare case. And there's a general obligation on providers to perform services that are consistent with Medicare guidelines. Um but the context is different in some respects because some services that the plans pay for may not be medically necessary and reasonable as defined by the statute. So they may be supplemental benefits that that um go beyond the basic benefits. So maybe I should talk about those uh concepts for just a minute. So, well, first let's talk about the landscape. So Medicare um Advantage, which sometimes is called Part C, but um more technically should be called Medicare Advantage. Um allows Medicare beneficiaries to receive benefits from private plans rather than directly from CMS. So in 2024, so last year, 54% of Medicare beneficiaries were enrolled in Medicare Advantage, and that was the highest um percentage ever. Um from what I hear this year, it's expected to go down some, and maybe Annie, Annie, why don't you comment on why Medicare Advantage enrollment would be declining this year?
SPEAKER_01:Yeah, that's a very interesting observation, Judy. Um, and we're actually entering into open enrollment right now, being that it's October, it just kicked off on October 15th. So that's an interesting conversation given that you know, generally the workforce is aging. Um, the amount of people entering into Medicare is increasing. Now, the actual percentage of people involved in Medicare Advantage over original Medicare fee for service is something worthwhile to watch, right? That's one of the reasons why Medicare Advantage is sometimes seen as different compared to original Medicare fee for service. On the original Medicare fee for service side, you can usually select your providers, but there's higher cost sharing on the Medicare Advantage side. Usually plans will buy down, so there's a zero dollar premium for membership. But um, in terms of enrollment, it's interesting to see you know what kind of supplemental benefits are offered on top of original Medicare. How is that going to impact whether an enrollee decides to enroll in Medicare Advantage as opposed to traditional Medicare, or whether they'd like to elect a standalone prescription drug plan?
SPEAKER_03:So we're talking about open enrollment here. According these statistics are from kff.org, KaiserFamily Foundation.org. Um, the average Medicare beneficiary has access to 43 plans as of 2024. And so if you think about your your parents or your grandparents trying to choose between plans, it's it's not easy. And and um, Annie, maybe you want to comment on how people do choose between those plans.
SPEAKER_01:Oh, yeah. And uh it's definitely all difficult. I remember my in-laws recently also had to choose what Medicare plan they wanted to be a member of. And I think what you see nowadays in some of the larger health plans is they want to cover your entire continuum, right? From birth to death, basically. So starting with commercial insurance, going into potentially Medicaid andor Medicare, covering that extent and really ensuring that continuum of coverage is one of the priorities of health plans that cover multiple lines of business. But we also have smaller Medicare vantage carriers in the market, right? And they usually have networks that they've built and cultivated that are specialized, either specific to a population or to that region, and also developing tailored benefits for that population. So it's interesting to kind of see the shift and where people may decide to enroll. We know that Medicare Plan Finder, which is on cms.gov, is one of the ways that many people will choose to do their research. And they have recently expanded it this year to include provider directory, which is a new enhancement as a result of the final rule. How that will play out is to be determined. We will see whether that provider directory being on Medicare Plan Finder is going to make a difference. There's also the very influential industry of agents and brokers who help navigate Medicare Advantage options. And that model is also continuously being challenged by health plans that are, you know, making some plans non-commissionable, which has been a very interesting tactic to encourage or discourage enrollment in some areas.
SPEAKER_03:So as we're recording this, as of this date, which is October 27, the government is still shut down and it's not clear when, maybe if, the government will ever reopen. And so open enrollment has been in some question as to how that's going to proceed. We also understand that as of today, um, some CMS employees have been recalled uh despite the shutdown to work on Medicare enrollment and presumably some other things. So I would say that all of that is um a rather fluid situation at the moment, and we'll see how that plays out. Let me just throw out one more statistic from KFF.org, and that's the total number of plans. So this was as of 2024, was almost 4,000 plans. So we talked about each beneficiary has a choice of approximately 43, but overall they're almost 4,000. And as we will talk about um in a few minutes, providers now need to comply with the terms of each plan or face potential false claims act liability. And so if you the plans are different in terms of their requirements and expectations, um, and that's a lot to to keep track of. So let's talk a little bit just about the the basic um structure of Medicare Advantage. So the the first requirement is that the plan has to provide basic benefits, those are the same benefits that would be available to a beneficiary under traditional Medicare, so parts A and Part B. And they have to comply with the traditional Medicare rules for each of these. Um that now includes, and that this was clarified in it in the 2024 final rule, which was issued um in late, I think in late 2023. Anyway, uh they it's now been made clear by CMS that the basic benefits have to be provided in the same manner and same setting as it would be under traditional um Medicare. And that was a big, at least from my perspective, that was a big clarification. And I put clarification in quotes because I don't think it well, it wasn't clear to me prior to that date that uh a plan could not offer the same benefits as long as they as long as the benefits were provided, that perhaps there was some latitude in terms of how to provide them, maybe in a lesser setting, maybe not as an inpatient, um, maybe as anyway. Now it's clear that they're expected to be pretty much exactly the same as under traditional Medicare. They're also what we've referred to in some of our comments earlier, uh, some plan supplemental benefits. And those are things that plans offer to beneficiaries to distinguish themselves and make a plan a little more attractive. Annie, do you want to comment on some of the things that are included as supplemental benefits?
SPEAKER_01:Yeah, I think that some of the most common supplemental benefits you'll see are typically adding in a dental benefit or transportation, and that would be for non-emergency, since some emergency transports cover under regional Medicare. I've also seen a lot of different ones, um, which I will talk about later, SSBCI, which is special supplemental benefits for the chronically ill. Um, that you do need to have a qualifying chronic disease to qualify for. But uh the amount of benefits that that opens you up to if you do qualify is very, very interesting because it does need to be primarily health related. But we've seen a lot of creative benefits being incorporated by plants. So we'll touch upon that later.
SPEAKER_03:Thank you. And I can tell you that that here in the Bay Area in California, um, there are commercials that are being run right now, uh, primarily about dental and hearing benefits. So, so yeah, supplemental benefits are ways of of distinguishing plans from each other. So let's talk just a little bit about provider and plan relations. I I think particularly after the um the killing in New York of the United Healthcare um executive, that there was a lot of attention paid to people's anger over um, and I can say this because I'm on the provider side, Annie might not, she's on the plan side. Um, there was a lot of anger against that that surfaced. Um, I don't think it was caused by, but I think it surfaced with people who were unhappy about the performance of their plans. So just um some takeaways here, and if you need these statistics, you can always email me and I'll give you the source. Nearly 15% of all claims submitted to private payers for uh reimbursement are initially denied. And those tend to be for higher cost treatments, with the average denial pegged to charges of$14,000 and up. And over half of the denials are ultimately overturned. The average cost incurred by providers in fighting denials is for about$44 per claim, meaning that providers spend$19.7 billion a year just to adjudicate claims with providers. So, Annie, I'm going to turn it back to you for some tips on Medicare advantage compliance for the plans.
SPEAKER_01:Yeah, this is a really great segue given that prior discussion about the recent sentiment in the industry and kind of the large media scrutiny. Um, I know that AHIP made a very public statement in alliance with many of its membership plans about changes they're making to prior authorization processes, which was one of the very vocal areas of discontent among the public. Um, number of plans signed on to commitments to make prior authorization easier for providers moving forward and even waiving a lot of prior authorization requirements for routine services moving forward. So that will be one interesting area that will play out. Um, so thank you for bringing that up. So, going on to Medicare Managed for plans, there's three areas I'd like to focus on today that I think are very relevant to Medicare Managed state of compliance today. First, kind of what are the changes in the new administration and what are they looking at? Second, the 2026 final rule. We know that there was a number of proposals that were not finalized. So those will be interesting to see how they play out in future guidance. And third, there were about nine areas that were finalized in the recent 2026 final rule that I just like to cover today. So, first, just a quick comment on the new administration. There were several existing regulations that recently gone into effect that they were saying that they were going to review again current regulations. The notice here was that the health equity areas took a special area of focus. So that was very interesting to me. There are four areas in particular where health equity was one of the areas where the administration said they'd like to do some additional research. First, with the HEI reward or the health equity index. This is one of the star rating measures. Um, it was recently rebranded by the administration as EHAO for all or excellent health outcomes for all. So kind of rebranded for 2027. It'll be interesting to see how that plays out, whether the calculations will be different. Second, was that there was a requirement prior to this administration that all health plans conduct an annual health equity analysis of their utilization management policies and procedures. That was actually put on pause by this administration. Originally, there was a July 1st, 2025 enforcement date. I did see that some plans went ahead and voluntarily posted them. So that's interesting to see. Essentially, what that required was that people look up their prior authorization metrics for percentage of approved and uh percentage that were denied, just as Judy mentioned earlier. And they post the overall metrics compared to those that are impacted for the low-income subsidy and disabled population. So that kind of a comparison is being vetted again by this administration, currently put on pause, enforcement discretion. A third area where the current administration is looking for additional review is cultural and linguistic services. So very big area where there's a set threshold as well as expectations for applicable integrated plans to meet the expectations for their languages in their specific locales. The fourth area is quality improvement and health risk assessments. Specifically, there were new measures that were required to be added that focused on health equity and social determinants of health or SDOH. Those are also currently being reviewed by this administration, and we'll just have to see how the guidance plays out. Now I'm going to talk about 10 areas that were proposed for 2026 that have not been finalized in the most recent guidance. And these I've seen in the trends are either number one, costly, or number two, are very protective from an oversight perspective for enrollees and or from a disclosure perspective. First area is anti-obesity medication coverage. So that's one very costly area. Number two, enhanced guardrails for artificial intelligence. AI, right now, absolutely a very hot buzz topic. So those areas for guardrails would have impacted equitable access, potential non-discrimination, and disclosure expectations. Three, I already talked about health equity initiatives, so I won't linger on that too long. Four, behavioral health parity. So that would have implemented stricter protections for enrollees as well as expanding network adequacy requirements. Fifth, agent broker oversight. So this would have greatly enhanced the amount of oversight performed on agencies. They would have to submit their materials to CMS for review, as well as provide more information about low-income status and any kind of implications of switching to traditional Medicare. So that is currently on pause given that it was not finalized from the proposal. Next, pharmacy transparency. There was a proposal that pharmacies are able to term without cause within the same time frames as health plans. That also was not finalized. Formulary placement of generics. So that would have provided additional steps to health plans to check access to generics. Next, supplemental benefit administration through debit cards. We've seen that that's kind of grown in the market where health plans will issue a debit card to members and they'll be able to access their supplemental benefits like grocery delivery or over-the-counter medication through that debit card. CMS had proposed some guardrails in place. Those have not been finalized yet. Next is community-based service and in-home service contractors, specifically expanding provider directory requirements to incorporate those networks within MA provider directories, not finalized yet. Last but not least, Part D medication therapy management programs, which CMS had originally proposed to expand that list of core chronic diseases to include dementia and Alzheimer's, also not finalized yet. So it was finalized. You know, it sounds like a lot was not finalized yet. I know there was a second version of the rule that was released recently, but that only touched upon provider doctor requirements. So what is new is there's nine areas that were finalized. What I've noticed is they primarily focused on reducing administrative burden or they've codified existing expectations. So really low-risk areas, low-hanging fruit for CMS to codify. So I'll go ahead and talk about those nine areas. First, eliminating cost sharing for Part D covered insulin and ACIP covered vaccines. So that was a given. Number two, M3P or Medicare Prescription Payment Plan. This was a new program that was put in place to allow enrollees to be able to instead of pay at point of sale at the pharmacy for their medications, they could just get a monthly invoice instead and not have to pay up front. That is a program that you can elect. So being the case, CMS went ahead and finalized some of the operational procedures, such as plans must process such requests within 24 hours. That was actually slimming down compared to original real-time phone and web processing from the original proposed rule. Also, talking about election procedures as well as outreach requirements, there's been template letters that have been released for MA plans to use to administer this program. Also, what was codified was that if a member elects for that one year, they will auto-renew to be elected in that program each subsequent year. And they do have a 30-day opt-out period. So very important operational processes. And we'll see, you know, how many members tend to elect this option moving forward. The next couple are really just codifications of existing requirements and expectations. So nothing new to MA plans who have been accustomed to this through sub-regulatory guidance. First area is prescription jug event or PRD claim submission, just confirming the time frames, which are you have 30 days to submit once received, and 90 days to adjust, delete, or reject. And for the new negotiation program, there's a seven-day process for those PDEs. Along those lines for the negotiation program, there's a transaction facilitator data module that is new. And the acronym for that is the MTFDM. That does allow network pharmacy agreements to be able to log into that website and to not only enroll but also certify, provide remittance advice, file a complaint or dispute, also self-report if they have cash flow issues. So that was one interesting takeaway. And they can also check the refund status on that data module. Continuing on, I touched upon this a little bit earlier, but huge change finalized in the rule here was for inpatient services. Those are now considered Part C organization determinations that are subject to appeals. So that can occur at any time before, during, or after the inpatient service is performed. And really, CMS explained in the rule that they wanted to prevent plans from not providing appeal rights to providers, and that this is typical for claims reviews. So what this really states is that there's no more retroactive denials or downgrades of inpatient services if the service was previously authorized by the health plan. And that even applies if clinical data was received after the admission. So this is really a key area to watch out for. So compliance officers, make sure you're auditing for that. Um, there are two exceptions to that rule, which is if there's potential fraud or good cause. Moving on to supplemental benefits, we touched upon this earlier as well. SSBCI, which is the special supplemental benefit for the chronically ill members, do need to qualify for this benefit, and plans are responsible for verifying eligibility. And they can do so through a variety of ways. Now, SSBCI benefits need to be primarily health related. So what CMS did in this final rule is they came up with this amazing laundry list of what is not considered primarily health related. So they can, in other words, not be included as SSBCI. It's a very interesting list here. So it does not include cosmetic surgery, hospital indemnity insurance, funeral planning expenses, life insurance, alcohol, tobacco, cannabis, membership programs. I always think of like Costco, uh, and non-healthy foods. So that may be a little, you know, gray area. Some people like to eat snacks, uh, borderline, what's healthy, what's not healthy, maybe negotiable. Uh, but CMS has clearly stated that it's not primarily health related. What's interesting to note though is there were some other areas in the proposed rule where CMS did not finalize guidance as now allowable. And those are areas such as cash or money rebates, gambling items, firearms, and ammo. So interesting list right there. So, with that, there's just three more areas I wanted to emphasize that were finalized recently in the 2026 final rule. For dual eligibles, which is members that have both Medicare and Medicaid, CMS is really trying to create a more integrated experience. So they are now mandating that health plans with duals, um, as they're affectionately mentioned, have an integrated member ID card as well as an integrated health risk assessment. Although the health risk assessment portion is postponed until 1-1-2027 implementation. Some of the other operational processes most health plans already know about because CMS is auditing based on these expectations, such as performing initial health risk assessment within 90 days, and then having a minimum of at least three non-automated phone calls for outreach and sending a follow-up letter through correspondence, unless the member declines to take that health risk assessment. Also, it's now codified that health plans must update their individualized care plan if there's a change in health status or transition. So there's no limit to the amount of times that you need to update the ICP so long as that expectation is met. So, real quick, risk adjustment data. There is now an update to the HCC definition, which transferred from disease to diagnosis. And it is now codified that risk adjustment data is a mandatory submission. For medical loss ratio for reporting, this is an interesting area. We've seen health plans get enrollment sanctions or even be closed down due to failure to meet the MLR. So a lot of what CMS finalized has to do with the calculation of the medical loss ratio. What they did finalize is that you do exclude the M3P or as we mentioned earlier, the Medicare prescription payment plan unsettled balance from the numerator. However, there are three areas that CMS declined to finalize for the MLR calculations, and they primarily have to do with quality improvement. So one of the areas is providing incentives and bonuses tied to clinical or quality improvement standards. Another area is administrative cost exclusion from quality improvement activities. And the third, how the expense is allocated across lines of business. So I know that was a lot of interesting information. I hope you're taking notes. But as long as you got a couple of takeaways there, really the main goal is to understand that this is what's been finalized. This is what may potentially come down the line for those that are proposed. And here's The focus of the new administration.
SPEAKER_02:So, Annie, you mentioned a lot that was finalized, but you also mentioned a number of items that were paused. What happens to those items that were paused? Did they come back? Did they go away? Is that for a different day?
SPEAKER_01:A different well, uh, what I would say it's now become a waiting game, right? Um, we do expect uh CMS annually to re-release the rules through proposed proposed and final format. So what could happen with those past proposals is they could show up in the 2027 final rule. They could show up in the 2027 proposed rule, they could come out through HPMS memos. Either way, I don't think it's the end of the story there. Compliance officers and lawyers will just need to make sure that they're checking guidance to see if those ideas will be formalized in a different format.
SPEAKER_02:Well, in terms of one thing that was on the radar, but I don't think we've seen yet, is the managed care compliance guidance coming out of the Office of Inspector General. Any word on the timing? And it's actually hilarious.
SPEAKER_01:It's funny that you mentioned that because originally uh we were expecting that to come out um early last year. And uh kind of a waiting game. I know OIG did state that they were expecting it towards the end of 2024, still did not come out. Um, then there was the change in administration, so things were on pause for a bit. Um now we've not heard any rumblings yet of when that is expected to come out. Judy, do you have further insight on that?
SPEAKER_03:So no, I've heard for several months that it's it is um done from OIG's perspective, but just um hasn't been released yet.
SPEAKER_01:Thank you. That's helpful.
SPEAKER_02:So go ahead. I was gonna say, what about other enforcement activity or potential enforcement activity on the MA front, out of OIG or otherwise?
SPEAKER_01:Yeah, I'm actually going to jump into that segment in quite a bit, talking about some enforcement actions from CMS. Judy, definitely feel free to chime in on OIG. I know you're about to speak on MA compliance from a provider perspective.
SPEAKER_03:Yeah, so so I think that there are some um cases that have been pending for years that may be reaching um a point or a point of resolution. I won't name what those are, but having to do with the um the Radvi audits, which is basically um a system where Medicare tries to pay more or CMS tries to pay more for sicker beneficiaries. And so that was based on diagnostic codes along the way. Um CMS feels apparently, CMS actually more appropriately, DOJ feels that the diagnoses that were reported in some cases were not consistent with the documentation. And so um those there were audits initiated and then investigations, some whistleblowers were involved, um, alleging that the diagnosis codes were basically overgenerously reported so that the plans would receive more money. So I think that those are going to um, if and when, hopefully soon they resolve, that those will provide more guidance in terms of what um what the government expects in terms of that, and particularly if there are CIAs that are attached along with that, we'll know a bit more about what what OIG is expecting in terms of plan compliance. Um, but in terms of new enforcement, I think it will be um I from my perspective, all enforcement right now is a matter of some question, not just related to plans, but it's all a bit unsettled from my perspective.
SPEAKER_02:What about fraud and uh abuse, Judy? It that seems to be a watch word that this administration has been talking about and focusing on in its various activities.
SPEAKER_03:So I think the question there is how do you define fraud and abuse?
SPEAKER_02:I agree, I agree.
SPEAKER_03:Everybody is against fraud and abuse, right? But so what's enforced is fraud and abuse. I mean, even if you think about the RAD viatas that I was just talking about, those are largely documentation issues in terms of, I mean, I'm sure there's some overt fraud where somebody's like, you know, somebody just making them up. Um, but for the most part, I think there probably is some sort of indication of that condition, but it isn't appropriately documented. So so yeah, fraud and abuse is a big catchword, but what fraud and abuse means, I think, is the big question. Okay, let's talk about what's what's new for providers. Um so one thing, this is not that new anymore, but I think it's important to um to underscore. So I talked about privity earlier on, and again, this privity is one of those concepts I find that governs my career. Um I'm gonna talk about the 60-day refund rule because the what this is is a statutory provision that came out of the Affordable Care Act in 2010 and requires that um a certain category of entities return and report and refund identified overpayments. So people here may be too young to remember the Affordable Care Act, and when it was passed, there was a big scramble. A lot of things were were added to the bill at the last minute. Um, a lot of details were not nailed down, definitions, effective dates, all sorts of things, not just in the 60-day refund rule. But it has been unclear whether the 60-day refund rule applied to providers under the plans or just to the plans themselves, and then providers under traditional um Medicare. So CMS, um, after a long saga that I won't go into, but CMS issued some new overpayment rules applicable to parts C and D. So Medicare Advantage and Part D, obviously the prescription drug act or prescription drug benefit. So CMS makes clear in this final rule that it applies only to the plans and not to the providers. And so that's a just a very important, is what I'd been saying all along. I was glad to see that they that CMS agreed with me. So let's talk about some new litigation though, um, that has been, from my perspective, a real game changer in terms of the expectations of providers. And that's a case involving LinCare, um, which was a supplier, is still a supplier of durable medical equipment and equipment that under traditional Medicare is subject to a rental cap. So, what that means is that beneficiaries are charged a rental fee for 36 months or whatever it is, and after that, the they basically are deemed to own the equipment, and so it's not billed any any longer. So, what Lyncare was alleged to have done, and this was a settlement, so no admission of liability, um what they were alleged to have done is to have failed to assure that they complied with the requirements of each of the plans to which they were submitting claims. And the the plans differed widely in terms of what they expected. So some followed the Medicare rule 36 months and then no charges after. Some didn't care, some had different, so it was all over the place, and Linkare had not um remember I said earlier there's almost 4,000 plans. I don't know how many LinCare participated in, but there were a lot, and they had failed to pay attention to the difference in those rules. They ended up with a big settlement and a corporate integrity agreement for five years. So, why this case is so important is that historically it had been difficult for the government to figure out how to assess damages in a false claims act case that were against a provider submitting claims to a plan because it's not like traditional fee for service. And again, the privity between CMS and the plant, it gives something like a lump sum, you know, based on the beneficiary's um conditions, not on the beneficiary's services. So it's not like fee for service, it's like this person has all these various diagnoses, we'll pay X amount for them. So this was the first, one of the first, and certainly the one that got the most attention, um, case that basically treated damages the same as in a fee for service case. So that the damages were calculated as what Lyn care had billed to um to each plan. So the settlement was$29 million. Finally got to my notes here. Um and that came out of the Eastern District of Washington. There was in a corporate integrity agreement that um includes a claims review of claims submitted to particular plans. So um there were a top, the top paying plans were identified, and then the claims submitted to those plans to see if they complied with the rules that were specific to that plan. So this is something of a game changer in terms of saying that the claims that are submitted to the plans, even though they are not directly submitted to and paid by CMS, will be subject to the False Claims Act. There are also, we've talked about the RADB audits, there are also um, or is also at least one case. I think there are a few others that that are settlements, where the provider has been um uh actually in one case charged criminally with overstating the diagnoses. And then um there are other some civil cases causing False Claims Act to be submitted. Uh so OIG, DOJ is uh going directly against the uh the providers um for compliance with the RAD V obligations. So Annie, I'm gonna turn it back to you for administrative enforcement discussions.
SPEAKER_01:Yes. Um if you don't know this already, bookmark the CMS Enforcement Action website because there's some really good case studies there of what the health plans are doing that CMS is not happy about. And they are in fact taking some action, such as issuing civil monetary penalties andor enrollment sanctions. So what I've done is I've kind of taken a look and CMS, I've noticed, tends to update this every couple of cycles when they issue their enforcement letters. The most recent batch deal with three areas. So 2021 financial audits and 2024 program audits, as well as financial solvency. So what I saw for the 2021 financial audit findings were there's three main areas where CMS uh dinged health plans. First, for failing to reprocess low-income subsidy within 45 days, and that typically results in increased cost sharing for the members. So there are three health plans that were issued that finding and issued civil monetary penalties. Second, where the health plans charged more than the maximum out-of-pocket limit. So, again, that's some out-of-pocket beneficiary impact. There were four health plans that were cited for that. Third, one health plan overcharged on Part C services. So you can kind of see a theme here through the financial audits. They're really looking to see was there any beneficiary impact? Do they pay more out of pocket than they should have? And we're going to take a you know a civil monetary penalty out of the health plan for failing to catch that and for hitting the member from the aspect. I do know that they also expect you to refund the member as a health plan. If they do identify these kind of issues through a program audit or a financial audit, they will expect the health plan to perform an impact analysis and identify all members that are potentially impacted, even those outside of contracts that were the scope of the audit. So that's a little key tip right there. Second is 2024 program audit areas of enforcement. And there were really five conditions that were cited that resulted in penalties to health plans. First, with inappropriate rejection of formulary medication due to eligibility errors. Now, that was a new one that I saw this year. Four health plans had this issue. Typically, if it's related to the PBM, what CMS will do is they'll audit the rest of the plans that use that same PBM to see if this is an issue widespread amongst that delegated entity. So it looks like here this was a costly mistake, right? Obviously, the eligibility fell resulting in a formulary change, that would mean that the member would get an inappropriate rejection of that medication at point of sale. So one of the high risk areas. Second was failure to initiate a coverage request and/or misrouting a request. Again, very, very serious impact being that when members call the plan, that's already the last resort. And if they're requesting that they need access to a service, whether it's pre-service or post-service are repaid up front, there's an expectation from CMS that health plans process that request immediately, that there's no delay. And they do follow the strict time frames for processing the request. So two health plans were cited for that and issued fines. Third, inappropriate rejection of a transition supply. So this is typically when there's a change in the contract year because there's appropriate rejection there. That's also a high risk area for health plans and ensuring that that transition of 90 days is processed. And recently that was copied over from the part D side over to part C, being that there's a 90-day transition. One other health plan was cited for authorizations not carried over when they change their PBM. That's another high-risk area that CMS always monitors for. If the member had an authorization in place, they should be held harmless. That should carry over even if the health plan switches PBMs. Last but not least, and this is interesting data, being that PACE audits were new. PACE is a specialized program under Medicare Advantage, requires an on-site center to administer services. There were three health plans that were cited for their PACE plans in failure to provide services and track, document, and monitor across different settings. So that was a new condition that I saw. It looks like CMS went ahead and took some action on it from a civil monetary penalty perspective. Very interesting to watch there. The last category was for financial solvency. Typically, we know financial solvency is an area that is monitored by states as opposed to the federal. So usually the state will catch the issue. And then CMS on the back end, because of financial solvency issues like failure to pay claims, issues with paying the provider network, that will result in an enrollment sanction. So there was one health plan in this past cycle of enforcement letters that was suspended due to that financial solvency issue. So I know we've covered a lot of ground today. I'm going to hand it back to Judy to provide some ending remarks and our conclusion.
SPEAKER_03:So thank you, Annie. And I just want to do some substantive conclusions. This is obviously an area of focus, this uh compliance for Medicare Advantage, both for plans and providers. The dollar amounts are very large. Um, the Trump administration has expressed support for Medicare Advantage, but again, as when we talked about uh what is fraud and abuse and how that's defined and how that implicates uh the whole scene, support will also be um, I'm sure, a term that um many people are disputing. So the expectations for both plans and providers seem to be increasing and have higher risks in terms of non-compliance. We're still awaiting the OIG's guidance and very hopeful that that will provide words of wisdom. Um, and with that, I want to thank you for sticking with us today and turn it back to Kathy for some closing um remarks.
SPEAKER_02:Thanks, Judy. And Annie, before we tune out, do you have any final words from the plan side or are we a wrap for today?
SPEAKER_01:Yeah, I this is why I love the field of compliance and healthcare a lot. Everything is constantly changing. Uh, but what I've really learned throughout this industry is regardless of what size health plan you work at, whether small, medium, or large, the expectations are always the same. So even though health plans have different ways of executing uh how they comply with these expectations, it's always important to stay abreast of the regulations and OIG and CMS's expectations in regards to them. And the best way to find out is reading those enforcement actions, staying up to date on guidance, going through audits and staying plugged into the industry.
SPEAKER_02:Thank you all for joining us today. Thank you, Annie. Thank you, Judy, for sharing a bit of what you talked about at the 2025 HLA annual meeting. And we hope you all consider joining us in New York City in 2026 for the annual meeting at the end of June through the first of July. And maybe we'll be fortunate to hear from Annie and Judy again as to what's happening with MA for plans and providers in 2026 and heading into 2027.
SPEAKER_00:Bye all.org and stay updated on breaking healthcare industry news from the major media outlets with AHLA's Health Law Daily Podcast, exclusively for AHLA comprehensive members. To subscribe and add this private podcast feed to your podcast app, go to americanhealthlaw.org slash daily podcast.